Jenoptik Stock

Ladies and gentlemen, and welcome to the Jenoptik conference call regarding the results of the first half year 2026. The conference will be recorded.

[Operator Instructions]

Let me now turn the floor over to your host, Dr. Prisca Havranek.

Good morning, everyone, and welcome to our call on the results for the first half year 2026. As in the past, I will lead you through the presentation and then Andreas, our Head of Investor Relations, and I will be open to your questions. But before we go into detail here, I would like to hand over to our new CEO, Dominic Dorfner.

Thank you, Prisca, and good morning to everyone. I'm very pleased to introduce myself to our investors and analysts on the occasion of our first year results release now that I've been officially on board since August 1. I've already had the chance to meet many optic colleagues at several different sites and even different continents over the past weeks and have gained some first good impressions of Jenoptik. What I saw during the first interactions impressed me. Firstly, I saw great people, highly dedicated to their business as well as highly motivated. So for me, that represents a strong basis.

Secondly, I saw strong technologies. Jenoptik's competencies, for example, in optics are just impressive. And so is its ability to turn science or physics into solutions that truly add value to our customers. And finally, I'm personally convinced that there is a great relevance of photonics for many industries we serve, and its importance may even accelerate in the future, or maybe in more simple terms, I'm convinced that photonics is an attractive industry with a lot of growth potential. So for me, as a physicist joining Jenoptik is a dream. For me as a manager, it means potential and ambition. So what ultimately drives me is finding out what is possible, shaping and building the courage and this is what we are striving towards together as the Jenoptik team. As I said earlier, I already had the chance meeting and talking to many people in the company and for the next few weeks, my focus will be on listening, getting to know even more people, customers and to understand all of our business in full.

Finally, I'd like to comment on a matter that has been mentioned in the news in the recent weeks or even months. You might know that we are currently undergoing some sort of a strategy process update which is in full swing already, and we expect the Jenoptik Executive Board to be in a position to communicate key findings and outcomes towards the end of the year at the earliest. So please bear with me and my colleagues that we may not be able to answer questions relating to that matter in the very near future. Thanks to you and I'll now hand back to Prisca for the H1 results, and also later the Q&A session. Thank you.

Thank you, Dominic. Now let me start with an overview on Page 4 of our slide deck. First of all, we saw exceptionally strong order intake dynamics, particularly in our OEM businesses to continue also in the second quarter, overall, exceeding our expectations. The ramp-up in the semi industry continues to be in full swing as far as we see it, but also order intake in our biophotonics business unit was substantially up compared to last year for reasons I will address a little later in this call. I am pleased to report that revenues for the first half year was slightly up year-on-year for the first time in a while driven by our semi business and SMS.

We are also pleased to report a strong improvement in our profitability in terms of EBITDA margin, noting, however, that profitability in the first half of 2025 represented a modest comp. Free cash flow improved slightly year-on-year, reflecting besides higher profits, greater working capital needs in conjunction with our strong order intake. Now looking forward, our near-term focus is clearly on our capacity expansion projects in our OEM businesses, as well as maximizing output in the light of the significantly increased order backlog. Furthermore, as Dominic has already mentioned, we are currently reviewing our businesses, including strategy, with outcomes expected towards the end of this year at the earlier. And finally, we continue to focus on, and address our commercial opportunities besides semi, for example, in optical data communications, defense applications as well as our SMS business in the U.S.

Regarding guidance, given what I've just been stating before, we now expect to reach the upper half of the initial guided revenue range and EBITDA margin range. Now moving on to Page 5. As I've just mentioned, we saw particularly strong demand in semi and advanced manufacturing as well as in biophotonics continue in the second quarter, driving order intake group level up by more than 50% year-on-year. Overall, exceeding our expectations. Now starting with semiconductor and advanced manufacturing, as you know, by far, our biggest business unit. Order intake was driven by both our lithography business as well as continued strong customer activity in our semi inspection business. And given that we mentioned in our last call that Q1 benefited from a large annual order, I think it's not a surprise that Q2 was a little below the order intake levels recorded in Q1.

Turning to our biophotonics business. Order intake was again very strong also in the second quarter, therefore, H1 '26, where we report a 45% increase year-over-year. This performance was, to a certain extent, driven by very high demand for our portfolio related to the defense end market in the first half year. In addition, we also saw an overall positive order intake dynamics in the med tech and life science fields. Here, a lower momentum in the field of dentistry was more than compensated by a multiyear order in the low double-digit million range that we received in the med tech space. Similarly, also, as we discussed in the first quarter, we believe that there also may have been certain early order effects in conjunction with growing geopolitical uncertainties since the start of this year. Also, let me remind you that we continue to believe that quarterly volatility of order intake in this business unit will remain high going forward, partly because of a special pattern in the defense industry as well as a certain volatility that you usually see while running a concentrated key account business model.

Now moving on to our solutions businesses. For both metrology and production solutions as well as smart mobility solutions, order intake develops broadly as we were expecting, with both business units reporting low double-digit order intake growth. So overall, as a consequence of these developments in demand, our H1 book-to-bill ratio for the group went up sharply to 1.4, and our order backlog grew substantially to around EUR 825 million. Please follow me now to Page 6 to cover our revenue development. So whereas Q1 revenues were still slightly down year-on-year, as you can see on the left side of this slide, we returned to growth in the second quarter. This leads to an overall modest 1% growth at the half year point. Excluding effects from currencies, especially relating to the euro-dollar exchange rate fluctuations, revenue growth would have been up by close to 3%. At a segment level, semi advanced manufacturing revenue was up by around 10% year-on-year, driven both by our lithography as well as our semi inspection business.

Digital datacom was supportive, albeit on a lower level, given the relative size of this business compared to the other 2 businesses. Now let's look at biophotonics. Here in the last year, as you know, we benefited from a strong dental business. Given this base effect, the medtech business did not quite reach the prior year's levels as we were expecting. On the contrary, a strong development in defense, partially compensated for this. However, overall revenues were still down by almost 5% year-on-year. For Metrology and Production Solutions, revenue development primarily reflects the continued difficult market environment in the European automotive sector. Nonetheless, given the typical seasonality in the U.S., in the MPS business overall and considering the overall robust order intake in this business, we expect the second half of '26 to be better than the first half. Finally, revenue of our Smart Mobility Solutions business was up by almost 11%, driven by almost all regions.

On the next page, Page 7, that is, we look at our profit performance. As you can see on the left side of this slide, the group's EBITDA reached around EUR 99 million, up by a little more than 25% compared to last year. This implies an improvement of our EBITDA margin by almost 400 bps, which is primarily driven by the following elements. Firstly, of course, we see the benefits of the overall lower cost base resulting from our cost reduction program executed last year. Secondly, we see our product mix improving, especially relating to the semi business. And finally, please remember, the first quarter of 2025 was influenced by onetime relocation costs relating to the move to our Dresden fab, which we didn't have in the first half of '26. On business unit level, based on the aspects mentioned before, our semi business recorded a very strong EBITDA margin of close to 32%. Despite a certain decline in revenues, as I've explained earlier, our biophotonics business continued to operate at a strong margin level of almost 22% in the first half. In the SMS business, we also saw a good move forward in terms of margins as top line growth was driving operational leverage, while in addition, R&D expenses were lower year-on-year.

MPS remains slightly loss-making given its modest revenue development in the first half. And as I mentioned before, we believe the second half of the year performance may be better than what we have seen in the first 6 months. The other line, which includes our corporate center as well as Prodomax, we saw in about EUR 8 million negative swing in the EBITDA year-on-year. largely relating to certain corporate project costs as well as provisions related to share-based compensation, while Prodomax is no relevant factor here. Now looking at key aspects of our P&L on Page 8. Gross margin was considerably up year-on-year, which was primarily influenced by a general lower cost base as well as a higher contribution by our semi business, as I have already alluded before. On the functional expense side, we remain very disciplined. However, those expenses grew by 3.7% year-on-year as we had to recognize higher expenses for share-based long-term incentives, amongst other things. EBIT for the period under review, grew faster than EBITDA, given slightly lower depreciation and amortization. Therefore, EBIT was up by 56% year-on-year, while the respective margin jumped to 12.3% in the first half.

Bottom line, our earnings per share reached EUR 0.69 versus EUR 0.42 in the prior year. Now turning to Page 9 and looking at cash flow and balance sheet data. Let me start with operating cash flow. The trend in the first half year is very much mirroring what we reported in the first quarter already, meaning that the strong order intake has led us to shift our priorities towards optimizing our ability to serve our customers. Hence, we've been taking on more working capital comfort to the end of last year, reducing -- resulting in a reduced operating cash flow. Adding on to what I just said, you see that our working capital ratio was up at the end of the first half. And I would like to note that given the ongoing semi ramp, we expect this ratio to trend to slightly above 2025 levels in the second half. Free cash flow, however, was slightly up year-on-year due to lower investing cash outflow. Please note that the first half of 2025 was still including considerable cash outflows relating to our new fab in Dresden.

On the remaining financial parameters, we have not seen any major changes compared to the end of last year, meaning that overall financial situation has remained very, very robust. And finally, please follow me to Page 11 to cover our specific guidance for 2026. So eventhough order intake is not a guidance KPI for us, as you know, I would like to make a comment here. It is clear that we are very pleased with the dynamics that we have seen in the first 6 months of this year. However, I think it is fair to note that we received some orders supplies in the early that as they were originally expected to come later in this year. Therefore, we believe that the very strong order intake dynamics in the first 6 months may not necessarily continue in the upcoming 2 quarters. Now on basis of our performance year-to-date, we now expect our full year revenues to reach the upper half of our initial guidance range of single-digit revenue growth. That means we are now expecting revenue growth of between 5% and 9% for this year. The prime driver is our semi and advanced manufacturing business, where we now expect to develop better than we expected earlier this year.

Also reflected in this updated guidance is the continuing weakness in our automotive-related businesses, which is very relevant for our MPS business unit. In line with our updated revenue guidance, we also expect our EBITDA margin to be in the upper half of the original guidance range of 19% to 21% on a full year basis. That is, we expect our EBITDA margin to come in at between 20% and 21% this year. We left our guidance on CapEx unchanged, meaning CapEx remains expected to be slightly below last year's level. Please be reminded, however, that, amongst other things, the main capacity expansion project at the moment relates to our classical optic sites in Jena, where we are working on expanding our high-precision premium production, which mainly relates to our semi-inspection business. And with that, I would like to thank you and hand back to our moderator to start the Q&A session.

[Operator Instructions]

The first question is from Michael Kuhn from the Deutsche Bank.

Firstly, 2 on order intake. You mentioned a bigger, let's call it, onetime order in biophotonics and, let's say, early orders in semi, would there be anything in the semi space, which you would regard like a onetime bulk order? Or is it just early ordering just to get a bit of better idea here?

Thank you for your question, Michael. Yes, let me reiterate. We have received a large order in Q2 in the biophotonics space relating to our medtech business. The remarks regarding pull-forward orders is less relating to the semi space. It's actually more relating to the biophotonics space, in particular, both, I would say, in the defense as well as in the life science and medtech area.

Okay. So semi, is kind of the, let's call it, run rate that you would see for now?

I think what we have to keep in mind there is that we have had an exceptional annual order that we have already pointed out in Q1, as you remember. And while I do not see any particular move forward of orders, I think, let me remind you of what general dynamics we have also discussed in our Q1 call, meaning that in a semi ramp up, of course, it could also be that some customers are putting in orders that are maybe mainly there to secure capacity because, as we know, in a ramp-up phase that is a key criteria. But don't interpret this as a specific pull forward of orders in semi from the first -- from the second half into the first half. That remark was mainly meant for the biophotonics business.

Okay. That's very helpful. Then on orders, again, if I look at the 60% to 65% conversion of the backlog that you're targeting, that would leave, let's say, roughly EUR 100 million of orders still missing to get to the sales target. What visibility do you have by now and, let's say, in which segments you would still need to collect orders turning into sales quickly to deliver on targets?

Yes. Thank you for your question, Michael. Now I mean, with above EUR 800 million backlog,we have a very, very strong backlog to execute both for the first half, but then, of course, also into 2027, as you know, right? So I think to your question, the answer lies in the -- on the one hand, on the mix, on the other hand, also in the differences between our businesses in the solutions business and the OEM businesses. As you know, the solutions businesses tend to have shorter, I would say lead times for orders.

So as we have pointed out, for example, in the MPS business. During the course of last year and that, to a large extent, may also be true for this year, that we can still get orders in that then convert into sales still this year, as it's a different cash cycle than we, for example, have in our optics business. And that explains obviously the gap that you may see from converting the backlog into revenue to the -- depends on where you set yourself in the guidance range.

Understood. Excellent. Then absolutely, it does. Last one on strategy and having listened to the introductory remarks. So strategic review taking place, no, let's say, findings to be announced before year-end, and you said earliest year-end. So that would make me think a CMD at some point over the course of next year. Is that the right way to think about it?

Yes. Let me cover that for Dominic for now. We have said that at the earliest at the end of this year. And obviously, at this point, we cannot specify this any further. We are very aware of the requirements of our -- the capital markets to get information, but of course, also please allow for us as the new executive team, to go to proper processes. So I can't give you a more specified answer than what we have already said in the call earlier.

