Dürr Stock

Welcome to the Dürr conference call followed by a Q&A session. The conference will be recorded. [Operator Instructions]

Let me now turn the floor over to your host, Björn Voss, Head of Investor Relations, Dürr AG.

Yes. It's Björn speaking. Ladies and gentlemen, welcome to today's call. We please apologize that we scheduled this call on short notice and outside business hours. But we think it's important to inform you about our Q2 prelims and optimization plans for BBS Automation instantly before stock market opening tomorrow. The presentation for the call can be found on our website, and we assume you have it already in front of you.

I would now like to hand over to our CEO, Jochen, who is joined by our CFO, Dietmar. Jochen, please go ahead.

Thank you, Björn, and good evening to all participants on this call. And especially many thanks for your availability at short notice.

Please, let's go straight to Page 3. As indicated in our Q1 call in mid-May, we prepared a comprehensive efficiency program for BBS Automation in order to shape the company according to the changed market environment to strengthen its operating excellence and to position it to make full use of market opportunities in the future. Our measures also reflect that demand in the first half of the year was weaker than foreseeable last year. I'm going to make you familiar with the details of the program in a minute.

Before, I would like to run you through our Q2 numbers, which were quite solid in our 2 largest divisions. Group order intake was up 13% in Q2, mainly based on year-over-year growth in Automotive. Within Industrial Automation, Measuring and Process Systems, Balancing Technology business also posted high order entry, resulting, among other things, from sound demand from the power generation sector. Here, we are benefiting from high energy demand for AI data centers.

Consolidated sales were almost on last year's level. While the Automotive division accelerated project execution and sales generation in Q2, Woodworking sales were down due to continued low demand in the furniture business. At BBS Automation, sales were also affected by market weakness.

Despite the challenging environment and the slight sales drop, the operating EBIT margin improved on the back of a favorable business mix and recent cost cutting and efficiency measures. The fact that we were able to more than compensate for the unsatisfactory earnings performance at BBS Automation underlines the effectiveness of our self-help measures and the earnings resilience of the 2 large divisions, Automotive and Woodworking as well as in Industrial Automation and Balancing Business.

Due to the upcoming efficiency measures and the related goodwill impairment at BBS Automation, we expect unplanned extraordinary effects of EUR 140 million to EUR 150 million in 2026. The impairment of EUR 90 million to EUR 100 million is included in Q2, while the major part of the planned restructuring expenses will be considered in Q3. However, based on the robust development in H1, we confirm all KPIs of our group guidance for 2026.

Slide 4 shows selective key figures for Q2 and H1 2026. You can see the sharp improvement in Q2 order intake over last year's tariff-induced trough. Sales clearly gained traction in Q2 compared to Q1. And looking at the sales trend, this positive development should continue in the second half. As mentioned, the EBIT margin before extraordinaries was slightly up despite the negative contribution from BBS and the somewhat lower sales level in the group.

Next is Slide 5. The Automotive division posted order intake of more than EUR 0.5 billion in Q2, thus clearly beating last year's figure and Q1. The pipeline continues to be solid also because we see increased productivity in the U.S. as foreign OEMs are speeding up CapEx plans there in order to increase local production and avoid tariffs. However, given the demanding market and the high macro uncertainty, predicting the timing of contract awards continues to be a challenge.

Automotive sales accelerated in Q2 as customer-induced delays in the execution of large projects have mostly managed. Also for H2, we expect a favorable sales channel and potential for further improvements. The same applies to the margin that almost met last year's level in H1 and is expected to improve in H2 based on excellent order execution, higher sales and the typical seasonal pattern.

Industrial Automation on Page 6 showed a heterogeneous development. The balancing business under the Schenck brand reached double-digit growth rates for order intake, sales and earnings in H1. This was based on a favorable environment in core markets such as aerospace, energy and also automotive. In contrast, at BBS Automation, business development was marked by low demand from the automotive industry, prompting order intake to fall below expectations year-to-date.

BBS Automation's automotive business is in an extraordinary situation. On the one hand, we see e-mobility gaining traction with e-car sales surging. On the other hand, many assembly lines that were installed as part of the CapEx wave in 2021 and 2022 are still not fully loaded, so OEMs and Tier 1s are hesitating with new investments. For BBS Automation, this currently means decreasing sales, resulting in underutilization as well as cost margin pressure.

Additionally, earnings were burdened by some extra expenses in project execution in Q2. Part of this was due to a conservative approach to order assessment, so there is a certain opportunity to reverse extra expenses in the final stage of order execution in the future.

The efficiency program developed by the new BBS management is called Vector and mostly designed to increase performance, make the business more resilient and resize it according to the actual market volume. As part of Vector, we will be performing a second noncash goodwill impairment of EUR 90 million to EUR 100 million that will be reflected in the Q2 financial statements. With this, the goodwill of the entity drops to some EUR 25 million, which will significantly derisk BBS Automation in the future.

Page 7, please. The main message for Woodworking is that the division is still exposed to the market weakness in furniture business, but was nonetheless able to increase the margin year-over-year in Q2. This was supported by the effective cost and capacity management as well as a favorable business mix that benefited from the successful marketing of the HOMAG Intelligence software platform. HOMAG Intelligence is unique in the market and seamlessly covers customers' complete order execution process from the point of sale to the final steps of production and logistics.

Please note that HOMAG's H1 earnings included operating one-off expenses of EUR 6 million for higher R&D spending, the ramp-up of the new factory in Poland and a major SAP conversion. Looking at the low level of order intake, I would like to underline that we are determined to protect HOMAG's profitability and to take action if necessary.

Page 9 leads us to more details of the efficiency program, Vector for BBS Automation. On the left, you can see the initial situation in the 2 different markets in the Automation business. Life Science used to be called MedTech in the past, but was renamed to better reflect the full spectrum of our activities in this segment. This market offers the strongest growth potential for BBS Automation. In simple terms, the world population is growing and is getting older, which increases the need for medical treatment and personal care.

Our Life Science business mainly focuses on Europe and the Americas and will be led by our U.S. operations in the future. What is key here is more focus on the sales process and making full use of our expertise for larger projects that not all our competitors can handle.

Looking at the Mobility business with the auto industry, I've already explained the temporary mismatch between rising e-car sales and lacking investment in new production equipment for e-engines. We expect the next chapter or the next CapEx wave to start not before the end of the decade, meaning that the current task is to align our capacity to the current subdued demand. As China is the most important market for e-mobility, this business will be led by our Kunshan operations near Shanghai and no longer from Germany.

In the center of the page, you can see that Vector encompasses optimization and capacity measures. We intend to adapt the workforce to current market needs and to cut some 500 jobs worldwide, thereof, 200 in Germany. At the same time, we will be turning BBS Automation in a better, more capable and more focused company.

With Vector, we will lift process excellence to the higher levels and strengthen sales, service and R&D in order to better differentiate ourselves with USPs in terms of technology and customer support. The business locations will have a clear focus and belong to either the Mobility or Life Science business unit, and we will implement harmonized processes and tools as guardrails for order execution.

We expect sales to be under EUR 400 million this year and probably next year. Until 2030, we want to grow them to at least EUR 600 million in a profitable manner. That means with a margin of 8% on a sustainable basis. This is a revision to the initial EUR 800 million sales target as market volumes are smaller. However, starting from the current base level of EUR 300 million to EUR 400 million, the new target of more than EUR 600 million translates into decent growth rates until 2030.

In parallel, we will bring down fixed costs with Vector meaning that volume growth will be accompanied by a margin level that supports the overall group margin target of 8%.

Page 10 summarizes the financial impact of Vector with the 2 upper boxes showing the composition of extraordinary effects. We foresee restructuring expenses of EUR 40 million to EUR 50 million this year that will be mainly accrued in H2, whereas some EUR 8 million were already included in Q2. Please note that the amount of EUR 40 million to EUR 50 million will be mainly, but not fully reserved for Vector. There is a certain cushion for small adjustments that might be needed in order -- in other parts of the group given the volatile business environment.

The goodwill impairment will be between EUR 90 million and EUR 100 million and reflects that BBS Automation's mobility business has been developing even weaker than assumed last year.

Benefits from Vector will be recurring cost savings of around EUR 30 million with initial single-digit million euro cost savings already in 2026 and almost the full amount already in 2027. From 2027 onwards, we are expecting top line growth mainly driven by the Life Science business, market share gains based on focused sales initiatives as well as service growth.

The midterm margin target of 8% before extraordinaries will be supported by volume growth and by efficiency gains resulting from better processes and the use of internal synergies. Moreover, earnings will benefit by an increased focus on the service business as well as from innovation spending that will allow for more value-based pricing. We see great synergy between BBS Automation and the Automotive division, especially in order acquisition, order execution or claim management.

Before entering into Q&A, some remarks on the outlook on Page 12. We're confirming all group targets despite the challenges at BBS Automation as we are benefiting from the resilience of the other group operations, from gross savings in the admin sector and from lower expenses for the OneDürrGroup program. In our view, this is not a given considering the current news flow in our major end markets like Automotive and Woodworking. However, Automotive will benefit from seasonal effect and the strong sales pipeline in H2. Industrial Automation is expected to see first positive effects from Vector and can rely on the strength of Schenck's balancing business.

Woodworking will benefit from the execution of the almost EUR 100 million timber house contract received in late 2025, which will support sales and profitability in H2. This will more than compensate for the round EUR 10 million onetime burdens that HOMAG announced in March that are linked to the SAP transition and the new factory in Poland.

Page 13 is next. We are confirming the outlook for the Automotive and Woodworking divisions while adjusting the guidance for Industrial Automation that has been under review since May.

I'm sure that you will have a closer look at this after the call, but to keep it short, I would like to directly jump to Page 14 with a summary. The group's business and performance were heterogeneous in H1. Despite this, we are confirming all guidance KPIs on the group level. This is strongly supported by the stability of the Automotive division despite the demanding market environment. Industrial Automation benefits from the strength of the balancing business and with Vector, it has laid the groundwork for future profitable growth.

I'm fully convinced that we will turn BBS Automation into an efficient and growing business and that we will benefit from the initiated self-help measures in the way we did when optimizing Automotive, Woodworking and the Admin sector before. It has proven that we are able to make businesses better, and we will put effort in repeating this with BBS Automation. Moreover, we can rely on the strong balance sheet and our ability for high multiyear cash generation. So despite the extraordinary and mainly noncash expenses, we see ourselves well positioned to continue with our sustainably dividend policy.

So far from my side. Thank you very much for your attention. Ladies and gentlemen, Dietmar and I will now be happy to answer your questions.

[Operator Instructions] The first question is from Nikita Papaccio from Deutsche Bank.

Three questions from my side. The first one on the Industrial Automation business. We saw now a minus 2.4% adjusted EBIT margin in Q2. Can we expect that this is a trough overall and it should improve from here on?

The second question on the synergies you mentioned to improve BBS. Could you maybe elaborate it even more what we could expect here?

And the third one, I mean, you mentioned the full year guidance for the group was confirmed while Automation outlook was lowered. Can you maybe elaborate a bit more which division should mainly offset this? And yes, why?

Thank you, Nikita, for your questions. Regarding Industrial Automation and whether the minus 2.4% are the trough. If you look at our new guidance, which is minus 1% to plus 1%, that is our assumption based on the fact that we have, on an operational level, also accrued for some of the projects, as I had explained. So at this point, we're assuming and for good reasons that it should be the trough.

On the synergies between BBS and the Automotive business, there is a couple, especially on the project execution, I already also mentioned that during my information before. We are using the project management tools meanwhile, that are used very successfully in the Automotive business now also in BBS, and we're already seeing results. That's one synergy.

Second is especially also on the sales side. We have some overlap between customers, especially on the OEM side, and we're using our well-established sales network that we have around the world also to open opportunities for BBS. So I would say those are the 2 main elements that we are currently using.

On the full year guidance, we benefit from the very strong business and also the profitability that we have in Automotive, where in contrast to BBS, as I mentioned, we are very well executing the current projects and benefit consequently from the margins there. But also HOMAG, even though HOMAG is still at very low sales levels, our cost measures are working. And consequently, also here, we have potential, which together with the cost reductions we have on a holding level, especially compared to last year, make us very confident that we keep the full year guidance.

The next question is from Sven Weier from UBS.

