OC Oerlikon Stock

Good morning, everyone, and welcome on behalf of the entire Oerlikon team. It's a pleasure to have you here today, both in the room and also online. We appreciate your continued interest in our company and are very pleased to spend time with you today at this Capital Markets Day. During the day, you will hear directly from the leadership team insights in our end markets, technologies, positioning and financial ambition. Thank you again for being with us today. We look forward for an insightful session and live exchange during the Q&A session, the breakout and also at the booth later.

Melinda Crane will moderate the day. Thank you.

[Presentation]

Good morning, and a very warm welcome also from my side to Oerlikon's Capital Markets Day, its first as a pure-play surface solutions leader. I'm Melinda Crane, and it is a great honor to accompany you at what is a very special moment for this venerable technology powerhouse. Oerlikon has been flourishing for 150 years, not least to an extraordinary capacity to reinvent itself. And it demonstrated that once again in February of this year when it divested the Barmag Polymer Processing business. With that milestone, the company's commitment to excellence, innovation and pioneering materials science is stronger than ever. So today isn't just a numbers update. Today is the reintroduction of a sharper, more focused Oerlikon, a global player with local roots in key regions around the world.

Over the next 4 hours, you will hear, as Aymeric told us, from the leadership team on strategy, technology and what it all adds up to financially and the businesses themselves will share how they are turning that strategy into growth. We've got a number of panels to dive deeper into all those areas you just saw now in the video, and we will take your questions after each major block. That means one time midmorning and then one time toward the end of the day. So let's get started. Please join me in welcoming Oerlikon's Executive Chairman, Michael Suess, who's been guiding the company's transformation since he took over as Chairman of the Management Board in 2015.

Michael, it's great to work together. Again, the floor is yours.

Melinda, thank you so much. So good morning, ladies and gentlemen. A very warm welcome here in this historic train station of Zurich. And when you came from outside, maybe you have passed by Alfred Escher sculpture. He was a pioneer of Swiss industry born in 1819, and we've been founded in his period in 1876, 150 years. That's a while. In 150 years, there was a period of reinvention daily, weekly, monthly, yearly. And Oerlikon went through all that as the Swiss community went through. And now after 150 years, we are here together to see what Oerlikon stands for now for the next 20, 30 years. And I hope I will get old enough that in 25 years, I would be invited for the 175 years celebration, seeing that everything what we have done and said went fruitful further on and Oerlikon remains as a cornerstone of the Swiss economy and the Swiss society.

As a leader in material science engineering, and it sounds a little strange material science engineering, but it expresses exactly what we're doing. We are great in material, we are great in science, and we are great in engineering and making adoptions and applications for our customers. We are driving the next generation of industries because without that, what we are doing, nothing will work. And you may have seen already or you will get a book with a little title the big impact because we do since 150 years, small things which have a very big impact, and you will see a lot of examples and you will realize that there is no day in life without Oerlikon. We will touch that.

But first, I would like to share you a little bit the view on why Oerlikon has such a unique business model because first and above, whatever you buy from us, it's pretty -- I would not say cheap, but it's affordable. versus the value we create for your products. And we do that in a lot of products and almost all of them, we are mission-critical. Without that, what we provide, this product would not fulfill these requirements. And we do that long term and very reliable. And this is built on a toolbox where we have always the same tools. And we use these tools for 10 different industries.

So that sounds complicated, but it's not as long as you understand your industries. And for sure, we have industries like cutting tools or automotive, where we are in for decades. And we have industries like semiconductor where we're in for 4 or 5 years only. So the intimacy with our customers is different. And this is where maybe the complexity comes from. But when you are then local and truly global on the one hand, but local on the other hand, as we are, as we're in all five big hemispheres, we're in Europe, in Germany.

Now Germany is part of Europe, but it's too big to keep it within. We are in China and Asia Pacific. We are in the Americas. We're in all these hemispheres with these 10 industries and participating not by sending experts, but by local people, which are working for us there since decades as well. And then we take our integrated business model from coatings and components, which fits very good together, built on the knowledge to build the right equipment and to provide the right materials for that and have answers when there are new requirements show up and do that with a very high entrance barrier on innovation and technology. And it's sometimes difficult for you to compare because we are the wide unicorn in the forest.

There is no other one. All our competitors are at least 3x smaller than we are. They are doing niches or some parts of that, but this integrated model where you interact with a customer and the customer has a demand and you can tell them it's PVD, physical vaporizing, thin film or it's a thermal spray solution or you need this, we can offer that. And we don't offer them a solution, we make it happen. And then we stay reliable with them like in aerospace, where you have to stay 30, 40 years in the program. We cannot disappear because they have to do the full reevaluation again. So with this leader in material, leader in application, leader in engineering, this is the entrance barrier which we have for all kind of competition.

And where we come from and where we are today, I don't describe you now that last 150 years, it would take a while, a very proud history, but that's why you will get the book. It's really interesting to read about. But in 2013, Oerlikon was built only on PVD. Yes, there was still a conglomerate, but that was today Oerlikon was only PVD. And we served 75% tooling industry, some automotive, a little bit energy. That's it. Within the last 10 to 12 years, we diversified the company from these industries into 10 industries, serving from airfoils to luxury goods, from car to tooling, from semiconductor to defense. This diversification was an effort, but it gives us a huge resilience because in the end, it's always the same toolbox again. What we develop, we roll it out in the different regions. And not in every region, we're working in 10 industries. It depends which industries like in India, where you have a more automotive focus or in the U.S. where you have a more aerospace and energy focus, but the 10 industries in total are a global scope.

And if you see, we are still a European-centric company. 50% of our revenue is Europe. By the way, in this business, we tripled in all 3 big hemispheres. So here, there is in APAC, there is China in and in Europe, there is Germany in. But for the matter of easier handling, we have separated internally. But we have tripled our revenues in all the 3 hemispheres. We have not achieved yet a super dynamic that America and APAC getting closer to Europe. That's the reason why the Europeans are still doing very well despite the perception, but we have a good market in Europe, and we work on that. But overall, we are shifting our focus stronger into Americas and strong into Asia Pacific because there are growth areas and markets which we don't see and don't have today in Europe.

If you do that, you need the right teams for that. And when I had the pleasure to join Oerlikon in 2015, there was still this impression about the company. It was super shaky. A lot of people have left it. We didn't have a very strong team inside. We had to build that. We had to hire from outside, and you will hear later on from Anna, what we have done on the HR level to have today not only that people you will see today, but a very strong base throughout the whole organization.

But it's a pleasure for me not to make a Capital Market Day where the CEO and the CFO and the COO shows up, but that you see the whole you see here, that you see the Managing Board, that you see the people who run the businesses, who do the strategy, who do the communication, who is the CTO for the company, who stays for this innovation power. And you will see them in action. You can interact with them, you can talk. It makes the company for you more transparent because sometimes we realize that Oerlikon is very capable, but people do not understand what we do.

Even people who have worked with us for 10, 15, 20 years when you invite them on site, then they say, "Oh, now I get what you're doing. And this was because of a conglomerate, it was difficult to tell the story. This powerful top management, a very lean group of 16 people makes all the decisions for 10,000 people in a very lean and dynamic way. And it has the right diversity and it has the right diversity on age, on gender, on experience and on nationality.

And with that, as I said already, we are serving 10 industries. And there is not a single day without Oerlikon. Wherever you are, wherever you raise up the morning, where you go to bed, you have met Oerlikon in products, outside, inside, because all these products wouldn't work it's power generation, defense, semicon, medical, aerospace will focus today very strong on electrification, on air traffic, on semiconductors and defense. But don't forget about, there's an oil and gas industry, there's a medical industry. There's luxury, there is tooling, which are still very strong and very good industries for us. And what's the benefit for us, and I mentioned already, the big impact, small effort, huge effect.

You have a driller, you work with this driller 10x the driller scrap. You coat the driller, you work 20x, 50x, up to 160x depends on the coatings which are on. And you can imagine what that means not only for the cost of material or the cost of tooling, but as well for the operational stability, if you don't have to change all the time your tools. And we're not talking only about small little simple drillers. We're talking about very complex tooling systems, which work very efficient and you need them.

If you think about defense, if you have armored steel, if you have composite materials, if you think about lightweight constructions with a carbon-based, how to cut carbon. You need diamond solutions. You need solutions which are not in the Walmart Or in a Home Depot where you can buy them. And that's where we are in. That's why we are an industry sometimes direct with the product and sometimes indirect by the tooling road. Or if you take jet engines and we take all of this example because maybe that doesn't sound too much that you have 0.1% of the cost of a jet engine and you save on a simple trip, you save 4,000 liters, no gallons of fuel. This is a huge amount.

And when we talk about sustainability, Anna will mention that. What we save only by fuel in jet engines is the equivalent on a 30%, 40% of Switzerland for 1 year. This has an impact. It's not only carbon emissions, it's fuel you're saving, it's range you're getting. And that's why this company has this big impact. And this is structured in a unique integrated business model. I will not go through this whole wheel because we will see all of that, the different coating services, different components, what we're doing and the mature equipment story. That's why I'm jumping directly on the 3 segments, we made it a bit easier for you to bundle that in segments.

By the way, it was a request from the market as well. You cannot report on Oerlikon, you should bundle that. That's what we're doing, but it's still integrated. We work together. We are in the regions, the P&L sits in the regions, and we have the different tools in the different industries we are serving. But nevertheless, coating services can be considered as the backbone of the company. Coating services comes very strong out of cutting tools of mold coatings. But meanwhile, there's a lot of precision goods and components, which get coated, PVD coated as well. We have some thermal services as well, too.

Focus is Europe, 50% Americas, Asia Pacific, 20%, 30%. Why? Because even today, Europe, especially in the tooling world is a very strong continent, and we are still very strong in this world. So almost 40% of group sales with a top-notch setup of technologies and don't forget about 110 sites globally. And I guess Dirk or someone will mention that, but virtual connected. So like one virtual coating center. This is why we have expanded -- not expanded, started into our digital world 2018 already because it takes you sometimes 3 or 4 years to get even your people on this trip until you really start to make benefit. But you will see the benefit in how we run 550 coders in PVD coatings, CVD coatings globally as one coder as it would sit here in Zurich altogether.

Next story, components. Why we have components? Because in certain areas, it makes a lot of sense further -- either to market access to deeper intimacy with your customers or simply to have a vertical integration. And one of the component stories was AM and a lot of people have always said, "Oh, Mike, with this hobby and with this AM and what it cost it and so on. First, it didn't cost that what all of you have in your mind. I don't disclose the numbers. But meanwhile, we are growing 30% to 40%. We are profitable. And if I would have to buy this business, I would need the double amount of money, which we have invested. And invested, I mean cost for CapEx and OpEx. It was a story which took a while, but to shape a new industry, which fits perfectly to us with all these material competencies with all that where we're already in.

To shape a new industry, it takes a while. And at the beginning already, Melinda was with us when we started to do this story, but we have a long relation even in Siemens and it was always great stories we had to share and we had to provide. But this AM story was something where you have to run for a while. And even if you have headwinds, you have to keep track. It's by the way, the same with digitalization. A lot of people in the beginning at the steel and materials company did never understood why we go more digital. Today, they understand. Today, they buy in. But to convince them, it's a 3, 4, 5 years track. And if you give up too early, and this is sometimes a problem of a public noted company, a lot of people know it better.

A lot of people tell you, oh, next year, you have to have this and that, but you have to keep track. And this is what we did. And in the end, we deliver. And the facts here are that we have 30%, CHF 40 million, CHF 50 million, there is some stories in like luxury. A lot of people may have not understood why we bought Luxury. And by the way, I have to say, timing-wise, it was not super smart because we bought it in '22, it was a super opportunity because typically, these assets is going only to private equities and the management team wanted to have a strategic player. And we wanted to get in the Luxury story with our colleagues. But unfortunately, the Luxury industry went to one of the major crisis in the last 4, 5 years.

And if you buy something at the beginning of a crisis, that's not super smart. Nevertheless, we made our homework. We cleaned up. We brought profitability further up. It's not there where we want to have it. But we are a full credible player, and Catharina will give you more insight about in the luxury segment. There's a lot of metal coatings and there's a lot of electroplated coatings, which takes much, much more energy, much, much more materials and a really significant lower surface quality. And for high-end luxury goods, by the way, the market we target, there is 20 million customers globally, an average EUR 7,000 spending per year. So we're talking about CHF 140 billion market. Our metal part is much smaller.

But now we have the credibility and not only in the areas where we work, but as well in other areas where we have a much deeper impact now in the watch industry and in other goods and luxury. And this is a field where PVD, especially PVD plays a role. And where we develop stuff and maybe some of my colleagues will share that with you, a new black, which was designed for luxury, but now you use it for defense, you use it for surgery instruments and for other stuff. So whatever you develop, you roll it out in the other industries. That's the smart part here. We will see about this, terminal isolated shields, how to make batteries safe. And we have one component business in here that's friction systems, which was contributing a lot in the past and gets more and more a little bit headache, but we still manage that because friction systems is manual gears linked. And there's not too much manual gear business growing in truck industry yet, but we have to handle that.

So there is not all-time sunshine. There is some little shadows, but this is good to be handled in the component world. And last but not least, materials equipment, where we made a huge restructuring after we bought Metco because it was harvested and under invested, and we had to do a lot to clean up. And Andrea will probably give us more insight about what they have done and where we are. Only one number, we came from more than 2 -- I think, 2,500 different materials. Today, we have 1,000. We are highly profitable, and we are an indispensable partner for the energy industry, for the industrial gas turbines as for the aircraft industry and others, by the way, because the tooling world, they are not tooling. The semiconductor world as well needs that coatings.

So the facts are here, we are almost 130, either fast growing, very good business, not too much competition. And in a business where you know that gas turbines, either for utilities or for aircraft are sold out for the next 10 years. And this industry has a lot of struggle to ramp it up, and we can help them to make that safe and to make that ramp-up safe. As I mentioned, more or less to refocus you, air travel increase drives our business. The center of electrification is not only AI, it's simply the overall industrialization of the world, the access to electricity.

When I was Head of Siemens Energy, we talked about 1.5 billion people no access to electricity. Today, maybe it's still 800 million people, no access. So there's a sheer demand on electricity driven by a lot of different stuff. In the end, you have to answer that by nuclear, 15 years, and you have a lot of phase out. Coal, huge carbon impact. Renewables, no battery solution. The solution for the next 15, 20 years, not the only one, but one of the massive ones is gas turbines, high reliability, low carbon footprint, gas is available. So this industry drives this growth on air traffic anyway and semiconductors driven by electrification and AI, where we are in as well.

And last but not least, a massive rebuild of defense. And these are public numbers. That's why I can mention that. But U.S. has 5,000 Tomahawks, and they have used in the run-up to 1,200 already. We need a rebuild, but the capacity of the states are 80 a year. So you can imagine what that means if you think about future conflicts, how massive you have to ramp up industry. When Thyssenkrupp Marine makes 24 new submarines, this is a huge demand, but these businesses are not in the order books yet. They're on the negotiation level. The CHF 500 billion only Germany wants to spend in defense is not in the order books. And we participate in that business in three elements: indirect by tooling, indirect by all the parts for that [indiscernible] engines and fighter engines, powders, equipment and then direct step-by-step in final applications where we do, for example, actual silencers and cool plates for fighters.

Fighter is a flying data center, a lot of heat, much more efficient. The breakthrough for the cool plates was in our aerospace in the space world, where we made the RF antennas, and we took a huge amount of parts out and a huge amount of weight and optimize the parts by a 3D printed solution. And there is more and more applications you only can do with 3D printing. So either you're in or you're out or you buy you in yourself with a lot of money. So these are the four areas we focus more. But again, don't forget about 10 industries which we are serving. And by that, the Mission 2030 is pretty simple. And it's built on reality. It's not a wishful thinking. There's projects behind. There's clear not only plans, there's plans with execution behind. So we know where it will come from above CHF 2 billion, and we have to do so because after all this cutting off, we are getting subcritical for a global company, you need a certain weight and a certain size, CHF 2 billion, above 20% EBITDA margin and above 10% ROCE in all three areas, and Marco Freidl will give you more insight on that.