The next question is from Maissa Keskes from ODDO BHF.

I will ask regarding Prodomax. So could you provide more colors on the business? It appears that the business saw some order intake in Q2 as well. Should we view this as an early sign that the situation is improving? Or it's still early to call a sustained positive trend?

Thank you for your question, Maissa. So I think it is a similar answer that I have given you in the Q1 call. And that is, it is encouraging. You're fully right that we see an uptick of orders also in Q2 after also an uptick of orders in Q1. Bear in mind that we have seen before that 4 to 6 quarters with very, very subdued order development. However, I wouldn't call this a trend yet. The geopolitical and economic situation for the end market in North America has not changed in any substance that I'm aware of.

So I would -- while I'm encouraged by the trajectory we've seen in Q2, I think it's too early to call this a trend. And on our strategic intent, also preempting that question, nothing has changed on the strategic intent to divest this business over the course of time.

The next question is from Martin Jungfleisch from BNB Paribas.

Maybe to start just on demand in the semi space. If you can just talk about briefly how your discussions with your main lithography inspection customers have developed over the last few weeks? Are they signaling increasing demand going into '27? Are they asking for more capacity? Are they worried about not having enough supply? And then also, I guess, if you would say that visibility has extended into 2027? That's the first question.

Thank you, Martin, for your question. And I'll definitely try to give you a little bit more color around the dynamics of the demand in semi. Now I think maybe starting with the obvious, you've seen in this year that the lithography business has reported very strong orders. And of course, it's also a revenue driver also in the first half. And you know that we have gone through the supply chain, let's say, adjustments that we went through 2025, and we now expect to grow a little lithography business. So nothing changed there.

If you ask me change in order dynamic or, let's say, demand between Q1 and Q2, I would say it's broadly the same dynamics that we've been seeing since early of the year. And on your question about visibility, I think we are in the semi business, keep that in mind, right? Things as you have seen, can change and I cannot give you any more flavor on to more or less visibility into the next coming quarters on the lithography business. Overall, of course, maybe let me finish with that. Overall, of course, we see this as a proof point that the semi ramp up is in full swing. I also mentioned that earlier in the call and we will support our customers and focusing the ability to deliver this.

Okay. No, that makes sense. And then I guess our customers increasingly worried about supply. I mean, you mentioned some capacity topics in your prepared remarks and can you maybe discuss also on capacities? How does it look like today in inspection and litho, both physically, the space but also on headcount?

Yes. So let me remind you, as I've also mentioned earlier in call, we have specified our guidance to the upper half and have explicitly mentioned that this is, amongst other things, based on a better-than-expected performance in the semi business. So that is clearly one large driver of the specified guidance in the upper range. So that means we expect, I would say, a higher growth in our semi output in this year and of course, also a step-up implied into the second half of this year. So that means we, of course, have capacities.

As you know, we have a broad production footprint. And as you know, capacity in loading and also mix, it's not the same across the system. So we are doing our best to obviously balance the demand as best as we can. And are adding capacities in the terms of people and machinery, where needed. Having said that, a ramp-up in semi is always a team effort between the customers, the suppliers and our supply chain. And I think we have a good momentum going there basically to cater to that demand.

And then maybe my final question is really on photonics. If you can just talk about your microlens arrays a bit. I mean demand must be quite strong given what's happening in the data center space. Can you just provide some color how this business has performed in H1 and also on the capacity point, if you have enough capacity to cater for demand in the next 1 or 2 years? And then also in terms of customers, I mean, can you talk about the number of customers you have in this business? And if you have seen additional customers actually coming to you and asking for products?

Yes. Just I get that right, you were referring to the microlens arrays that we -- that relate to our optical data communications business, correct?

Right.

Yes. Okay. Thank you for the clarification. Yes, what I want to reiterate also what we have discussed, given a bit more flavor is that we see a growth in demand in that business. We are also seeing a growth in revenues. As I've mentioned that in my remarks, obviously, on a significantly smaller base, but it is supportive and we will be growing on any other -- and we cater to multiple customers. So there is obviously not one customer, but we have an array of customers there. On any more longer-term or strategic considerations with that regarding that business, I would ask you to allow us to do our strategy update process and then potentially communicate more when we have the time at the Capital Markets Day or something like that.

Next question is from Olivier Calvet from UBS.

Yes, hi Prisca. Welcome Dominic. Just a couple of follow-ups left. Maybe firstly, on the order intake. So should we understand your comments in semis as implying you do expect order intake to remain at this level of, let's call it EUR 170 million, EUR 180 million seen in Q1 and Q2? I appreciate the low double-digit sort of one-off in Q1, that would be the first question. And then if you could comment on your current utilization levels in the inspection and lithography operations, respectively, that would be also helpful.

And if you could comment, I think you said so you expect to convert 60% to 65% of your backlog at group level into sales in full year '26. Just wanted to confirm if this was also the case for your semis backlog. That would be a question sort of 2 and 3.

Then maybe let me start with the last question first. So the -- as I said before, we have a strong backlog, in particular, in the semi space, given the order intake that you've seen. So the name of the game for the upcoming quarters, particularly in the OEM businesses is execution and output. So that is, of course, next to the mix and the loading in the plants, what determines at the end of the year and not so much any, let's say, major gaps in backlog. In the solutions businesses, we have a different business dynamic.

And as I answered the question before, we, as normal, have there, of course, a shorter time to convert orders into revenue. So that's what that it relates to. So on the utilization levels, as I said before, I mean, we have different loading levels across our factory footprint. And what we are doing is adding machines and people for the near term. You'll also that's basically coming into the system in the second half of the year as we are sort of continuing our ramp up. You know that we have a fairly new factory in Dresden, right? So we know that -- and you remember that we were ramping it a little bit slower than we were initially anticipating when we came online with the factory beginning of last year.

So now we are, of course, adding also to the ramp curve there in Dresden. We have, I would say, in the classical optics in Jena. As you know, we have already made a small capacity expansion at the beginning of this year. And as I have also alluded, we are working on additional capacity for the classical optics. And by the way, this caters both to inspection and lithography customers here in Jena that's underway.

And can I ask just on that, the timing of the expansion?

So we have had an additional facility coming online in the beginning of this year. And I would expect any additional facilities not to be affecting the next couple of quarters. This will take a little bit of time until we have the facilities ready.

And then on the order intake level in semis in the second half?

Yes. I think I've cautioned in the prepared remarks that obviously, with the record level that you see at the moment in semi, we cannot necessarily expect the same record exceptional levels. That doesn't mean that we don't expect good demand in semi for the upcoming quarters as a result of the ongoing semi ramp in the industry.

Next question is from Lasse Stueben from Berenberg.

Could you just give a bit more color on that multiyear order in medtech just to get a flavor of kind of what that is and sort of which end market we're looking at here? The second question would be on the margin level in semicon, very strong in advanced manufacturing, very strong in Q2, I guess, not that surprising given the uptick in revenues. But just wondering what -- if there's any key drivers there, be it volume or mix or a combination of both?

And then finally, on MPS, if you could touch on this briefly. Revenues were quite soft, as you mentioned in the quarter. but then orders were actually slightly better. So just wondering sort of what the key drivers are here. And if that kind of EUR 40 million run rate in the quarter of revenues is what we should be expecting for the coming quarters, or maybe a slight uptick given the increase in orders in Q2?

Yes, of course, Lasse. Thank you for your question. Let me start with the MPS question. I think the main message here from my side is that we expect a better H2 compared to a modest H1 and that is driven by both all lines of businesses there. So both the optical testing as well as the automotive-related businesses. That is true for that. And also, historically, if you look at the -- we tend to see a certain seasonality in that business towards the third and even the fourth quarter. So I expect the second a better second half there. Having said that, you've also seen in my remarks that we still see, I would say, a deterioration of the demand situation in automotive compared to what our expectations were when we started the year, and we've also factored that into our updated or specified guidance.

The order intake situation is actually quite encouraging. And that's basically is, of course, one of the reasons why I am expecting a stronger second half than the first half across the MPS. On the -- on your question on the large annual order in the biophotonics business, and a bit in a bind here, I'm afraid. You know that we have a concentrated key account strategy with key account customers. So what I can tell you is it is in the medtech space, not in the life science space. And it's not in the dental space. But I am afraid I cannot give you more flavor on that. I hope that helps anyway.

And then on margin level in semi, you're right. And we've seen a nice margin accretion in semi as we have also expected. And as we've also previously alluded to, if semi is firing on all cylinders, obviously, we can also land a tad above the, let's say, the 30% range that we round about, have sort of put out there. So I'm confident that the good development that we've seen in the first half, we will also continue to see in the second half.

Bear in mind, however, that, of course, certain lag effect we will see in factor costs, for example, the collective agreement in Germany that kicked in, in Q2 and also certain other factor costs, including, obviously, additional FTEs that we'll see coming online over the next couple of quarters. But overall, I would say, happy with the profitability of that development and the margin development in semi. I hope that helps to answer your question.

Next question is from Craig Abbott from Kepler Cheuvreux.

Yes. Three remaining questions on my side. Actually, I had earlier a number of questions about the ramp-up of capacity at the microoptics plant in Dresden, but a lot of that has been answered. I just want to do a quick follow-up there because we're seeing quite significant capacity increases by other semi the equipment suppliers. I mean, we've gone magnitude 25%, 30% quarter-on-quarter sometimes. And I just wanted -- one last question on that front is, so are you able to find the headcount that you need the FTEs that you need, particularly with a view to '27. We all know how dynamic the WFE CapEx for next year are? And also if your supply chain is able to feel comfortable that supply chain is going to be able to keep pace in terms of expanding their capacities as well. That would be the first question.

The second question, please. Just to remind us again, in your -- both in your lithography, probably not lithography, but in the inspection side. Is Jenoptik flying in any way, the Chinese semi equipment OEMs? And if not, is this an issue the company is trying to address? And could you maybe share with us your chances there, being able to become part of that ecosystem? And thirdly, the defense optics, I suppose demand trends remain strong, but if you could give us some color on how you see them continuing in H2 and into '27, I would appreciate it.

Thank you for your questions. Maybe I'll start with the semi first, on the FTEs for Dresden. So I can in general, find enough people at this point. And I would say the general answer is yes. Yes, of course, skilled operators are not always easy to find. We have our apprenticeship program, which, of course, we're also stepping up. So by and large, I would say we have an okay labor situation where we're able to staff the positions that we require. On your question or your sub-question on the supply chain, now I mean the broad expectation is that our supply chain continues to ramp up step, basically in lockstep with us, right? That's the general aim.

And for now, I would also say that we are not tangibly constrained anywhere in the supply chain. But of course, given the high level of order dynamics that we're seeing, there may be certain risks and we are certainly, and the teams there are certainly working on mitigating those. But for now, I see us ramping up basically in lockstep with our supply chain for the major part. I think then you had a question on if -- I hope I got it right, about inspection sales into potentially China? Did I get that correct?

Yes, directly to the Chinese semi equipment OEMs, not indirectly by the Western OEMs.

Yes. Okay. Thank you for clarifying, Craig. So by and large, we do not sell to Chinese suppliers overall in our semi business. That's a strategic decision that we made a couple of years ago. And for now, the decision is intact. That's across our semi business, I should say. And then last question, Defense optics, if I got that correctly?

That's correct.

Yes. Thank you, Craig. So I mean, defense has been strong. We've seen that, right? And I don't -- having said that defense orders tend to be, let's say, have them concentrated and sometimes multiyear in nature. I do not anticipate, let's say, I would say I would expect over the short to medium term, the defense optics business to grow. Obviously, from a revenue point of view, that's clear. But also from an order intake dynamics, what I would say is don't extrapolate the biophotonics order intake for the future. Because, as I said, there's various factors to keep in mind there. But overall, I would say fairly bullish on defense dynamics. I hope that gives you some flavor.

It does indeed. Thank you very much.

Ladies and gentlemen, at the moment, there seem to be no further questions.

[Operator Instructions]

There is one more question from Martin Jungfleisch from BNP Paribas.

Maybe if I can add 2, if there's time. First one is on TRIOPTICS, can you talk a bit about the demand trends you're seeing in AR/VR? I mean, Meta has launched the Rayban glasses. I think Google is coming with new smart glasses as well. So it seems like the market has picked up a bit there. And I know the business was initially hinging a bit on an uptick in AR/VR. So maybe if you can talk about if you have seen an inflection point there already.

Thank you for your question, Martin. So regarding our business in TRIOPTICS, what I would reiterate is a little bit what I said in Q1. We do see in the industry broadly more dynamics, which is, I think, considered a positive. But we do not anticipate more major order intake from AR/VR are in the business in the very near future. But our project is full and we are executing on a variety of projects in that space, which, of course, gives us a nice dynamic. Overall, the optical testing equipment, of course, that's sort of the legacy TRIOPTICS business is doing well, I would say, across, in particular, the optical testing space and inspection space. So that is still positive. I would say that the commentary we provided earlier this year remain intact.

Okay. Sounds good. And then just secondly, on pricing. There's some semi suppliers that have raised prices over the last couple of months to offset input costs. And can you talk about potentially some price increases in some of your classical businesses in semis and if these are offsetting input costs are even going up for you?