I got 2 questions, please. The first one is also kind of a follow-up question on the guidance question. Because if I take the midpoint of your divisional guidances and assume a certain holding other line costs, that would rather give me a margin towards the lower end of the guidance corridor. Is that fair? Or are you still aiming to achieve the midpoint of the margin guidance?

And the second question is, did you see any benefit on earnings from tariff payback in Q2? We now had a couple of companies having had a refund in Q2 and I was just wondering if you did see the same?

Yes, Sven, we agree that I will answer your questions. So maybe starting with the last one. In regard to tariffs, we get refund. But in certain cases, we also have to refund to our customers who have been willing to pay additionally for the U.S. customs tariffs that have been exposed to us. So the impact on profitability, there is a little one, but it's limited actually.

And in regard to the guidance, yes, you're basically right. We are moving to the lower area of the guidance, but we do see further opportunities then in the second half of the year coming up in the auto and in the wood area. And I'm sure you are aware that typically, we are performing stronger in the auto business in the second half of the year. And we will see that towards the end of the year. Project business is always exposed to contingencies that you need to maintain to what extent we can release.

And on the Woodworking side, I expect benefits now to kick in from the start of operation in Poland in the new factory that we did in May, and that will then accelerate in the second half of the year, the Woodworking development in regard to profitability as well.

Does that mean the midpoint is still achievable? Or are you...

Basically, yes. Yes, we still see chances to move to the midpoint, yes.

And then maybe if I might just chip in one final one on the Woodworking business and the order intake. I mean there seems to be also a bit of seasonality, right, in Q2 that the order intake was a bit weaker than Q1. Do you also ascribe, because it was obviously quite a bit of a sequential decline there. But do you think that's largely seasonality also? Or is -- what has fundamentally changed between the 2 quarters?

Sven, I'm trying to make a joke. I would have to call my lawyer to give a proper answer. But it's very difficult to say at the moment. How much there is seasonality, yes. We sometimes see that as often. We have price increases for some standard components in the second quarter. So typically, first quarter is stronger than the second quarter. But to be quite honest, it is currently very difficult to guess. This is why we continue to make homework in HOMAG and see what's happening, where -- I would say we're prepared for the worst and hope for better.

The next question is from Philippe Lorrain from Bernstein.

So it was just first to confirm with you that BBS within Industrial Automation is EUR 300 million to EUR 400 million of sales right now?

Yes, the answer is yes.

Okay. That was EUR 300 million to EUR 400 million or EUR 350 million to EUR 400 million. So if that makes a little bit of difference?

More EUR 350 million to EUR 400 million.

Okay. Perfect. Then the second question I had was to bounce back a little bit on what Sven was asking as well. So the run rate order intake for HOMAG per quarter in H1 was somewhere between EUR 315 million and EUR 320 million, which is a bit lower than what we had last year. So any chance that we move back towards what we saw rather last year? Or would you consider that to be quite stable for the rest of the year, i.e., below the EUR 350 million?

Yes. We probably see a bit of improvement further down the road. But year-on-year, for the year, I don't expect a real upswing.

Okay. And what are the implications maybe then for 2027 because you will come out of that with some reasonable visibility, I guess, between the mix of short-term orders and a bit more long-term orders as well. So how could sales look like a bit next year? Could there be growth? Would that be more flattish? And you were saying as well that you are ready to take action at HOMAG because you want, first and foremost, to protect the profitability there. So if you could elaborate a little bit on that, it would be great.

Yes. That's a tough one, Philippe. Honestly, I cannot give you a professional answer. It's really a bit like we prepare for the worst and hope for better. That's why we continue to increase cost savings as we speak, step by step. We have the means in our hand with the new facility in Poland that is now in operation that gives us more leverage possibilities in terms of also labor arbitrage. And we just continue our homework, but I'm not here to say that '27 will be a tremendous upswing. We all hope that things are becoming better, but I cannot, at this point, give any indication.

Okay. And the last one is more on -- basically on BBS Automation. So is there any issue arising in hindsight maybe with regard to due diligences on the deal because it's not the first time that you mentioned that there are some project costs that are weighing a little bit on that. So I wanted to ask you because you mentioned as well that there are some synergies with Automotive, especially with regard to project execution and project management and that they can learn from that. But since now you've had BBS Automation for nearly 3 years, would you have done the deal like knowing a little bit better perhaps like what could happen to demand?

Yes. That's a fair point, the comment on BBS. And to be quite honest, some, not all, of what we have been now reporting in terms of some project accrual goes back to the time of the due diligence. Some really also happened while we already owned the business. And this is why we have taken consequences with the new management, with new tools in order to make sure that this does not happen in the future.

[Operator Instructions] At the moment, there seems to be no further questions. So I would hand over to Björn again.

Yes, ladies and gentlemen, thank you once again for joining us at this late hour. Of course, Mathias and I will be available for follow-up questions tonight and of course, also tomorrow. So please don't hesitate to contact us. Our management is also available for investor calls in the next couple of days, if you are interested. And finally, I would like to highlight the save the date announcement for our Capital Market Day on December 9 and December 10. We will probably start the event on December 9 in the evening and really hope to see you all in person then.

For now, we wish you a pleasant evening and a successful day tomorrow. But before we end this call, I would like to hand over the mic to Dietmar for some very final remarks.

Thank you very much, Björn. Very final is not yet final, still a couple of weeks to go. But I think you're aware, I would like to add a personal note. This is my final quarterly call as CFO of Dürr as I will be retiring end of September. Honestly, it has been a pleasure to interact with you, and I would like to sincerely thank you for your interest in our company, for your thoughtful questions that always have inspired meaningful discussions and for the constructive dialogue that we had. And I have to admit there have been sometimes questions where I thought, yes, this is what I have to ask my management colleagues as well.

So I'm grateful for the relationships that we built over the years, and I hope you will continue to follow Dürr with interest. Thank you very much and wishing you all the best for the future. And Björn, with this, giving it back to you.

Yes. Thank you very much. Have a good night. Bye.

Welcome to the Dürr conference call for the first quarter of 2026. I will now hand over to Bjorn Voss, Head of Investor Relations of Dürr AG.

Yes. Good afternoon, ladies and gentlemen, and welcome to today's call. My name is Bjorn Voss, and I assumed the position of Dürr's Head of Investor Relations on April 1.

Many of today's participants probably know me, so only provide a small introduction of myself. I spent 20 years in the capital markets, first as a sell-side analyst for automotive and industrials.

Then I switched into portfolio and asset management at Warburg. And in the last 6 years, I worked as Head of Investor Relations and M&A at Bertrandt AG. You might have noticed 3 little changes in today's reporting.

First, we try to streamline the quarterly statement with a reduced number of pages, but with the full content we need. Second, the reporting package was online at 7:00 a.m. this morning, just to give you an appropriate amount of time to review the material. Of course, this will continue.

Thirdly, all documents on our IR website section can be printed again. Of course, we hope that helps you as well. And feedback is, of course, welcome.

Anyway, I'm really looking forward to getting in personal touch with all of you soon, and if you wish, already after this call to discuss more details on Q1.

For now, I would like to hand over to our CEO, Jochen Weyrauch, and to our CFO, Dietmar Heinrich. Jochen will start on Page 3. Jochen, the mic is yours.

Thank you, Bjorn, and good afternoon to all participants on the call. The war in the Middle East created a lot of additional political and economic uncertainty.

In this challenging environment, Q1 actuals basically met our own expectations. Especially our 2 large divisions, Automotive and Woodworking, did relatively well and demonstrated resilience with robust incoming orders and profitability.

Our third division, Industrial Automation, developed heterogeneously, with Sank balancing business performing well, while DBS Automation fell short of expectations, prompting us to develop far-reaching efficiency measures in the automotive business.

I'll come back to this topic later on. The book-to-bill ratio was slightly above 1.

Sales showed a muted start to the year, but will improve in the further course. On the earnings side, we continued on our improvement path.

The EBIT margin before extraordinaries climbed to 4.2%, mainly backed by a good start to the year in automotive, profitability gains in the service business, successful admin cost cutting, and strongly reduced corporate center expenses for the One Dürr Group program.

Net profit additionally benefited from an improved financial result and lower extraordinaries and was up 22%.

Free cash flow was clearly positive at EUR 29 million, supported by further improvement in net working capital. Looking at the sales channel, we expect higher net working capital needs in the next few quarters, accompanied by cash outs for tax issues and for the admin adjustments.

We are confirming the group outlook for 2026, given in early March. However, the divisional forecast for Industrial Automation is under review after the muted Q1 at BBS Automation.

A quick update on the CFO position. We will announce Dietmar's successor soon. There are only a few details to be finalized, but the decision itself has been made. Next is Slide 4.

The 11% drop in order intake was partly driven by the low level of new orders in BBS Automation's mobility business. Woodworking order intake at EUR 370 million was above last year's quarterly average.

In Automotive, we see a solid investment pipeline for the next quarter. There are enough projects out there. The question is whether they will be awarded within the expected time frame, given the uncertainty in the market.

Sales amounted to EUR 940 million and were marked by some customer-induced delays in automotive as well as by the low order intake at the height of the tariff uncertainties in Q2 and Q3 in 2025.

However, we foresee higher quarterly sales to come. As I've already explained the drivers for the improvement in earnings and free cash flow, I would like to jump to Slide 5.

The reduction in order intake versus Q4 was expected as Q4 included 3 very large orders and was extraordinarily strong.

The comparison with Q2 and Q3 2025 shows that the impact of the war in the Middle East on order intake was less severe than the dampening effects arising from the tariff conflict last year.

Our customers seem to have gotten used to the macro volatility and can cope better with it. Slide 6 shows the regional split of order intake. I would like to highlight 2 things here.

First, we won several larger orders in China in Q1 against local players, which underlines our competitive edge there. And second, despite low order intake in the Americas in Q1, we see a promising pipeline in the U.S.A. as customers are planning more investments there in order to localize and evade taxes.

Slide 7 deals with our Middle East exposure. As mentioned, the direct impact of the Iran conflict on order intake has been limited so far. However, lasting energy price hikes, rising interest rates, and supply chain disruptions could affect our customers' investment behavior.

On the other hand, the strain on energy prices underlines the risks our customers are facing when operating their plants with oil and gas. This triggers additional awareness for Dürr's energy-efficient and non-fossil production technologies and their advantages regarding security of supply and efficiency.

In April, the Automotive division organized an amazing virtual trade fair, mainly focusing on innovations for energy-efficient and the electrification of plant shops.

I was watching the performance together with customers and can assure you they have really been thrilled.

In terms of energy and transportation costs, we are not too much worried. Our business is not energy-intensive, and logistics costs are under control. In many cases, there are price escalation clauses in place.

Our sales exposure in the Middle East amounts to around EUR 150 million, of which more than 80% is attributable to Saudi Arabia. We are currently executing 2 major projects near Jeddah in the West.

So far, there have been no major impediments caused by the conflict. Another topic from the political sphere is that we have requested the refund of IEEPA tariffs paid, as these were declared unlawful by the U.S. courts.

However, it's still too early to assess the outcome.

Let's continue with a view of our divisions, starting on Page 9. I've already commented on Automotive's order intake in Q1 and the solid pipeline with new investment projects.

The sales channel indicates higher revenues in the further course of the year, and this should go in line with increasing net working capital needs, which will be mainly reflected in higher contract assets.

As you know, there's a seasonal pattern in the division sales and margin development. That's why the 6% in Q1 is a solid start and a good basis for reaching the full year target of 7% to 8%.

Please note that the lithium-ion battery business unit that formerly belonged to the Industrial Automation business has been part of the Automotive division since January 2026.

Next is Industrial Automation on Slide 10. The division's two business units performed heterogeneously in Q1. Schenck Shen's balancing of technology achieved significant increases in order intake and earnings.

On the other hand, BBS Automation's performance was not satisfactory, which led to decreases in most relevant key figures on a divisional level.

As you know, there is a new management in place at BBS Automation that is tackling the challenges systematically, especially the soft automotive business and improvements in the operating business.

The first measure was initiated in early April with the consolidation of BBS Automation's China business at the Kunshan site, whereas the neighboring Suzhou site will be closed. China has already performed solidly, but this will further improve our business there.

We're working on further efficiency measures in other parts of the world, and we'll present them to you in due course.

Last but not least, please note that the figures shown for 2026 and 2025 no longer include the lithium-ion battery business that was shifted to automotive and the BENZ Tooling business that has been part of woodworking since the beginning of the year.