We are very well on track. And then you make your own calculation. If you have CHF 400 million EBITDA out of CHF 2 billion revenue, you ask yourself which kind of multiple you will reflect our actual share price. And then if you make this mathematics, as I have done, you would invest. With that. And if you're not invested, you missed already the first 60%, but there is another 60% or 100% to come. So -- but that's on yield. We never forced someone, but we know what we are doing, and we're very self-confident that we will execute that in a proper way. That's from my side up to now.

Now I hand back to Melinda. And later on, we have a chance to interact. But before you, you'll see a lot of incredible people.

Many thanks, Michael. And we'll come back to those numbers a little bit later on in the morning. But first, we want to talk about how that strategy we've been hearing about translates into action. Dirk Linzmeier joined Oerlikon as Chief Operating Officer in April 2025, bringing with him a really unique combination of experience across traditional industry operations and technology and including senior roles at Mercedes-Benz at Bosch and a highly successful stint as CEO of TTTech Auto, a fast-growing automotive software company that you repositioned, scaled and then successfully sold off.

So please join me in welcoming Dirk Linzmeier to talk about operations.

Good morning, ladies and gentlemen. Also from my side, a very warm welcome. Michael has just outlined Oerlikon's Mission 2030, above CHF 2 billion in sales and a sustainable operational EBITDA margin of above 20% by 2030. And my objective today is to show you exactly how we get there and why we are confident in that path. So now let me start. The new Oerlikon is diversified across markets and segments, and we benefit from powerful structural growth trends. So it's aerospace, it's semiconductor, it's electrification and it's defense.

And as Michael already said, it's only 4 out of our 10 industries. And across all these segments, that's a great thing. We benefit from a balanced exposure to OEM and aftermarket demand. So together, we expect these trends to strengthen our overall business and to add approximately CHF 300 million sales by 2030. So now let's start with air travel. You all know air travel has increased significantly over the last years. We are above pre-COVID times. More than 5 billion passengers flew in 2025, and that's an all-time high. But at the same time, aircraft cannot be built fast enough. There is quite a big backlog. There is engine shortages and other components, which are critical. And the fact that not enough aircraft are available right now due to supply shortages leads to the fact that airline keeps flying longer and longer aircraft life means more maintenance and more maintenance means more Oerlikon.

So both are growing, new aircraft and maintenance, leading to a 6% annual growth in global engine MRO. And Oerlikon is mission-critical in the aircraft, in these engines. No aircraft takes off without Oerlikon. There is roughly 13 different coated engine parts in an aero engine. And we supply 100% of all major aero engine OEMs. And the great thing is once qualified, we typically remain on that program for the entire life cycle, creating highly recurring revenues. So our average content of approximately 10,000 is only a fraction of the aero engine cost. Michael has already outlined that. So it's less than 0.1%, but plays a key role in improving the engine's efficiency.

Another trend already mentioned is semiconductor, where we can play our technology. And here also, I mean, coming out of the world, I think it personally really fascinating. It took 40 years to get to a CHF 600 billion semiconductor market. And now it takes only 3 years to hit the CHF 1 trillion, and it's further accelerating and growing. That is massive. And to manufacture semiconductors, of course, you need highly specialized production equipment. So wafer fab equipment. And this market is around CHF 100 billion. And for Oerlikon, this translates into an addressable market of approximately CHF 1 billion. And driven by around 7% annual growth in wafer fab equipment spending, our addressable market will reach roughly CHF 1.3 billion by 2030.

And also here, the great thing is the fab equipment is refurbished roughly every 18 months to ensure consistency and quality and also that is creating recurring revenues. Where are our Oerlikon technologies in semiconductor? So semiconductors are produced basically in four steps. You have deposition, you add the material. You have lithography, you define the pattern. You're etching, removing material and then doping, changing the electrical properties. And we are with our wafer carriers in this whole chain and in also other several steps of this, improving the yield at lifetime through precision, wear resistance and contamination control. But not only our coatings play in semiconductors as a role.

You have already mentioned it, Michael, with additive manufacturing. Also here, known as 3D printing, we have high-performance components such as volume reducers for atomic layer deposition. So also with additive manufacturing, we are playing a role in semiconductors. And we are a trusted partner of the five leading OEMs in this domain. And this AI-driven semiconductor boom is also accelerating another major trend, and that's where I'm coming next to. That is electrification or also we say technologies powered by electricity.

And also here, AI needs data centers. Data centers need chips and chips need electricity. And a 50-megawatt data center consumes as much electricity as roughly 100,000 to 150,000 households. That's equivalent to cities like Bern or Lausanne. And data centers need just not any electricity, they need stable electricity sources such as gas turbines. And gas turbines, again, need Oerlikon. So there's a 20% more electricity expected to be consumed by 2030. And that means roughly 10,000 additional industrial gas turbines. And again, Oerlikon plays here mission-critical roles. So our thermal spray coatings, they protect the turbine blades and veins against this really high temperature of up to 1,150 degrees, improving efficiency and the lifetime.

And also here, I mean, you can read this 1% improvement. First, I thought that's not too much 1% improvement. But just imagine, you increase the efficiency of a turbine from 40% to 41%. This results for 100-megawatt gas turbine in a yearly saving of CHF 2 million already in natural gas. So if you now have a 1 gigawatt installed base, this is already CHF 20 million. So this 1% is a significant saving. And for a typical 100-megawatt gas turbine, we have approximately CHF 100,000 worth of Oerlikon coating materials in this gas turbine. And again, this is only a small fraction of the overall cost of a gas turbine.

The next market I would like to highlight is defense. And as already mentioned, defense is growing massively and defense is also a good example how we can replicate, how we can copy our existing technologies and solutions across different markets and applications. So the defense demand and market is supported by basically 2 major streams. On the one hand side, there's a lot of investment like the CHF 700 billion Rearm Europe, which goes into scaling existing production. So what's already available, just scale, make more of it. And on the other side, we have then venture capital. For example, here, CHF 2 billion also already went into venture capital. And here, we are accelerating innovation. So completely new things, robots, automation, where we have the chance to get in with new applications.

And then on top, there's a trend in the defense industry to accelerate additive manufacturing because you need to have these additive manufacturing parts. They are lighter. There are certain structures you can't do with any other technology. And so it's even forced by the U.S. defense to have this manufacturing capability. And Oerlikon contributes in all the 3 segments. That means higher volumes lead to a higher demand. New systems are designed and get more complex. Here, it's where advanced manufacturing plays a critical role, heat exchangers, for example, cooling plate structures. And then scaling production leads to a higher consumption of our materials and thermal spray equipment. So the mega -- the mega trends create the demand.

And now I switch into the segment view, how we capture that demand. Let me start with coating services. our also known PVD business. We are the global #1 in PVD or those of you who don't know PVD in thin film coating. And we operate the largest coating network worldwide, and I come to that virtual coating for on the next slide. So growth in coating service is basically putting more volumes through our existing pipes sites, largely by filling capacity with limited incremental CapEx. And we expect our business to deliver 4% to 6% annual growth until 2030. And growth opportunities are moving in 2 directions. Coated tools become more critical as customers scale production. So there's more coated tools in aerospace, in defense and in other industries where formerly have no coated tools being.

And then there's new coated applications, for example, in semiconductor and in the medical industry. So our strategy is clear, technology replication across industries, coating the uncoated, once a customer is qualified, we typically stay for the entire life cycle, generating recurring revenues. And last but not least, leveraging our existing global network. And here, a little deep dive into digitalization because Oerlikon has invested a lot since 2018 in digitalization. And now we see the benefits out of these investments. So we have established, and we call this virtual coding center. And basically, no matter where this 550 coders in the 110 sites globally are, I can look at my dashboard, I can look at it as one big global connected factory. And we also -- we not only look at our own sites in the factory, we also look at the complete customer journey. So already, it starts from the pickup of the tools until back delivering.

So we have, for example, introduced the pickup app where we can see exactly where our tools is. We can optimize the routing. We can optimize the behavior of the picking up. We have a better transparency with the customer. And this is only -- I only picked 2 out of 10 examples or more we already have. I don't have the time to present all these great examples. So the pickup app is one. The other one I also find fascinating is in the meantime, when I summarize everything, we basically have 31 billion data points a day. That's massive. And now with the compute capability and AI, we can identify pattern in this data.

So what -- a good example, we had an issue at some site. And basically, we couldn't find it out in the first place with the technician. Then someone looked at the data, compared this coder data with a good coder data, and we found out that there is a certain sensor is not working properly. We told the technicians, they could fix it within minutes. So that is the power of data once we use it in our facilities. And there is many more examples. And this, of course, reduces throughput by 10%, increases utilization by 30% and reduces maintenance by 15%. And on top, we can even create additional revenue streams. Another example are the components. And components is where our integrated business model really comes to life. We manufacture critical components and enhance their performance with our coating solutions. So we don't just protect the customers' turbine blade, actually, we also make it. And that is a really fascinating part. There is a state of wane. So there's a lot of technology in that.

There's only a few companies in the world who can produce such a state of wane. We are currently ramping up. You need to imagine that's a ring at the end. We are ramping up that with one of the major aero engine OEMs. And yes, I think it's fascinating. And we don't just coat luxury components, we manufacture it as well. And we expect this business to grow by 5% to 6% annually through 2030. So growth opportunities are in aerospace, what I just showed this one here with the state wins. But we also have in semiconductor and defense, especially with additive manufacturing, new opportunities, 25,000 3D printed parts are already delivered by today. We have then in luxury, only also the technology shift into PVD. Michael mentioned it already from electroplating to PVD, already 15% is PVD technology, and there's also new customers coming.

And then in automotive, so we should not forget automotive. So my home base is automotive. I come from automotive, and this is still a great industry. So it just transitions and there's also new opportunities for us. So for example, and you can see that later in the showroom, there's the thermal insulation system protecting batteries, but also with HRS Flow, new opportunities in hot runner systems with the latest technology. And also here in these businesses, we are diversifying out of automotive, for example, in packaging and medical. So our strategy is focused on high-value components where the integrated Oerlikon solution creates a real competitive advantage.

And then last but not least, our really strong business right now, the Materials and Equipment business. And here, every machine we install is not just a sale, it creates recurring demand for our materials and services for many years. So roughly 50% of our sales is already coming from aftermarket business, materials, spare parts and upgrades. And here, we expect even 6% to 7% annual growth through 2030. And more than 2,500 thermal spray systems are already installed out there. And this is also, to my knowledge, the largest fleet in the world. And more than CHF 800 million worth of materials are sprayed annually through this installed base. So we have on top of that secured, and we come to that later in the panels, critical minerals. That was a hot topic in the last 12 months. And I think we did really well, and you will later see from the team what they did to secure such minerals like Etium and tungsten. And this is creating now for us new opportunities because we are able to deliver where others are currently not able to deliver.

And we are also launching new applications like, for example, brake this. And that's -- I mean, you can see that later, that's such a powder. You can't see it from here. It's very thin. It's very fascinating. And this is adding additional sales then even on top. So also here, strategy is clear, capture the super cycle growth with new equipment and material sales and leveraging our installed base and recurring revenues over the next years.

Let me pull that together in summary. All three segments contribute to Mission 2030. CHF 2 billion, above CHF 2 billion in sales with 6% organic annual growth. And it's the sum of concrete identified growth initiatives. gaining market share, coating the uncoated, scaling new applications and ramping up aerospace components, additive manufacturing and thermal insulation systems. And together, these four structural growth trends at roughly CHF 300 million by 2030. And don't forget only these four adding the CHF 300 million. There is other 6 industries we have in our business.

Again, the new Oerlikon is more diversified, more resilient and less dependent on any single market. And we stay close to our customers locally while using our global expertise, knowledge and competence. And most importantly, none of this would be possible without that outstanding team behind Oerlikon, many of whom you will meet today.

Thank you very much.

Thank you very much, Dirk. I'm sure it hasn't escaped your attention that cutting-edge technology is the powerful engine that is driving the strong growth that both Dirk and Michael have taken us through. So let's turn now to the company's Chief Technology Officer and hear more about what's driving the engine today and how strong customer partnerships are helping to keep Oerlikon at the forefront of value creation in the future.

Who could be better positioned to deliver customer focus than a CTO who has worked for or provided services to all of the key industries that Michel referred to earlier. Brett Rosenthal started his career as a mechanical engineer at Raytheon. He then became a customer of Oerlikon as a manufacturing engineer at both Apple and Tesla, and he subsequently served as CTO of an equipment business working with the semiconductor, defense and industrial gas turbine industries. So pretty much covering the whole spectrum there.

Brett Rosenthal, you have the floor.

Thank you, Melinda. I'd like to walk you through our value creation process, how we're customer focused and how we translate this into some of the key metrics that Michael and Dirk talked about earlier. So first, we invest in our customers' unmet needs. How do we do this? We take 4.5% of revenue. We allocate it to our R&D budget. We roughly break it up 1/3 to revolutionary topics and 2/3 to evolutionary topics. And how do we sort of think about these? These are really customers' short-term needs versus their long-term needs because a lot of times, you're advancing from Alcrona Pro to Alcrona EVO, but the customers also have demands when they shift materials from stainless steels to these carbon fiber composites that Dirk and Michael have discussed earlier. So that's split between 1/3 and 2/3. Then we have a risk framework where we evaluate each project on 4 key value frameworks.

First, the value proposition. We have to be able to deliver at a customer price the customer Is willing to pay. Second, market acceptance. Who is the customer? Who is the user? Who is the decision-maker in this? How are each of these stakeholders sized? Resource maturity. Do we have the suppliers in place? Do we have the equipment in place? Are our team members capable of delivering what they need to do? And finally, do we have the license to operate? You're going to hear more today about defense topics and others, and we need to be able to make sure that we meet regulatory, safety and geopolitical topics. I'll come back to this later.

Once we identify a risk, we work with the team to address immediately, usually in the terms of a proof of concept. Why this is really important? We don't want just the best technology. We want to be working on technology that customers adopt. And the way to do that is to derisk the highest risk topics and if we can't, shift our resources to other more promising solutions. This helps us reallocate our resources and always be working on the latest generation of topics customers need.

A lot of people say that they're close to their customers, and I'd like to show you how close we are with ours. First, we have 6 global hubs placed around the world. These are co-located with very critical ecosystems in our customers' own businesses. Then we have 120 customer solution centers. What is the customer solution center? It's simply an application specialist. They take a global solution and they translate it into local needs. Additionally, with all this data and virtual coding center topics that have been addressed, they take all these local learnings and bring that back to global business. This really helps us arm our 900 sales engineers that are really knowledgeable in the industry trends with the latest technology and help address unmet customer needs around the world.

This structure allows us to have three things: First, a short time to market; second, it helps us protect our existing markets. And finally, it helps us expand into new markets. And now I'll walk you through an example of each. Our first example is about a short time to market in our materials business. We acquired Scoperta back in 2017, and this is a company that helps us simulate millions of different alloys. And you're going to hear a lot about different AI use cases around the world. But what separates Oerlikon is what's next. We take these million different materials that we simulated. We bring 100 to the lab to validate. We bring three into production, and we give these powders to our customers to test and validate. This used to take months for Oerlikon, it takes days.

Now how does this actually generate value for the customer? First, we'll talk about supply chain resilience. When China imposed export restrictions on rare earth materials, including nitrium, Oerlikon was able to support its, customers in 3 ways.