Yes. Martin, I understand your interest, however, given the very concentrated nature of business in semi, as you know, I'm afraid I'll be a little, let's say, vague in the color I can give. So what I can assure you is that we have very constructive conversations with all of these customers, of course, depending a little bit also on the demand situation. And that I reiterate what I said around good profitability we've seen in the semi business overall. But I'm afraid I cannot go into any of the commercial details with this customer base here.

There are no further questions in the queue. So I would like to close the Q&A session now and turn the floor back over to your host, Dr. Prisca Havranek.

Thank you very much. And let me close the call with reiterating our key messages. We delivered a solid Q2. The ramp-up in semi is in full swing, and we see strong customer activity in our biophotonics business although H1 should not be extrapolated into H2. We returned to profitable growth in H1 and our near-term focus is on added capacities and our ability to deliver. We have specified our guidance in the upper half of our range.

And with that, I thank you for attending our call, and I look forward to seeing many of you in the road together with Dominic over the next coming weeks. Thank you very much.

Good morning, ladies and gentlemen, and welcome to the Jenoptik conference call regarding the results of the first quarter of 2026. [Operator Instructions]

Let me now turn the floor over to your host, Dr. Prisca Havranek.

Good morning, everyone, and welcome to our Q1 2026 results call. I will lead you through our presentation. And then as always, Andreas, our Head of Investor Relations, and I will be open for your questions.

Now let me begin with an overview and some key messages on Page 4 of our slide deck. First of all, I'm very pleased to report that order intake was very strong for our OEM businesses in the first quarter, as we already indicated on our previous call at the end of March. Ramp-up in the semi industry seems to be in full swing now, hence, demand for our semi equipment customers was particularly strong. But also order intake in our biophotonics business unit was substantially up compared to last year.

Revenues for the quarter were slightly down year-on-year as we expected and I had indicated on our last call. We are also pleased, I can say, with the evolution of our profitability in terms of EBITDA margin in Q1. Noting, however, as you know, that Q1 does not represent a modest comp if you look at last year. Free cash flow in Q1 was down year-on-year, reflecting higher working capital needs in conjunction with our accelerating order intake.

Now taking a broader view at our company and at our strengths. We continue to believe that we have established very strong positions in certain end markets, combining a well-developed technological base with strong long-term customer relationships. And looking forward, we aim to further leverage this powerful foundation by focusing on our growth opportunities. particular areas like AI-driven semi demand, which we are seeing right now, optical communication for data centers, defense applications, SMS expansion in the U.S. and also AR/VR applications. Lastly, we confirm our outlook for 2026.

Moving on to Page 5 now. As I just mentioned, we are overall very satisfied with the order intake development seen in the first quarter. And indeed, the total number reached almost EUR 357 million on a group level, and that marks a record for us. Now starting with Semiconductor & Advanced Manufacturing, which you know is by far our biggest business unit. As you know, our lithography business was subject to certain supply chain fluctuations last year. And in Q1 2025, it was particularly weak. So in the first quarter of this year, we have seen a clear acceleration of demand in this field.

In addition, customer activity in our inspection business in semi has remained strong as we already saw throughout last year. I would like to note that the order intake of around EUR 180 million also includes one large order that we do not expect to reoccur in the coming quarters.

Turning to our biophotonics business. Order intake was also very strong last quarter, being up by almost 66% year-over-year. Importantly, we recognize positive momentum across our different business fields, meaning MedTech, Life Science and Defense. Here, in the Biophotonics SBU, we believe that we have seen that the strong dynamics that we've seen in the first quarter may also have been supported by certain early order effects relating to growing geopolitical uncertainties since the start of the year.

We continue to believe that the quarterly volatility of order intake in this business unit will remain high going forward, partly because of a somewhat special order pattern in the defense space as customers there tend to place few but sometimes very sizable orders.

Now moving on to our Solutions businesses. Both for Metrology & Production Solutions as well as Smart Mobility Solutions, order intake developed broadly as we were expecting. As a result of all this, our first quarter book-to-bill ratio at group level went up sharply to almost 1.5, and our order backlog grew to EUR 719 million.

Please follow me now on Page 6 to cover our revenue development. So as we broadly indicated in our previous calls, revenue was marginally down by 1% year-on-year to around EUR 241 million. Excluding FX effects and here, especially, of course, relating to the euro-USD exchange rate fluctuations, our revenue would have been up by close to 2%.

Now if you look at the segment level, Semi business revenue was up by around 7% year-on-year from a low basis, as I've already mentioned, in the same quarter of last year. Main driver was our semi inspection business, but also Digital datacom was supportive, albeit, as you know, on a lower level.

Now let's look at BioPhotonics. Here, the comps were very high, driven by a strong dental business last year. Consequently, our revenue was down by around 11%. However, both our Life Science and Defense business fields saw good growth in the quarter. For Metrology & Production Solutions, revenue development primarily reflects the continued difficult market environment in the European automotive industry. Finally, revenue of our Smart Mobility Solutions business was almost up by 11%. And here, we've seen growth across all regions.

On the next page, Page 7, we look at our profit development. So as you can see on the left side of this chart, the group's EBITDA reached around EUR 44 million, up by a little more than 22% compared to last year. This implies an improvement of our EBITDA margin by around 350 bps, which was primarily driven by 3 aspects. Firstly, of course, we didn't have the onetime relocation costs relating to the move into our new fab in Dresden that we had in Q1 2025. Secondly, some improvement in our product mix, especially relating to our semi business. And finally, across all of our business units, an overall lower cost base as a result of our cost reduction program executed last year.

On business unit level, based on the aspects mentioned before, our semi business recorded a healthy EBITDA margin of 30.6%. Despite a certain decline in revenues, as I explained earlier, driven by the dental business, our biophotonics business continued to operate on a strong margin level of around almost 22% in this quarter. Both our solutions businesses recorded good progress in terms of profitability, given, on the one hand, tight cost control in regards to MPS and revenue-led operating leverage in the SMS business.

The other line, which includes our Corporate Center as well as Prodomax, saw about EUR 6 million negative swing in EBITDA year-over-year, largely relating to certain corporate projects and to a lesser extent, due to lower profits generated by Prodomax.

Now looking at key aspects of our P&L. If you follow me please to Page 8. Gross margin was considerably up year-on-year, which was primarily influenced by a general lower cost base as well as the contribution by our semi business, as I've alluded before. If you look at functional expense, I think we have remained fairly disciplined overall with those expenses growing by 2% year-on-year despite the typical low cost inflation impact, of course. Largely driven -- or let's say, our depreciation and amortization was largely flat. The improvement of the EBITDA, therefore, fell through to the EBIT line, driving EBIT margin up to 10.7% in the first quarter. Looking at the bottom line, our earnings per share reached EUR 0.29 versus EUR 0.16 in the first quarter of last year.

Now turning to Page 9 and looking at cash flow and balance sheet data. Let me start with operating cash flow. Given the strong order intake, our priorities have shifted towards optimizing our ability to serve our customers. Hence, we have been taking on more working capital compared to the end of last year, resulting in reduced operating cash flow and also reduced free cash flow in this quarter.

Adding on to what I just said, you see that our working capital ratio was up at the end of the first quarter, but I would like to note that we consider this as temporarily elevated due to the support of the semi ramp. On the remaining financial parameters, we have not seen any major changes, meaning all our financial situation overall has remained very robust.

Finally, please follow me to Page 11 to cover our guidance for 2026. And here, I would like to start with some general remarks first. So with regards to the order intake, of course, we are very pleased that we saw what we saw in the first quarter, right? But in the sense of managing your expectations for the coming quarters, I would like to reiterate that we saw a sizable kind of annual order in semi, meaning it broadly covers a full year demand in that quarter. We also think that some early order effects, as I have mentioned before in biophotonics business has been supportive. So net-net, we do not believe that such an order intake level is generally representative for the coming quarters for the group.

Secondly, when it comes to revenue, please bear in mind that particularly in the semi and biophotonics business units, it will be fairly relevant what kind of mix of orders we are going to see in order to judge the revenue conversion. since, as you may know, our factories are currently operating at different utilization rates. Thirdly, we think that macroeconomic and geopolitical uncertainties have clearly more accelerated rather than decelerated since the beginning of the year with applications, for example, in our automotive-related activities, which are being difficult to predict.

So overall, we continue to expect our revenue in fiscal year 2026 to be up in the single-digit percentage range versus prior year. And on profitability, we expect our EBITDA margin to be in the range of 19% to 21% on a full year basis, and we expect our CapEx to be slightly down below last year's level. Our main undertaking with regards to capacity expansion is our classical optics site in Jena, where we're expanding our high-precision cleanroom production, which mainly relates to our semi business and which we expect to come online in 2027.

And with that, I would like to hand over back to our operator and to start the Q&A session.

[Operator Instructions] So the first question comes from Mr. Lasse Stueben of Berenberg.

I was wondering, would you be able to share how large that order was in Q1 in semicon and advanced manufacturing? The second question would be, in the past, I think you always gave kind of what proportion of the backlog you expect to convert into revenues in a given year. Are you willing to share that number with us again this time? And then the final question would be around, and you mentioned product mix in semiconductor being favorable to margins in the first quarter. So I'm wondering, given what you're seeing in the orders, should we anticipate the mix in semi to change and sort of what that implies for margins going forward?

Lasse, I will start with the first question, which was related to the large order that I've mentioned. And obviously, it's hard to give you very specific details here on the call. But what I can tell you is that it's a low double-digit million amount that we are talking here. And I think the main message being that we do not see this recurring in the upcoming quarters. I think that's clearly the message we wanted to send with this.

As for the backlog question, I don't have the number at hand here. And as I mentioned also in my remarks regarding the outlook, it very much depends on the, let's say, the output that we're able to get in our factories given also different utilization levels. I think what I can say here is, I'd like to reiterate, our backlog has increased. We have a strong backlog, which gives us a good foundation, obviously, for the remaining 3 quarters. But at this point, I'm not able to give you a good estimate of how much we're going to convert into revenue. As you know, our revenue guidance is confirmed at the single-digit percentage range versus last year. I hope that helps a little bit.

And on your last question regarding product mix, I believe this was regarding product mix in semi. We have seen a strong inspection business in Q1, yes. I've already alluded to the demand trend in lithography, but we have not yet seen the, let's say, the impact of that in Q1. But bear in mind, if we look at mix, you also have to keep in mind that the previous year lithography was also affected by the move into the Dresden fab. And this is not only the onetime cost that I've mentioned, but of course, also the loading level was different in Q1, given both the business momentum, but also the effects of the move. I hope that helps a little bit.

Your next question comes from Malte Schaumann from Warburg?

Can you hear me?

Yes.

Okay. Good. So for the current -- maybe not in the first quarter, but do you see customers or a change in the customers' order pattern for the instance, customers beginning to beginning to place orders earlier than expected due to potential capacity constraints, which are in discussion already reserving slots for '27. Anything you recognize in that sense?

Thank you, Malte, for your question. Let me give you a general answer. I think you've seen that we have seen a very record order intake across the company and particularly in semi, but we've also mentioned that in our biophotonics business. We believe that we have seen a certain early order impact and we think that may be coming from, for example, geopolitical worries that could also affect some of the supply chains for our customers. So I think we see some effects of that.

With regards to the semi market, I think it's really hard to tell at this point, but I would believe that the ramp-up dynamics that we've seen also in previous cycles would also be valid in this cycle. So in that sense, I would say, cautiously, yes, that some of the orders, let's say, that we see in Q1 may also be of semi ramp being at full speed. And there are some, let's say, some effects of that, that customers tend to place their orders even earlier in a steep ramp-up phase rather than, let's say, in a stable or ramping down period.

Okay. Understood. And then touching on AR/VR. I mean, that has been a topic which never really took off during the past couple of years and now you mentioned it specifically in your comments and quarterly reports. So what are you seeing in this area? And what are the potential implications? Do you already benefit from increasing orders? Is that sustainable? Or do you expect further potential ramp-up then going into the year?

Yes. So I think maybe a little bit of a longer order there. I think maybe reiterating what we have seen over, let's say, also what we discussed in our Q4 call in March. I think we see a stronger noise, stronger momentum, also stronger customer inquiries for augmented reality versus virtual reality. yes. So I mean, there's a couple of major OEMs launching devices in the AR space over the last couple of quarters and months. So we see augmented reality actually more dynamics as compared to VR dynamics.

Having said that, yes, we see more interest, more conversation. We also mentioned that at the industry conference at Photonics West, I believe, at the end of January, there was definitely more dynamics discussed. But from an order input point of view for us, it's early days. And while we are very well positioned, I would say, particularly in the waveguide testing space, we've only seen, let's say, modest order intake as compared to the previous years. And we have not seen or not also anticipating any major VR orders coming in, in the near future.

So I would say it's a bit of a balanced picture, but the good news is, is that various players are launching AR devices that I think are, in some ways, also accepted well by the market, although it's early times to tell about that.

And then on the other business area, probably that refers to Prodomax. The order intake has picked up a bit in the first quarter. Is that a onetime thing? Or do you see more sustainable recovery in the market that customers are now be able to order at higher levels again?