We know that a change in reporting structures causes hassle on your side. However, the new organization is helping to simplify the group structure and to become more efficient, and we do not intend to change anything else for the time being.

Page 11 shows that the Woodworking division's order intake in Q1 clearly surpassed last year's quarterly average of EUR 352 million. While business with the furniture industry remains subdued, the positive trend in timber house production technology continues.

Sales were affected by the muted order intake following the tariff conflict in Q2 and Q3 2025, but should gain traction in the further course of the year.

The margin was impacted by the sales reduction, higher R&D spending, and initial one-offs for an ERP transition, but should also increase looking down the road.

An important optimization measure is the ramp-up of HOMAG's new factory in Poland later this year that will generate further efficiency gains from 2027 on.

A quick view of the service business on Slide 12. While the service share of group revenue was stable, the gross margin developed nicely on the back of a higher spare parts portion.

The continuous development of the service business has always been high on our agenda as it balances out the volatility of new equipment orders. Consequently, profitable service growth was included in this year's STI target for the Management Board and the entire executive team.

I'm now pleased to hand over to Dietmar, who will take you through the financials.

Thank you, Jochen. Ladies and gentlemen, a warm welcome from my side as well.

As Page 14 basically presents figures Jochen already touched, I would just like to point out two developments. Despite lower sales, the gross margin rose by 60 basis points in Q1.

This was driven by improved utilization at HOMAG after the preceding capacity cuts as well as by higher service margin and reduced D&A.

On the EBIT level, we additionally benefited from a reduction of the admin cost share of sales from 6.4% to 5.6%, reflecting our adjustments in the administrative sector and lower expenses for the group program that was completed to a vast extent in 2025.

Slide 15 contains information on the quarterly and regional sales split, which might be helpful for your follow-up analysis. For now, I would like to directly jump to earnings on Page 16.

The improved EBIT margin before extraordinary effects benefited from the better gross margin as well as a 6% reduction of functional costs despite higher R&D expenses.

The reported EBIT improved by 13% as PPA-related expenses halved to EUR 4.3 million, and there were no extraordinary burden anymore from the sale of Environmental Technology.

Slide 17, please. The higher free cash flow was supported by a further net working capital reduction to EUR 291 million.

This development seems to contrast with our full year guidance of minus EUR 150 million to EUR 0 million. But please keep in mind the higher net working capital needs in tandem with the sales acceleration we foresee for the next quarters.

This is also true for the Automotive division that was again able to improve net working capital in Q1.

Moreover, the free cash flow performance will be impacted by tax payments related to the sale of Environmental Technology and the tax in Germany that we consider as unjustified and that we will have examined by court.

And finally, the payment for the admin restructuring will be due in the course of the year.

Page 18 shows where the improvement in net working capital came from. While higher inventories were roughly offset by lower receivables, we saw not much of a change in contract assets and trade payables, but benefited from a further increase in prepayments that are included in contract liabilities.

Given the foreseeable sales channel and the fact that more large projects will enter the construction phase, we expect contract assets to arrive in the further course of the year.

Next to Slide 19. The positive free cash flow caused a further decline in net financial debt to EUR 47 million.

Total liquidity, including cash on hand and term deposits is still at a high level, but was down almost EUR 150 million due to the repayment of our convertible in January, which is also reflected in the lower level of gross debt.

As more funds will be funneled into order execution, net financial debt will increase during the next quarters, but remain well under control. Larger acquisitions are not planned for this year as our focus is on increasing efficiency in the existing business, especially at BBS Automation. 

Slide 20 shows that we are well-positioned for the current phase of political and economic uncertainty with ample available funds. After having repaid the convertible in January, we paid off the EUR 100 million Schuldschein in April.

This Schuldschein maturity is still shown in the diagram, reflecting the status on March 31. But from today's perspective, there are no maturities left in 2026. Ladies and gentlemen, thanks for listening. I now hand back to Jochen for the Outlook section, starting on Page 22.

Thank you, Dietmar. We are confirming the group's outlook given on March 5. With the margin improvement in Q1, we laid the foundation for an increase also in the full year.

The main drivers for the targeted margin expansion are further earnings potential at Woodworking, cost savings in the admin sector, as well as a reduction of Weir Group expenses and of the losses in the lithium-ion battery business.

For sales, we are expecting higher dynamics in the quarters to come based on the sales channel and the project mix in automotive. 

With regards to order intake, we see a better pipeline in automotive than last year. But please keep in mind that the timing of contract awards is difficult to predict given the high degree of macro uncertainty. 

Next is Page 23. We're also confirming the outlook for the Automotive and Woodworking divisions, while the guidance for Industrial Automation is under review after the muted development of BBS Automation in Q1.

If we should decide to adjust the guidance for Industrial Automation, this would have no effect on the group outlook, as we are talking about our smallest division, and the Schenck balancing business within Industrial Automation performs well. 

As things stand today, group KPIs developed fully in line with the forecasted guidance corridors. Please also note the information on the smaller effects from shifting the lithium-ion battery and Ben tooling business to automotive and woodworking, respectively. 

Ladies and gentlemen, please find the summary on Slide 24. Q1 basically met our expectations. We had a solid start to the year in terms of order intake, earnings, and cash flow.

Despite macro headwinds, we continued on our profit-oriented course by improving the EBIT margin before extraordinaries and, even more clearly, net profit.

These improvements are largely based on the successful execution of self-help measures that we have been implementing continuously, such as the fixed cost reductions in administration in the lithium-ion battery business and at HOMAG. 

The resilient performance of the Automotive and Woodworking divisions testify the effectiveness of our self-help measures. Both divisions are in good shape and well prepared for both to cope with macro challenges and to benefit from a market recovery.

With regard to Industrial Automation, you can expect us to take determined action in order to lift the division to the same level of resilience and operating strength as Automotive and Woodworking. 

This more precisely applies to BBS Automation, while Schenck's balancing business is stable and performs at high margins. BBS Automation is the next unit within our own portfolio that will be systematically optimized. We already started in China, and we'll be extending our measures. 

Moreover, we put full focus on accelerating order intake, sales, and earnings in the forthcoming quarters. We are confident that Dürr will reach its full-year guidance despite the challenging environment.

Ladies and gentlemen, that concludes our presentation. Dietmar and I are now happy to answer your questions.

[Operator Instructions] 

The first one is from Nikita Papaccio, Deutsche Bank.

I would have 3. The first one is on HOMAG. Having booked now EUR 370 million of orders in HOMAG in Q1, how do you think about H2 in this division in light of your guidance? Will this support the lower or rather the upper end of the revenue range? 

The second question is on your battery business. If I remember correctly, you mentioned in your last conference call that it's roughly 70 basis points of dilution on margins. Is it the same magnitude in Q1? Or was it higher or lower? 

And the third question is thinking about the full year now. How should we think about profitability in the next quarter? Are there any seasonalities or bigger projects that are executed now you want to highlight here?

Thank you, Nikita, let's try to answer your questions together. For HOMAG, at this point, we are confident to be well within the guidance.

Note, we've only now covered 3 months of the year, so still hard to say. But at this point, there is no new view on the year than it was when we published the guidance earlier this year.

If I understood you right, on the battery business, your question was whether there is higher or lower dilution effects over the course of the quarters in the year. 

Also, looking at DMA, I don't see that. I would say you can assume kind of an equal distribution, as we are currently also executing a relatively large order that POCs through the year basically. 

On special effects in terms of a different seasonality, also here, I don't see any specialties as you've always seen for good or bad, we always have the seasonality, a relatively weak first quarter and then performance increases during the course of the year as project execution accelerates and there's somewhat also increased activity on the service side as well.

Also here, I don't see any special effects to be expected.

The next question is from Philippe Lorrain, Bernstein.

So the first one would be on automotive. So in the slide pack, you mentioned customer-induced project delays, which are weighing a little bit on sales. Could you shed some more light here?

What light should we? Look, we have a number, as you know, we have a pretty solid backlog. And what we're seeing is for some of the projects, especially, let me try to mentally allocate them.

There is somewhat a few things in Europe, a bit of Middle East, a little bit of North America. And I think that would roughly do the mix, if that helps.

That's good on the geography, but I was meaning like do you know what are the reasons behind that, whether that's just cautiousness from the clients or whether that's other suppliers, et cetera?

Yes, the reasons mainly are, in a few cases, are approvals as well as some customers who have modified, for example, layouts at a late stage, and we have to adapt engineering, so things like that.

So more technical delays than basically sentiment shifting delays or whatever?

Absolutely. Yes.

Then the second question I had was on the refunds that you are seeking in the U.S. Could you quantify that? And as well, I guess, the guidance doesn't really reflect, for instance, that exceptional income because timing is uncertain.

Yes. So it is, I would say, a lower double-digit number. And you always have to keep in mind that we cannot fully assume that this money, if it is ever paid, will end up on our P&L it's completely because some of this would be money theoretically also belonging to our customers.

So it's because we have a mix of who's paid the taxes, et cetera. So that would be the answer to that. And of course, timing, we don't know.

Okay. So it's not in the guidance?

No, no, no. There's nothing in the guidance.

And the third question would be on the ERP transition at HOMAG. Something like EUR 10 million of one-off costs that are basically part of the adjusted EBIT or impacting the adjusted EBIT for this year.

Can you quantify as well the impact that you had maybe on Q1 and what we should expect on a sequential basis to put that a little bit better in our spreadsheet for RAG?

Basically in the first quarter, there was a very limited impact of a couple of hundred thousand of euro.

The full year impact together with the relocation in Poland is amounting to close to EUR 10 million. The project in regards to ERP stretches over 2 years. Go live will be beginning of 2028, and we expect total project costs of around EUR 10 million to EUR.

15, sorry, is that correct?

10 to 15 yes. So EUR 10 million to EUR 15 million...

And for the EUR 10 million that you for this year, you say that it's basically more like H2? Or should we expect like a bigger impact already on Q2 after you had, clearly not much in Q1?

I think it's basically stretched the quarters go live in the first quarter of 2028. So now the 8 quarters that are basically bed starting with Q2.

And the other impact was the start of the production in the new plant in Poland, we are currently transfer production now in May basically and then will be the ramp.

The next question is from Adrian Pehl, ODDO BHF.

Actually, on the automotive pipeline, I was just wondering if you could give a little bit more of color on what kind of projects are around there in the funnel.

I mean I'm referring to because you said year-end, for example, last year, we see a couple of larger contracts and you saw a higher probability to actually strike those deals.

I was just wondering what kind of project funnel is out there and probably in which regions? And then on the order intake that you booked in the first quarter, should we assume that you have had the opportunity to increase your pricing a bit in light of increasing input costs?

Or how is the general pricing environment there? 

And the third one is on HOMAG again. I mean you said  as an answer to your question before that you don't have a new view on what's going on, on the order intake side there.

But I was just wondering if there are any signs of increased activity from your clients on quotes or any kind of pre-indicators that at some point, we will reach a turning point on the furniture side this year?

Thank you, Adrian, for your questions. On the auto pipeline, in terms of the regions, we see a little more or less the same trend continuing for the remainder of the year that there would be more orders coming from outside Germany, if not outside Europe.

So more Asia, more North America, which doesn't rule out that there is also a pipeline in Europe.  So yes, more well balanced with maybe a focus on Asia and North America.

Regarding the pricing in automotive, honestly, we don't see real effects yet probably on the supply chain side in terms of the pricing. Of course, we always want to negotiate the best prices that we can. And I think we've proven quite well that we've been successful in the future.

But there is not an extra need, if you will, from the supply chain. We don't know what's going to happen in the second half of the year. Potentially, some of what's happening now will create the effect only later this year.

But so far, on our supply chain side, we don't really have constraints or any increased pricing in a significant way.

On HOMAG, now, unfortunately, I cannot predict the turning point. We run at the low level currently from quarter-to-quarter. We had a very solid construction elements business last year as we had reported. Let's see how that continues.

But on the furniture side from today's perspective, hopefully, we can be a bit more optimistic later this year and give some ideas. But at this point, nothing has changed to a quarter ago.

Two quick follow-ups on my question.

First of all, on the construction side of things, you don't see any signs of weakening on that business?

And secondly, on the automotive funnel again, what does it do to your margin profile if you sell more or get more orders from the U.S. and Asia? Is there any difference? Or does it depend on what kind of project it is?