The first way, only a company of Oerlikon's size -- and later you'll hear from Andrea and capability could work with existing suppliers, existing vendors to secure licenses to continue to ship these rare earth materials where they need to be.

Second, and now we get into some unique things in the technology space, Oerlikon was able to identify new suppliers. But when you bring in new suppliers, you bring in new supplier qualification risk. And with our simulation capability, we could quickly simulate these differences between the current and the new supplier, and we can help validate it for our customer quicker than our competition.

And finally, we were able to develop new rare earth-free and rare earth-reduced materials for our customers. This is truly unique and something that when people talk about AI and big data and other things, I like to talk about customer-focused value creation, and this is really a key part of that.

Our second example is about defending existing industries in our equipment business. Traditionally, the thermal spray business is an engineer-to-order kind of business. And what that means is a customer sends us a purchase order -- or sorry, a request for quotation. We provide them a response to their quotation. There's an iterative process where we work on defining the specification. Then we get a purchase order from the customer. We purchase our equipment, we assemble, we do a factory acceptance test, a site acceptance test. You can imagine, I'm just going on and on and on. This is quite a long process.

Now with our modular systems, we've moved from this traditional engineered-to-order to configure-to-order. This really helps our customers move beyond an iterative open-ended process into a more defined process. In the thermal spray industry, there's a saying that goes, "spray and pray." Now our customers can spray with confidence. And more and more customers are moving to these configured systems, and we have customers that are now ordering these machines by the dozen where in the past, they used to be ordering one machine every few years.

Our final example is about expanding our addressable industries in the advanced manufacturing or components segment. When Oerlikon has been providing thermal barrier solutions to the industries for decades, we've expanded our offering with cooling solutions. Additively manufactured parts are no longer prototypes, but critical pieces of complex assemblies where customers require maximum performance to function.

Imagine you're an aerospace engineer and you're tasked with designing the next-generation aircraft fighter or drone. One of the key features you have to think about is the flying data centers that was referenced earlier. We're adding more power electronics to a system and you have to cool these power electronics.

What is your cooling medium of choice? It's your fuel. So we have this traditional trade-off of there's a limited amount of fuel in the aircraft, but we have increasing power demands. So how do we solve this debacle? With additively manufactured parts, we can increase the cooling efficiency by 10x. So now the customers no longer have to have this trade-off of cooling efficiency and range, in addition to all the topics that were addressed earlier from part consolidation to weight savings to conformal designs.

And what is really unique about Oerlikon is, okay, other people you've heard from have additive manufacturing capabilities, designing this in a way that it's actually manufacturable, industrializable that you can take these powders out of the component after you print it because you can imagine if you have AM powder in your fuel lines, you have a big problem. This is really unique capabilities inside the Oerlikon business.

As you can see from these examples, we deliver an immense amount of value to our customers. And as Michael talked about and Dirk talked about earlier, this is at a relatively low cost. And I think this is really unique about Oerlikon. We don't just look for the best technology. We don't just look for the most exciting industries. We say, how can we have a reoccurring business model that generates value for our customers and at a low base, so we have these really attractive niches that we get to take advantage of.

Thank you for your time. And back to Melinda.

Brett, thank you so much. Really fascinating, and you can get ready to come right back up here in front because we want to move seamlessly now into our first panel that will drill deeper on Oerlikon's solutions to serve growing industries and provide a host more examples of the kind of technologies that Brett was just taking us through.

How is this company positioning itself to capture growth in key markets and industries and what distinguishes it from competitors? We'll hear more about that now from 4 leaders with expertise that spans technology, hands-on strategic oversight and growth industries in key regions.

And they are, respectively, Guilherme Rocha is Senior Vice President for Strategy, Business Development and Commercial Excellence, driving revenue growth initiatives across the company. Jane Cao is Country President, China at Oerlikon Surface Solutions. Stephen Skrenta is Designated Regional President, Americas; and Brett joins us as well. So I'm going to go over here.

And Brett, let's start basically where we left off with you. And you've shared some key examples. Now drill down a little deeper, if you would, on what solutions for growing industries look like in practice and in particular, how you work closely with your customers. Many of you this morning have talked about deep customer partnerships. Maybe you can give us a few more examples of those.

Absolutely. We generally have 2 bundles. Customers, they have demand, the sort of customer pull model, and we also have some technology push that we'll get into as well. So on the customer pull side, I mentioned the 120 customer solution center employees around the world, and they're really working with the customers directly. They have an immediate need. They need to address it. They are taking global solutions and adapting them to the local market requirement. And this is daily business for Oerlikon.

We also want to be able to find these technology pushes. We want to be able to look a little bit beyond what the customers' immediate needs are and see where the industry trends are going so we could be ready for solutions when they need to be. And we have to de-risk these solutions really with proofs of concept. And later, you'll hear from Jane and Stephen on this, that this is a regular topic for us where we find a way to bring a machine or a process or a technology directly into the region so that we could get immediate customer feedback.

One example here is we have a thermal spray customer in the U.S. on the Defense and Aerospace industry that was looking to manage their, I would say, variable demand. And we had, of course, immediate solutions available for them, improving efficiency, reducing costs and providing availability of materials. But we also said, what if we brought in one of our standard PVD coaters, a machine called the INNOVENTA kila and co-located it very close to you in our Westbury, New York facility.

And this ultimately led them to realize we could do coating service for them. We could sell them equipment. We could do a range of different outcomes. They ended up purchasing a machine. So now we have the machine sale, but we also have the reoccurring materials business out of this because we're not just providing them the equipment, we're providing them the materials. So I think this is one way where we also show between the technology -- or sorry, between the customer pull and the technology push that we meet our customers' most immediate needs and then we show them solutions that will be beneficial for them.

That's a great example of that customer intimacy that has been mentioned several times. Apply that concept now of being so close to the customer in connection with this new demand for supply chain security and also particularly on rare earths and critical minerals. As we know, this is a very, very key challenge facing all industries essentially at the moment or all tech industries.

Absolutely. Thank you, Melinda. We discussed a bit about the Scoperta model, but also it really integrates the business. We don't just develop new materials for people to test. We find ways to source and secure supplies that they're already used to. And I think I like to consider Oerlikon an anti-fragile company. I don't know how many of you read Nassim Taleb's book on the concept, but as the industry is changing, as geopolitics are changing, as critical minerals are becoming a key feature of our supply chains, Oerlikon is uniquely able to not just handle these changes, but to grow stronger for them and grow closer to our customers with them.

So a customer in particular, came to us and said, I really need a rare earth-free -- sorry, a China-free solution for my topics. And we were able to show them sources outside of China, but we were also able to show them technologies that just eliminated the need for these critical minerals. And I think this is really in that anti-fragile spirit that we read about.

Thank you. Anti-fragility is definitely a good place to be at the current moment in time. Guilherme, the leadership team spoke earlier about current mega trends creating lasting positive momentum in these key industries, Aerospace, Defense, Electrification, AI-related industries. In all of these, Oerlikon does have a strong presence. Can you elaborate on the related growth potential and share, again, concrete examples of that?

Absolutely, Melinda. Aerospace, power generation, semiconductors, automotive, understanding the trends and the growth opportunities and actually the challenges of our customers is the job that myself and my team, we do like every day. And I want to give you a couple of examples that Melinda requested in some industries we mentioned before.

Let's take aerospace. We learned that there's a strong backlog for new builds. There is a strong demand for MRO, and we are there on the engines right supporting with the efficiency. But there's another perspective into it. So we see in the modern aircraft, the use of more and more advanced materials. What they're looking for is efficiency on the fuel savings and the fuel consumption. So we see more adoption of carbon fiber-reinforced polymers, ceramic matrix composites that provides them with this lightweight at the same time with the strength that they need.

The challenge here, those materials are quite hard to machine, right? So when it comes to the normal production site using normal using cutting tools, they might bring some quality issues, the delamination in the profiles and at the same time, productivity issues because you need to replace those tools quite often. So this is where we come. So Oerlikon has developed a very thin and a very precise coating solution to the cutting tools that are used in the industry, diamond-based coatings.

And this is enabling our customers to produce with the quality they need, with the speed and the ramp-up that they need. And we are able to provide them with those solutions in the markets where it matters. So those industries are growing in Europe. We have sites that can offer that specialized coatings. We have sites in U.S. where also this demand is growing. So every time you look out right in the window in the plane where you're flying, you see in the fuselage some carbon fiber elements. You would know that very, very likely these parts were cut using coated tools right from Oerlikon.

Thanks a lot. So aerospace is an established industry as we know, it is going through a transition. But let's talk a little bit about emerging industries where the ultimate direction is perhaps not entirely clear yet. Does an industry have to be fully ripe for Oerlikon to find a niche?

Very interesting point, Melinda. As I mentioned before, we watch growth trends, right, across different markets and across different regions. We spoke about AI here. I want to take a different perspective. With advance of AI, we all learn that now we are coming to a point where the models or the software is so advanced that are enabling new use cases on the robotics side, what the industry is calling physical AI.

So we are seeing now an increase of a new industry emerging of humanoids, of robotics, where basically you're translating that knowledge on the software side into the mechanics. So imagine yourself that's not only enough, right, to have the right software power, but you need also to have the smoothness on the hardware side because you need to move smooth. You need actually to make it reliable, you need to make it durable. And that is where our solutions come in. We talked about the replication. So replicating the knowledge we have of wear and friction into that market as well. Think about safety. Those humanoids, they carry a battery. So what happens when they have some issues with thermal insulation, there are our solutions, the thermal insulation systems that can also provide safety there.

So I could go on and on, Melinda, with some examples. But for me, it's important, the message is we are not a company, right, with one single product, one single market to one single region, right? We are, at the end of the day, a company with a technology platform, a toolbox, which is proven and enables our customers to solve one of the most challenging business problems; productivity, efficiency, durability, safety, sustainability. So we say we are present in every daily life, as you see. But I would argue that actually, we are enabling the future of the industries with Oerlikon solution.

Thanks so much. Within both established and also emerging industries, it's pretty clear that 2 industrial superpowers are definitely going to retain a commanding position. And I'm referring, of course, to both China and Americas, which is why we seated them at the center of this first...

Don't worry, we will not fight.

Exactly. This is a collaborative and complementary work that we have here. So Jane, say more, if you would, about how Oerlikon is positioning itself to participate in China, which is clearly pioneering more and more advanced technologies, including but not limited to the robotics that Guilherme just mentioned.

I'm very happy that Guilherme mentioned the robotics. But before I dive into that, China, with all the 20 years economic development has become a very dynamic and competitive market. As a Chinese, I relocated back to China 2024. And even me, I was shocked sometimes how industry, a market application had developed in China. Look at the EV 5, 6 years ago, I would not be imagined that nowadays, one of the 2 cars sold in China is an EV car.

And the top 3 OEMs, they are now BYDs and Great Wall, and Geely, and they have changed the landscape of the automotive industry in China. We now also pick up similar trends in the robotic and humanoid area. With AI development, with government subsidies fundings with public and local investment, and there are signs this could be still immature, but it could be very exciting growth opportunity for China.

Let me ask you a question. Would you guess how many small components like gear and shaft, it takes for robotic hands to mimic a human movement? Just take a guess.

Call out the answer, if you think you know.

50. So our engineer told me, to my surprise, it's more than 200. So it looks very simple from the outside, but there are hundreds of small components which need to work continuously precisely, repetitively to even do simple move like push a button or hold a glass. And when these components need to move millions of times, friction and wear become a problem that's where Oerlikon comes to a play. We are already working with some leading players in that field, and they are using a carbon-based coating solution from Oerlikon.

With the carbon, there's 2 formats of carbon; diamond and graphite. So from one hand, with diamond structure, it creates wear resistance. With graphite -- and I mean I'm not an engineer, so very, like, fascinating for me to provide friction reduction at the same time with the same material. And with this, we could increase the lifetime of such component easily by 30% to 50%.

So make it even more concrete for us, if you would. What exactly are these robotic hands doing? You said hold a glass, but clearly, that's not their key function.

Exactly. So we are -- the team are really excited about this. So we are supporting one of our customers which are going to deploy hundreds of those humanoids in ice cream chain shops. I also see on a video, they promoted this robotic moves so fast, my eyes cannot really catch up, and then there was like in a minute, boom, like kits for Pfizer and for milkshakes. I literally feel like I'm in a Star War movie, but accelerated.

And in a country as hot and muggy as China in the summer, that could be a very key innovation.

There is already one in Shanghai store. So I'm very curious to visit myself.

Thank you very much. So that's the hand. But robots clearly have numerous other highly complex parts that are also subject to wear and tear and repetitive action of the type you described. And I'm thinking for starters about those jointed arms that we now see in so many videos from the high-tech factories. So tell us a little bit about what that could mean for Oerlikon going forward?

Indeed, like I mean it's not in hands, but although hands is most expensive component of our humanoid, it's more than $50,000, can be even more. But there, as Melinda rightfully said, humanoid contains also bigger component like the joints of the arms, the shoulders and the legs. Those are much bigger components. And also different a little bit from the hand, they often need to work with loads like holding stuff or accelerating or make a stop or pushing, right?

And there, the condition even get more challenging. And we are now in the frontiers with our customers developing the next-generation solution. And some colleagues have mentioned material science with the lightweight application, we are even looking to putting coatings, some polymer, high-strength polymer materials such as PEEK. And this could -- why customers need coating, brings a longer lifetime, bring the cost of the product lower, then it can enable more applications and working scenario of humanoids because we don't want to have the human just there for entertainment dancing, which they can do, obviously, but we want them to work in extreme situations where the humans might not be suitable to do so.

So based on that EV example that you started with, it sounds like you're saying to me, this may all seem pretty far away to us right now, but 5 years from now?

Exactly. I think now nobody can say 100% certain that how big the humanoid industry can be. But we are on top of it. I mean if EV, it's everything about electrification, mobility, I think robotics, smart robotics, humanoids is everything about intelligent motion. And when there is a motion, there are wear, there are friction and Oerlikon has an important role to play there.

No motion without Oerlikon. Thank you so much, Jane, for sharing your optimism. And Stephen, let me ask if the outlook is, in fact, equally promising when it comes to participating in these mega trends also in the Americas.

Definitely so. And in particular, across aerospace and defense, energy, power generation and semiconductor. And maybe just start with aerospace and defense for a minute. In the U.S., we're seeing tremendous growth in that industry. It was discussed a few times already today. But if you look at the backlogs across both commercial as well as defense, the backlogs are huge. The latest reported numbers that I saw on the commercial side, driven by passenger miles is today, backlog is over $1 trillion, which is staggering.

Equally sizable on the defense side, driven by modernization of the U.S. defense complex restocking due to the geopolitical activities that the U.S. is involved in currently around the world. Our business model, our 3 segments are leveraged perfectly against the aerospace and defense growth in the U.S. currently. So when I talk about segments, we're talking about coating services, materials and equipment and components. Our customers in aerospace and defense in the U.S. are some of the biggest names in the space, but also dozens, if not hundreds of Tier 1, 2 and 3 suppliers. Those suppliers we're serving through our vast coating services network.

We have the largest coating services network. We're talking about PVD coating services across the United States. What does that mean practically? We have coating facilities where we need them and certainly where we want them, and it's typically up against clusters of industry participants and aerospace and defense is no exception there. We're doing a lot of coating work at those centers, mainly on the tooling side for our aerospace and defense customers.

Within materials and equipment, I'll start with equipment. We're selling both thermal spray as well as PVD equipment under the Metco and Balzers brands, respectively, into aerospace and defense. We are increasingly being the go-to equipment provider, largely because of our global capabilities, our size and our customers on the aerospace and defense side want to work with very well known and established equipment providers such as Oerlikon.