Yes. Thank you for your question, Malte. I would say it's too early to call this a trend. You know that we've had basically 4 consecutive difficult quarters in 2025 in Prodomax, including as well a cancellation that we pointed out in Q4. Now what I see in Prodomax in Q1 is encouraging. It's a good first step in the right direction. And I would also say that some of the RFP requests are potentially going up a little bit, but I wouldn't call this a trend at this point. It's too early.

And I would say the general muted investment environment for the U.S. OEMs remains the same as well as the geopolitical tension or I would say, the certain reluctancy to go across the border to Canada for your supplier. So those 2 things, I don't really see a major change in the trend. But I think it's encouraging that we have seen an uptick in demand in order intake in Q1 for the first time quite honestly, in a couple of quarters. So overall, let's say, slightly optimistic on Prodomax.

Okay. Sounds good. Last question on the gross margin. I mean, probably there were some mix effects, especially coming from the semiconductor business. Lithography probably becoming a bit stronger in the next couple of quarters. So what do you think -- what should we think about gross margin progression throughout the year? Was that more than 35%? I think it was the highest gross margins in quite a number of quarters. So what should we expect for the upcoming quarters?

Yes. Thank you for your question. So I think when you compare year-over-year, obviously, Q1, as you know, the semi business, I've just mentioned it before, was very much affected by also the move to Dresden. So the micro-optics business was not firing on all cylinders operationally. And then we have demand-driven trends there. So it's not really a good -- a fair comp to look at last year's quarter 1.

Now having said that, I would say we have seen a good gross margin in Q1. And I would expect -- I'm not guiding you explicitly on gross margin, I can't do that. But I would expect the normal fluctuations that we've also seen in, let's say, the good semi quarters last year to continue also into the next quarters here. So ballpark number, I think we have an okay gross margin right now.

At the moment, there seems to be no further questions. So I might repeat once. [Operator Instructions] The next question comes from Maissa Keskes from ODDO.

Given the very strong order momentum and the recent guidance raised from one of your key customers, could you provide a bit more color on the full year '26 growth expectation? Should we interpret the current single-digit growth guidance more towards the upper side rather than toward the low end?

Maissa, thank you for your question. Let me try to help you along with that. Now obviously, maybe, first of all, we have not changed our outlook, and we are expecting a single-digit growth, and that is valid both for the group and also for our semi SBU. So I would say all the ranges are in play as of today. We are, I would say, encouraged but what we have seen in the demand picture in the Q1. Now I think, as I've also said in my remarks, the focus now, as is also true in typical semi ramp-up phases is on execution. Operational execution across all of our sites yes. And our team is fully focused on that.

And that will also, let's say, be a determinant on where we land within our total revenue for the semi business. So meaning where in the range that I recognize is a wide range at this point, we will land is, to a large extent, next to, of course, the mix of orders that we are getting, also relevant how we will be able to convert those orders into revenues. And that obviously, in a perfect world, you would have a balanced utilization across all our sites. Clearly, we have different technologies here at play. We have different customer products. So this is not the case. And that will determine a little bit the phasing on the one hand, on the other hand, also the total outcome where we land in the guidance.

The next question comes from [ Louis Hilary ]. Okay. It seems that we have no more questions. So there are no further questions in the queue.

Okay. Well, then thank you very much. Maybe summarizing very quickly, we had a very good start to the year, dynamic demand in our OEM businesses. And even though this very high momentum is unlikely to continue at this pace, it provides us with a very strong foundation for the successful fiscal year 2026. And with that, I would like to thank you for attending our call, and we are looking forward to seeing a lot of you on the road during the next few weeks. Thank you very much.

Good morning, ladies and gentlemen, and welcome to the Jenoptik conference call regarding the financial results of 2025. [Operator Instructions] Let me now turn the floor over to your host, Dr. Prisca Havranek.

Thank you very much. Good morning, everyone, and welcome to our fiscal year 2025 results call. Today, I'm here with Andreas Theisen, our Head of Investor Relations. I will lead you through the presentation. And then as always, Andreas and I will be open for your questions. As you know, our preliminary headline 2025 results have already been published mid of February. So today, we will cover the full set of audited financial figures, including key business unit results as well as our outlook for the year 2026.

Now let me start with an overview on Page 5 -- 4 of our slide deck. From a management perspective, 2025 was a very busy year. First of all, let me briefly comment on our progress on executing our strategic goals. Number one, we implemented a new organizational structure, making our company somewhat leaner, increased accountability within our businesses and with our new reporting structure, also increased transparency for our investors.

Secondly, we brought our biggest single investment, I mean, our new micro-optics fab in Dresden online, and we are now in a position to further grow this business going forward. Thirdly, again, in our semi business, we delivered on our strategy to grow share of wallet in our inspection business. So overall, I think we made substantial progress in making Jenoptik stronger yet again and in delivering on our strategic agenda.

Now looking at business development. From a market perspective, in particular, semi lithography was somewhat difficult in 2025. We focused on what we can control and thus, our focus throughout the year was on executing and accelerating our efficiency program. This has paid off in terms of margin protection and cash generation. As we enter 2026, we have seen signals of a rebound, in particular, in the semi market and overall, a more positive trading environment across most of our verticals.

In 2026, we will keep our near-term focus on addressing and further developing our growth opportunities, particularly in areas like AI-driven semi demand, optical communication for data centers, defense application, SMS expansion in the U.S. and also AR/VR. As a consequence, we expect to return to profitable growth this year, and I will cover the details of our guidance here at the end of my presentation. Lastly, I'm very excited that our management team will be complete soon again with Dominic Dorfner joining us as our new CEO, as you have seen from yesterday's release.

Now turning to Page 5. Looking at order intake in detail on group level, we reported a decline of approximately 3% year-on-year. However, the dynamics have been fairly divergent between our 4 strategic business units. So starting with Semiconductor and Advanced Manufacturing. As you know, development has been impacted by certain supply chain fluctuations in our lithography business as well as an order cancellation in Q1, as we highlighted on our previous call.

While we saw a stabilization of demand in the lithography business in the second half of 2025, order intake for the full year was down by around 11% year-on-year. Customer activity in our inspection business was strong throughout the year with us executing on our strategic road map of increasing our share of wallet.

Turning to our Biophotonics business. Order intake was very strong last year, being up by around 19%. We saw positive momentum, in particular for our defense product offering, but also a positive development in our life science applications. In MedTech, we have seen lower momentum in the second half post the launch of a new generation product in our dentistry business.

I would like to remind you here that quarterly volatilities of order intake in this business has become more pronounced given our customers' order behavior in the defense business. Here, customers tend to place few, but partly very sizable orders, sometimes for multiyear deliveries. Overall, given the nature of this industry, we do expect fluctuations between single quarters to remain high also going forward.

Now moving on to our Solutions businesses. In Metrology & Production Solutions, orders are slightly down year-on-year on an ongoing weakness in the automotive market, whereas Smart Mobility Solutions recorded robust mid-single-digit order intake growth last year. Our book-to-bill ratio was slightly below 1 or at 0.95 to be precise. Our order backlog reduced compared to prior year-end to around EUR 591 million. Overall, we anticipate turning more than 80% of this backlog into revenue in 2026.

Please follow me now to Page 6. The revenue in 2025 declined by approximately 6% year-on-year to around EUR 1.05 billion. This reflects generally weaker order intake trends at the beginning of the year, especially in the semi space, as I mentioned before, it also includes a 1 percentage point negative impact from euro-USD exchange rate fluctuations.

With regards to our semi business, revenue was down 12% year-on-year. This was a result of what we already discussed several times in earlier calls, meaning softer demand in the lithography business, which, as you know, makes up for a big chunk of our volume. On the contrary, revenue with our customers in the semi inspection arena developed very well last year.

Now looking at Biophotonics. Here, revenue was up by 10%, driven by a strong performance primarily of our defense as well as our MedTech businesses. For Metrology and Production Solutions, revenue development reflects what I've mentioned before on order intake. So an unchanged difficult market environment in the -- particularly European automotive industry was primarily weighing down on our revenue performance.

Now finally, revenue of our Smart Mobility Solutions business was up by almost 9% in 2025, particularly as our efforts in the important U.S. market are gaining traction following our strategic decision to enter the smart mobility market in the U.S. with our own sales and our own service force.

Please follow me on to Page 7, where we look at our regional revenue distribution. First of all, I would like to note that given the size of our key account businesses, and I'm talking about our semi and our Biophotonics businesses here, the meaning of regional performance is somewhat limited. Year-over-year decline in revenues in Europe, including Germany, was very much triggered by issues we had in our semi business or to be more precise, our lithography business.

In the Americas, we saw a positive development driven by Biophotonics and of course, the now well-advanced go-to-market transition of Smart Mobility Solutions in the U.S. Looking at revenue share we realized with our top 7 customers. Unsurprisingly, this has dropped from 48% to now 43% in 2025, reflecting the somewhat special situation in lithography. Looking forward, of course, we expect that the share of our top customers to grow again.

Now on Page 8, I would like to cover our profit performance by business. As you can see on the left hand of this chart, the group's EBITDA reached almost EUR 193 million, down by around 13% compared to last year. Our absolute EBITDA improved sequentially every quarter last year, and margins in the second half improved to the above 20% level. However, the full year, our EBITDA margin contracted by 150 basis points year-on-year, including an about 1 percentage point impact from our cost reduction program.

On business unit level now, influenced by lower utilization and changes in the product mix, EBITDA in our semi business unit dropped by almost 18% year-on-year. Importantly, we were able to retain a strong margin level of around 26% on a full year basis and even around 29% when looking just at Q3 and Q4 together. So I believe this clearly shows the resilience we have in this business.

In our Biophotonics business, the strong top line growth drove better utilization of our capacities in combination with positive product mix effects. EBITDA margin substantially improved to more than 20% last year. Looking forward, though, broadly keeping the strong margin level is what we're aiming at. And let me reiterate that semi type margins are not realistically in the cards from today's perspective.

When looking at our Metrology and Production Solutions business, lower overall revenues impacted profitability on the basis of lower fixed cost absorption. But for sure, our cost reduction program will also help us to get our fixed cost base lower going forward. Finally, Smart Mobility, we saw good margin progression of more than 200 bps to 13.6% based on strong top line development and the associated leverage of functional costs.

Now turning to Page 9, looking at key aspects of our P&L. I think we've said several times already, strict cost management was a key priority to us in 2025, considering the lower revenue levels that we alluded to before. Overall, we have reduced our headcount measured by FTE by almost 5% compared to the prior year. So now looking at the main developments of our P&L in detail. Gross margin was down by 130 bps year-on-year, which was primarily influenced by lower fixed cost absorption and product mix effects. On a business unit level, our semi business saw the biggest impact here.

On the functional expense side, I think we remain very disciplined as those expenses declined by 1% year-on-year despite some general labor cost inflation impact as well as the already mentioned cost reduction expenses. Moving on to the EBIT line. You see a more pronounced decrease in both absolute terms and of course, margin compared to EBITDA since depreciation and amortizations were as expected, slightly up year-on-year.

Further down the line, as you may recall from our Q2 call, we have recognized an income of a little above EUR 3 million resulting from a settlement agreement regarding the sale of VINCORION, our previous mechanical defense activities. Bottom line, our earnings per share reached EUR 1.26 versus EUR 1.62 in 2024. And as you have may read in our communication this morning, the Executive Board and the Supervisory Board proposed a dividend of EUR 0.40 for fiscal 2025 compared to EUR 0.38 for the year before.

Finally, on ROCE, not unexpected given our earnings development last year, ROCE was at 8.4%, quite below our ambition level. We continue to see ROCE as a core metric in steering our company and remain committed to getting back to more satisfactory levels.

Now turning to Page 10 and looking at cash flow and balance sheet data. Here, let me say that we are very pleased with the development, particularly considering the difficult trading environment for some of our businesses. So despite decline in earnings, as you can see, our operating cash flow pretax improved considerably, mainly on lower inflows into our working capital.

And with additional support from the normalization of our CapEx, free cash flow was up by nearly EUR 50 million, enabling significant debt and leverage reduction. Finally, please follow me to Page 12 to cover our guidance for 2026. When looking into 2026, I think it's clear there's still high market uncertainties persisting driven by both macroeconomic, but also geopolitical developments that are generally difficult to predict.

With regards to the semiconductor equipment industry, the by far biggest end market for Jenoptik, recent news flow has been positive, given, amongst others, announcement of massive data center investments and the associated need for computing capacity. Based on these trends and as well customer order activity, we expect positive momentum for our business in this space. Overall, for the Jenoptik Group, we expect revenue in 2026 to be up in the single-digit percentage range versus prior year.

On profitability, we expect our EBITDA margin to be in the range of 19% to 21% in fiscal 2026. We do expect our CapEx to be slightly below last year's level. With that level, we are delivering what we promised and we will be trending towards our maintenance CapEx level.

Now before I close my presentation, and we go into the Q&A, let me give you some extra color in sense of model assumptions, which some of you may find helpful. On revenue, we estimate a similar FX headwind of approximately 1 percentage point as we saw in 2025. Regarding profits, for sure, we may have some benefits from our cost-saving program and the emission of the associated onetime expenses from the restructuring as we are moving into '26, but general cost inflation, expected FX headwinds should also be borne in mind.