Just to get a sense on do we talk about when we speak about the funnel here about, let's say, I don't know, just putting numbers to it a handful of triple-digit million projects? Or is it kind of more upgrade projects? Or how should we see it?

In terms of the construction elements business, as we had said. Last year was a record year. We've done more than EUR 200 million on the construction element side, wooden houses side.

Let's see how this year continues, whether we get close to that number or whatever. But so far, the first quarter has been relatively solid also in that respect.

The auto funnel, the margins, no, there is not so much a correlation necessarily by region. It really depends on the nature of the projects more than that.

How are the projects that we see? There are a few bigger ones out there. We've also booked quite nice orders in the first quarter, which you have seen on the auto side.

I would say it's rather mix. I don't expect the high, high triple-digit number projects this year. So more, yes, of course, triple digit is part of it, but more also the midsized projects and some really also upgrades.

The next question goes to Holger Schmidt, DZ Bank

I have a question on your R&D spending. I think it's up almost 50% as compared to last year. What is behind that? What kind of innovations can we expect going forward?

And is this more a onetime effect? Or how should we think about the future run rate for your R&D spending? That's the first question.

Yes, we are focusing Holger innovation for the organic growth.

But the other side, especially on the wood side that we already talked about ERP change in that regard. We have to work on the CAD design as well and that causing additional efforts.

So that's why we have more spending, especially on the woodworking in that regard.

And then a question on your service business. I mean it's on par in relation to revenues, about 28% of total revenues comes from the service business, but it's down in absolute terms.

So it's down by about 6% versus last year. Is there anything specific to read into that? Or is it just lower utilization of the installed base at your customer side?

Or how should we think about the future trajectory of the service business?

Yes. Thank you, Holger. I'll take that one. Our service business consists of spare parts, some services, which is man hours and then also smaller rebuild projects.

On the spare parts side, that's also the reason why the margin has developed quite well. We don't see a shortfall.

What we had a little less in the first quarter than compared to the average of last year and also different to what we expect, we really expect a pickup is on those smaller brownfield projects.

And we expect those to kick in a bit more in the course of the year than this was in the first quarter, and that will accelerate the volume. On the spare parts side itself, we don't see really much of a change compared to last year.

Maybe a follow-up to this spare part situation here. Are you able to foster price increases year-by-year for the spare part because that would mean that the volume has been down also the spare part business.

Yes, absolutely. I mean we increase spare parts prices every year, sometimes even twice a year because there is fixed spare parts list and the prices accordingly.

And we announced that to our customers. And some of them, we also negotiate some of them are given. But yes, there's always spare part price increases of a few percent every year.

So my last question is on the development so far in the current quarter.

So we are almost 6 weeks into the second quarter. And how would you the fundamental development so far as compared to the first quarter? What has changed since the 1st of April?

So we're doing the Q2 call already today. We don't see any significant effects in any way.

So as we said, our expectation, of course, is to accelerate somewhat in the second quarter as we typically do with the seasonality given. And I don't see anything different this year than we had, for example, also last year.

At this point, I don't see surprises on the operational side.

The next question is from Christian Cohrs, Warburg Research.

A couple of questions from my side. First of all, what are your thoughts about Daifuku acquiring Eisenmann? Do you expect that this could have an impact on the competitive landscape in the midterm?

Secondly, coming to the Industrial Automation business or BBS in particular, taking the last 12 months or 4 quarters, you've had roughly EUR 570 million order intake for the division as a whole, which looks quite soft.

So is this the result of a soft market? Is this the result of a wrong portfolio or a wrong go-to-market approach? So is it more or less a top line issue? And you mentioned strategic repositioning also in your presentation?

Or is it an OpEx issue? And should we expect some rightsizing measures down the road and also costs for rightsizing?

And lastly, income from investment has gone up in Q1. It was above the level of the preceding quarters. Actually, is this a reflection of your new 25% stake in your former Environmental Technologies activities?

Thank you, Christian. On Daifuku Eisenmann, of course, we are always watching when there is developments at our competitors.

And obviously, Daifuku is a relatively large company, not really much involved in that type of business yet, might give financial strength. But also when you look at Eisenmann, Eisenmann is not the one that you're probably used to like 4, 5 years ago. It's a part of it.

And let's see. I mean, we're used, if you are in automotive and I've been in automotive basically all my life, your customers always are very active in making sure that there is enough competition.

So we're used to it. And whether it is Eisenmann today or any other company tomorrow, we have to be competitive, and we have to differentiate on the innovation side, which I think we do. And let's see what it leads to. So we're watching it.

We're not concerned in a humble, I mean, not being in an arrogant way, but we do what we do, and we watch the competitive environment and see what's happening.

On BBS, as we had already stated in our comments earlier, on the one hand, yes, on the automotive side, especially the mobility side, as we can all see, the market has come down significantly, which we also see in our bookings.

On the other hand, having said that, the way we've built the group, we are in a difficult market environment, we even got orders that the companies on a stand-alone basis would have never received in automotive, but especially on the MedTech side.

We have started a program. We have consolidated the locations in China, and we will further work on efficiency measures, which we will talk about more once they are precise. And there might be some one-off costs, or there will be some one-off costs associated with that.

In terms of our own positioning, we will sharpen our go-to-market, and we will make more benefits from further integrating the activities in the group, but the current challenge on the order intake side is driven by the market.

On the interest side? Dietmar?

Yes, regarding the investment profit that is not related to the environmental technology coming from another company that we are accounting for.

[Operator Instructions].

Next question is from Sven Weier, UBS.

Two questions, please. The first one is on e-mobility-related order because, if I understood you correctly, the weakness in BBS that's behind it.

I was just wondering on the automotive side, is there a more favorable situation with regard to e-mobility OEMs? Or do you see the same kind of weakness also in automotive? That's the first one.

Thank you, Sven. In automotive, I'm just reflecting on what orders we're executing right now. We see more activities actually on at least the facilities that produce hybrid cars.

Having said that, there is, I mean, we're currently still executing 2 orders in Saudi Arabia, which are purely e-mobility. We've awarded them quite a while ago.

We've also finished or almost finished a big rebuild in the U.S. for an e-mobility customer. There are still a few projects for some of the customers that are purely e-mobility customers, mostly extensions.

So we see the trend more again to internal combustion engine or hybrid facilities if they are purely internal combustion engine hybrid, because more and more of our customers have the capability to produce all 3 approaches, internal combustion hybrid, and battery electric in one facility.

So we see some activity still there. But if you go back 2 or 3 years ago, when most of the projects were e-mobility driven, that has changed.

And so there's also no specific relation between maybe BBS leading the orders of automotive or the other way around. That's kind of not connected.

Of course, we're using our sales network around the world also for everything that we do, of course.

And BBS automotive activities are, at least from an exchange point of view, getting support from automotive, where we have a strong network around the world, but it's a separate setup.

The other question I had was just when you look at the project pipeline on automotive, you said it's quite mixed between large, small, and mid-sized orders. I mean, how do you see pricing at the moment?

Are you happy with the pricing on the orders? Or is there more pressure because of the environment?

No, I don't see much of a change at this point. We always work in this arena between cost and price, as our projects are typically calculated on a gross margin basis, simply because those projects are always only to an extent comparable to each other.

What we don't see is an erosion on the gross margin side.

Partially also driven, of course, by constant cost reductions also on the product side.

At the moment, there are no further questions in the queue.

[Operator Instructions]

There seem to be no more questions to be incoming. Thank you very much, dear ladies and gentlemen. With that, we are closing the Q&A session, and I hand the call back over to the host.

Yes. Thank you very much to all of you. And if you have further or additional follow-up questions, please don't hesitate to call Mathias or me. And otherwise, I will be looking forward to seeing all of you soon.

Thank you very much. Bye.

Welcome to the Dürr conference call for the preliminary figures of 2025. I will now hand over to Mathias Christen.

Thank you, Anna. Welcome to today's call, ladies and gentlemen. The corresponding presentation is available on our website, and I assume you have it in front of you. As you know, we published select key figures in an ad hoc release already on February 17. Nonetheless, there are still enough figures and news to share with you today. The figures usually relate to continued operations with some exceptions that will be marked. Our CEO, Jochen Weyrauch will start on Page 2 before Dietmar Heinrich, our CFO, will take you through the financials.

Jochen, the floor is yours, please.

Thank you, Mathias, and good afternoon to all participants on the call. As the most important figures, as Mathias said, were already released, I would like to start with a wider perspective and share with you what I personally consider the most important achievements of 2025. Basically, we delivered on what we promised. We simplified our group structure and turned Dürr in a more focused technology company with only 3 instead of 5 divisions. This involves sharpening our focus on the core business, which is automating production processes and making them more sustainable and efficient or Sustainable Automation as we call it.

In this context, we successfully sold the noncore environmental technology business with a high post-tax book gain of EUR 227 million. On top, we started resizing our administrative structure to adapt to a smaller scope of business and tackle cost savings of EUR 50 million. This was after the capacity measures at HOMAG, a further major step to systematically reduce our fixed costs. The effectiveness of our cost-cutting measures is being testified by the improved operating performance in 2025 that was achieved despite the adverse macro environment.

Next is Slide 3. The improved operating performance is reflected by 100 basis points improvement of the EBIT margin before extraordinaries. At 5.6%, the margin even slightly exceeded the target corridor of 4.5% to 5.5%. The group's net profit of EUR 206 million benefited from the good operating performance and the high book profit from the environmental technology sale. At EUR 227 million, the book profit was higher than assumed, mainly due to valuation and currency effects. We met our revised order intake guidance, thanks to a strong finish [ to the ] year. In Q4, customers have more flexibly adapted to the uncertain environment and started to place large strategical orders again.

However, I would like to underline that we might see quarterly fluctuations in new orders again as the macro volatility remains high. Sales stood at EUR 4.2 billion and we were not satisfied. But given the fact that we were facing customer-induced project delays, I would still call them solid. Free cash flow for the continued operations reached EUR 162 million and was appreciably higher than projected, mainly because of very high premature payments in Q4 that were expected in 2026. For 2026, we see potential for further earnings improvement. I'd like to talk about the drivers in a few minutes.

Slide 4 shows the already released figures relating to the developments I just described. I would like to highlight that we managed to increase operating EBIT by 19% despite the slight drop in sales. This was mainly supported by 50% earnings increase at HOMAG and further improvements in Automotive from an already high base level. Moreover, we benefited from lower cost -- lower expenses for our OneDürrGroup synergy program that will be closed in 2026. On Slide 5, you see strong fourth quarters are not -- as you can see -- as we already mentioned a number of times, strong fourth quarters are not unusual at Dürr. Nonetheless, Q4 2025 was a really good one.

As I already mentioned, the good levels of order intake and free cash flow, I would like to underscore the high 7.4% EBIT margin before extraordinaries, mainly resulting from an 11% margin in Automotive and an above 6% margin at HOMAG. Automotive's high margin reflects the division's best-in-class project execution and the effects of the value before volume strategy while HOMAG benefited from its self-help measures. Slide 6 shows that we met or exceeded all of our targets that has in part been revised in July. Please note that the low reported EBIT margin of 0.7% was influenced by high extraordinary expenses of EUR 204 million, while the book gain of EUR 264 million before taxes was not considered in EBIT as it is not attributable to the continued business.

On the opposite, net income of the group includes the post-tax book profit and thus doubled to EUR 206 million. Slide 7 reveals the strong impact of the tariff conflicts on order intake in Q2 and Q3. In both quarters, new orders were almost EUR 300 million lower than they should have been in order to meet our initial guidance from March. Q4 included 2 major automotive orders from U.S. and Eastern Europe and the largest order ever for HOMAG in timber house construction equipment. This order from North America has a volume of not much less than EUR 100 million and underlines the outstanding market position of HOMAG when it comes to really large projects. Slide 8, please. The global distribution of order intake was well balanced.

We saw the expected declines in those regions that we were very strong in 2025. That means Europe and particularly Germany. While the China share continued to decline, we benefited from higher dynamics in other Asian countries, especially India and Saudi Arabia. Slide 9 underscores that the sale of the environmental technology business was a really successful transaction. This is mainly expressed by the high book profit. Before 2018, [ these ] environmental technology activities were a low-performing business. Then we acquired our main competitor, MEGTEC/Universal, shaped an integrated global player with best-in-class technology and consequently created additional value.