On the materials side, we're very active. Here in aerospace and defense because it's a strategic industry, more and more so almost uniformly. We're being required to produce materials locally in the U.S. And so we do that in our Westbury, New York facility as well as our 2 facilities in Plymouth -- sorry, in Plymouth and Troy, Michigan.

On the component side, it's been touched on. We're probably most active on the component side within aerospace and defense in our additive manufacturing business. That is work getting done in our Huntersville, North Carolina facility in the Southeast. The cooling plates have been discussed. I'll spend a brief second on the suppressors or silencers as they're called, that we are in serial production on the additive side in Huntersville, which is great for us and supporting that business model and driving a lot of growth.

Thank you so much. So what I'm hearing from you is that those backlogs and this massive structural transformation in the industry that are often depicted as challenges in the big picture, actually, that's a multiyear runway, excuse the intended pun, for Oerlikon, it seems.

Let me ask you now about another massive growth sector in the U.S., namely AI and the associated infrastructure build-out. Talk to us a little bit about how the enormous investment in that area is also creating new opportunities for Oerlikon?

Yes. I mean the AI build-out, it would be an understatement to say it's tremendous in the United States. I mean we all read about it all day, every day. The sheer amount of capital that's flowing in to support the infrastructure build-out to support AI data center build-out is tremendous. When you think about energy infrastructure in the U.S., you think about power, power generation, when you think about power generation, you think about industrial gas turbines.

So industrial gas turbines for us, very similar to aerospace and defense, massive backlogs, huge, huge demand. We are playing in that space with some of the -- well, all of the largest OEMs. And we have both our equipment, mainly Metco, some Balzers, as well as our materials going into the most demanding parts of those turbines. So it's a great business for us and a long-term growth trend that we would expect for years to come.

Equally, I would say, interesting for us is and driven by the AI investments that are getting done and the insatiable demand that this build-out has for compute power, thus chips, thus fabs and equipment that goes into those fabs is our coating services within semiconductors. We do that work largely in upstate New York at our Amherst facility, where we have our coatings going into that end market. It's been a growth market for us over the last few years, and we would expect that to continue.

Equally exciting as well on the component side for us is some of the additive parts that we're producing in North Carolina that's also going into semi, which is helping diversify the additive manufacturing business for us, which is excellent. And so if you think across -- if you think about the U.S. across aerospace and defense, energy, power generation, that is, and then semiconductors, these are long-term trends that we are participating in currently expected to continue.

The last thing I would say about each of those 3 is that it's interesting for us because not only is the growth quite healthy, but the margin structures in each of those segments are equally attractive. And we are participating across both the consumable cycle at our customers as well as the CapEx cycle will help -- which helps further diversify our own earnings streams.

Stephen, very quick word, if you would, please, on localization and critical minerals because this, of course, is an area that's been mentioned several times of enormous concern also to many major U.S. companies. So maybe you can talk about that a little bit in terms of the opportunities that also offers for you.

It's a big opportunity if you operate locally, which we do across all 3 of our segments, and that's excellent for us. I mean it's not just aerospace and defense. Aerospace and defense is a good example, but it's other industries. Technology, for instance, is a critical industry in the U.S. And so more and more, we're seeing the benefits of our localization strategies, in particular, a good example would be our materials business where we're producing powders in New York as well as Michigan and meeting the requirements increasingly so by these critical technology customers that we have.

Thank you very much to all of you for sharing your fascinating insights and also your very convincing proof points about how Oerlikon is positioned to support and profit from dynamic growth industries in these key regions and from these megatrends that put a premium on those local routes that you have very convincingly described for us, all those place names that Stephen just took us through, those are all local companies in the eyes of the customers that you work with.

And that's why it's also possible to have both China and Americas sitting here side by side in harmony on this panel because this is a global company with local roots, and that offers enormous advantages at a time when anti-fragility, as Brett called it, is at a premium. So let's give them a warm round of applause, if you would.

Strategy, execution, technology, market reach, we have covered a lot of ground. Now we're going to talk about the numbers. What does it all add up to when it comes to financial impact and value creation? For more, we hear now from Chief Financial Officer, Marco Freidl. He's formerly at UBS in equity capital markets and M&A advisory and brought from there strong financial expertise with a strategic mindset. He's now been with Oerlikon for nearly 9 years. He played a key role in executing the pure-play strategy and leading the carve-out and sale of the polymer processing business. And he's also helping guide Oerlikon's Vision 2030. Marco, the floor is yours.

Thank you, Melinda, and good morning, ladies and gentlemen, also from my side. This session is about how we convert the strategic progress that we've heard a lot about into measurable financial impact and shareholder value. The underlying principle here is to maximize value creation by capturing profitable growth, while at the same time, remaining diligent on cost, capital and cash allocation.

Let me quickly recap our 3 headline targets that you've already seen. Our 2030 mission is to organically achieve more than CHF 2 billion of sales, higher than 20% EBITDA margin and more than 10% return on capital employed. The combination of EBITDA and return on capital employed here is the essential proof point for the quality of growth and earnings. These 3 metrics are naturally interlinked. And in our execution, we will focus on striking the right balance within this financial triangle.

What do I mean by this? We will not optimize an individual KPI in isolation, but balance achieving increased percentage margin while creating value-accretive growth. And here again, ROCE ensures that we execute in this triangle with the right balance. In all that, we keep a focus on diligent cash flow generation allocation and balance sheet strengthening.

This slide here is the anchor for my presentation. And over the next couple of minutes, I will provide you with substance and examples how we will achieve these targets. Let's start with profitability. And here, the baseline is 17.3% EBITDA margin as of '25. And our 2030 mission is to achieve more than 20% EBITDA margin. On the following pages, I will elaborate on the bridge from the baseline to the target, and I will base that based on 3 levers. First, it is volume and mix impact. Second, it is cost of goods sold optimization. And third, it is reduced SG&A intensity.

The logic will be built on showing you examples of already successfully implemented measures and in addition to that, initiatives that will provide further upside potential. This will show that the path to 2030 is indeed built on a well-diversified set of initiatives and not based on single high-risk measures. Overall, I think about these 3 levers in the following way: volume and mix is the commercial quality lever. This means we must grow in profit and value-accretive areas. Cost of goods sold optimization is the industrial discipline lever, means efficiency, means footprint optimization and means complexity reduction. And last but not least, SG&A is the focus to create further operational and functional leverage and remain diligent on cost.

The next 3 pages will unpack the details behind each of these 3 levers. First, on improving revenue quality, so not just volume. Here, a successfully implemented example I would like to mention is portfolio optimization towards higher-margin solutions. And the great success story here is our strong growing materials business, in which we have increased profitability over the last 5 years by more than 30%. One key enabler here was the reduction of the product portfolio, getting rid of dilutive and subscale products to strengthen the margin. So here, we have reduced the number of product references from around 3,000 to around 1,000.

Another example is, and you heard about that from Brett, is innovation as a driver for differentiation and pricing power. And here, we have launched over the last 5 years, more than 200 materials in that segment to support that target. Now looking ahead, very important for us will be that we improve the mix of our businesses. And you have seen which industries benefit currently from strong growth trends. We expect that the share of these industries is above-average margins will increase by 15% to 2030. This is driven, for example, by aviation, energy and semicon that benefit from these sustainable strong trends.

In terms of scaling, also components will play an important role as outlined by Dirk. A second upside I would like to mention is high-value innovation and low marginal cost of growth. An example, we expect higher than 30x sales to innovation cost ratio for recently launched products. And just to give you an example what I mean. As we innovate a coating, this happens to a very large extent in the process innovation. So it's not about putting a new equipment into the field every time we innovate. So this supports our growth journey quite a lot.

The second one is low marginal cost of growth. And here, you've seen it before, we operate based on 110 coating centers globally, and we have material sites in all 3 regions. So this allows us to scale very efficiently, and I strongly believe that this is a key differentiator for Oerlikon. Bottom line, this bridge element combines portfolio and mix strategy, pricing focus and efficient scaling.

Let's move to cost of goods sold as the industrial discipline lever in the bridge. And here, we have, over the last 2 years, closed or combined 17 sites globally to support that target. And already this year, we see that this contributes to the financials in the way that we expected. Another example is productivity related using digitalization. We are using and have introduced a technical design software that saves us more than 50,000 hours a year. This means a reduction of manual work and allocation of resources to areas that really create growth and value going forward.

Looking ahead, efficiency potential remains a key driver within the cost of goods sold lever. And here, I would like to highlight the utilization of our coaters as our most important asset in the base. We expect that we can increase the utilization by more than 30% going forward. This will be achieved by reallocating coaters within the global landscape and by optimizing the use of this equipment. And here, again, I refer to what Dirk was saying, digitalization supports because knowing how these coaters perform and being able where they can identify where they can fill a gap is very essential, and we already see the very positive dynamics which were triggered by these developments.

A second example is complexity reduction, for example, by modularization in our equipment business. And here, we expect that the reduced variation of parts will enable efficiency and support the cost of goods sold ratio by 20 basis points. An example here is, for example, the spray guns, controllers and powder feeders. And here, we are on track to reduce the variation by 60% to 90% until '28 if we compare to what we had in 2020. So that's a significant step and an important example for a driver as well. So bottom line, cost of goods sold naturally is key to achieving our target on the margin, but also to strengthen resilience of our business.

Now to the third lever. It's about SG&A as the functional and operating leverage lever, means as the business scales, SG&A intensity has to reduced. Last year, we rolled out Salesforce as a CRM tool to 1,400 users within only 12 months. What does that mean? It means standardization and providing one platform to our Salesforce to drive growth. In terms of central functions, we reduced the G&A cost over the last 3 years by CHF 15 million. This shows that we kept a very strict focus on cost after the sale of Barmag to compensate for, but even beyond the required savings from the sale.

Also looking ahead, sales cost will remain an important driver. We expect that the cost of sales will grow at a pace of below 50% compared to sales growth. And here, digitalization will also support sales effectiveness, for example, reducing the back office work by 10% to 15%. On the functional side, we have identified more than 200 basis points of G&A ratio improvement potential. And here, AI and digitalization also play a key role to optimize organizational structure and processes. And to not to leave it just with the buzzwords on AI and digitalization, we are already using a digitalized payables management system. We use bots in treasury, in reporting, we use agents for our IT help desk or also for trade control screening. And looking ahead, the implementation of SAP S/4HANA will further strengthen process standardization and optimization.

So with here -- with this slide, I close the EBITDA margin bridge. And all the elements matter to achieving the 2030 targets. And if you look at our H1 '26 results, you see that we are very well on track.

Now ladies and gentlemen, let's move from profitability to capital return. We introduced return on capital employed as an additional target because EBITDA margin alone is not sufficient if capital intensity is not well managed. The importance of ROCE for Oerlikon is also underpinned by the fact that this KPI is used as part of our long-term management incentive plan. Now how do we work on ROCE operationally? We use our capital allocation framework, which simply means as we identify the right areas to invest in, we make sure that these areas are margin and value accretive and that they create above-average growth.

Naturally, we will focus as well on allocating capital to the strategically important areas highlighted before. Now where do we stand? And what are the drivers that will bring us to the target of more than 10% ROCE. If you look at H1, we achieved 6.2% return on capital employed. So we are on track towards the target already. And in addition to allocate capital to the right industries, what I would like to highlight here is allocating capital to businesses with lower-than-average capital intensity.

So looking at our segments, the strongly growing materials and equipment and components segment have a significantly lower capital intensity compared to coating services. So also basing our capital allocation on that fact will be key. In addition to that, footprint optimization, asset utilization as discussed earlier, will improve capital efficiency. This will help us to reduce the gap between EBITDA and EBIT and drive the EBIT margin towards the low teens area. Capital allocation for us is a key steering element in achieving the targets 2030.

And for us, as Oerlikon, it has become deeply rooted in our governance. So it's much more than just a budgeting exercise. A key element for improving capital return is CapEx. And here, this is about supporting capacity, but also capability to support the path to 2030. We expect a CapEx envelope of around CHF 110 million per year, which corresponds to 4% to 6% of sales.

I would like to highlight 3 examples which I consider as very important to support the path to 2030. Number one, in '24, we invested in India into a combined coating center. By combined, I mean integrating our thin film capabilities and thermal spray capabilities. We did that close to the technology hub, Bangalore. So this will help us to benefit and capitalize on the strong trends in aviation and semicon.

Looking at the States in '25, we invested to combine 2 material sites in the state of Michigan to improve capacity and efficiency. And also here, the strategic industries are in the focus. It's a lot about driving growth in aviation and in energy. And last but not least, this year, in Switzerland, we are investing in what we call Campus Reichhold. It is a combination of 3 sites to build a thermal spray hub, integrating engineering, production and services. So bottom line is our CapEx envelope is disciplined, but supports the right priorities towards our 2030 targets.

Let's continue with the balance sheet. And here, the commitment of Oerlikon remains clear that this is a focus for us. And when you look at the pattern here, end of '25, we stood at 3.4x net debt EBITDA, including Barmag. And we communicated with our full year results '25 that our target at the end of '26 is to be at below 2.5x. And as you've seen in our H1 results, we achieved that target already half a year earlier. This was supported on one side by using 2/3 of the Barmag proceeds for deleveraging, but as well by the very strong H1 results that we were able to report. Leverage management clearly builds on achieving the targets as outlined before.

Another KPI that is important when we talk about balance sheet strength is our equity ratio. And also here, we are very glad that we were able to show an improvement to 41% in our H1 results. And the combination of the deleveraging path and the strengthening of the equity ratio also supported the reconfirmation of all of our 3 investment-grade ratings in spring this year. In summary, we see balance sheet strengthening as protecting financial and strategic flexibility, but also support shareholder returns.

Now over to our final element, which is the cash allocation strategy. And basis for this is that we expect that profitable growth and tight net working capital management will support the cash conversion ratio of 80% to 90%. We expect to allocate around 35% of cash flow to CapEx as our main reinvestment priority. Around 25% will be allocated to dividends based on an unchanged dividend policy. And the remaining 40% are allocated to financing, balance sheet strengthening and creating strategic optionality. The target of our cash deployment strategy is to strike the right balance to reinvest enough to grow, return cash reliably and enable balance sheet strengthening and strategic flexibility.

Ladies and gentlemen, let me close this part of the presentation with summarizing our financial strategy. Number one, we have a clear path to achieve more than CHF 2 billion of sales and more than 20% EBITDA margin by 2030. Second, on this path, we act on a strengthened focus on capital allocation and return, which will help us to achieve the ROCE target of more than 10%. And in all that, as I described initially, we will act in the financial triangle, striking the right balance and making sure that overstretching one KPI will not cannibalize another. Third, in all that, we will act with a clear strategy on balance sheet strengthening and cash flow generation and allocation.

Ladies and gentlemen, we are convinced that the diligent execution of this financial strategy will improve the quality of growth and earnings, capital return, strengthen our resilience, and with all that, be the basis for sustainable shareholder value creation.

I thank you for your attention.

Thank you so much, Marco, for that very detailed and very informative presentation. There's a lot to talk about now after all we've heard. So we're going to open the floor for questions.

Let me ask Brett, Dirk, Marco and Michael to please return to the front. And we will now take your questions. Please raise your hand if you want to pose a question and do tell us your media outlet and your name. So let's go here to the Third row.

Laura Bucher with Octavian. I would like to ask a question. I mean... Just from the presentation today, I mean, you're mentioning EUR 300 million incremental revenue, right? And then you go to the EBITDA slide where you show the 3 levers. If I look there, I mean, basically, it leaves 50 bps of margin potential to increase based on volume, so i.e., operating leverage, right? Maybe I'm wrong, but for me, that doesn't seem a lot of operating leverage there on the EUR 300 million incremental revenue. So first, I'd like you to comment on that, maybe I'm seeing things in the wrong way. And second, if you could give some light into utilization rates and all the other 6 markets that were not mentioned today.