On the contrary, rising energy prices may not influence the equation significantly, at least as far as we know from today's perspective. On our financial results, we are in the process of refinancing some of our German debenture bonds and overall expect our financial results to be broadly in line with previous year. And very importantly, from a phasing perspective, we do expect revenue in the first quarter of 2026 to be below last year's first quarter, given our current order book structure and capacity availability.

So in summary, as we move into 2026, we see an improved demand picture as of now, supporting positive expectations, especially in our semi and defense businesses. Therefore, operational execution is our main focus at the moment. Moreover, we believe we have ample growth opportunities ahead of us, which we aim to realize.

And those include, as I've mentioned in the very beginning, firstly, digital data communication with our high-performance microlenses used in transceiver. Secondly, defense, where we have established -- we have an established product offering and a strong international customer base; and lastly, further leveraging our infrastructure investment in the U.S. market for our SMS business. So as I see it, we have everything in our hands to be successful in 2026. And with that, I would like to thank you and hand back to our moderator to start the Q&A session.

[Operator Instructions] And we have the first question. So the first comes from Craig Abbott from Kepler Cheuvreux.

Good morning, Prisca and everyone. And thank you Prisca for also giving us some of the additional modeling indications. I'll just ask a couple of questions first and then get back in the queue. In the -- looking at your EBITDA margin in your semi activities in Q4 was indeed quite high, I think, around 30%. And I just wanted to -- this could be an indication of a new level of profitability we can expect going forward. Appreciating there will always be some quarterly fluctuations. But if that nevertheless is like kind of directionally a run rate? And can this be scaled further? That would be my first question, please.

Of course. Thank you, Craig. And I would like to caution a bit here. Yes. You are right. We were actually quite pleased with the 29.8% margin that we saw in Q4 '25, right? Main driver was better product mix and also lower costs from our reduction program. And also, of course, to be fair, we also have some onetime effects from release of bonus provisions that impact obviously the whole company, but also this business.

So to your question on to moving forward, if this is an indication of a new profitability level, we expect good margins to be realized. But we have to also think that we -- next to the sector cost inflation, you know, we have a labor cost agreement of about 3% hitting us as of April '26. We also have to put in additional resources to accommodate the ramp-up and then our accelerating demand that we -- that as I've mentioned that we anticipate at least based on what we see today. So overall, that would not lead me to believe that we will come to a different margin environment for this business in 2026.

I'll ask two more now and then I'll get back in the queue. The secondly, in semi, you mentioned twice, and you've talked about this before about increasing your share of wallet in the inspection space. I just wondered if there's any more light you could provide here and kind of helping us put that in some kind of dimension. And yes, if you could remind us kind of the sales split in your semi activities between lithography end markets and the inspection activities.

Yes. Thank you very much for your question, Craig. So as you know, we talk a lot about lithography, and I'm sure there will be some questions going forward. But our second large pillar in this business is our inspection business, you know, where we, again, also sell optical components, optical systems into the key players there. And we have indicated on several occasions that we actually have seen nice growth development throughout the year '25, both in order intake, but also in revenue. And with that, of course, that business has been growing versus the lithography business that has not been growing in 2025.

Strategically, we think that's important, not only to build up, I would say, a second large pillar outside of the lithography business, which, of course, volume-wise is still the bigger one, but also because we believe we have ample share gains that we actually can get in our -- in the share of wallet of our customers. And this is linking back to our Capital Markets Day in 2023, where I think we talked about that. And now it's basically to give you a data point also that we are delivering on that strategic goal.

And my third and last question for now. Please, on the EBITDA margin progression, if you could help us bridge that through. You gave us some indications in your comments a moment ago, but just trying to gauge like how much of that is like the efficiency measures feed through coming through now plus the follow the cost there last year. And secondly, mix effects from perhaps an over-proportional growth in your semi activities and whatever else may be factors worth pointing out, thank you.

Yes. Thank you, Craig. I mean you've seen the segment guidances that we are giving on this. Maybe where I can put a little bit more flavor, as I already alluded to in the comments. So of course, there's a one-off effect overall for the company from the restructuring expenses that we had in 2025 of high single-digit millions, which, of course, on a recurring basis, we will not have that, and we'll get some incremental impact from this restructuring project.

We also have a project where we are working on introducing material expenses. That's also part of the activities we have kicked off last year. So that, I would say, is a tailwind. The headwind is, of course, the normal labor cost inflation. We have -- I think I mentioned that in the comments, labor cost agreement in Germany, and this is the biggest cost factor, obviously, for us that starts in April and is above 3%. So we have to, of course, factor this into the equation. And then we have to see overall what the geopolitical situation will bring.

At the moment, we do not expect a major increase in costs from the current geopolitical situation, and maybe I can comment some more on that afterwards. But we will, of course, also have a slight increase in energy costs. But keep in mind that we are not an energy-intensive business. Our energy costs are fairly small compared to a lot of other industries.

So if you take the net-net there, that gives you sort of the view on the sector cost inflation. And then on top of that, you mentioned our semi business. As you know, the mix matters in our company. So the demand acceleration, the early signs of which we are seeing today will, of course, have some influence on how the year plays out. And the semi profitability, of course, is a big mix factor within our total company profitability mix. I hope that sort of gives you a little bit of flavor on those questions.

Yes, indeed. Very helpful. Thank you very much.

The next question comes from Maissa Keskes from ODDO BHF.

Regarding Prodomax, the order intake is very low in '25 and the backlog is almost done. So how do you see the business development in '26 and beyond? And should we expect additional costs that could put some pressure on margins? And what are the concrete measures that are you implementing to mitigate this?

Yes. Thank you, Maissa, for the question. On Prodomax, we have seen in Q4 in 2025, an order cancellation at that business in the mid-single-digit value. So that, of course, is, I would say, not great news. That is unfortunate. It's not something that we will see going forward in our view. But of course, it's also a testimony to what I'm going to say next, which is that the demand situation for Prodomax in the overall North American/U.S. OEM space is still quite volatile and quite subdued.

And that, of course, has an impact on Prodomax top line and the demand picture overall, as I've just mentioned also for 2025 order intake. Now what are we doing about this? Now Prodomax is an asset-light business that has actually -- it's based out of Canada. So it has a certain flexibility in its cost base that we have and the management there together with us have already, I would say, put to use in 2025. And of course, that's what we have to closely monitor again in 2026, depending on the demand situation. What I think is important, but I think you're fully right, a very low demand and also depressed revenue level will also hit profitability there. And there will be some structurally remaining costs that we cannot -- that are fixed basically, yes.

But I think what is important to note is Prodomax is a business that has a very good market position, I would say, in this North American OEM space. So when -- it's more a question of when the demand will return rather than if the demand will return. So we believe this is temporary in nature. And while it's hard to be specific on when do we think the demand will return, we are absolutely convinced given the market position that it will return given time.

The next question comes from Olivier Calvet from UBS.

Prisca, Andreas, my first question would be on the sequential development in margin. Do you expect a similar development as 2025? You touched on the Q1 growth rate being a bit subdued, let's say. Yes, maybe start there perhaps.

Yes. Thank you, Olivier. Yes, you are right. I have mentioned, I would like to reiterate that given the current demand pattern and also our internal capacities, we expect Q1 revenues to be below Q1 revenues of '25. That is correct. And obviously, given our full year guidance, then there will be an acceleration of demand -- or of revenue in that sense for the coming quarters.

And of course, the margin picture will also -- because your question was on the sequential margin development, that will also follow, obviously, both the revenue development, but also the mix development is important. So I would say I would expect overall a back-end loaded development for the year, given also the start into the first quarter revenue-wise, as I've mentioned. I cannot give you specifics on margins on particular quarters. But I would say, in general, a bit also what we've seen also in '25, I would expect a stronger H2 compared to H1 at this point.

And just on your comments on capacity availability, could you maybe just give us a bit more color there? And I guess also within the semis business, could you touch on the lead time or sort of order to revenue conversion cycle in lithography and inspection perhaps?

Yes, of course, happy to take that question. So maybe let's start on a little bit of a higher level, right? We have businesses that have longer lead times, and now I'm referring to the semi space that you've been asking about, and that would be the classical optical components manufacturing. So whenever we do classical optics components, lenses, lens systems and subsystems, that has longer lead times. It's more lengthy manufacturing processes and also sometimes in the supply chain, there is longer lead times.

If we then look at the micro-optics business, so mainly our sensor business there. So what we have basically invested into Dresden for, that typically is a faster manufacturing process with shorter throughput times, shorter cycles. And so those are the two different dynamics, I would say, in the semi business. And that is valid, I would say, both for inspection and for lithography where applicable.

I would say, broadly speaking, you could probably imagine that the classical optical business is more than double of the -- maybe the lead times or the throughput times in the micro-optics business. Now as to capacities, let's say, we have -- as you know, we have invested into Dresden, and we have ample capacity there given the investment there also for, of course, going forward. So we can definitely accommodate substantial future growth for this business in this site.

Now in the classical optics, as we have several manufacturing sites, you may have seen that we announced an investment into our Jena manufacturing site in Germany in fall last year. So we have also added there, I would say, moderately capacity in the sense of machines and also, to a certain extent, clean room facility. But we have had a good loading, I would say, overall, in particular, in our German sites in '25, also given the growth dynamics of the inspection business.

So of course, we -- while we are -- we will be adding resources to accommodate a potential acceleration, we have to, of course, also make sure that we have -- our loading is not always completely balanced across all sites. I think that's the reality of a manufacturing organization. So in that sense, we have to be putting full operational execution into doing that. And that, of course, will also be determined next to the demand picture on how the year plays out. Hence, being at the beginning of the year, we have to cater for some volatility here.

Maybe just a final one on capital allocation. Good to see a higher dividend. But are there any changes that we've seen some moves on the Supervisory Board? Anything we should think of in terms of share buyback or anything like that?

So there was a lot of questions in one. I'll try to address at least what I can say. Now maybe, first of all, I'm very happy that our Supervisory Board is now complete. And I think you will understand that I will not sort of -- cannot comment on the composition or the Supervisory Board as such other than saying that I think we have an excellent Supervisory Board that helps the management team together shape the future of the company.

As to capital allocation, which, of course, we were very clear at the Capital Markets Day '23 on what our capital allocation policy is. And let me remind you, and I think we've just talked about growth and capacities. Number one, capital allocation priority is supporting organic growth. Having said that, the major investment in Dresden is behind us, hence, also my comment on trending towards maintenance level from a CapEx point of view. But there will always be growth CapEx, obviously, given a little bit also the shape of the demand picture.

And then second, obviously, returning to shareholders. You've mentioned the modestly increased dividend that we have. And this is our primary instrument at the moment that we use at Jenoptik. And then last but not least, of course, while I don't want you to read anything into that, but just reiterating what we said at the Capital Markets Day '23, of course, there could also be M&A activity, but we don't have an appetite at the moment to have a focus on M&A.

The next question comes from Martin Jungfleisch from BNP Paribas.

I have 3, please. I'll go one by one. The first one is on just the start of the year. You mentioned that you have seen a solid start, particularly in the OEM business. Could you just quantify this a bit? So what does this mean on the order side? Would you potentially see a level of the Q3, like EUR 300 million? Or is it more like the Q4 of EUR 220 million? If you could provide some color on that, please?

Yes. Thank you, Martin, for your question. And I think you will understand, obviously, I cannot really give you a quarter guidance on that. We've seen, as you said, significant improvement in demand, in particular, our OEM businesses. I have mentioned particularly semi there and also, I would say, the Defense business and some parts of our Life Science businesses.

So we actually see good momentum there. But also, of course, our -- as I've said, particularly in the Biophotonics business, including the Defense business, there's high amount of order volatility. So we have to keep in mind that these businesses are driven by ups and downs in order volumes. Yes, but overall, we've seen in the beginning of the year, a significant improvement in demand in OEM, meaning Semiconductor and Biophotonics/Defense.

Okay. So the order -- the book-to-bill should be probably significantly above 1, I suppose.

Yes, I don't know, I cannot give you, as you will understand, some guidance on that. I think you have to do the math yourself there.

And then -- yes. And secondly, maybe on the semi business. Can you disclose what the segment guidance implies for the litho and the inspection business? Like would you expect higher growth from litho this year versus inspection and some other areas? And maybe if you have also baked in some positive effects from some restocking at your largest customers given their growth ambitions for 2026 and beyond?

Yes. I am afraid I won't be able to give you much detail on the specifics of those businesses. As you know, we work with a very concentrated customer base. And then therefore, it's -- we're a little bit limited on what we can say there, as you understand. I mean what I can tell you is that as we have said before, we believe the effects from the supply chain correction in lithography are behind us.

As we've continuously said, we think this was most pronounced in the first -- in the beginning of '25. So we believe that this is behind us now. And as Craig has also before -- sorry, asked was around that we are happy with the growth momentum we see in inspection and also our strategic move there. So overall, I think if you put those two together, you sort of get the impact for the wider segment.