This value is reflected in the high book gain we generated from the sale. When looking at the lower table, please keep in mind that the 12% margin in 2025 is not an adequate measure for assessing the selling transaction as it includes EUR 9 million of positive nonoperating allocation effects. Let's have a look on the divisions, starting on Page 11 with Automotive. Looking at the 29% drop in order intake, please consider that the 2024 base was very high due to several exceptionally large orders. On the opposite, Q2 and Q3 2025 were exceptionally weak as automotive OEMs postponed CapEx decisions due to tariff-induced uncertainty. Q4 was appreciably better again with customers resuming strategically important projects.

At constant sales, the operating margin exceeded last year's high level and reached a strong 11% in Q4. There were 2 decisive factors for this. Our excellence in order execution under the umbrella of the combined Automotive division and our value before volume strategy with its focus on margins, strong projects in the sales process. Page 12. At the Industrial Automation, order intake [indiscernible] were mainly burdened by the market weakness in the lithium-ion battery business. We restructured this business and transferred it to the Automotive division at the beginning of 2026 to make use of Automotive's execution strength. The negative EBIT includes impairments of EUR 135 million.

Of this, EUR 120 million are attributable to the impairment of BBS Automation in July. Further impairments of EUR 15 million were recognized in the battery business in Q4, reflecting the weaker market outlook. A quick view on the other 2 businesses of Industrial Automation. Schenck's balancing technology business showed a very good earnings performance, while at BBS Automation, there's still room for improvement. We installed a new management at BBS at the beginning of 2026, headed by the former Chief Operating Officer of HOMAG. His task is to improve operating excellence at BBS and further develop the strategy. He has a great track record at HOMAG, and I'm very sure he will do a very good job at Industrial Automation and BBS as well.

Speaking about HOMAG, the main message on Page 13 is that the division made excellent margin progress despite slightly lower sales and was able to much better cope with the difficult furniture market environment than in 2024. The margin increase of just under 200 basis points is the result of self-help measures and successfully reduced fixed costs. Order intake slightly grew on the back of the accelerating demand in the timber house sector. 3 years after the beginning of the market weakness in the furniture sector, it's still difficult to tell when there will be a real recovery.

But what we know is that HOMAG is well prepared for it. Next is Page 14. Service sales were almost on last year's level, even though the uncertain environment prompted customers to temporarily be more cautious in their service spending.

With this, I hand over to Dietmar, who will take you through the financials.

Thank you, Jochen. Ladies and gentlemen, a warm welcome also from my side. Page 16 basically presents figures Jochen already touched upon. Therefore, I would like to limit myself on shedding some light on net income. You can see 2 net income figures here. The first one is minus EUR 50 million for the continuing operations, resulting from the high extraordinary expenses of EUR 204 million, of which EUR 135 million were impairment driven. We will get back to this point more in details later on as well.

On the second topic on the bottom, you can see the net income of EUR 206 million of the group as a whole. This additionally includes the post-tax book gain of EUR 227 million from the environmental technology sale. Slide 17 contains information on the quarterly and regional sales split which will certainly be helpful for your follow-up analysis. For now, I would like to directly jump to Slide 18 with the EBIT before extraordinary effects. As mentioned, operating earnings increased by a high 19%, spurred by a strong second half when HOMAG fully benefited from its self-help measures and Automotive contributed very high earnings. High margin towards the end of the year are a characteristic at Dürr.

But the 7.4% in Q4 2025 are really remarkable and came close to our midterm target level of 8%. The main earnings driver in the full year was a gross profit increase of EUR 23 million based on lower material costs, good order execution and well-managed personnel costs. And this despite a sales drop compared to previous year. On top, we benefited from lower costs for the OneDürrGroup synergy program as well as from lower negative allocation effects of EUR 9 million. On Slide 19, we show the composition of the extraordinary expenses of EUR 204 million in continued operations. 2/3 were attributable to the impairments and will not lead to any cash out.

The second largest item was cost of EUR 38 million for restructuring measures, mainly for the admin adjustments announced in mid-2025 that are well on track. PPA decreased from EUR 42 million to EUR 28 million. On the group level, the extraordinary expenses were opposed by the high book gain of EUR 264 million from the environmental technology transaction. Now let's turn to Page 20. Back in December, we announced that free cash flow would be in the range of EUR 100 million to EUR 200 million and exceed the original target of up to EUR 50 million. In fact, it reached EUR 162 million in the continued business. This resulted from very high customer prepayments before Christmas.

We were often asked about the reasons for this. The answer has a lot to do with customers' balance sheet and cash flow considerations. If they expect lower cash flows in the year to come, they will bring forward payments to the old year to reduce future cash outs. Beyond high prepayments, free cash flow mainly benefited from lower cash outs for investments. Page 21 shows that we kept net working capital under respective 2024 levels during the complete year with very low days working capital of 27 at the year-end. While the business volume was almost constant with a sales decline of just under 3%, we strongly reduced inventories, receivables and contract assets.

This shows that we are able to keep a decent level of cash in the company, which is even more important when macro uncertainty is high. I'm pleased to say that we saw strong progress in net working capital management at BBS Automation under the Dürr umbrella and that the Automotive division managed to further reduce net working capital to less than 0. Page 22 is next. In the group as a whole, free cash flow expanded to EUR 193 million. Based on this and the EUR 295 million proceeds from the environmental technology sale, we were able to reduce net financial debt by EUR 330 million to only EUR 66 million.

This equals to a low leverage of 0.2 and brought back debt to the very comfortable levels before the acquisition of BBS Automation in 2023. My last slide, #23, is on ESG. I would like to point out 2 important facts in our climate reporting. The first one is a reduction of Scope 3 emissions by 27% in 2025. Scope 3 mainly includes emissions in the use phase of our products. 27% is an enormous decline. This figure illustrates the very high relevance of our painting equipment for reducing our customers' CO2 footprint. The reason for the strong reduction is that a large share of the painting equipment we commissioned in 2025 features low-emission technology.

The prime example is the world's first paint shop to operate entirely without fossil fuels that we handed over to a customer in Europe. The second fact I would like to draw your attention on is related to the EU taxonomy. We were able for the first time to recognize sales from the spare parts and service business in our taxonomy eligible and taxonomy aligned revenues. This means that almost 1/4 of group revenues are taxonomy aligned compared to 13% in 2024.

With this, I would like to hand back to Jochen, who will make you familiar with the outlook for 2026.

Thank you, Dietmar. Slide 25 expresses that we expect the high level of macro uncertainty to persist in 2026. And looking at the war in the Middle East, this assumption seems absolutely justified. Automotive, we see a solid pipeline with quite a number of CapEx projects in the field of painting and assembly technology. However, the lesson learned from 2025 is that predicting the timing of contract awards is difficult nowadays.

There's enough new business out there, but we cannot rule out that projects expected for 2026 might be postponed. Industrial Automation continues to see good prospects in the medtech and consumer sector, while new business with auto OEMs and suppliers is expected to remain volatile given the slower pace of EV transformation. At Woodworking or HOMAG, it's difficult to predict when the furniture business will finally recover. From today's point of view, we would rather expect another challenging year. However, HOMAG is strong enough to cope with this, especially given the upward trend in the timber house business that will support utilization and sales realization.

Page 26, please. The war in the Middle East additionally threatens economic stability. This increases uncertainty and makes the outlook for 2026 even more difficult. Provided that the war will not further escalate, but rather be finished in the foreseeable future and under the assumption that no other international conflicts put additional pressure on supply chains and economic stability, we can give the following guidance for 2026. Sounds like a little longer disclaimer this year, however. We see potential to increase both order intake and sales. In the best case, order intake could rise up by up to 8% to EUR 4.2 billion, while sales could expand to up to EUR 4.3 billion.

Looking at the ongoing uncertainties and the fragile geopolitical situation, however, we also included the possibility of declining new orders and sales in the guidance. With respect to earnings, our target is to further improve the operating performance and to increase the EBIT margin before extraordinaries to up to 6.5%. This also requires that the world will return to a more stable state soon. Supporting factors from earnings increase in 2026 include further earnings potential at HOMAG, operating improvements at BBS Automation, positive effects from the capacity cuts in the administrative sector and the battery business as well as strongly reduced expenses for the OneDürrGroup synergy program.

On the opposite, we expect a onetime burden of around EUR 10 million at HOMAG for the transition to a new ERP system and for ramping up a new factory in Poland that will yield efficiency improvements from 2027 on. For free cash flow, we are giving a guidance of EUR 150 million minus to EUR 0 million. This considers the advanced customer payments at the end of 2025, higher net working capital needs for 2026, the tax payments for the environmental technology sale and the cash out for the administrative adjustments. Moreover, there might be a payment resulting from a tax audit that we will have examined by court, however.

Upside potential for free cash flow may arise from customer prepayments in the course of the year that are not yet fully foreseeable. Page 27, please. To keep it short, I would like to refrain from going into detail on the divisional outlook. When looking at this, please note that the shift of the battery business from Industrial Automation to Automotive at the beginning of 2026 and the transfer of the BENZ Tooling business to Woodworking. The joint sales volume of both businesses is around EUR 100 million. This brings us to the summary on Slide 28. 2025 was marked by the transformation of Dürr into a leaner group with only 3 divisions and full focus on automation and sustainable production.

Alongside with this, we improved our earnings resilience. Our 2 largest divisions, Automotive and Woodworking, were able to increase earnings in an adverse environment based on operating excellence and self-help measures. Industrial Automation will go the same way and improve its performance under the new management. Order intake was impacted by market uncertainties in 2025, but there is potential for improvements in 2026, provided that the extremely high level of uncertainty that we are facing right now will not last too long.

Sales should, if at all, only grow slightly in 2026, but are expected to accelerate more strongly again in 2027. Provided that the geopolitical situation will calm down soon, there are good prospects for further margin improvements in 2026 and beyond based on operating excellence and further cost reductions, for example, in administration. Free cash flow will probably be lower in 2026. However, given our business model, it makes more sense to look at the 3-year cash flow average as this smooths out the high fluctuations in customer payments.

Our balance sheet is very solid, securing the funds to grow and further develop our business. In 2026, we will put full focus on further strengthening our efficiency and operating excellence, especially at BBS Automation. Large acquisitions should not be expected this year, but are an option to speed up top line growth beyond 2026.

Ladies and gentlemen, thank you very much for listening. Dietmar and I will now be happy to answer your questions.

[Operator Instructions] We have a couple of questions already incoming. We will start with the first question from Nikita Papaccio, Deutsche Bank.

I would actually have 3. The first one is on your service part of the business. The share of revenues is fluctuating close to 30%. Are there any initiatives or planning to increase the share? The second one is on your margin guidance for your automation business. I understand that you installed a new management team, but could you explain in more detail the building blocks of the margin improvement in 2026, please? And my final question is on dividends. Maybe I oversee it, but any comments here would be really helpful.

Thank you for your question, Nikita. First on service. We have always ongoing initiatives for the service business. And it's a bit different by division. We have already a very good share of service revenues in Automotive, which we are further expanding with new offerings, for example, our spare parts in many cases now comprise RFID chips to make it easier for our customers to track the lifetime of our products on the one hand. But on the other hand, of course, make our business more captive as companies, let me simplify, like pirates are more difficult to work on similar spare parts.

We use a lot digital products in the service system now partially based already on artificial intelligence. This maybe on Automotive. On the HOMAG side, we are developing because we have a very high installed base, a very complex installed base. We are developing very special standardized service and upgrade programs that will help to support the service there as well, just given a few examples. And as you can see on our Industrial Automation business, especially at the BBS side, is not so much used to a strong service business yet.

There, we're really kicking off programs to benefit from the [ potential ] that's out there. So lots of programs. And this makes us really very confident that this business will grow. And actually, we've set this as a strategic target even down to our remuneration for the year. On the margin guidance for Industrial Automation, the blocks and improvements, Dietmar, do you want to cover a few topics where we see the improvements?

It's on one side, continuing the optimization measures that are already established. We will on the -- one impact have the -- negative impact from the lithium-ion business that Jochen mentioned before that was under stress, and we had to do the impairment actually is removed to auto. This helps them to lift already to a certain extent then the margin. The second topic is that we are working on operational excellence in project management that we are improving the footprint continuously.

We are combining 2 locations here in Germany that are very close together. That's already agreed upon with the works council there so that we can realize synergies. So that's why we are finally confident that we can reach the margin improvement, but it's not yet where we want to go. So there are still further steps to come finally beyond 2026.