I mean, do you need a significant pickup there so that we would really see the operating leverage starting to kick in or.

So thanks for the question. I mean what we outlined is in the bridge of the EBITDA individual elements and examples that will contribute. And as you've seen, for example, looking at the G&A ratio improvement alone, and if you look where we stood at H1, this is supporting a target of above 20%. We are not aiming to 20%, but this is about showing that there is a well-diversified set of initiatives that will support achieving these targets, which are beyond what you showed. So there is definitely operating leverage in all these areas and the CHF 300 million will support that. do you want to...

I can say -- so utilization rates, so we have to differentiate between our coating service and our material and equipment production. So material and equipment, we are fully utilized and in coating service depends on the industry. So we have automotive industry where we have a utilization of 70% plus between 70% and 80%. And then we have other industries where we are around 50%.

Maybe to add to utilization then to finalize your question on the other industries. First, what you have seen out of the past, we're optimizing the real to the ideal. The real was coming from a time 20, 30 years ago, you had to be very close to customers. Now we're bundling. We're making bigger centers. We optimize that because of -- by using more -- sorry, more modern logistics setups. And we can move.

It's not like to move big equipment. We can move coaters very fast from one site to another one. The only what you have to consider is if you go from 60 hertz to 50 hertz that you have to do something on the controls. Otherwise, you can move these equipment very fast around. And to have the overview, that's why we're working on the virtual coding center, it's like one center. It's only distributed globally, but it's like one center. So coming to the other 6 industries, and I think the secret is above. We're talking about EUR 2 billion. Dirk was mentioning EUR 300 million out of these 4 segments, which we have shown. And even if you take $100 million or $150 million, we are above EUR 2 billion. So we're not targeting exactly for $100 million.

But today, what we see is the super dynamics we have in industries. Oil and gas for us for the moment has not a huge dynamic because they don't drill too much. When they start drilling again, we are in the coating with the drill heads. Automotive have a different dynamic. In some areas, it works very well. In other areas, it's stalling a little bit. General industry is a wide range. Medical is growing nicely. Here, we are in robotics and surgery elements in dental. We are not in this, how you name it. Class 3 level, where we -- Metco before we acquired had one big issue, and we say we don't do that. So the other industries are contributing. But for today, it was really to highlight the super obvious ones. If you have a 10 years dynamic, and I think Stephen mentioning that very well on the U.S. defense will invest in the next 10 years like health.

Utility for IGTs, industrial gas turbines. That's the only way it was 10 years in that industry. The only way is can shift a little bit your heads? Yes, perfect. The only way is to fill that gap with gas turbines. A nuclear site from start 15 years. And by the way, we have 450 big nuclear power plants on this planet and 150 are phasing out in the next 10 years. So even to keep that level, you need a lot of that one, which are in the pipeline. So the real answer to feed the power demand is gas turbines. The same answer is [indiscernible] engines. The same answer is if it's rockets or drones, you need the engines for that. So that's why we highlighted that, that these are trends which are not for 1 or 2 years. This is a 10 years, 15-year story. And we are in and we are indispensable there. But the combination is more than the EUR 300 million.

Let's take some more with the hands, please. There's one in the third row.

Christian Arnold from ODDO BHF. On your deleveraging path, I mean, you are below 2.5x in '26. You aim for around 2x in '27. And then until 2030, you only go for 1.5 to 2x. If I look at your CapEx spending, if you look at your growth, I would expect actually to grow this ratio much further down to more like 1x or even below 1x. So what I'm missing here? Are you planning M&A? And do we have some extraordinary CapEx we have to think about in that area? Actually, not according to your slide you mentioned. So what I'm missing here?

Yes. No, your calculation, thanks for the question, is obviously right. And in our cash allocation slide, we had the 40%, which were on one side, obviously, for financing costs, which we cover below cash flow from operations. And then it's about deleveraging and also creating strategic optionality. I highlighted that CapEx is our first reinvestment priority because we are strongly convinced that there is a lot of organic growth potential in the business. So no, there is no extraordinary CapEx element planned. And with regards to M&A, we do not consider that a priority at the moment. But as one of the options coming out of the strength of the balance sheet, that could be one, but it's not a priority at the moment.

It gives us simply more flexibility as he was mentioning there.

Next to that gentleman, and then we'll go to the back.

Torsten Sauter, Kepler Cheuvreux. Actually, I have a question and a request. The question would be, I appreciate very much that you give us group targets for growth and margins. Now you've introduced these segments. And could you give us a little bit of a feel for the segment dynamics, the margins that you have in mind for these, specifically given that components currently has a negative EBIT. And then a request that I would like to chip in, is there a chance to receive a longer-term track record of these segments' performances?

You want to start with...

I can start, yes. So what we -- thanks for the question. We introduced the segment reporting first time in H1, right? And what we provide is the guidance on the group level, and we do not intend to give a guidance on further below revenue on the segments. I mean revenue outlook, you saw we gave CAGR ranges for the individual segments. This is certainly something that we do provide. On the components performance, this is clearly not there where it has to be. So we outlined that this segment, and this is important for me to highlight, but I'll let Michael and Dirk add, it has a lot of growth opportunity in there, which is benefiting from strategic industry dynamics. I mean this is the components business in aviation, for example. So as that segment scales, this will contribute to improving margin.

And secondly, we have taken restructuring measures also in that segment. In Luxury, we closed 2 sites last year in Italy. And here, we manage the profitability side also on the cost. So no, we don't give targets below revenue for the segments, but the measures are in place, one, to drive growth. And secondly, we are very diligent on the cost side as well. In terms of giving more history on the segments, we have to look into that. At the moment, that's not planned.

If I can comment on -- I don't look too much backwards, if it's not necessary. So instead of doing all the work to clear up and how could this track record look like, anyway, you should look more forward and backwards and about that dynamics because history, sometimes people saying you made 22% margin in 2016. Oerlikon was a different, the role was a different, the setup, the mix, everything. It's not comparable. If you would say 2016 and say what is 2026, you all would have been wrong. So the forward-looking and the quality of that on which our forward outlook is built on, that's I would like to discuss with you more and go deeper in.

And for example, when we talk about components, and I go a little bit deeper and I'll go a little bit beyond there. The friction system story is a story which is facing slightly out, and this is the components. Still makes a good business in Asia, but not to make too much business in Europe. This is something which depends on how finally e-mobility is ramping up and how China will look on this battery security, because today, the government has ordered the system for their cars, but for the mass cars, it's not. In Europe, it's different. So there's different dynamics where we are positioned, but we are not always in a driver seat to have an impact on these dynamics. In Eldim, we have a big order since a while from our customers and the transition took longer than expected, but now it takes space. And this is what Dirk was showing you.

So that this component will contribute significantly in the future and we will make the component story better as additive manufacturing is on a growth pattern, profitable now. And as I said, growing by 30%, sometimes 40%.

Still from a base, you could say you want to start deep enough, but we expect a significant contribution by 2030. So within the component world, there's a lot of interesting parts in. But there is as well, does luxury come back and when? We don't know, but we know what we're doing in luxury with the PVD story, and we have achieved already 15% of our revenue today in PVD, and we would never have been there without being a player of the crowd. If you're not in this industry, they don't take you serious. We had in the past before my time, some projects with Xero and Fadropsky that never really worked out because I said you don't have the smell of us.

You don't understand what we're doing. And this is the secret of Oerlikon now that in the 10 industries, we are perceived and accepted and realized as a real player of these industries. And that's the industries we are working through now. And now we have a dynamic in Materials Equipment, fantastic dynamic, which will last very long because of the underlying effect.

We have a very good dynamic in coating services, which could be even better, but we're gaining market share even in the industrial gas turbines -- not industrial gas turbines, sorry, the ICEs. We're gaining market share against market. But it's a matter of fact that 90 million cars have 15 million electric cars, and it's not the amount of 90 million combustion chambers anymore like in 2018. But there are other elements as it was told us in defense, in aero, where they do the coatings. There's a very good dynamic here. And as I mentioned already, in the component world itself, we have these different chapters to solve and to follow.

And just one more add-on in the showroom, you see our components. I think it's really worth to look at the showroom later there we have explained and also then you see how we grow there.

And by the way, we will also hear more from the components and the other segment after we take a quick break, but the break isn't yet.

Don't miss the other panels. don't miss them. They're really good.

We have a couple more questions in the back, and I see one here, too. Let's go to the back first. They've been waiting and then we'll come to you.

Yes, Sebastian Kuenne from RBC.

I have 2 questions. One on the sourcing side and one on the windfall gains that you might see or have seen this year. On sourcing, we have a very extreme situation now for the rare earths and for Tungsten. China closed down its U.S. clients in April and closed down EU clients in June. That makes Oerlikon last man standing now. How long do you think the situation will last? Can you still source in China for how long can you source in China? Why are you different to others? And if that situation continues, what does that mean for market share? And the second question on the windfalls. I mean, the way you presented your first half was a bit like, yes, everything is done operationally and out of your own power. But at the same time, we had like a 20, 30, 50-fold increase in some rare earth prices in the last year. and you pass it on to clients. So to what extent was your margin performance driven by windfalls or by one-offs basically?

I'll take the first question and Michael adds and then Marco can elaborate also on the second one. So first of all, I think what was really when we realized the shortage in materials, I think we were one of the first really -- and the team has done, in my opinion, a really great job of diversifying building up a second source in that case, somewhere else outside of China, we build it up a second source. And we ramped it up over the last 12 months. And this enables us now that we have now, as already presented, different sources, and we can even say, okay, we can provide for our American customers, for example, Yttrium without Chinese Yttrium and for our other customers with Chinese Yttrium.

So I think that is one of the things we have done very fast and good to build up the second source, which now is actually supplying us, and we are now secured with Yttrium also for our growth in the next years. A second thing, I think that is also very important to mention what I realized, our materials in the past were commodity. So we were basically -- Oerlikon was at the team leader level of the procurement organization of the bigger OEMs.

Now we are in touch with all VPs, SVPs or Board members of procurement, and we became a strategic element. And by that, we could secure long-term agreements over the next years for our materials, which is a huge benefit. So I just have been to the Farnborough Air Show, have meetings with all major aero engine OEMs on the highest level. And this brought us so much closer. And really, that's, I think we can also build on for additional business. So that is one of the things. Michael?

Maybe if I'm allowed to add, the situation will not ease out completely in the next 5 to 10 years simply because China will keep themselves in the game because it will be stupid to force everybody to build up other resources. So they play a balance. We are ready and we have shown them that we can deal with this balance better than even our big -- much bigger customers.

So there have been 20 metric tons released without any limitations where we can use to each and everybody from Chinese administration because there is a certain trust level, you have to maintain -- and they have fully understood if they don't supply, we will find a way to supply. And as we said, we have 3 elements there. That's the strategic one. We have a non-Chinese source. For the customers who want, they have a non-Chinese source. We have a Chinese source where China as well starts to cooperate despite the fact that they put things on export control. This is as well a geopolitical signal how strong or weak they are. And third, we have technology solutions. This Citim-based answer for Yttrium is a real technology solution and where our customers are testing them and then they have the opportunity either to use the one or the other.

Coming back to before Marco may add something to your windfall profit, they are not windfall profits. You don't like this word because it's a market position. If you are strong and good, sometimes you have headwinds, which we had and never was accepting that we have headwinds and sometimes you have tailwinds. And the market situation actually is in favor for us, and we use them. We use the pricing power, use the power that we are -- that we can supply and others cannot supply. Is it always easy? No, it's not. Is it always that way that we have -- I think we not even can rework all the backlogs we have out there because there is significant demand. But as a windfall, I wouldn't consider that. It's simply a position where Oerlikon has positioned themselves and takes benefit out of different sources. Marco, maybe you may give a more qualified answer to that, but...

No, I wouldn't call it more qualified. But it's a mix of the effects. I guess you listen to the H1 results. At the same time, you see that our updated margin comments on what we assume in terms of prices and what it could mean in the range to that effect. So I think, yes, it is a balance of effect.

It is the restructuring we did in the last 2 years that I highlighted, which contributes. It's the right positioning, which allows us to push prices in the right areas. And there is some elements that we benefited from, but you need to be at the right spot to benefit from that.

And we do powder in China, in Europe and the U.S. So we have invested years ago in a situation where we have now this flexibility that we can play it.

And we're going to hear more about that as well later on in our second panel. But let me now go to the lady in the middle for one last question. That's you. Can you raise your hand?

Leonie Zirn from UBS. I have 3, so I'll make them quick. So regarding the incremental revenue that you mentioned like those EUR 300 million, EUR 400 million, can you just give us a bit of an understanding in regards of the aerospace? I understand that this probably is one of the biggest chunks that will add to those EUR 300 million. You mentioned around 6% growth that you expect from MRO. Do you expect a similar growth number as well from the new engines? Or like how should we think about the split within aerospace? Is that more or less balanced? And then also, is aerospace likely going to make up half of the additional revenues or probably between like 30%, 40%? Can you just give us some broad numbers? And then I'll have some details on the ROCE.

I wouldn't go that deep, but I give you some mathematic to calculate. Airbus and Boeing are ramping up in narrow-bodies by 75 aircraft a month, which is 750, 900 a year from both.

So it's 1,800 times 2, it's 3,600 engines, which you need per year. And you see already the dynamic behind there, but that's new build. And then you have, if you go for services, you have in the jet engine industry, 3 services over lifetime over 20 years. And each service almost contributes a completely setup of our coatings. So you need to strip the blades and brains and everything and you get a new coating 3 times. There are some more parts in the second, which is the most and the biggest service effort. Something similar is in gas turbines utility.

The real driver for us is gas turbines. And I would not fix it only to aerospace. The industrial gas turbines has a comparable dynamic and the fleet is behind. And because of the installed base, and I think it was mentioned several times, 2,500 sumo systems globally out of 3,500 in this segment. So in aerospace and energy, there are 3,500 systems and 2,500 of us, 2/3 is us. This business comes to us wherever it comes, new and recurring maintenance.

And to differentiate here too much, it's a theoretical exercise, which doesn't bring us too much forward because it's the same customers. They very often do not even differentiate. You get an aircraft in, they take the engine off the wing, they put a new one on, and then it goes further on. For us, it's important that each engine which comes into service is contributing the same as a new build.

And maybe just to add on this. So aerospace business is what Michael just said, materials for both new builds and MRO, then we sell the equipment. And then we sell also the stator vanes, also that is growing and is significantly contributing to that. And on top, even the PVD business, so the coating service, we have an increasing PVD business in the aerospace, not only on the engine itself, but also on the coated cutting tools, which are taking a higher and higher share.

Can I? Last one.

Super short, if you will.

ROCE above 10%, do you include goodwill or not?

Goodwill is in the denominator, yes.

Great. Thank you very much.

I'm afraid we'll have to leave it there, but we'll have a second question period after our next panel. So -- or you catch up with REC during the break. But we will now go to a break, and please keep your eyes open when we reconvene because we're running a bit late, but I assume we're going for about a 15-minute break, right? So see you back here for a multipart panel that will feature those segments that you all want to know more about. So look forward to seeing you in a minute.

[Break]

Welcome back, everyone. And let me just say also welcome back to our online audience. We're very glad to have you with us as well as all of us -- those who have joined us here live in Zurich. And I hope everybody had a good break. Our second panel is entitled Oerlikon Solutions to serve growing -- and this is not one panel actually, but 3. We are going to go with the different business segments, Coating Services, Materials and Equipment and Components and hear their respective outlooks on performance across regions and markets. And we start out with Coating Services and ask the key question, how much further can an already leading position be expanded and where? Here to answer that question are Floriano Rovera. He's Head of Product Management in Coating Services. Then we have Sumeet Gupta with us sitting in the middle, also sits on the Management Board and serves as President for the APAC region. and Dr. Martin Bartsch is Country President, Germany and a member of Oerlikon's Managing Board. So welcome to all of you. And Florian, let's start out with you. And of course, this is Oerlikon's most established high-margin business. So share with us, if you would, a few more examples that show us how the company is positioning itself and the coating services solutions to capture the potential of the growth markets and industries that we've been talking about so far. And maybe you can also say a word about what sets Oerlikon apart from its competitors.