And maybe just one last question is on the photonics product. I think you've highlighted a few times. Can you just talk a bit about the photonics for the micro-optics business and the Probe Card business a bit more? So what kind of size in revenues was that last year? And what are your expected growth rates for this year? I mean there's a lot of companies in the laser transceiver business that are seeing the revenues doubling this year. So just checking with you if you're seeing like a similar trend here? And also, how does this tie with the capacity? Do you have enough capacity to cater for that demand?

Martin, it's Andreas here. Maybe on the UFO Probe Card for everyone. So this is for -- this is a testing set of kit for photonic integrated circuits, so special submarket of the semi market. I think we alluded to that before, and we have an interesting product, as I said, for testing those chips. The scale of the business is relatively small at the moment. So we are talking about a single-digit million euro number.

We see growth here. But I think we can also say that we are not having the only solution for this for testing those chips. And therefore, we do not really see this to become a tangible or a major driver for our P&L going forward. So it will be growing, but not in a tangible sense.

And maybe to add on that, on your question on the micro-optics, basically the micro lenses, yes, the micro lens -- difficult word, arrays that we supply into transceivers basically or optical data communication. Now as I've also mentioned in my remarks, we have seen -- and we talked about that in '25, right? We've seen a big interest, big demand for the existing product portfolio, I would say, we have of our business there. It's modest in size, but we expect, given the -- all the massive investments into data centers, AI driven, we expect actually some nice growth there, obviously, on a smaller basis as we speak. But we believe -- we closely monitor this market, and we believe that it's an interesting growth opportunity for us incrementally.

Okay. And the capacities are sufficient for growth, I suppose?

We are in the business of sort of adding capacities wherever we need them, right? And so in that sense, I would say it's too early to tell how that will really develop. And therefore, for now, we are fine capacity and this -- we'll closely monitor that.

[Operator Instructions] And we have one more question from Lasse Stueben from Berenberg.

Sorry to come back on the Q1 again. I was just a bit surprised because Q1 '25 wasn't a super strong quarter. So can you give more color on sort of between the businesses, what's kind of happening? Is this largely down to the lumpiness in Defense or simply just the phasing of the demand in semi? And then the second question I would have is just on the Q4 margin in Metrology, that was very high. And it seems like in the segment outlook, you're sort of guiding for an improvement in the margin there for '26. So maybe some more color on what that could potentially kind of look like? Should we be looking for a double-digit EBITDA margin for Metrology in '26 or something else?

Yes. Of course, Lasse, thank you very much. I'll take the Q4 Metrology question first, and then I will try to give a bit more flavor on Q1. Now I mean, if you look at the margin in Q4 Metrology and you look at the revenues, right, it was a super strong given basically comparing the other quarters, Q4 in Metrology. And this is the main effect that you see there.

Now from a CFO point of view, I would prefer, obviously, a somewhat more flat or not as volatile revenue development, right? But there's nothing -- the main driver in that margin is the top line. And I've said -- I've mentioned AR/VR growth potentials in -- when I talked about '25. So I think that's an interesting thing to take a look at, not saying that we are planning at all for an inception or anything there. But we've seen some nice commentary and movements also in a trade fair in January in Photonics West regarding that.

But then on the other side, as you know, in the metrological business, it's also, as I've mentioned, the automotive business, where we do not really see an improved demand picture right now. So I would say we have to see how this overall plays out into the next year. But that's the explanation on the Q4 on the floor levels. And I -- We have a segment guidance on -- specifically on MPS, which is revenue higher than -- sorry, profitability higher than -- growth higher than revenue. But we have to see how the year plays out.

And then on your question on Q1, obviously, we're not guiding for quarters. So I'm somewhat limited on what I can see there. But what I can tell you is keep in mind that, I mean, while semi is the biggest business, there's also sizable other businesses in the Biophotonics space, depending on the Metrology business as we go there. And when we say that we anticipate lower revenues than in the previous year, obviously, it's related to all of those businesses. Do not just focus on the semi business here.

And we have one more question from Craig Abbott from Kepler Cheuvreux.

Yes. I actually just wanted to follow up on part of what you were just discussing in terms of the Metrology protection business. Indeed, I was pleasantly surprised actually by the positive tone of the outlook for this year. I was going to ask you to what extent that is due to pickup finally in the AR/VR applications? Or is it other applications more than traditional applications for TRIOPTICS? Because I assume also given the margin progression in Q4, that the big driver there is the TRIOPTICS business. Is that correct?

Thank you for your question, Craig. So I'll try to give you a bit more flavor here. So yes, you're right. We have guided for mid-single-digit growth in '26, right, for MPS. And as we take a part this plan, if you're right, TRIOPTICS is one of them. And of course, how the smartphone business, which still is a sizable chunk of our TRIOPTICS business plays out, we have to see. So that is one assumption around that.

AR/VR, we have seen, I would say, nice small movements and also a lot of press, obviously, if you look at what Meta is doing and so on. But if you then look at the volumes, I think one of the Ray-Ban is 15,000 volumes or something. So you have to say that I don't think we are at the commercialization of that yet. And when and if there will be an inflection point, we have to see.

So we have factored some assumptions into that, but for sure, not a complete takeoff of the AR/VR business. But then on the other side, we have factored in that the automotive demand remains depressed, but we have not factored in an incrementally reduced demand. So those are a little bit our assumptions into that segment that has a wide variety of end markets and dynamics there. So that drives our thinking for 2026. But it's early days, so we have to see how those things play out then in detail.

So at the moment, there are no further questions. Oh, we have one more question, sorry, from Malte Schaumann from Warburg Research.

I have a question on the Smart Mobility business. You expect quite significant growth in 2026. Order intake has been kind of book-to-bill close to 1. So maybe a comment on how the project pipeline might look like and if you would expect -- I mean, this implies that maybe some larger projects are in the pipeline that might realize during the first half of the year. So maybe additional color here would be appreciated.

Yes, of course, Malte. So keep in mind that when we have TSP revenues, our order intake is actually not that relevant, where we have recurring revenues that -- it's really where the hardware sales that the order intake is revenue important, right? Where we have solutions businesses, it's less of an importance. So just as a sort of structural comment on that.

And then obviously, we expect a growth trajectory from a continued expansion in the U.S. That's something that we've invested in that we would like to see continue there. And then you also -- on your question on order intake, this business is also somewhat volatile for order intake because sometimes there are projects or orders. Think of our business in the Middle East that we take opportunistically that can increase and decrease certain -- or give some volatility in the quarterly order intake. So that's the thinking around growth in SMS.

So now there are no further questions. [Operator Instructions] But I think there will be no more questions. So then I can give the word back to you.

Thank you very much. And I would like to close the call with a clear message. Despite market uncertainties, we believe that we are well positioned to return to profitable growth in 2026 by focusing on both exploiting our growth opportunities in our key end markets as well as focusing on operational execution. Thank you for attending our call, and we look forward to seeing many of you on the road over the next weeks. Thank you very much.

Good morning, ladies and gentlemen, and welcome to the Jenoptik conference call regarding the results of the first 9 months 2025. [Operator Instructions]

Let me now turn the floor over to your host, Dr. Stefan Traeger.

Thank you very much, and a very warm welcome to our Q3 earnings call. Our third quarter has been a quarter of light and shadows as so many other companies report. We have some specialties that are worthwhile pointing out and throughout the call, we are going to do that.

With me today is, as usual, Prisca Havranek-Kosicek, our CFO. And I'll give some sort of color upfront, and then Prisca is going to lead us through the numbers.

As I said, first quarter, a bit of a quarter of light and shadows. Revenue is down from prior year figures. If you take the third quarter 2025 versus third quarter 2024, our net sales are down by around minus 7%. And as a result, EBITDA or operating profit is also down versus prior year. That goes for the quarter as well as for the full year, year-to-date.

On the other hand though, free cash flow is very, very good. We have had a very good free cash flow, significantly improved by -- versus prior year. And probably even more importantly, our order intake pattern has developed as expected, but yes, very nicely. Our order intake in the third quarter is almost 14% higher than in the second quarter. And then the order intake in the third quarter 2025 is 18% higher than in the third quarter of 2024. And as we always expected, order intake will strengthen in the second half of the year. And we do see that pattern emerging, which is great, and obviously helps us going forward.

Nevertheless, we have implemented a program to reduce personnel and material expenses. I guess that's just prudent. We all do that. That's -- yes, just good management practice. We expect to see a high single-digit number in terms of extra cost, onetime effects in our P&L this year. And let me just address that straight away in our guidance that we are going to specify a bit more going forward, those numbers, the onetime effect, the special costs for structural cost takeout is already included. So that's after -- that's the number that we are going to specify later after those special costs.

Overall, we do remain focused on our main growth opportunities. I'm very convinced that we have good opportunities to further growth even this year is challenging for all of us. But given, not at least our order intake pattern in the third quarter, but overall, the macro trends that we have, we're very convinced that we will see further growth in the years to come.

There is ever more AI-driven demand in semiconductors. There is optical communications for data centers, for defense applications, in particular at the moment in Europe. We do see success in expanding our SMS business, in particular, in the United States. And at some point, and I'm really convinced about that, AR/VR applications are going to see an inflection point. It's hard to say exactly when, but there will be smarter ways of human and data interaction than just our phones in the future.

So if you take it all together, there's a bit of a mixed picture that we are going to report in detail now, a bit of disappointment in terms of net sales due to the time it takes for us always to convert orders into sales. We have a relatively long lead time with our relatively complex products. And as a result of that, operating profit for now is not where it should be, but it's more than just a bit of light at the end of the tunnel. There's a pretty strong order intake pattern. And again, Q3 this year, very strong order intake, pointing to growth in future, and we're committed to that.

Again, the restructuring project and program that we have implemented is ongoing. We had some of the numbers there already in our third quarter, but predominantly, the cost will become in the first -- in the fourth quarter and are already included in our forecast, which we are going to specify at the end of the call.

And with that said, I'll hand over to Prisca to guide us and lead us through the numbers in more detail. Prisca, over to you.

Thank you, Stefan, and good morning to all of you on the call also from my side. As always, I would like to now cover our performance in the first 3 quarters of 2025 in greater detail, starting with order intake on Page 6.

Looking at order intake on group level, we are pleased to report that overall demand has continued to pick up over the course of the year, with orders now in the third quarter being some 50% higher compared to the first quarter figure. And as Stefan has mentioned, approximately 18% year-on-year. If we take the first 3 quarters together, order intake was at EUR 777 million, and that's only marginally below prior year level. However, dynamics have been very different between our 4 strategic business units.

So starting with Semiconductor & Advanced Manufacturing, as you know, development has been impacted by certain supply chain fluctuations in our lithography business as well as an order cancellation in Q1, as we highlighted it on our previous call. Thus, order intake for the first 9 months period was down by around 18% year-on-year. From all we can judge, we believe this supply chain or inventory impact, if you will, was most pronounced in Q1. On the inspection side, however, demand from our key customers remain strong, including in Q3.

Turning to our biophotonics business. Order intake has been very strong for the first 9 months and particularly in the third quarter. While we saw positive momentum in both life sciences and medtech applications, order dynamics in our optical defense products was particularly strong. So with overall biophotonics order intake are up by around 34% year-on-year, which, of course, is very good. I would like to also note that there is a certain lumpiness in the order pattern of this business, particularly in the defense-related part. So let me explain. While major orders in this area were recognized last year in the fourth quarter, we saw them this year in Q3 already. Therefore, we currently expect some sort of normalization for the fourth quarter.

Moving on to metrology. Our Metrology & Production Solutions business as well as for Smart Mobility Solutions, order intake was also strong overall, up at high single-digit rates, with MPS benefiting from higher orders, especially in the optical test and measurement arena.

As a result of all this, our book-to-bill ratio on a group level returned to above 1 or 1.03 to be precise, and reached 1.2 when just looking at the third quarter. Our order backlog reduced slightly compared to prior year-end to around EUR 659 million. We anticipate turning approximately 35% to 40% of this backlog into revenues this year '25.

Now please follow me on to Page 7. So revenue in the first 9 months declined, as Stefan has already mentioned, by close to 8% year-on-year to around EUR 753 million. This reflects generally weaker order intake trends at the beginning of the year. We think we've talked about that, especially in the semi space. It also includes about 1 percentage point to 100 bps negative impact from FX fluctuations, especially relating to the euro-U.S. dollar exchange rate.

Now if we look into the businesses, with regards to the semi business, revenue was down 15% year-on-year. This was a result of what we already discussed several times in earlier calls, meaning softer demand in the lithography business, which, as you know, makes up for a big chunk of our business. On the contrary, however, revenue with customers in the semi inspection area developed very well in the first 3 quarters.

Now looking at biophotonics. Here, the revenue was up by 13%, driven by a strong demand performance in our defense business as well in our medtech business. For Metrology & Production Solutions, revenue development is lagging a bit behind the order intake dynamics that we just discussed before. So revenue overall was down by around 11% in the first 3 quarters of the year, due, on the one hand, to the unchanged difficult market environment that we are facing in automotive. On the other hand, influenced by some revenue shift into the fourth quarter.