On the dividends, I think we have -- there is nothing to be communicated yet. So it's difficult to comment on it at this point.

But Nikita, maybe to add, Jochen, we have the guardrails of 30% to 40% of the net income, but you are for sure aware that in case of extraordinary charges, we did some adjustments. This year, we have, 2025, an extraordinary benefit. So we might consider this. But in general, we are a good friend of a continuous dividend policy.

And of course, nevertheless, having our shareholders having a share of the -- or the income [ that is the ] benefit that we produce. So it's a very generic statement, I have to say. We will discuss with the Supervisory Board. And when we get out with the final report at the end of March, you will get information in that regard.

All right. The next question is from Philippe Lorrain from Bernstein.

So I also have like a few questions. So maybe if I can just follow up a little bit on the impairment that you were mentioning for Industrial Automation, if you can quantify that? And also with regard to the guidance that you provide per division, you give indications on the sales for 2025 in the lithium-ion battery system business and also for BENZ.

But looking at 2026, what would have been like the kind of figures that you were anticipating for this in terms of order intake and also like the margin impact, maybe the dilutive margin impact on Automotive and the relative margin impact on Industrial Automation would help a little bit. So that would be the first question.

So Philippe, in regard to the impairment, just to make sure it's LIB that you mentioned.

Yes...

Because I was still busy taking note, sorry for that. Yes, it's the market situation in the battery market in European market is very, very difficult. That's the area that we focus on because we have been of the opinion that we can gain business in the European market with the drive also for independency in regard to battery supplies in the European Union. We can see that from a customer perspective, this did not materialize finally. We could see the difficulties of Northvolt. We could see Porsche's announcement regarding their joint venture, Cellforce.

And we do see that last year, the market in regard to new business was very, very low. At the very end of -- then we reviewed the business opportunities, we reviewed the business plan, and we came to the conclusion that for the foreseeable future, it's not going to build up then finally in the area that we really targeted. And we did then finally impairment of EUR 15 million. So the impairment as a whole is EUR 135 million. As I mentioned before, thereof the EUR 120 million for BBS that we already [ or PAS ] at that time that we already did at the end of the first half of the year and the EUR 15 million now in the fourth quarter for LIB.

Okay. So the margin -- yes, sir.

Maybe to add to that - go ahead, Philippe. Go.

No, I was just meaning -- so the margin step-ups come basically from the fact that we just reduced the amount of depreciation going forward?

Yes, it's also operational improvement. So we expect a significant -- after restructuring we've made in the lithium-ion business, we really expect even close to double-digit million improvement in the lithium-ion business as such operationally independent from any depreciations on the business. You were asking also on the dilution for the business, it's...

Based on last year, it would be around 70 basis points for Automotive in the margin.

Okay. So basically, so if I take like the 7% to 8% target -- margin target range, sorry, for 2026, I would need to hike that by basically like around 70 bps. So more or less what you expect...

Philippe, when you look to 2020 figures, then you would go down from the 8.6% towards 7.9% in order to have it comparable. And in regard to 2026 guidance, as Jochen outlined, we want to bring back the figure to the breakeven or the business to breakeven for 2026. So the dilutive effect is significantly smaller.

More comes from volume. And you were asking about volumes, both businesses are in the magnitude of EUR 50 million or a bit more at the moment.

So that was the order intake volume for the LIB.

Also order intake on lithium-ion was lower last year. We had a good 2024 with a large order that we're currently still executing and BENZ would be around the EUR 50 million roughly, yes.

Okay. Perfect. Then I have like one question maybe on the large order that you had for timber house for HOMAG in Q4, if you can quantify a little bit that kind of impact?

Yes. That order was close to EUR 100 million in order intake is coming from North America. It will be executed this year and to some extent, also next year. And all in all, in that area, what we call [indiscernible], which is the wooden houses business, we had an order intake of about EUR 200 million last year, record order intake.

Okay, including that order?

Including that order, yes.

Okay. Perfect. I've got 2 more technical questions, so to say, for you. So the first one is on the announcement that you already preemptively make that you are to revise the 2030 sales guidance. So obviously, there's a need to adjust anyway for the sale of the environmental business of CTS. But are there any other reasons also that push you to do that, say, for instance, like the slightly lighter anticipation in terms of order intake for 2026 versus what could have -- one could have expected, so let's say, me, for example, in terms of growth and also generally like the cautious stance that you have with regard to the geopolitical situation?

All of what you're saying is valid in a certain sense. However, EUR 100 million up or down, maybe I'm a bit too generous now, in 2026 don't have much impact on 2030, at least I hope. So CTS is a valid discussion. We will be, of course, reviewing growth potentials, which currently we are really revisiting in order to, not too far in the future, redefine what would bring us to the EUR 6 billion or whether the EUR 6 billion are still the EUR 6 billion.

And Philippe, it's always including both organic growth and inorganic growth, which means acquisition, Jochen pointed out with -- on the presentation, you can see 2026 is on efficiency. But of course, for the future, especially when opportunities coming up to strengthen the business, we will seriously diligently look into them.

Within the core business.

Within the core business and with net debt being reduced to a level close to 0, we are also now having a good headroom again to act when opportunities are coming up in the future.

Okay. So maybe you will actually stop targeting such a fixed figure, including, let's say, like M&A and so on and rather guide organically that could actually like be wiser, I guess, going forward?

We will take it into consideration.

Yes. That's good. And finally, I've got a question for you, Dietmar, because you were mentioning the fact that contract assets were actually reduced. So to which extent do you manage to proactively reduce or keep that under control versus what is it that you actually cannot control? Because I understand there's always a relation between that item and also the sales recognition and the earnings recognition and actually, the market typically likes if contract assets are not too much inflated. So it's good news here, but we get that to be seen. But I was wondering whether there's actually like -- really like something that you can control versus something that you have to actually deal with.

Yes, you're right, Philippe, and looking into the number, we had a decline of EUR 84 million from end of 2024 to end of '25. So that's a significant decline. But basically, I would say the majority of this, we can manage. I think one of the reasons for this at the very end is in conjunction with the sales recognization, especially the excellent EBIT margin on the automotive side in the fourth quarter business.

So a couple of projects have been completed. We had to -- or we could then finally realize the outstanding sales. We could realize then also the profit with releasing contingencies that we had in there, and that was also making a contribution to the drop in the total contract assets as well.

Okay. Perfect. And if you don't mind just like a very -- like a little housekeeping stuff. So you mentioned EUR 10 million of cost for HOMAG for ERP transition. Is it going to be recognized below the line, so i.e., in earnings adjustments or within the guided margin?

We had internally some discussion, but let's say it this way, the Head of our Audit Committee is not too much a friend of it.

So it really goes bottom line.

Okay. So in the adjusted EBIT still?

This is earnings before extraordinary effects.

And that's also -- Jochen mentioned that we had a decline or we expect a decline or had already a decline last year in the OneDürrGroup synergy program. In that regard, we stopped the one ERP approach, and we finally moved now to a brownfield approach regarding SAP R/3 to S/4 transformation that is division based. And we have on one side, the savings, and we have smaller amounts due to the brownfield approach than in the division, but it's reflected directly in the divisions, and it's shown there.

The next question is from Adrian Pehl, ODDO BHF SE.

Actually, 2 questions left from my side. First of all, on the cash flow guidance that you gave, just to get a sense of what defines really the very low end and the upper end of that? Because if you take the 2 years together, i.e., 2025 and your, let's say, very low end of 2026, there's literally any -- hardly any cash flow left on an EBITDA of EUR 600 million. So that seems a very cautious to me, but maybe also the moving parts and building blocks would be interested on that number.

And then secondly, on the regional developments, I mean, obviously, throughout the year, we have seen, in particular, China quite soft. And I was wondering also on the order side of things, actually now down to book-to-bill of 0.4 in Q4. First of all, how do you think of that business progressing? And secondly, is that due to a structure of Chinese rather buying Chinese products? So is that a structural thing? Or how should we see it? And then I might have a follow-up on the regional setup.

Shall I start with the free cash flow guidance? Adrian, in that regard, we mentioned that we received quite big early prepayments or payments in December from our customer side that had a strong influence. Remember that the guidance originally was 0 to EUR 50 million. Now -- then we increased, we got out now with EUR 162 million. Based on the past, maybe we sometimes could overexceed a little bit. So you can roughly say that we received around EUR 100 million more than we expected finally. And this, of course, is missing as a cash inflow in 2026.

So that's why we are certain. On the other side, we will not, for ongoing projects, receive significant milestone payments because these earlier payments also to some extent are made. And then we have nonoperating cash outs like we mentioned for the tax on the environmental technology sale. We booked the net gain finally, but the tax payments will be made in 2026. And we have the expected payout from the tax audit in Germany that we are targeting or not targeting, we will have it examined by the court. We don't want to mention the number due to the tax authority not letting to know our real position on this, but we build up respective provisions.

So no impact on the profit side impacted. And that's actually -- and of course, when orders are coming in towards the end of the year, we could have again the advantage that we get the initial down payments and then have a better cash flow development despite the fact that not much of the contracts as is being built up during that time. So this defines the upper and the lower end from a verbal explanation.

On the regional distribution, especially China of the orders, first, as a disclaimer, as you know, in many cases, we have orders that are triple-digit millions. So this can fluctuate over time. However, especially on China, where we've seen some declines, it is -- China is a very competitive market. And from what we see, it's not about in terms of winning the orders, at least in most cases, independent from whether you are local or not local. In fact, we are local for more than 30 years already in China. It is competition.

And of course, the market after boom times around adding capacities with now dozens of producers that -- it's natural that the investments have been somewhat down. However, I can note that this year, we've already seen some upwind and book 1/2 orders in automotive, not the big orders, but activities there. So let's see what's happening. And China, of course, is the most competitive market on the planet. This is why we are also continuing to play there, especially to learn from them. And not to forget, we're using our own Chinese facilities to follow Chinese OEMs into the world. So if you look at China from a holistic point of view, it's a bit more than just the order intake mix.

Right. And more generally on that, I mean, how are you managing your capacities, in particular on the automotive side of things? So I mean, obviously, your overall profitability was solid in particular in the second half of the year. It looks like you are probably also assuming or selecting orders depending on the margin profile. Is that continuously the case? And how should we think of the margin profile in your order backlog going forward?

Yes. We have a healthy -- continue to have a healthy margin in the order backlog. And in many cases, with the excellence that we have in order execution, we turn or we even increase the margin that we have in the backlog when executing projects. Then in terms of capacity management, we are very much used still today to manage projects very globally. So when we -- just to give you an example, execute an order in Saudi Arabia, you would have colleagues from China involved, from Korea, from Italy, from Poland, from Germany and probably a few more countries. This is how we are used to execute orders, not saying independently from where they are, but to a large extent.

And this is why we can manage capacities quite well. And second, also very important is that a lot of the P&L, especially in automotive, is purchased goods. So we are not so dependent in terms of load in factories because our value adding, our own value adding in terms of products is limited to the amount where we can differentiate with own IP.

So dear ladies and gentlemen, there are no more questions in the queue at the moment. [Operator Instructions] And there is a follow-up from Philippe Lorrain, Bernstein again.

So the first one would be on the extra cost that you had on the continuing business prior to the actual sale of CTS Environmental. So could you quantify that again for the full year of 2025, so we know what negative impact actually leaves the P&L?

This was around EUR 30 million, Philippe, as a whole, a smaller amount, low to 1-digit million euro, I would say, EUR 3 million to EUR 4 million was already in 2024. The remainder was in 2025. So that's the amount that we spent, and this was related to the carve-out preparation, which was quite complex and was then transaction-related expenses.

Okay. But you had also this -- this also includes the impact of shifting the costs that were actually not recognized anymore in CTS Environmental, but rather in the existing continuing business also [indiscernible] all together?

That's correct. It recorded in the discontinued operations.

Okay. Perfect. And second question that came to my mind as well, as you were mentioning Saudi Arabia. But with the current situation in the Middle East, so do you have any, let's say, like significant projects where you have works on the ground and so on? And what's the situation like there in this kind of scenario that we are going through in the Middle East?

Yes. We are -- Philippe, we're having 2 projects that are currently significant, the 2 projects in Saudi Arabia, but they are not at the Persian Gulf side in the East, but they are in the West, near Jeddah, King Abdullah Economic Zone. So far, first of all, our people are safe because we have the people there. We have all the plans to deal with the situation and escalate if necessary. And second, in terms of the supply chain, we're carefully watching. And where necessary, we reroute goods at this point.