Thank you. Good morning, everyone, or almost noon time. I will start with stating or emphasizing that Oerlikon is today the undisputed leader for wear-resistant coatings in cutting tools and forming tools. We have helped our customers with a global network of 110 coating centers today to improve their productivity, to improve quality and ultimately to save cost for decades. So this is a very strong foundation. And even here in this legacy business, we continue to innovate and grow. We've heard a couple of examples before. The market is throwing new challenges at us, difficult-to-machine materials, Think about modern aircraft engines or aircraft in general. We have heard about humanoid robots, but also about defense, where materials by design are kind of difficult to deform or difficult to machine.

And here, we work with our R&D teams to bring new solutions almost every year to stay at the cutting edge of cutting industry, if you will. What truly sets us apart, however, I would say, is our ability to bring these advanced coating solutions into -- beyond tooling into all the different components applications across all the industries that we touch. And I'll give you a couple of examples. We have heard about technical toolbox. We've heard about diverse properties. Jane mentioned before, friction reduction. So let's start with this, diamond-like carbon coatings. As such, an impossible material, you could say, you combine the hardness of a diamond with the low friction coefficient of graphite in one material that's actually not possible. We made it possible in our coating machines.

So you can put such coatings on, let's say, transmission components, let's say, an electric car. I guess everyone has driven one these days. You probably enjoy the acceleration, the immediate torque. I can assure you that the gears do not enjoy that at all. So there we actually put carbon-based coatings on these gears to improve the load bearing capacity to actually make the trip to your next service a little bit longer. It also can reduce the noise, by the way, and even can contribute to extending the range of your electric car. You can also put such coatings on large roller bearings in wind turbines or in huge mining trucks, where this very thin layer on a roller component can actually extend the lifetime of these huge machines many fold.

Or it can also put last example, we can also put these friction reduction coatings on a critical valve component in, let's say, a subsea oil and gas production facility or the coating ensures that the valve opens or closes when it matters, prevent an oil spill.

So I was just thinking this is interesting because it takes us back to what Michael talked about when he was talking about the streamlining, essentially the versatile toolbox where you can take one tool, one process and that has a potential to cover a broad range of different applications, as I understand it.

You're absolutely right, right? I mean I can give you different examples. You can -- as our coatings are also very hard and wear systems up to elevated temperatures, you can put them in an aircraft engine, right, where they, for instance, help to prevent erosion on airfoils or turbine blades and will ensure that the engines function as designed over the lifetime and save fuel, save cost for the operators, reduce carbon dioxide footprint. And if you then put wear resistance and friction reduction together, you get a reduction in particle generation, which is very important actually in semiconductor manufacturing that we heard before, particles are the enemy of the microchip. And here, basically, our coating solutions on wafer fab equipment can help to keep the yield in modern microchip manufacturing up and keep the cost of microchips down.

So I asked you what sets you apart from competitors. And we heard from Michael, there is no one competitor who spans all these different businesses. But in coating services itself, what would you say makes Oerlikon unique? And how do you play with that global footprint, local presence in that context?

It, of course, helps with 110 coating centers and the sales teams around it, you have your eyes and ears close to the marketplace, so we can actually recognize market requirements in all those industries early and address them. And one thing we have heard it earlier that I would see as a key differentiator is our customer solution centers. Brett mentioned that. which is basically interdisciplinary teams, if you will, experts in the countries that closely work together with our sales and operations teams to -- and also combine deep coding technology knowledge with application knowledge and then work together with our customers to bring something from an idea, if you will, from a feasibility study into stable production. We increasingly also use digitalization and artificial intelligence here with this. So you could consider it, let's say, a global application brain -- so all those different neurons in the different countries. We connect that also with digital tools and AI tools so that in all the data that is generated in the countries locally together with customers. We also make sure that we find it later, we find it quickly and make this application's brain, if you will, smarter and faster every day.

Thank you very much. Let me jump over to Martin now. And Europe is the largest coating services market for Oerlikon. At the same time, this sector is highly competitive here in Europe. So is there still room for growth? And where would you see that growth particularly?

I would answer your question with yes, Melinda. Yes, first of all, we are the largest coating service market in Europe for Oerlikon globally. And 50% of that business is coming out of Germany. So -- and actually, in August, we are above the 50% ratio in Germany, but it is a very competitive market for sure. And it is -- people think it's a mature market, and I don't believe so because we still see a lot of room for further development in the region or in Europe. Europe is in a transition. We heard about it.

It's about global geopolitical situation, putting a lot of competitive pressure on Europe nowadays and also the circumstances we are working in are not so favorable with increasing energy costs, labor costs and also bureaucracy. But this is putting a lot of pressure on the industry and the companies. And it's not a bad thing because it they are moving towards higher resilience. And higher resilience is not just having the best cost base. It's also to innovate and to invest in innovation and processes as well as in products.

When I say here, we -- for us, this is a driver for growth in general in the European region.

When I think about this market, highly competitive, also highly complex. You mentioned some of the factors, geopolitics, supply chain security issues, but also industrial transformation, sustainability requirements, advanced manufacturing technologies. What do those all add up to in terms of opportunities for Oerlikon?

I can give you some examples on that one. We heard about aerospace, energy and semiconductor, and that is also -- these are areas where we are in and developing also in Europe. But Europe is much more than that because we have a very, very high portion of general engineering, general industry in the region. And some examples we heard about this EU7 induced material sales for brake disc, but you can only do this together with your customers when you know about the application. And this application know-how we bring into this discussion with the customer to develop the right material for the right purpose. That's one example. The other example is pumps, pumps.

And imagine how many pumps are in the market. It's a huge capital bound in pumps. And we're developing for the different purposes of pumps, the solutions for our customers. So we have pumps for water. We have pumps for wastewater with different needs. We have pumps for chemicals, different chemicals, aggressive chemicals where we have to have a solution. We have pumps for -- even in the food industry where the situation is completely different. And here, we are innovating together with our customers, the main pump OEMs to come up with the right solution for the right purposes.

Thanks a lot. Another great example of one tool, but with multiple applications in multiple sectors. You mentioned at the beginning, the geopolitical shifts. Is that proving to be beneficial that you have a strong local European identity?

I would say so alongside this topic, competitiveness, innovation and solution engineering we are talking about, customers looking more and more for security of supply, local manufacturing and trusted partners. And we heard a lot about trusted partners in the market, and we are one of them. And they expect from us that we enable them to have the better products, the more reliable products, increase their productivity levels and also to help them to come up with the next-generation technologies. And that is our role, how we drive our sales and our development in the market because we are the ones enabling our customers to perform.

Thank you very much, Martin. Let's go over to Sumeet now. And Asian countries and particularly India have delivered the strongest regional growth for Oerlikon in recent years. So tell us more about how the company plans to capture that momentum. And what are the 2 or 3 growth drivers for coating services that make you especially bullish on the next, say, 3 to 5 years?

Thank you, Melinda. So we heard a bit of a deal around China this morning with my colleague, Jane Chao. So I'm going to give you some insights on what's happening in rest of Asia, as you particularly mentioned, India. So as you rightfully mentioned, Melinda, Asia has been the strongest growth region for Oerlikon in the last few years across our product lines, coating services, materials, equipment, APAC has delivered a staggering growth of 9% from 2021 to '25 if we look at the constant FX.

Within APAC, I see India and Southeast Asia as a major growth regions going forward in the future, driven by 3 main markets. First is the broad-based industrial growth; second, semiconductors and advanced electronics supply chain; and third, aerospace and mobility.

Broad-based industrial growth. Can you break that down a little bit? What do you mean by that?

Sure. So India's manufacturing base is expanding rapidly, as you all know. In fact, manufacturing GDP is poised to double from $500 billion to $1 trillion in the next 5 years. And the growth is coming from many high-precision sectors, for example, renewables, for example, pharmaceuticals, capital goods, electronics and so forth. And these industries are very relevant for Oerlikon. Florian mentioned earlier, all of these industries require high-precision solution, highly engineered surfaces, higher throughputs, long lead time of the equipment -- and this is exactly where Oerlikon technologies and advanced materials and services play a crucial role. In India, we are very well represented. We have 9 coating centers. We cover the major industrial corridors from north to south, very close to all the manufacturing hubs. In fact, Marco mentioned, we opened our largest coating center globally last year, which is in Bangalore in India. That's why I'm very confident that to achieve high single-digit growth in coating services going forward.

That does indeed sound promising. And I know those numbers in India are sometimes so that you have to rub your eyes to believe them.

Let's talk about the semiconductor angle because this is also an area where India has got a lot of aspirations. And not only India.

So in fact, I see 2 countries within APAC, where I see very strong growth potential for semiconductors. Let's start with India, as you mentioned. India is currently laying the foundation for self in semicon. I don't know if you have heard Indian government has just announced 2 major semi-conducer projects totaling $17 billion in fab equipment invest. And this number is expected to multiply as we go through 2030. India's domestic semicon is poised to triple from $50 billion to $150 billion in next 5 years. So Brett mentioned about major OEMs. So all of them are very active in India. They are looking India as a strategic hub not only to capture this domestic demand but also to diversify the supply chain and make the supply chain more resilient.

And you can be rest assured that we are in contact with all these OEMs to help develop this ecosystem. Another country, Japan. geopolitensing, OEMs are looking to diversify their exposure beyond U.S. Taiwan and China -- and we all know Japan being a major industrial economy, being a mature supply chain, very resilient supply chain offers a great leverage to help support this ecosystem and growth. Like India, we have 6 centers in Japan. We are very well presented from Tochigi in the East to Kobe in the West, and that's what convinces me that we are well positioned to capture this growth.

A big ambitions, aerospace, another sector where India, in particular, is looking to move fast and forward. So tell us briefly, if you would, about that opportunity...

India's commercial air fleet is expected to triple in the next few years. However, currently, most of the component MRO and aircraft manufacturing is happening outside India and only 15% to 20% of the MRO work is currently being done in India. And that creates a huge opportunity for the MRO market to grow, which is poised to grow from $3 billion to $10 billion in the next few years. We are seeing major aerospace OEMs coming to India. Safran being an example. They've recently announced their largest MRO facility globally in Hyderabad in India, and we're working with all of these OEMs to help develop that ecosystem.

And then on the side of mobility, as you all know, automotive is -- India is one of the major automotive suppliers to the world from passenger vehicle to 2-wheelers, that demand is just surging in India. So 2031. For passenger and commercial vehicle, we see India exceeding 7 million production units by 2031. And for 2-wheelers, 25 million production units.

And we are currently the major supplier to all these automotive companies and very, very well positioned as I indicated before.

So I'll summarize my view on Asia overall, Melinda. So I remain very bullish on Asia because in Asia, growth is not driven by one isolated driver. It's by multiple drivers driven by supply chain diversification, growth in the domestic demand, availability of labor force, highly skill labor force, and the demand is just surging. With 30 locations that Oerlikon has, Oerlikon is well invested and uniquely positioned to leverage on this growth. And I must emphasize here, there is no other player is Asia which even closely matches the footprint, the technology breadth and the scale that we have. Thank you.

Thank you so much.

Again, that strong striving for autonomy in India, obviously, very good for a company with local roots of the type that Oerlikon does have. Let's give them a warm round of applause, please. And you may take your sights because seats we are going to move seamlessly now to components of the business that several of our guests were asking about earlier on. And it is a business that pairs Oerlikon's specialized metallurgy, its cutting-edge production engineering and also its advanced materials and service technologies to create precision components for demanding environments.

And we're going to talk now about products that range from turbine components. This wasn't one of those, though, right? Or was it? I forget. You're going to tell us again about it. And as also transmission module systems, thermoelectric insulation and high fashion accessories, which is why a bag has private place here in this panel. And we have put together a panel with wide-ranging expertise. David Franz is President, Europe. Andrea Peru is CEO, HRS Flow; and Katharina Rick is President of Oerlikon Luxury.

So David, the Components business is a diverse one. And in the past, automotive has played a key role. The disruption in the auto industry is making headlines, especially here in Europe and in Germany. How is Oerlikon managing this transition?

Thank you for your question. So first, Dirk, I like when you say automotive is an exciting business, a challenging one, but it remains a very exciting one. So I will not state the obvious. The volume are under pressure. The electrification is changing the engineering content of our vehicles. And last but not least, we know that the manufacturing chain is moving to low-cost location. But we said already before, the this is nothing new for us.

We have already started more than a decade ago to diversify and to reduce our exposure to automotive. Basically 2 elements to navigate in this transition. The first one is to adapt the footprint to the shifts of the demand. Marco, you mentioned, we have reduced our footprint by 17 locations.

The second one, what I find internally very exciting is that we have redeployed our engineering capabilities towards new applications.

Give us some examples, make that concrete for us, if you would.

I will take one we have discussed already a bit about -- let's speak about -- again about electrical vehicles. Thermal insulation systems is a great example. Key for us is that we have redeployed our engineering capabilities from friction system being in the traditional automotive to tackle and to solve one of the biggest challenge that electrical cars have. We mentioned that already, battery safety. So just imagine what it is.

You have a cell in the battery, which overheats. We run the risk to have a chain reaction that can lead ultimately to the fire of the battery. Our solution help to contain the heat, the gas and the particle in order to prevent or to delay this propagation. So this is what I see for us in terms of transformation. We reallocate our engineering capabilities in growing fields.

So another way you're doing that, as I understand it, it's not only electric vehicles. It's as we move away from the internal combustion engine, essentially, you are becoming increasingly powertrain agnostic as you put it. Can you tell us what that means specifically in practice?

Thank you, Melinda. I will ask nobody what means powertrain agnostic. So I will translate that. Powertrain agnostic is an elaborate word to say something very simple. If you charge your car with electricity or if you feel it with petrol, the application stays. A very simple example. It's also your business headlights.

If you have electrical cars or a combustion engine, we have more and more complex systems. And Oerlikon, with our recording solutions and also the capabilities from HRS Flow, we are fully integrated into the supply chain of these parts. And the same logic applies also to other parts. You think about the body of the chassis of the parts, electrical or combustion application space.

Tell us a little bit about the diversification strategy beyond the automotive sector itself. What are you doing with that versatile toolbox to provide solutions -- component solutions beyond automotive?

So I have close to me our baby. So components for Oerlikon is much, much more than automotive, and we will witness that across the next minutes. I take an example I like very much, Eldim. You said already, we manufacture and we assemble highly complex parts that are being mounted in engine. And at the end, they are under the wings of 777 or the new generation coming of the 777X.

This part, you have been a bit shy in saying that, but this is basically -- you imagine you have 10 of these parts assembled in a 1-meter something ring and you have 4 to 6 of these elements inside. This is the complexity we manage. And actually, we are ramping up this project with one of the leading aero engine manufacturer in America. And with a certain pride, I have to say that the contract we have been awarded with is one of the biggest Oerlikon ever had. Just short, the secret recipe behind why we get the contract is that the customer has recognized that Oerlikon is the only one to have the full box, the full toolbox.

And this is why we get there. Another point, and I keep it short, moving into components bring us higher in the value chain, but also closer to our customer challenges for surface solution.

We get firsthand experience, for example, if we look for the machining of a very complex alloy in aerospace by manufacture parts, we can learn it and translate that into solution for our customers. So this is a relatively simple circle. We manufacture, we learn and we provide better solution for our customers. This is the logic of our transformation, Melinda.