Now finally, revenue of our Smart Mobility Solutions business was up almost 14% in the January to September time frame, particularly as our efforts in the important U.S. market are gaining traction, in addition to some good momentum in the Middle East Africa region.

Before moving to profits, I would like to also note that negative FX impact on revenues in the fourth quarter are expected to represent more of a headwind compared to what we have seen in the January to September time frame.

Moving on to profits on Page 8. As you can see on the left hand of the slide, the group EBITDA reached almost EUR 132 million, down by around 18% compared to last year. Absolute EBITDA as well as EBITDA margins improved sequentially every quarter this year. However, for the first 2 quarters in total, our EBITDA margin contracted by around 220 bps year-on-year, including an about 40 bps impact relating to the onetime move costs to our new set interest, as you know, in the first quarter.

On business unit level, influenced by the just mentioned one-off costs as well as lower utilization and product mix effect, EBITDA in our semi business unit dropped by almost 30% year-on-year. However, I'm pleased to report that while third quarter EBITDA margin in semi was still down somewhat year-on-year on the lower revenues, but it was also at almost 28% at a very good level in our view.

In our biophotonics business, strong top line growth drove better utilization of our capacity. In combination with positive product mix effects, EBITDA margin substantially improved from 10.3% to 21.3%. As I've mentioned before, we continue to believe that this business is currently shipping a bit above normal profitability level.

When looking at our Metrology & Production Solutions business, lower overall revenues impacted profitability with lower fixed cost absorption. As said before, considering our order intake and also our order backlog, we expect revenue development to improve in the fourth quarter. And as a result, we also believe that margins will move back to better trajectory.

Finally, for our Smart Mobility business, we saw a very good margin improvement of more than 400 bps to 12.1% in the first 3 quarters, and this is based on the strong top line development and the associated leverage of the functional costs.

Moving on to Page 9. Here, I would like to give you a little more color on the drivers behind the evolution of our margin. First of all, I would like to stress, as Stefan has also mentioned before, strict cost management remains a key priority for us at the moment, considering the lower revenue levels that we have alluded to before. We've started early on working on this subject and as a result of that, we've been able to reduce material costs to some extent, and our head count measured in FTE is down by almost 4% compared to the same time last year.

So now looking at margin development of our P&L in detail. In the first 3 quarters, we saw gross margin approximately 200 bps down year-on-year, which was primarily influenced by the lack of fixed cost absorption and product mix effects. And on a business unit level, of course, our semi business had the biggest impact here. On the functional expense side, as I said before, I think we remain very disciplined that those expenses declined by about 3% year-on-year despite some general labor cost inflation impact.

Moving on to the EBIT line, you see a more pronounced decrease in both absolute terms as well as margin wise as compared to the EBITDA since depreciation and amortization was, as we had expected, slightly up year-on-year. Further down the line, as you may recall from our Q2 call, we have recognized an income of a little more than EUR 2.5 million resulting from a settlement agreement regarding the sale of VINCORION, that was our previous mechanical defense activities. Bottom line, our earnings per share reached EUR 0.80 versus EUR 1.15 last year.

Now turning finally to Page 10, looking at cash on balance sheet data. And Stefan has mentioned it before, I think we are pleased with the development here, particularly considering the difficult trading environment some of our businesses are facing at the moment. So despite a decline in earnings, as you can see, our operating cash flow pretax improved considerably year-over-year on lower cash inflows into our working capital. However, working capital intensity has increased somewhat year-over-year, reaching 30.3%.

Moving on to CapEx. As you know, in the beginning of the year, we have stated very clearly, our intention was to bring down CapEx compared to the somewhat elevated levels that we had during our investment phase in Dresden last year. Overall, CapEx in the first 3 quarters was down by almost 20%, basically in line with our expectations. Finally, our net debt position was down versus year-end at EUR 366 million, reflecting improved operating and free cash flow performance. Finally, our leverage was at 1.9x at the end of the third quarter.

And with this, let me turn back to Stefan to cover our outlook.

Thank you, Prisca. And if you could go to Page 12 and -- or follow me to Page 12. When it comes to revenue, the rest of the year will be a sprint against time for us, essentially finding hard to make sure that we can convert the increased order intake into as much revenue as possible in Q4. In some of our factories, where we used to have or have had short-term work, we're calling workers back into the factories to -- yes, as I say, run against time when it comes to sales and revenue recognition. Nevertheless, we do see that -- we will expect to see revenues for the year 2025 at the lower end of our guidance range. And the figure is -- our guidance range is between last year's figure and minus 5% of net sales. So we believe we are landing around the lower end of that range.

We've talked a little about our measures to reduce costs already. Prisca already mentioned, we see FTEs down already. We will see further reduction in FTEs in the fourth quarter, in particular, of course, in our admin organizations. We expect a really high single-digit million euro number as expense for those structural cost takeouts. That included, we believe that our EBITDA margin will be at or around the lower end of our guidance range. And as you know, the guidance ranges between 18 and 19.5 percentages. Last year, it was 19.9%, so if you would basically dial back in those numbers -- yes, you can do the math yourself, but essentially, including those high single-digit million euros, we believe we will be at the lower end of that guidance range.

Effects from current macroeconomic and political uncertainties that we all know and we all hear every day in the news and some place else as well as fundamentally very positive developments in the semiconductor industry and their effects on our 2026 business is really hard to assess at the moment. It still is very sort of liquid out there, very volatile. And despite the fact that we do see a good development in Q3, that's great, and we anticipate that that's going to carry into Q4. But for a sort of more precise outlook into 2026, it's really too early. It's really, really hard to give us -- to have sufficient certainty for that.

We do think that the expected negative impact from things like material cost increase and wage increase, we will basically offset by our 2025 cost-saving measures, so the measures we talked about, we believe that will offset the cost increase that we anticipate, at least for next year. And as a result of all of that, we expect an increase in both sales as well as EBITDA and an improved EBITDA margin in 2026. The precise number for that, though we can really not forecast at this point with sufficient certainty.

With that, thank you very much for being with us, and we're more than happy to -- and expect a lot of questions from you. Thank you very much.

[Operator Instructions] And the first question at the moment comes from Craig Abbott, Kepler Cheuvreux.

Yes. Yes, my first question, please, just -- I realized, clearly, as you said, too early to give a guidance to '26, but you're saying you expect a higher margin versus this year. And I just want to be clear, I assume you're referring to a higher margin versus that, let's call it, adjusted EBITDA margin in '25, i.e., if we take -- if we add back the high single-digit one-off cost. Is that the basis from which we should be working? That's the first question.

We don't adjust our forecast. Obviously, as soon we don't...

No, but we do.

I'm trying to dance around the answer here. But look, let's see where we are at the end of the year and then we give you a precise number, but I think your assumption, by and large, is fair. But we really don't want to give any more guidance at this point. But obviously, given what I just said or what we just said in terms of cost measures should offset cost increase. And then if you -- of course, those restructuring extraordinary costs, those are onetime effects, and they will not show up next year. So essentially, I think the answer is yes, you're correct.

Okay. Well, the second question -- and again, we know it's probably going to remain lumpy and all that for those of us that follow the reporting in the semi space. But nevertheless, could you give us like some kind of feel, even if it's just a ballpark range of what your customers of the litho space kind of indicating to you for '26. There is the expected growth in WFE CapEx next year, probably mid to high single-digit, I think, is the current consensus. So are they kind of like given the indications to be ready, be ready to ramp, we just can't give you visibility yet on when the call-out rates are really going to materially start to increase. Just to kind of give us a feel what the dialogue is like there.

I would refrain from going into litho versus inspection too much. But what I could say is -- because I mean, obviously, the litho there is essentially just one customer, and you'll understand that I can't really sort of disclose that. But overall, if you take it overall, like litho and inspection together, then I think it's fair to say that at the moment, we do see actually a strong order intake or strong demand pattern in inspection. And it's more the inspection side at the moment than the litho side. And for 2026, we really have to wait.

Okay. And my last question and I'll turn it over to -- sorry, Stefan, yes?

Is that fair enough? I know I didn't quite answer your question, but...

Fair enough. And just looking at the other 2 divisions real quick. I mean, Prisca, you made clear that in biophotonics, there were some pull-forward effects that we would have thought normally would come in Q4. Fine, we get that. Nevertheless, a really good performance. But on M&P, you said that also strong order intake -- and you said it was on optical measurement. It kind of like -- it sounds like you were expecting things to like gradually improve here. I just wonder what's like behind that. Is that upgrade type investment? Is that -- or was it a one-off order in that Q3 number? What's driving -- what should drive this number to increase from here?

Craig, just to get you right, your question was on biophotonics order intake dynamics. Is that...

Well, I danced around a little bit, apologies for that. Actually, I was getting to both the M&P and biophotonics. I mean biophotonics, you said in your comments that there were some pull-ins. Don't expect that kind of dynamic for Q4. But if you can maybe on both of those divisions, just kind of give us a feel for how your pipeline is looking?

Yes, yes. And I think -- as I mentioned in going through the businesses, there is fairly different demand dynamics at this point across the 4 businesses, please keep that in mind.

So on your question on biophotonics, I think what we have seen is, as Stefan also has alluded to, good medtech demand, but in particular, very good defense application demand in Q3. And as I've mentioned in my comments, we see these orders in this area, particularly lumpy, meaning hard to predict on the one side, but also -- sometimes it's also including multiyear demand. So what we expect is that while we have some orders -- similar orders in Q4 last year, we have seen them in Q3 in this year. That's what we see. Therefore, we expect in biophotonics, a certain normalization.

Now this is different from what we have seen in our MPS segment. We've actually seen quite good order intake in MPS, I would say, across the year. We also had a good Q3. I think what we've seen there is that the measurement or the optical test and measurement part, it's actually relatively stronger. I've mentioned in my comments that in the automotive-related parts of the business, we -- honestly, we still see a significant weakness. So you can expect the driver of the -- or the good order dynamics comes more from the optical test and measurement. So yes.

And maybe to follow up on that, Prisca, real quick. As Prisca pointed out already, in the MPS segment, it's essentially the TRIOPTICS business, good order intake and the Hommel business with -- as Prisca mentioned, what -- more automotive related is still somewhat lagging.

The next question comes from Michael Kuhn, Deutsche Bank. Please go ahead.

One more on the one-offs and the expected savings. Firstly, on the one-off, were those like evenly split across the quarters or were there quarters that were more heavily impacted? So just an idea in terms of what was underlying profitability across the quarters.

And then into next year, you mentioned you expect those savings measures to basically cover inflationary pressures. Could you also quantify that, that we have an idea what's the million euro number of savings you expect? And how does it compare to the one-off incurred this year?

Thanks so much.

What's that, sorry?

Yes. I think, Stefan -- yes, I think very -- thank you for your question, Michael. So I think this is a very good question. Now maybe let me clarify. The one-off effect in the amount of high single digits that we expect for this year have been in the second half of this year. So you will see a very moderate impact in Q3, and we expect a higher impact in Q4. And that is because the program that is related to that is sort of underway right now. And therefore, you'll see basically the impact on the margin of the one-offs in this time period.

Now on to your question of the impact, broadly speaking, I think it would be a fair assumption to assume that the amount of the one-off cost is roughly equal to the amount of the full-year effect of -- in this case, it's personnel cost reduction -- of the personnel cost reductions that we expect -- that would expect roughly a one-to-one relation on that.

And that maybe to the last part of your question, that will of course, not fully impact this year as we are implementing towards the second half of the year. So you will see an incremental benefit coming as a full-year effect then in 2026. I hope that answers your question.

Yes, yes, that was very clear. Then to, let's say, on business mix, firstly, in biophotonics, obviously, defense driving that business right now. Would you be willing to give us an indication on the defense share of that business year-to-date, and probably what you would expect into next year and then probably medium term because obviously, defense is not kind of a one hit wonder, but generally expected to stay strong.

I think in the last call, we specified that last year in 2024, defense for the overall group has been at around 3% of total sales in 2024. This year, it will grow over and above that with the share of defense in the overall group will be higher than 2023. We cannot give you a specific number at the very moment. We -- yes, we do expect it to grow even further. At this very moment, it's too hard to -- it's not the right time to -- yes, to tell what's going on in 2027, 2028, it's hard to tell. But what we can say is, again, last year, I think it has been 3% of overall group. And it will be more this year, but we are not talking like 10% or so this year or next. It could come to that point in the future, but let's say we cross that bridge when we come to it. And that's total group, not biophotonics, that's total group.

Yes. No, no, that was clear. One more mix question. In Metrology, what is the current share of automotive versus nonautomotive. And in automotive, also on the last call, we discussed some, let's say, efforts to move away from combustion engines and move into new areas like battery cells and so on. Have you made further progress in the meantime? And what are the longer-term perspective for that automotive-related Metrology business?

Maybe let me take the first question.

Okay. Go ahead.

So just on the numbers, maybe -- so our -- please bear in mind that the MPS business also includes the former Hommel business, including the TRIOPTICS and some other smaller businesses. So the rough estimate of the exposure to automotive is about 50% for this segment.

And this will return to growth at some point? Or what's the perspective?

So I will...

We do have -- Prisca, why don't you go ahead?

Please go ahead, Stefan. Sorry, my bad.