So, so far, we're not with a view on this region, expect any interruptions. What, of course, we have to carefully watch is our supply chain in general. And there, it's difficult to say at this point. It is what we said before, if this conflict is managed within the foreseeable future, we don't see a real impact. If it takes longer, we will have to see.

Thank you very much. With that, since there are no more questions in the queue, I'm closing the Q&A session again and handing the floor back over to the host.

Thank you, Anna. Thank you, ladies and gentlemen, for your questions and the discussion. If there are follow-ups, please don't hesitate to contact me. The full annual report will be published on March 26 and the Q1 figures on May 12. We are planning a Capital Markets Day in the course of the year as we are currently examining our midterm sales targets and working on a strategy update. For today, that's it. Take care. Goodbye.

Welcome to the Dürr conference call for the third quarter of 2025, followed by a Q&A session.

Let me now turn the floor over to your host, Mathias Christen.

Thank you very much, and welcome to today's call, ladies and gentlemen. The corresponding presentation is available on our website, and I assume you have it in front of you. Our CEO, Jochen Weyrauch, will start on Page 5 before Dietmar Heinrich, as CFO, will take you through the financials.

Jochen, please go ahead.

Thank you, Mathias, and good afternoon to all participants on the call. As our main focus is on profitability, I would like to start with pointing out the high earnings level in Q3. The EBIT margin before extraordinaries increased to 6.6%, which is almost 2 percentage points more than last year, based on earnings growth in all of our 3 divisions. In the year-to-date, the margin amounted to 4.9%, which means that after 3 quarters, we are almost at the midpoint of the full year guidance.

Order intake continued to be impacted by heightened macro uncertainty caused by geopolitical and trade conflicts. However, we expect Q4 to be much better. Sales accelerated in Q3 after the moderate first half and should gain more traction in Q4. Free cash flow continued to be strong in Q3, bringing the year-to-date figure to a high level of EUR 85 million. The recent months were also marked by pushing ahead with our sustainable automation strategy. We successfully closed the sale of environmental technology and thus completed the process of turning into a lean company with only 3 instead of 5 divisions.

At the same time, we began to streamline our administration, aiming at cost savings of EUR 50 million. The guidance given in March and partly revised in July is being confirmed.

Let's turn to Page 6. Regarding the 29% drop in order intake in the first 9 months, please keep in mind that last year's figure was extremely high due to a unique EUR 500 million contract and further large orders. Sales were slightly lower than last year. We saw sequential improvement in Industrial Automation and woodworking in Q3. Automotive should benefit from an accelerated execution of large projects in Q4. I already touched the positive trend in operating EBIT. With regards to earnings after tax, please note that this position is burdened by the EUR 120 million goodwill impairment in Q2, whereas last year's figure included a EUR 19 million book gain from the sale of Agramkow. Adjusted for both special effects, net income was up a good 50% this year.

Slide 7 shows the same key figures for the group as a whole, still including the discontinued Environmental Technology business. Page 8 shows our quarterly order intake. After a decent start to the year, the effects from the high level of investment uncertainty in Q2 and Q3 are playing to see. However, there were some positive aspects in Q3. Industrial Automation [Audio Gap] than in Q2. And in general, I would like to emphasize that despite the macro turmoil, customers are not paralyzed. Many of them are pushing ahead with large investment projects, and the pipeline looks solid. This is true, for example, for strategic projects in the automotive industry, but also for HOMAG's timber house construction business. Q4 has the potential for several large orders if our customers stick to their timing.

Let's move to regional order intake on Page 9. New orders in Germany dropped sharply as last year's figure was boosted by the huge EUR 500 million contract. The increase in Asia without China was driven by India and Saudi Arabia, which has become a very attractive market for Dürr.

Next one is the Automotive division on Page 11. Q3 order intake was marked by the absence of large orders, but this does not mean that there are no such projects being planned. It's rather a characteristic timing issue of our plant engineering business. There are quarters with no large orders, and there are quarters with several big-ticket orders placed all at once. The EBIT margin before extraordinaries exceeded last year's high levels in Q3 and in the year-to-date, based on the good margin quality of the order backlog.

Revenues were up sequentially in Q3 and should further accelerate in Q4 as the execution of large orders is speeding up after customer-induced delays in the first half.

Page 12, please. Industrial Automation saw a good Q3 with order intake and sales clearly exceeding low Q2 levels and returning to the encouraging Q1 levels. BBS Automation picked up with continued strong MedTech business and improvements in the other business. The EBIT margin before extraordinaries almost doubled year-over-year and clearly exceeded the full Q2 level, spurred by volume effects and the recovery in service business. Please note that for 9 months figures, there is limited comparability as last year's figures still included the Agramkow Group that was sold on July 1, 2024.

Reported EBIT was burdened by the EUR 120 million impairment in Q2. As the battery business has been suffering from poor market conditions, we initiated restructuring in Q3 to lower fixed costs. Slide 13 is on group working. The division has implemented a number of self-help measures and thus successfully strengthened earnings resilience. This is testified by the fact that the operating EBIT margin increased by almost 2 percentage points on slightly declining sales in the year-to-date. Order intake was impacted by the tariff uncertainties, causing additional investment restraint in the furniture industry. As of now, the exact timing for market recovery is hard to predict. This is why HOMAG's improved earnings resilience is so important.

Looking at the timber house construction business, the outlook is brighter as we see an increasing demand and good opportunities for large orders in part already in Q4. Slide 14 gives an overview on Environmental Technology. As this business was effectively sold 2 weeks ago, there is no need to comment on the figures.

Next one is Slide 15. Service sales recovered in Q3, beating the Q2 level by 14%. Under the impression of the tariff chaos, many customers immediately cut service spending in Q2. So it's good news that there was sort of normalization already in Q3.

Now it's time to hand over to my colleague, Dietmar Heinrich, who will explain the financials.

Thank you, Jochen, and a warm welcome to everybody also from my side. Let me start with Slide 17 and our key financial indicators. As Jochen has already touched a couple of them, I will limit myself to gross profit and net income. We managed to increase gross profit by 5% despite slightly lower sales. This was mainly an effect of rising margins in the equipment business due to the value-before-volume strategy, as well as capacity adjustments and lower extraordinary expenses.

Net loss in the 9-month period was marked by the goodwill impairment in Q2. In Q3, net income stood at EUR 26 million versus EUR 21 million 1 year ago. However, last year's figure included a EUR 19 million extraordinary book gain from the Agramkow sale. Adjusted for this, net income was up by almost 50% in Q3 2025. Slide 18 is on sales. In Q3, we came close to the prior year figure and exceeded this year's low Q2 level. The latter was mainly based on sequential improvements in Industrial Automation and woodworking. Automotive is expected to speed up revenue recognition in Q4, which in terms of sales is usually the strongest quarter.

On Slide 19, you can see the strong margin performance in Q3, which was supported by all divisions, with Automotive achieving an outstanding figure of 8.7%. The EBIT margin before extraordinaries for the first 9 months increased to 4.9% and clearly reached the full year target corridor of 4.5% to 5.5%. In terms of absolute EBIT before extraordinaries, Q3 was by far the strongest quarter, not only in 2025, but also compared to last year. In the first 9 months of 2025, we saw an increase of 9% based on the higher gross profit. Overhead costs were up 2.6%, mainly due to higher R&D costs.

Slide 20 shows that after a strong second quarter, free cash flow was clearly positive also in Q3 and climbed to EUR 85 million in the year-to-date. The main driver for this was lower CapEx spending. Please note that EBIT and DA were marked by the impairment in Q2. Our guidance for free cash flow is EUR 0 million to EUR 50 million. This implies a negative figure actually in Q4. But if you ask me if this will really happen, my answer is we stay on the conservative side, as free cash flow is difficult to predict in our business, but I can't rule out the possibility that free cash flow might develop a bit better than guided.

Slide 21 is on net working capital. Compared to the end of 2024, there was a 16% decline and an improvement to 31 days working capital. Positive effects resulted from well-managed contract assets and considerable prepayments that are reflected in higher trade liabilities. These 2 effects overcompensated the temporary rise in trade receivables.

Net debt shown on Page 22 was stable at a level of EUR 480 million in 2025. In Q1, liquidity was reduced by EUR 97 million payment for the acquisition of 2.5 million HOMAG shares after our cash settlement offer had ended due to a final court decision. Net debt will strongly decline as of December 31 as a consequence of the gross proceeds of EUR 290 million to EUR 310 million from the environmental technology transaction that was closed on October 31.

Let's look to Page 22 and our funding situation. The funding situation is comfortable, and it will additionally benefit from the environmental technology proceeds, which are not yet reflected on the chart. The maturity profile is also favorable. We repaid Schuldschein tranches of EUR 55 million this year. The next maturity will be the EUR 150 million convertible in January 2026.

So far from my side, I'm now passing back the word to Jochen, who will continue on Page 25.

Thank you, Dietmar. I would like to briefly comment on the sale of our Environmental Technology business. My personal judgment is that we were able to conclude a very good deal for Dürr and its investors, but also for the environmental business that will benefit from better growth perspectives. Enterprise value and proceeds clearly met our targets. We will use the proceeds to further strengthen the balance sheet and bring down net debt to presumably less than half of the pre-deal level.

Please note that the EUR 290 million to EUR 310 million are gross proceeds after having acquired the 25% reinvestment share and before tax payments that will be mainly due in 2026. We anticipate a book gain of EUR 160 million to EUR 190 million after taxes, which is at the higher end of expectations. Moreover, the transaction was a major strategic step to finish D's transformation into a lean group with a clear focus on highly automated and sustainable production processes for our customers.

Slide 26 visualizes our transformation. Within not more than 1.5 years, we divested the non-core businesses of Agramkow and Environmental Technology, consolidated our automotive business in one powerful division, integrated the automation business under the BBS brand, and reduced the number of divisions from 5 to 3. The new Dürr Group acts under the motto of sustainable automation with automation as a joint technology platform and further synergies, for example, bundled purchasing, cross-selling in the auto sector, shared services, and business locations, as well as best practice processes in order execution. And on top, we are more focused and easier to understand for our investors and analysts with only 3 divisions.

Page 27 shows the result of our transformation process. This structure is the right setup for the coming years. We are not planning any larger M&A transactions, but will put the main focus on further improving efficiency. Our target is an EBIT margin before extraordinaries of 8%. Even though we are not yet there, we have already done a lot of homework. The Automotive division reached its mid-cycle margin target of 8% last year and is set to repeat this in 2025. Woodworking has strengthened its earning resilience and will return to an 8% plus margin under normal market conditions. In 2026 and beyond, we will put special attention on improving the margin of Industrial Automation. There is still work to do. Nonetheless, I'm fully convinced of the potential of our automation business, especially as we continue to expand the well-performing activities in the medtech sector.

Slide 28, please. A consequence of our lean group structure is the planned resizing of the administrative sector. As outlined in July, we are planning to cut 500 jobs to make admin structures leaner and more efficient. This goes in line with empowering the 3 divisions and give them more entrepreneurial leeway. We are targeting for cost savings of EUR 50 million, which requires provisions of EUR 40 million to EUR 50 million in Q4. We have already started to reduce the admin workforce abroad and entered into negotiations with the Works Council in Germany.

Page 30 brings us to the outlook. We are confirming the targets set in March and partly revised end of July. The order intake guidance requires a strong Q4. There is still work ahead of us, but I'm very confident that we will be successful, as there is a good level of investment activity on our customer side. Regarding sales, we are confident to reach the lower end of the EUR 4.2 billion to EUR 4.6 billion target corridor, backed by a strong Q4, especially in automotive. The EBIT margin before extraordinaries almost reached the guidance midpoint after 9 months. So it's fair to assume that last year's level should be exceeded.

Regarding free cash flow, Dietmar found the right words before. We maintain a conservative approach, even though there is an opportunity to beat the upper end of the guidance. Given the book profit from the Environmental Technology sale and the good earnings performance since Q3, we are confident regarding the net income guidance of EUR 120 million to EUR 170 million. The target for net financial debt is absolutely realistic, given the environmental technology proceeds.