A great example of a virtuous feedback loop within that customer intimacy that we've been talking about. Let me go over to Andrea now. And as Oerlikon moves to execute this pure-play strategy, HRS Flow is clearly one of the highly profitable and advanced tech anchors in the Components segment. So traditionally, also HRS Flow has been automotive focused. Is that changing now in view of the transition we're talking about? And what does it look like?

Thank you, Melinda. Thank you for the question. And yes, you're right. The HRS Flow core business has been since the company foundation automotive. But lately, the company has been diversifying into a wider spectrum of vehicle segments, embracing not only passenger cars, but also commercial and heavy-duty vehicles like trucks, agriculture or motorbikes. So today, I would actually describe the anchor of our main revenues and margin stream as mobility rather than just automotive.

And in my role, together with my team, of course, I'm constantly monitoring the trends and the latest developments of this industry, an industry which is evolving very rapidly in different directions and with different paces. This is because of the different regulatory frameworks all over the world and also because of different local consumers' behaviors. But there is a common denominator across all the latitudes, and it is the strong need for driving further efficiencies in production, in the supply chain and the plastic supply chain where we are in is no exception.

So coming to your questions, yes, there's strong growth potential for HRSflow even if we're a market leader already because we intend to exactly leverage this strong market need efficiency. Let me give you 2 elements. So the first even in automotive, so passenger cars, like David was mentioning, where the traditional logic value over volume is now entering a critical phase. We are still in a good position to deliver additional value for our customers, enabling them significant productivity gain or cost saving, cost optimizations. And I'm basically referring to those technical shortcuts that our hot runner solutions are providing, enabling customers energy saving, materials, scrap avoidance, lightweight in general or even the elimination of some injection molding post-processing activities, like painting, for example, a very expensive process if you consider that 60% to 70% of the cost, the final cost of a plastic part is given by that.

So now imagine to have the possibility of getting a plastic part ready to be used in a production line by carmakers, which is paint-free, no longer in need of painting. And later, actually, if you join our booth, our automotive booth, I can tell you more, and I can guide you through this disruptive technology, which has clearly an impact on this.

The second point, it's, of course, keeping this over time because being a true global partner with strong aftersales presence across all the regions, we can maintain our customers' productivity seamlessly like no other competitor can achieve. So in short, basically, it's about driving certain efficiency into our customer processes and then making sure they can maintain it over time.

So what I'm hearing from you is that for an industry that is hard pressed at the moment to reduce costs, your cost value proposition is of particular interest in that automotive sector. Now talk to us very briefly, if you would, about applications beyond automotive because I know that HRSflow is also seeing some promising opportunities for you.

This is a second diversification that we put in place over time because there's a lot of know-how and expertise that we wanted to move from automotive and beyond automotive into segments that on top of my mind are basically rigid food packaging, medical and pharma packaging, beauty and personal care. Even robots, we mentioned today because sooner or later, injected plastic will replace metals and other materials. And we are already in that journey with excellent results so far. And let me also conclude by saying that this is a great example, a great outcome of the pure-play strategy because we are now applying into our products, unlocking full potential from the nonautomotive product line, the coatings offered by Balzers and the surface treatment offered by Balzers with an improvement of the performance, specifically cycle time or durability of our system, which has no equal.

Thank you so much. Let's go over to Katharina now. And Katharina, like the automotive sector, and this was mentioned by Michael at the outset, the luxury sector has seen some clouds of late. However, in luxury, there are definitely also silver linings, both metaphorically and literally. So tell us a little bit, if you would, about how you see the fundamentals evolving in luxury for Oerlikon and how the company is positioned to capture an upswing, a turnaround.

Thank you, Melinda. Certainly, and that's no secret, the luxury industry has undergone the deepest crisis in decades in the last few years. You can see that by the stock prices of the large maisons. However, what is happening at the same time is really helping our strategy to move more from the traditional electroplating to PVD coatings in this sector. So consumers increasingly demand much higher quality, durability and also sustainability of their articles. So you also indicatively see that in the rise of the secondhand market because traditionally manufactured goods have gained more appreciation. So a secondhand luxury bag is actually more expensive than a new one. And that's our main outlet of product.

So we're -- instead of the traditional brass and electroplating coating for the metal components in such a handbag, for instance, and you'll see more in the booth later. You have with PVD, a huge advantage. You have a much more durable color. You have a harder surface and also because of the stainless steel inside, the product is never oxidized. So you have a lot of the traditional quality problems you would have with leather, which is a very aggressive material, leather eats the parts actually, you will not have those problems anymore, and that's one of the key factors for our customers. The second element is that we have also invested in becoming a very integrated player. So Oerlikon through the diversification strategy entered the luxury segment in '21, and we've strengthened our position to become a fully integrated provider of metallic components in '23 with the acquisition of Riri. So now we are the only player that is basically producing all metal components from zippers buttons to what we call fine parts, which is all the other attachments you would need in such a metal accessory.

And on top of that, we also invested into producing the parts. So we are integrated in terms of the portfolio we offer to the customers, but also in terms of our vertical integration depth.

Let me ask you about a hint that we got from Michael earlier. I always thought Orange was the new black, but from what I understand, you've got a new black. And can you link that up with what you're doing in using new technologies and advanced innovation in the luxury sector?

Absolutely. Same as my colleague here from HRS, we're benefiting a lot from being integrated into the R&D environment of Oerlikon, and Brett has already mentioned, there's revolutionary and evolutionary products. This is probably more of a revolutionary one. Unfortunately, not yet applied because not on the market yet. This was coated with a laser in the logo. If we had done this with our new black, which is basically much deeper and profound black than the lacquering, it probably wouldn't come off after a couple of years. So that's definitely something that is giving us an edge to replace traditional production methods. The other part where we have to innovate, we have to stay competitive with our 10 production sites in Europe is also to invest into automation and robotization, where also the Oerlikon environment and ecosystem give us a leading edge.

So I give you one example, we're now introducing instead of a manual visual control, which traditionally is the case in the luxury business, an automated system that works with cameras to sort the good from the bad parts in lightning speed. So that's definitely a big -- that's a big step forward in terms of productivity and also maintaining that strong position in Europe. We're definitely one of the go-to partners for the luxury business. So whenever they are testing something new or they have a new idea, they usually knock on our door.

Thank you so much. And I was fascinated to hear that hint that this new black is not only applicable in luxury, but also in sectors like military, which is not luxury, I guess, although...

Three, yes, if there's on 3, you're coming.

True. Exactly. Thank you so much to all of you for this very, very interesting look at promising opportunities for components. And we move on now in the final segment of this panel to raw materials and Equipment, a segment that clearly has global reach and is also a segment whose time has come at this moment of concern about raw materials and supply chain reliability, which is why we've invited 3 decision-makers with regional and operational responsibility to share their perspectives on key sources of demand and growth in the business.

It's a pleasure to welcome Wolfgang Schmitz. He is President of Americas, and he's also a member of Oerlikon's Management Board. Andrea Lai is President of Global Operations. And Jane, you know she was with us earlier telling us about those robotic hands and joints, and she is now back in her capacity as Country President, China. So welcome back to you. And I think we'll start this time around with Andrea. And these days, when one hears mention of material supply chain challenges are one of the first things that comes to mind, and they've been mentioned, of course, several times here already today. Your materials and powders do rely to some degree on rare earth. So tell us how and to what extent supply chain disruption is impacting your operations and how you're responding, what you're doing to boost resilience or antifragility, as Brett called it.

Thank you. Thank you, Melinda. So it's the hot topic of the day for me, it's the hot topic of the last couple of years, to be honest. And that's why I'm sitting between U.S. and China here, right? So yes, we have been impacted. We have been impacted going back at the beginning of last year. You all know all the export restrictions that came out of China. And I must admit that us as a team, we reacted really from the first, second. How did we react? We react in multiple ways, right? There was a question this morning about prices. We face increase of prices of [ Erbium ] from $10 to $1000 per kg within 3 weeks, right? So us as Oerlikon in terms of competitive advantage, we started really, first of all, with our manufacturing footprint, being present in the 3 different regions. And this was definitely one thing that for us has been vital and is vital today in terms of localization. Secondly, the most important aspect is the supply chain diversification, okay? So we really started from the first second to build sources outside of China to keep the sources in China because as of today, we can export material out of China because we have been lobbying with the U.S., with the authorities in the U.S. and also with the Chinese authorities.

So we had credibility in both countries because our target in terms of resilience is to supply everyone from everywhere. So if someone wants to have China-free or non-China materials can get it. If someone wants to have like the Chinese customer, Chinese material, they can get it. Last but not least, definitely is what Brett mentioned this morning and it has been also thanks to Scoperta and thanks to his team develop rare earth materials, rare earth-free materials and as well really offer this to our customers.

I'm very glad you brought up that last point because I was really struck by the idea that you use that customer intimacy to help customers identify needs, new needs maybe before they've even realized those needs themselves. Can you share a little bit more?

That's actually what happened. Dirk mentioned this morning, we were a commodity. Now we are a strategic partner, right? So gas turbines sold out by 2035, huge backlog. We need to be resilient. We are resilient now, right? Out of this crisis, we came up really strong. So -- and why Oerlikon now is the king of the hill. And we need to stay king of the hill because the growth that is in front of us is really huge, and that's a must. And by the way, our horn is well tooted. So we want to stay king of the hill.

Thank you very much. Let me go over to Wolfgang now. And your installed base in the Americas is one of the largest globally. Clearly, that generates strong revenue in the short term. What about the longer term, especially in a market that, in some ways, is quite volatile at present?

Yes. Thank you, Melinda. Let me introduce the answer with a summary of what we heard today. We have not only in Americas, the strongest installed base, we are basically -- our equipment at our customers at different tiers is the largest in the industry, number one. Number two, we are in the most critical industry high reliability required in aero, in medical for obvious reason, but also energy, the gas turbines, but also semiconductor. And those industry have a very high requirement in terms of the qualification. Qualification processes take 2, 3 years can do -- can cost multimillion to run through those processes. And number three, we heard that also when we sell an equipment and that's the installed base, that is the starting point of a customer relationship.

I'd like to take the espresso example. If you have an espresso machine, you buy the capsules, and that's similar with us. Once the base is installed, we have aftersales services, we have upgrades to those equipments. We have spare parts, we have consumables and obviously, the coffee is the material that we sell into those markets. Now this explains why we are growing very strongly now, and you can see the order book in our first half year's numbers. They come a lot from the equipment piece. Why do we believe we can grow long term? We are driving a change in the thermal spray market with our new equipment. I also invite you to go back into the next room. I cannot detail that here too much. But historically, if someone wanted to have in those regulated industries wanted to have a thermal spray equipment, it was customized. They wanted to have something very specific engineering, variation and so on.

So we have built a toolbox in equipment, a platform architecture with some core elements that allows us to specific requirements of the customer still answer with a standard solution. It's obvious that helps us reducing variation in those equipments that helps us with expansion of margin. Even at a location in Switzerland, we can do low-cost sourcing of some of those modules. For me, Americas is most important is I can now localize some of the equipment in the U.S. because we have a very strong order book, and our plan is next year to finalize 30% of the equipment we sell in the U.S. in the U.S. tariffs, everything else we know will have a less impact on us, but that helps us with resilience.

I'd like to come back to that last point in a moment. But first, I'd like to ask about what you said that this is not a one-off transaction business. These are essentially, I think it was referred to earlier, a recurring business. What is it exactly that creates that stickiness? We know what it is in Nespresso's case. You'd have to buy those capsules. But what is it in your case?

Yes, the stickiness that we really have, it comes from the criticality of the components that our main partners produce. Oerlikon technology is embedded in the production system, not only at the OEM, but also at their tiers, the guns we use, the controllers we use. They have the qualification process, which is done with our technology. And finally, on the material side, this is all qualified and therefore, Oerlikon becomes part of the reliability concept of those players, and they cannot change. They will not do pirates because they're going to lose the reliability concept. And therefore, it's really sticking more even than with coffee, I would say.

So through the certification process, you essentially become an indispensable part of their supply chain. Just very briefly, beyond this bundled model, what is it that gives you confidence that materials and equipment will show significant growth also going forward in the Americas?

In our segment, the materials piece is even a larger component than the equipment, which is the start of the customer relationship. And I'm even more bullish than so much about the Asian market about this materials market. We serve the markets that we heard now the whole day that they have very strong fundamental drivers, aero, IGT and so on. And those drivers are not -- we have some other industries in America that are consumer depending. Interest rates go up and then people buy less cars. Those are consistent long-term drivers. Secondly, we're expanding share at the moment, partially because we are able to better perform than our competitors on the materials side and have that supply chain resilience that customers want, but also because of the portfolio -- we heard about 200 new offerings and materials that we bring to the market. We have the strongest materials portfolio from all competitors. And the third element is that customer intimacy. We -- you have seen those coating centers.

We talked about oil and gas. We have in Houston, our oil and gas center does qualifications for the customer. They come to us with their powder, we qualify for them. And then you have an intimacy that really gains us market share. So if you have the coffee machine base, our installed equipment, it's the largest base. I'm sure we're growing at the moment also this market share of the base. We have a very strong demand on those industries we have. We are having a very strong materials position. So over time, the material -- the growth rate in that segment is compounding. It's not linear. It will compound because of the aftersales, the stickiness in the whole system.

Thank you very much. So now I'll jump over to Jane and come back to the growth markets in China this time through the lens of materials and equipment. And Wolfgang just took us through some of the localization efforts in Americas and the importance there of customer intimacy. How much does development of a local footprint in China figure into your strategy for tapping the strong growth you were talking about?

Thanks, Melinda. I think before I talk about localization, I think there is something important to understand about China. The Chinese government, every 5 years, they publish a 5-year business plan. The last one was recently published a 16th 5 years business plan. In this plan, the government lay out hundreds of emerging applications, also several strategic industries. And beneath that, we see actually a couple of those we have already talked about this morning. There are semiconductor -- there are energy, not only industrial gas turbines, also hydrogen, there are also commercial aviations. So these are considered strategic industries because it will bear certain national interest behind that. Take industrial turbines, for example, there's a lot of aftersales market. In the past, I would say the global players take a majority role. But recently, in the last 4 to 5 years, we see an emerging of local aftersales players emerging up.

And these offer also have some government backing, some domestic -- can be public company, private company. And in the meetings we just met with them in the last few months, all of them not only ask the cost side of the question. They are more focused on is Oerlikon able to produce the powders and provide a secure supply chain. Are you flexible enough to cope if the policy changes because it will change. Let's be also realistic about that. And luckily, Oerlikon made also a strategic decision more than 10 years ago, we partnered with a local company and set our footprint in China in 2014. And with this, we actually also defended our market in silicon carbide in China. When we talk -- we heard a lot about gas turbines and engines. also, but there are also thermal spray application in general industry like papers and steels. And the local footprint give us not only cost effectiveness but also give the confidence to our customers that we are close to them. We can manage with local supplies with shorter lead time, and this gives us the resilience of the supply chain.

Let me ask you about how you make that localization decision because I'm guessing, but I would suppose that you can't simply localize every single aspect. And you did mention that those 5-year plans tend to shift focus from time to time. So what's the balance there? How do you -- what are the factors that you weigh in deciding how and when to localize?

Absolutely. I mean, you heard we produce more than 1,000 material. We cannot produce every site. So when it comes to making a decision whether we localize or not, we look at the local market, the market potential, especially economics. So in certain cases, where, for example, China, we have strong demand in ceramics to support the energy sector. That's why we're expanding the capacities and capability locally to support and tap into not only the global OEM, but also the local OEMs. However, in certain areas that we think it is still better to leverage our global footprint where we have the scales and competence and then still could provide the best actually security and also the cost side of things.