Okay. So yes, correct. We are working on additional applications and new applications for the technologies there. And -- not all of it, even if it's automotive, it's combustion engine related. I think that's important. We cover things like airbag solutions, most of you have heard about that. Regardless of what do we talk, EVs or ICE engines, electric vehicles, others doesn't really matter to us. For that business, we have other new applications when it comes to certain light applications. It's a bit too much to go into all the details here. But interesting new applications that we have based on laser technologies, and we certainly expect that to grow. And what we do expect not to grow at the moment, at least, is the ICE, internal combustion engine applications we have. But overall, I think the automotive industry, as much as it's in difficulties, the applications that we serve are growing ones.

And I'll give you another example, ever more cars have cameras, headup displays and a lot of optics are on cars these days. And here, we support our customers with Metrology solutions, for example, to -- with all these cameras that cars have these days and all these driver-assistant schemes that we have in our cars these days and more optics, and that helps us in MPS quite significantly actually.

Very clear. And last one, any news on Prodomax? Or any active conversations going on? Or was that more or less put on hold?

The later one, more or less put on hold. We don't have any active communications with potential acquirers at the very moment. Strategy is still the same. We -- in the long run, believe that there should be a better owner out there for Prodomax. But the difficulties of the challenges or proposals or discussions between Canada and the United States of America doesn't make it any easier at the moment. And given where this business currently is and where it actually should be, and we know it's a strong business actually. I mean last year, it was one of our more profitable units, we believe it's better at the moment to wait and -- until the business is back at the point where it should be, and then try again in an effort to dispose it. Strategically, no change. We still believe that there should be better owners out there. But at this point in time, it's clearly not the right time to go for a sales process again.

The next question comes from Martin Jungfleisch, BNP Paribas.

Yes. I have 2 questions on semis. So firstly, I mean semi orders were better year-on-year, but they were weaker sequentially. I mean would you expect semi orders to improve in Q4 sequentially or is the visibility on semis and specifically litho, not really improving from here? That's the first question.

I think the answer is yes.

Okay. That's good. And then maybe a bit more in detail, right? So you -- I think you mentioned you're seeing lower demand in litho, right? And your main customer there, these EUV shipments to decline in 2026 where EUV shipment should be up. How does this mix impact you? I mean, is it financially really net neutral when you ship more into EUV and is the DUV due to higher ASPs? Or is this, I don't know, net negative. Can you provide any detail on that?

So really, what matters to us is the number of machines sold. For us, the -- there is -- we do take more price for EUV versus DUV, but not as much, if that makes sense. And so what really matters for us is not the revenue growth, but the number of shipments growth at our main customer. And so it's good, it's good for us if there are more EUV machines than DUV machines. But what really matters is the overall number of machines shipped to us.

And the content in EUV is not higher than DUV, right?

I mean, I can't go into very specifics here, but let's put it that way. Essentially, the technology is needed in both. Obviously, EUV is more complicated than DUV. Therefore, it puts a bit more and it's a bit more expensive, cause a bit more to produce and it's more expensive. But it's not like you need 10x more product for EUV machine versus a DUV machine. That's why I'm saying, by and large, at least, these are just sort of really back on the envelope figures. But by and large, for us, it matters the number of machines shipped and not that much the number of revenues sold by our customers.

The next question comes from Lasse Stueben, Berenberg.

Just on guidance for this year. If I'm just looking at the fourth quarter, if I take out that one-off effect, you're looking at basically stable margins on Q3. I'm just wondering in terms of mix, are we -- does that capture biophotonics remaining at a similar level kind of in the fourth quarter? Or should we expect that normalization to already take place in Q4?

And then the second question would just be on defense orders within bio. Can you just help us understand the lead times here? Or if that's materially different from the rest of the business? And also what that means in terms of profitability because we've heard from other businesses that defense customers tend to be, how should I put this, willing to pay a bit of a better price than others? So just wondering how you see that in terms of margin mix as well.

Yes, maybe I'll take the second question. And Prisca, if you can take the first one? So the second one is the defense business. Yes, the lead times in defense tend to be longer -- or the time scales, I should say, tend to be longer. And it's not necessarily always more profitable actually because often, it's -- times at least, it's like open book contracts. And it really depends on the individual projects and the individual agreements. So it's hard to say overall, the defense business is more profitable. But I guess, by and large, it probably is. There is pressure on price everywhere in defense as much as in other applications. But there's always, if demand is so much higher than supply, then the supplier has good position when it comes to price negotiations.

And I think if that answers the question, then I would hand over to Prisca for the first question.

Yes. Yes, of course, Lasse. So your question on the biophotonics margin level. I think I've mentioned it also in my comments earlier, we're having a really, really good year for biophotonics. On the demand side, as I just discussed it with -- particularly defense, but also on the top line growth and margin expansion. So I've cautioned already in the last call and I will do that again, I don't expect this to be a run rate margin, and I would expect the margin somewhat to contract again, as also expected. And that also includes the fourth quarter specifics, now biophotonics.

On your second part of the question, when you said one-off effect, I assume you mean the one-off costs regarding to the personnel reduction. Bear in mind that there is effects both in the Q3 and in the Q4. I would expect the effect in Q4 more pronounced. But of course, it's in both quarters.

The next question comes from Olivier Calvet, UBS.

A couple of questions. The first one on semi. Could you remind us how to think about lead time for EUV? Or if your clients get an EUV order, when do you think you'll see the orders come in? That's the first one.

Well, typically, we do get frame contracts and we produce sort of level loaded and then into stock and then basically get a call of and then we ship the product and then we cut an invoice and revenue recognized. Often, we have POC revenue recognition with that, but it does depend on the individual contracts. It varies, shall we say. And -- that's what I'm saying.

Lead time, it's not as if we get an order and then we start to produce the product and therefore, it can be shipped, I don't know, x weeks later, but we have a frame and we know roughly how many products over a period of, let's say, 2 years or so, we need to produce. And that's why we balance and then we shift whenever we get them to call us. So it's hard -- lead time is a difficult term in that respect.

Visibility is probably the better term. How much visibility do we have? And it -- I used to say in the past, we have a couple of quarters, that's shorter now. We -- the visibility is much shorter. That's the point. More than lead time is the question sort of visibility for us. And that, for us, at the moment, is more like, let's say a quarter or so more than -- and in the past, it was more than -- more like 3 quarters.

Yes. Okay. Makes sense. Well, on the topic of visibility, I understand that we don't have enough details from your customers to create like a new 2026 formal guidance, but it's also when the current strategic period now lapses. So I'm just wondering, if you're thinking about the midterm update, when that could come?

Yes, I think that's fair. I think -- we need to do a midterm update sometime next year when we have more clarity. It's a very fair comment. We're not in the position as of now, but I think in the next year, you can expect the new midterm plan from us.

Okay. Okay. And finally, just on Prodomax. It's still within the other part, like not in the segment. Can you just give us a bit of color on how the business develops profitable in other [indiscernible].

Yes. It's in others because it doesn't really fit into any of the segments. And we also want to highlight and signal that we still -- into, looking from a strategic point of view, find a better owner for and a better home for Prodomax since there is, pretty much, next to no synergies anymore to the rest of our business.

How it develops? Well, it is challenging for Prodomax at the moment. I mean we're talking really challenging. Prodomax has lost significantly in both in terms of orders and sales. And we really talked significant numbers here. And as a result, of course, profits are down. They are still profitable, but given that it was -- used to be one of our most profitable units still in the last year, me saying they are still profitable indicate the size of the issue.

It is significant. I mean we do see light at the end of the tunnel in terms of now more requests for proposals, and that's good. There is activity going on again in Ontario, in the automotive industry around Toronto. And in particular, now that it turns out that most of the products are actually what's called CUSMA exempt. So CUSMA is basically what used to be NAFTA in the past. And therefore, now that the dust starts to settle on the tariffs, it turns out that most of the products of Prodomax are actually not -- the tariffs are actually not applicable, but the whole uncertainty in the region is what's so hard for Prodomax at the moment. And I'll use the term significant when you ask me about the impact of it to the business.

Okay. Okay. That's helpful. Just a final one on the defense side of things, actually. Can you provide us about the kind of applications that you're supplying here, if you can?

Yes. Yes, sure. I mean those products that we have in the portfolio ever since it's optics, photonics space, products for range finding, for night visions, those type of stuff. So not new product developments, but the products that we had in the portfolio all the time, but didn't see much demand for it in the past and now demand is increasing like big time. I mean...

You're selling a complete solution? Or is that just a part of a...

No. The delay one. We sell optical components by and large.

[Operator Instructions] And there is a question coming from Malte Schaumann, Warburg Research.

First question is on the OpEx. That has come down quite strongly to the third quarter of the year. So I was wondering, having in mind the additional cost savings, what's your target OpEx run rate for 2026? Maybe that was a bit -- artificially down in the third quarter, but maybe not. So maybe you can share some color on what the expectations on functional costs are for next year?

Yes, Malte -- yes, exactly. Thank you, Malte, for your question. I cannot give you an expected OpEx run rate for next year. But what I can tell you is that, as Stefan has already mentioned and then I as well, we've been very cautious on adding personnel wherever we have people leaving. So attrition, basically, we have used that to not hire again. Top of that, we've already talked about the cost saving, personnel reduction measures. So of course, that goes across both gross margin but also several OpEx lines. So you'll see a positive impact from that.

Now labor cost inflation, I would expect in the -- broadly in line with what we've seen this year, what we have read now. And then also bear in mind that there is a small part of amortization in some of the OpEx lines that are also decreasing and comes from the normal purchase price allocations of the previous acquisitions. So if you take all of that, you get a few ups and downs in what happens in the OpEx. But I can assure you that we will continue to be very, very strict on cost management across, and of course, that includes also the functional expenses.

Okay. Good. Then on MPS and the order intake, you indicated that it is mostly coming from TRIOPTICS. I was wondering which applications are driving the kind of uptake? We have recently seen some improvement maybe in the AR business with the recent launch of the meta -- new meta glasses. Is that something that is also beneficial to optics? Or do you actually see other applications driving the uptake? And then what's the sustainability of maybe a better business from what we have seen in the past?

Malte, thanks for that question. I don't want to go into many specifics in the product lines here, but it's measuring -- the measurement of the quality of optical components for a number of applications, yes, AR/VR is part of it, but there are also just classical optics production at the very high end, and other systems is growing strong at the moment. So others in terms of advanced driver assistance systems for the automotive industry. And the combination of all of that is driving the demand, in particular, TRIOPTICS at the moment, and business in Asia.

Okay. And this is somehow sustainable, so you see kind of a better pipeline than going into next year?

It can be lumpy, but I don't want to forecast the rest of the year. But overall, yes, I would say it's sustainable. No, that's -- don't take that as a guidance on Q4 order intake MPS, please. But in the midterm, yes, I would think so.

Okay. Then on the biophotonics, again, you indicated to expect a normalization of the order intake in the fourth quarter. We have seen quite significantly, differentiation between order levels. So should we assume that maybe the second quarter order level we have seen is that kind of a normal level you would consider as normal going forward? I mean, Q1 has been significantly lower than that. Last year has been between 40 million and 70 million. So maybe you can add some more color on that?

Again, very difficult to answer the question. As Prisca already pointed out, that business is very lumpy. I mean, you can get big order intake swings from, in particular, defense contracts space, if that's what we're talking about. And therefore, it is very challenging to predict, so to say, order patterns by quarter. I would probably not do it.

But focus on the long run on mid range and long range, I would say, the medical and life science industry is still under pressure overall. We all know that. And that's -- there's still the remaining of the post-COVID blues. There is the fact that research budgets are cut, NIH budgets are cut and so on and so forth. That will have a negative impact on our biophotonics business in 2026 and maybe beyond, but particularly in 2026.

And on the other hand, defense budgets are growing, in particular in Europe, but also in other parts of the world, and that should have a positive impact. And which one of those 2 factors is stronger, it's a bit hard to tell, but I would say life science, health care, more on the negative side and defense on the positive side. And we'll have to see what that means for 2026.

No. Okay, understood. Then on semi, the indication for kind of an improvement -- sequential improvement in the order intake into the fourth quarter, is that also then mostly relating to the inspection side of the business?

No. Okay. Sorry. I got to place my [ wording ] hopefully now. But no, I think -- I would say that goes overall for the total semi business.

Okay. Let me just wait a couple more seconds if there are any more questions coming in. But that does not seem to be the case. So I'd like to hand it back to the speakers at this point.

Okay. Well, thank you very much for being with us today. I think the discussion has shown a bit of a bumpy ride at the moment. Most important for me -- for us is that we really have a sprint ahead of us for the next couple of weeks to make sure that we can turn as much as possible those nice order intake patterns that we have seen in Q3 into sales in Q4, and have a good basis and a good foundation for 2026.

And with that said, thank you for -- again for being with us. And to our teams everywhere, good luck and all the best for the rest of this year. But no -- jokes aside, I think we will see a good closure of the year with all the challenges that we had throughout the year. We always indicated that, the second half will be better. And those of you who follow us for a bit longer, you will probably know that the fourth quarter tends to be the strongest by far for Jenoptik. So we'll work hard to deliver that this year as well. Thank you very much.