Slide 31 is a rather technical one, designed to help you to follow the guidance, especially the information on the influencing factors for net income may be helpful. The divisional guidance on Page 32 is unchanged compared to August 7, when we made some adjustments marked in blue. We are confirming the divisional targets, especially the improved earnings performance in Q3 is a sound argument to be confident.

Slide 34 brings me to the summary. The sale of the Environmental Technology business was a milestone, not only because it was a financial success, but also because it represents the final element of our transformation. Dürr has become a lean engineering group. Our leading competence for highly automated and sustainable production processes is a distinguishing feature that sets us apart from the competition. We are confirming our guidance and expect a high order intake in Q4, provided that there will be no customer-induced delays in order placement.

The good performance in Q3 underscores our earnings resilience and our ability to brie margins even in a challenging environment. Free cash flow and net financial debt should meet the targets set in our guidance, maybe even more. We continue to improve earnings resilience and margins with the planned adjustments in administration, targeting for annual cost savings of EUR 50 million. And after having reshaped the group, we will direct our focus even more on improving efficiency in 2026.

Ladies and gentlemen, thank you for listening. Dietman and I will now be happy to answer your questions.

[Operator Instructions] And the first question is from Sven Weier, UBS.

I just have one regarding the order intake and what you said on Q4. I mean, with a view to the group guidance, is it also fair to assume that it's more likely that you will end up at the lower end of the range? And I was also curious how you see that on an individual divisional level.

Thank you, Sven, for asking the question. Yes, that's fair to assume in terms of rather the lower range of the guidance. And from a divisional perspective, we see some momentum in HOMAG, but the bigger part at this point is assumed to come from automotive.

So HOMAG is also going to be more towards the EUR 1.3 billion level, I guess?

Let's see. I would guess rather somewhat above, but let's see.

The next question is from Nikita Lal, Deutsche Bank.

First, congratulations on the strong profitability we saw in this quarter. Is this a run rate we can expect for the next quarter? Or what is it dependent on? My second question is on any comments on dividend already. Should we expect a payout ratio of roughly 40%? And the third one, when we think about 2026, do you see any improving KPI for HOMAG?

Thank you, Nikita, for your questions. Let me start with the run rate for the remainder of the year. If you make the math with the midpoint of the guidance, which we've now reached, we would expect Q4 probably not be exactly at the Q3 levels, but at least to a point that it -- I shouldn't say easily, but that it well confirms what we've guided. On the dividend, no, we have not yet discussed anything. But I would say we are probably known for some sort of continuity, whatever that means at the end of the day. And then your last question was on HOMAG, I think, for next year.

Let's see how things develop. HOMAG has made good steps this year. And you can clearly see, I mean, HOMAG is up almost 2% compared to last year, that we've made our homework in terms of efficiency, and the effect of our restructuring program kicks in. But next year, to some extent, really depends on the outcome for the remainder of the year. And being at this year's level would already, I would say, is -- would be a good starting point, and let's see what's possible.

And the next question is from Adrian Pehl, ODDO BHF.

Actually, a couple of questions. Well, first of all, on HOMAG again, actually, you're phrasing it a little bit differently. Since in the past, we have been talking a little bit about the quality of discussions that you had with your clients. And I was just wondering if there was some sort of incremental change on that, hopefully, towards improvement, but happy to take any color you might share. The second one is on -- as you were referring in your presentation to probably not pursuing bigger M&A transactions. Nevertheless, I wanted to hear your thoughts on the proceeds that you will be collecting from the sale of the environmental business. Is that -- will you pay down debt with the money? Or how should we think of the respective capital allocation here? And thirdly, before I might have a follow-up, on the phasing of the cash out on the restructuring, maybe you could remind us how this will unfold starting Q4 going into 2026, that would be helpful.

Okay. Thank you for your questions. I will answer on HOMAG, and Dietmar will probably take over for M&A proceeds and the phaseout of the restructuring. On HOMAG, the -- yes, obviously, it's -- I've been burning my tongue a few times on this topic, always looking at when things would become better. It's twofold. It's very difficult to guess action from the discussions I have with customers. So we're careful when it comes to furniture at the moment. I don't think there is more room to go down, but still, you don't see any real recovery in the numbers. I think there is with some customers in Europe, maybe discussions become a bit more positive. On the other hand, we see some uncertainty in the U.S. from customers who now, of course, have to suffer from tariffs.

How this will play out in the end and when really there will be momentum upwards, downwards, I don't expect any -- hard to say. Where we see definitely activity is around wooden houses and timber processing. And there, we really are discussing with a number of customers on significant projects. And there, I'm quite optimistic.

So I will pick up as Jochen already mentioned, the other 2 questions in regard to the use of the proceeds of the Environmental Technology sale. We are going to use it for debt reduction. We have the maturity of the convertible bond coming up in January of next year, and we have another Schuldschein then coming up in April of next year, and we are targeting actually to repay this through debt. In regard to the cash out for the restructuring, then in the administration area that Jochen explained, we are targeting to build up the provisions in the fourth quarter of this year. We are already getting closer to the negotiation results with the works council. And so I'm confident that we will build up the related provisions in Germany, but also outside of Germany, until the end of this year.

In regard to the cash out, I do not expect the real cash out to happen within this year. The majority will for sure be done in 2026. But depending on the individual agreements and the impact that we are having in there can also be that some portion of the payout still will be done in 2027. We can provide more information in regard to this when we are really having the progress in conjunction with getting the agreements with the individual employees who are targeted to leave the company.

And then last question from my side again on automotive, just also probably a bit more color, just to what you said already. I mean I took obviously, and the order intake in Q3 was pretty low. But I want to hear your thoughts. Is that just a function of shifts in projects that, on the other hand, are very likely to materialize anytime soon? Because I'm actually asking you referred in the press release to, I think that was a half sentence saying that if these projects are then finally been signed, so there's still a high level of uncertainty, obviously, and there might be some shift into 2026, but anything on color, clients, regions, investment behavior would be helpful.

Yes. Thanks for the add-on question. We have a few -- a bit -- yes, some large orders that are very much progressed in terms of the negotiations. And so still not signed, but it gives us the confidence that we have expressed in our comments before. On the regions, I ask for your understanding that it's also from a confidentiality point of view, and you know that the market is quite sensitive at the moment. I would rather comment on that we have booked the orders.

And the next question is from Philippe Lorrain, Bernstein.

I wanted to bounce back a little bit on automotive. From today's point of view, would that be fair to assume that the kind of order intake level that we could expect for Q4 kind of matches the one that we've seen in Q1?

It very much would match, yes, what we had in Q1.

And then a second question to specify a little bit more what you were saying on the adjusted EBIT margin guidance. So I take it that you are saying, okay, you are very confident with the midpoint of the range, but the midpoint of the range at 5% would imply actually, like another 5% or so in Q4, if I'm not mistaken. So to circle back with your comment, like saying, okay, if we look at Q3 and maybe we assume that it's not exactly the same level of margin that we can generate for Q4, that would imply actually that we'll land well within, let's say, the upper half of the margin range. So is that fair to see it that way?

Yes. Maybe, Philippe, I take this question in that regard. As you know, we are always a bit conservative, and projects have sometimes their own dynamics. So we stay on the conservative side. And then we stay to what Jochen explained before, staying at a very -- or we stick to staying with the guidance, we are in the midrange of the guidance. We will feel comfortable in that regard; in case we perform better, of course, that will be the case. But I don't want to raise the bar right now that would not be reasonable.

And my last question, again, on -- probably a bit more on automotive and to some extent, also on HOMAG, but now with the trend that we've seen that Q2 and Q3 were slightly longer in terms of order intake, how should we expect actually sales to evolve in the coming quarters? And I'm trying to extrapolate a little bit further than just Q4.

Yes, especially in automotive, we still have a very good backlog. So the orders we are now fighting for are rather further down in '26. So there, we have a nice buffer independent on whether we get one of the bigger orders a quarter earlier or later. HOMAG, we'll have to see. I mean our -- you can see it in the numbers. The order backlog has somewhat come down. This is even more visible on the furniture side. So we will have some measures in place already for Q1, which should help. And you've all -- I mean, we've seen a similar thing this year. So we're working -- I mean, we're working from, how would we say, hand to mouth. And -- but that's why I said expecting something similar to start with for next year, compared to this year, I think, is a fair assumption.

But on a full-year basis, probably still continue on an improvement trend margin-wise?

That would be our aim, definitely, but let's see how the market helps us or doesn't help us.

At the moment, there seem to be no further questions. [Operator Instructions] And the next question is from Holger Schmidt, DZ Bank.

Just one question on the battery side. Could you give us an update on your battery business? I mean you are making some capacity adjustments at the moment. Do you see any kind of improvement of -- or potentially deterioration of the business?

Yes. Thank you. Good question, Holger. No, it's tough to be quite fair at the moment. That's why we are restructuring. We see a challenging market. We still believe that there will be some activities coming back. There is a few smaller orders, but nowhere near to what we've been planning for. This is why we make significant capacity adjustments. And this is where we obviously see some earning issues at the moment. But we are adapting the team. It's not too huge anyways, and then see what we can get out of it. But it definitely is an issue at the moment, and that's why we already announced significant restructuring, and let's see how it goes forward. Fortunately, it's not a big ticket in total.

And let's assume the market would remain weak at the current level, would you also consider to step out of this business?

We don't do that right now. Let's see how things develop. If you listen to what is said in public, there is a confirmation that, especially in Europe, that we need some sort of a supply chain in the battery business. There is some projects. And actually, we are hopeful also to collect a few orders, at least 1 or 2 double-digit. So we will, in a way, deal with what we have. Hard to rule anything out, but at the moment, that's not our plan.

And the next question is from Elizabeth Weisenhorn, Portikus Investment.

Mr., Jochen, you very often go to China, as I noticed. And I would like to know what you think about the competition there. I read and see pictures about the automation degree that is going on there and how competitive it is.

Yes. Thank you for the question. Yes, indeed, I go to China quite often because it's an important business for us. And China is very competitive in any industry. And in automation, definitely, there is a number of very strong players, obviously, including us, because the majority of our employees in production automation are sitting in China, mainly in Suzhou and Kunshan, and we're playing a significant role. That's why it is important to play in China to learn what's happening there, but the dynamics are incredible. I can really only say -- and that's why, again, it is important to be there to be successful, and we are successful in our automation business with our strong local team, but you have to continuously develop, be efficient, be cost-driven. And this is why the business that we run and the competition we play with in China makes us also quite strong for the business outside of China. I hope that helps a little bit. That's all I can say at this point. And it's -- I'm always impressed.

Then we come to the last question. It's a follow-up from Philippe Lorrain, Bernstein.

Just wanted to follow up with 2 little more questions on automotive. So the first one was just like to make sure I understood you were saying your, let's say, confidence with regard to the statement speaking about an improvement in Q4 order intake trends is based more on the fact that you see orders being like nearly assigned. But how about orders that you've signed, maybe at the beginning of Q4? How has been like current trading, so to say? And the second question would be -- and perhaps it ties also together a little bit with all of that generally. But I remember you were speaking about a bit of a slowdown in execution this year. However, it seems to pick up, especially with regard to Q4. Would you say that all these issues are now behind us? Or has there been like a structural shift somewhere?

Yes, on auto and bookings in Q4, in general, our pipeline overall doesn't look very bad, I must say. Actually, let me turn my words around. It looks quite solid. And that is not only Q4. It is -- we're always watching the next 12, 18 months. And this is what I can say. It is solid. Is it fantastic? Probably not, but it's very solid, and there is enough projects out there to feed the organization at this point. When it comes now to Q4, there is 2 to 3 larger orders that would turn the needle. And on most of them, negotiations have progressed quite well. And then based on that, let's see how things turn out. Does that help a bit, Philip?

Yes, perfect. So I understand it's really, yes, something that needs to be signed. And with regard to the question on the pace of execution on sales.

Sorry, I missed that one. I would say we are running a relatively normal pace at this point. There was a few orders or a few projects where there was some modifications at customer ends. There was a few delays on progress of buildings, which, by the way, can happen always in that business. But what we are currently seeing is, I would say, normal project execution.

And as we have no further questions from the audience, I would like to hand the floor back over for closing remarks.

Well, thank you, Heike. Thank you, ladies and gentlemen, for your questions and the discussion in today's call. If there are follow-ups, please don't hesitate to contact me. We are looking forward to meet some of you on the investor conferences during the next few weeks. Take care and have a wonderful end-of-the-year season. Bye-bye from our side.