Thank you very much. You've all 3 given us a great overview of how Oerlikon defines the opportunities in a rapidly changing business and essentially profits from the challenges at this moment in time. So many thanks to all of you, and you may take your seats because we are -- we are now coming to the closing session of this year's Capital Markets day. We spent the morning on strategy, on technology, on markets, growth industries and numbers. We want to turn now to the foundation of every strong company that it ultimately rests on, namely its people and its long-term commitments. And to that end, it's a great pleasure to welcome Anna Ryzhova. She is Chief Human Rights Officer and Chief Sustainability Officer at Oerlikon. Did I say human rights? -- human resources. It's been a long morning. She's now in her 10th year at Oerlikon, and the CSO position was just recently added to your responsibilities, which tells us something about how closely Oerlikon sees the link between human resources and long-term sustainability. So take it from here. Anna, the floor is yours.

Thank you very much, Melinda. Good afternoon on my side. And as Melinda said, I would like to talk about people that drive the beautiful strategy and the beautiful projects we have been talking about first, and then I will move to the sustainability. So let's look at the big picture first. Let's look at the big picture first. Oerlikon has a motivated and diverse team. We have more than 100 nationalities diversified across regions, in line with our revenue distribution. That allows us to be local, as my colleagues explained, and at the same time, keep the global strategy together. Our sales force is extremely motivated and engaged to drive growth journey. Our engagement of the sales force is consistently above the market benchmark over quarters when we measure it. We have about 10,000 people in Oerlikon and 60% of them are aged between 30 and 50, which is a balanced age profile, which underpins the continuity of today, but also renewal for the future. We are able to retain those great people. Our voluntary turnover has halved since 2022.

And again, in every country, we are below the benchmarks, which means we are doing better than our competitors. That's important. Our average tenure is a little bit less than 10 years, which speaks for the great experience being retained in the company and at the same time, enough space for the new things, for the new developments. And you see that 75% of our jobs are filled internally. That means making a career inside is much more possible. If you work hard, if you develop yourself, you have 3 chances out of 4 to get promoted into management of high-tech roles. So altogether, that's a balanced, motivated and diverse team to drive our growth journey, and we are ready for that. Not only we want to have the team in place, this team also needs to have the skills, the skills of today and the skills of the future.

And I would like to bring 3 examples to your attention. The first one is digitalization and AI. Marco talked about amazing productivity gains we achieved, for example, in engineering and HRS flow. Marco was talking about hours, I take time. 2x the productivity was improved. How did we get there? On the skill side, only 3 elements. The first one is intrinsic motivation. The team itself has developed a vision. They said we want to be 100% digital. No change management, no convincing, no pressure. They are in the driver's seat. The second story, the competence of transforming processes, automating and improvement was built inside that engineering tech team. So they themselves transform each other. And the last but not least, Oerlikon investment in Digital Hub paid back because the digital hub experts have been able to develop that mathematical algorithm, which stood in the middle of the optimization and the processes. So that's how we deal with digitalization and AI, and we do it across the company.

The second important area is research and development, breadth, teams and around. So there, we totally talk about collaboration and endless competition and exchange with universities and peers because it is impossible to innovate and develop in the black box. Here, I'm proud to say that we are getting every year some nice achievements and one of them is a Houska Prize, which was achieved this year for the high-temperature coatings, and we are very proud of the team. Last but not least, is the talent, the leadership to lead the company. This year, we have started our fourth generation of Horizons program. It is a leadership program, which has run all of regions to develop the future generation of leaders, somebody who will step in our shoes some years later. It's not only about the right education and the right exchange. This is also their challengers. They talk to us, they challenge us, they propose projects. They talk about some ideas and we listen to them. So it's an amazing exchange of experience and, I would say, ideas between generations, and we value that a lot.

So altogether, digital innovation, award-winning research and future-ready talent is the skills, and we have the right skills to shape the future. My last step on the people side is about incentives because having a team is great, having the team which is skilled and developed itself is amazing, but how does it connect to the strategy? And you see the small wheels on the picture. You've heard from Michael, Dirk and Marco about the goals, 2030, marginality, market achievement. What we've done on our side, we have also optimized the organization first. Since we have divested Barmag, we have reduced -- we have delayered a lot of roles. Our top management count have reduced from 78 to 37.5 that made us leaner, that made us faster and that also achieved speed together with the costs. Another dimension, we wanted our incentives to be meaningful or to make a sense for the people. That's why we always watch at the pay mix. So what's the share of variable for every employee and the higher the level is the higher the share of variable.

And the last but not least, we have been reinforcing the performance culture. That means we have thought about the strategy and connected the goals of the long-term incentive and the short-term incentive exactly to the same. to the same parameters. So what you will see in 2027 is the higher weight of return on capital. You will see the net sales growth coming in, in the long-term incentive. And also in the short-term incentive, you will see higher weight of all the financials, which my colleagues have been talking about, cash flow growth and profit. Altogether from strategy through the right organization, through incentives to shareholder value increase. That's how we see and connect the wheels together. That concludes my part on the people side, and I would like to move and say a few words about sustainability. When I took over the topic, I asked the question to my predecessor, how sustainable is Oerlikon? And when you lean back and give yourself a pause and you think about it, the answer is always, we are absolutely sustainable because everything that we do contributes to the efficiency of fuel to the reduction of efforts to less electricity consumption or to the lower use of metal.

These are the 6 pictures. I'll talk about 4 of these and ready to get other questions later on. The first one is air turbine. Michael mentioned that it was in the video, 5% efficiency increase of efficiency. It comes through our coatings, adorable, bond and top coats are applied in different stages of the turbine engine. What does it mean? If you take the forecast of 2026 flights, we will save about 12 million metric tons this year because of our coatings. This is 30% of the Swiss CO2 emissions. That's a number. Another example would be from tools. Our coatings give us from 20 to 170x lifetime extension depending on the coating. And again, if you take all the tools coated by Oerlikon worldwide, you multiply it with the savings, it's 60 million tons or 40% of the Swiss emissions, which we saved just because of our main activities and our main products. My favorite fascinating example comes from the new or relatively new markets, additive. If you think about the space, a lot of fuel consumption, energy consumption, we now produce space antennas. And because of additive, we managed to move from 350 components to only 5. And we managed to move from the weight of 170 kilo to only 40.

And this is a substantial improvement and substantial reduction. And imagine how much less fuel rocket will need to fly, and this is Oerlikon. And last but not least, in luxury, because of replacement of electroplating with PVD, we are 4x more CO2 efficient because there is no chemical waste, there is no water. We only use a little bit of gases, and we use much less of metal. To conclude of this, Oerlikon has a high track record of improving sustainability for our customers just because of what we do. I would like to highlight 3 of our sustainability commitments, which you see in our annual report. So first, Scope 1 and 2 reduction. We are targeting a 42% decrease compared to our base year, and we have proven in 2025, we have already reduced by 17% -- we also focus on waste. We increased treatment and recovery of the liquid waste. We improve waste aggregation and recycling, and we also try to reduce the waste generation in all our operations. The target is a 50% reduction at 2030 compared to our baseline. And of course, people, total accident frequency rate. Our motto is zero harm. We'd like people to come healthy and leave healthy and be happy afterwards. With this, we track the total accident frequency rate and our target in 2030 is below 0.5. We do it by investing in processes and training a lot of awareness campaign, but also in walking the talk ourselves. We measure ourselves, we are tracked by a certain number of ratings.

And I would like to highlight, of course, the Morgan Stanley Capital International, where we are AAA. We are medium risk at Sustainalytics. With EcoVadis, we are 70%, and we intend to increase this year because of our commitment to SBTi and because we are considering to commit in addition to UN Global Compact. And with CDP, we have improved from a C to B in 2025 on climate and water security. With this, I want to say it's not an easy journey. These are hard targets, but I'm very sure we will achieve it through a hard work. Thank you very much.

Thank you, Anna. Thanks very much. And we are almost ready to take more questions from you, dear audience. But first, let's go to Michael for some closing thoughts, and then we'll open the floor once again for your questions. Michael, over to you.

So, thanks to all presenters, and thanks to your time to the audience to be with us today to share a great story, which is not a story, which is reality. That's why it's so easy to tell it about. You don't have to think about something and then to make it artificial. It's a matter of fact that this is what we talk about is happening. And if you take this -- if you summarize 10 industries, global footprint, being local, having the people seen, which are driving the show. It's not 1 person, it's not 2 person. As an old friend of mine Klaus Kleinfeld once mentioned, nobody is perfect, but a team can be. I think this team with this all this diversity with its setup, it's a great team, and it's a pleasure for me to be their chair and to give them a little bit sometimes direction and then they push me. Sometimes that's a good in and out. And if you see all that, what you have seen and you represent investing forece -- investment forces, I can only encourage you to engage you more with us and become really a friend of Oerlikon, become part of the Oerlikon family. And if you're already part of the Oerlikon family, go deeper into that. We will not regret. Thank you so much.

So let's now open once more for questions. I'd like to ask the EC team to please join me one more time up here in front. And we will now take your questions. Please raise your hand if you have a question and tell us your name and your media outlet. Are you thinking about lunch? Lunch will be served, I promise. But first, we want to hear your questions.

We have answered everything.

Maybe then add-on question on India. You opened a major service coating center there. A little bit to understand how do you do it? Do you have already demand from clients in that region? Or is it opening and then going and searching for...

So as Sumit already said, in India, we already have a huge footprint. So we are already the largest provider of PVD. And quite often, what it works, we have in Oerlikon established a concept, which is called strategic accounts. So whenever we have something in one region, we also transfer that. And we see currently in India that more and more is moving towards India. So actually, I have been together with Sumit at Hyderabad, and we visited one of the big engine OEMs. And as Sumit said, they are building their biggest MRO facility. But not only that, we have also been to a customer for electric scooters. Also, they apply our coatings in their electric scooter.

And also here in India, we also have the big advantage that automotive is still growing. India is still a booming automotive industry. So here actually, we see semiconductors moving to India. We see aerospace is moving to India. Auto is still growing nicely and then the channel industries are growing as well. So I would say I can only share the confidence my colleague, Sumit has brought over or transmitted. I'm as confident as he is.

But maybe on the way how we do it, it's not -- decades ago, I'm not saying years ago, maybe you went to service center to be close with the customer. This is not the major item anymore. The major item is -- and by the way, on Monday, we had an EC meeting, we just passed a service center in China on request of Jane. If the size, customer volume, somehow guaranteed volume already plus a certain secured demand volume is big enough for a service center, which fits strategically in this real versus ideal landscape. There is an ideal landscape will even change year-over-year because ideal will change. And there's a real landscape. And our total game is to get closest to ideal without making nonsense. I'm not doing something that only looks nice, but it has no payback.

But wherever we can do, we close strategic windows. We put something where it makes sense. We had 2 or 3 sites very small, somewhere where we thought it will develop proper, then we shut them down. You always be in line with the rental agreements of the lease or if it's your own land to have then an idea what you make with this land. So it's not that someone, "Oh, I have dreamed pretty nice and my dream has shown me I need a service center in Kamchatka. That's not the case. There's a real process behind and works very, very well, and there's very -- it's highly disciplined. And it's starministic. There's a certain amount of money and you have 5 requests and only money for 3, the 3 best will get it.

And maybe if I can add on your first question, what is the common denominator? It's really material science. And again, I think I pulled this because I think it explains this very well. So we get the outer bands. Then it's a very tough material, so a special milling process. Then -- you cut in with a water jet, you cut in the whole very, very unique process. You need to understand the materials, then you get the wanes, you assemble them. You first do a small ball pin soldering, then you braze it. So we could reduce, for example, the brake cycles from 3 to 1, which reduces cycle time and gets uptime. And all this is about -- so it's all about material science. And there, we have a lot of experts getting all this together.

They just decided to take the powder home with him.

Let's break this powder. That's great.

I see you want to ask one more. Can you keep it super short because we do have a couple of more...

Yes ok. Just a short one. The industrialization in Europe, how of a problem is it? I see that you are now compensating with some of the new markets. But is there any need to, let's say, restructure the footprint of the service center in Europe you have? Or do we have to expect any major restructuring activity in the coming years due to this European deindustrialization topic?

I would say for the future, we do not expect, but we had some. And you know that especially in France and Germany, where we did some stuff that costs money. But when we have seen there is a need, we did it without how it looks like, but it's done. If you talk in general about Europe, I think we are very well positioned. If the European Union doesn't stop the over bureaucracy, we have an issue. not we at Oerlikon because for that, we are global enough, but we, as Europe have an issue. And then we here in Switzerland have an issue because it will not work without Europe. But this is a total different political scheme. If we don't stop this over bureaucracy, if we don't stop this over rescuing the world, if we don't stop all these legacies where we have to deal with, then business goes where it's easier. And then we will not give up positions, but we will grow more in other areas as we do somehow already. So money is shy and money goes there where it finds the best environment.

Thank you. I had 2 more over here.

Andreas von Arx from ZKB. Maybe since we come towards the end, time to tackle big questions here, one for the Chairman. I mean, you said you don't look back, but you do have an ambitious above 10% return on capital employed target, which since you have arrived at Oerlikon, you have achieved in one single year of more than a decade. So I guess what most investors think about is why now will it work when it hasn't in the years before? What is different today? And why is that 2030 target achievable?

I try to make it in a short answer because as you rightwise mentioned, until 2018, the company developed very, very well. Then there was a COVID time. There was a lot of cleanup. There was a conglomerate. There was a diversification and a lot of things took money and took effort, and that's done, and that's the difference. Simply the company of today is not the company which was. That's why you could look back and you can look back, but then you judge on something which is not existing anymore because it was a company with 4 different businesses, not regionalized, struggling between Metco and Balzers, which been 2 silos, which you have to clean up, and we clean it up. And we made all the effort necessary. We brought the right people in. And that's why I'm looking forward, very, very encouraged and positive that with all this homework done, the outlook is a strong one. And I think we will prove it. And the ones who join us will see that this approval is nice for them and the ones who are not joining us, we'll see that I missed an opportunity.

Thank you. Here, I have one more.

Thank you again, I'll try and make it very brief. And just a follow-up on the semiconductor, you mentioned around EUR 1 billion market potential. Where do you see your market penetration today? And where would you like to see it 5 years out? Or if that's easier to say, what is the revenue share today and where would you like it to see in 5 years? And maybe a similar question around energy because you have like 5% revenue share today. Where should this ideally go with all this IGT growth? Should this go to 10%?

I start with the semiconductor market, and you can take the energy. So in semiconductor, so basically, today, our biggest technologies are PVD coating and also additive, but we are extending also in thermal spray. So we have signed contracts also in Metco coating service, so in thermal spray, extending into that area, and this enables us a much bigger market. So the thermal spray market within the semiconductor equipment manufacturing is the biggest one, and that is the market we have just entered. And we're extending also the others additive and coating, they are growing nicely. But as I said, thermal spray is a completely new entry.

Ray talk a follow-up to this.

I mean broad revenue estimates for semicon?

So I mean, as we always say, I mean, for us, a really good business is or Michael...

We are disclosing not numbers in the future in that deepness, I would say or as Marco to give us.

Do you want to say something regarding that or.

No, I mean we don't guide on revenue on that level, but it is already a significant part of our business. You see the share of general industries and the growth will in that part of the business significantly come from semicon.

Then on energy, if you say 5%, I think you think about the share of 5% of our revenue into gas turbines. So how...

5% of total revenue...

Yes. And so that will go up if they will achieve 10%, depends a little bit how the other business will do. But you simply can calculate what's going on, and we will grow significantly in materials and a huge part of that comes out of the industrial gas turbines. So I would say if you take the number above 5% and below 10%, you will be right.

And then maybe just maybe a bit of quoting question. So can you give us some thought about the biggest risks that you would see to your 2030 mission and why you think those risks are controllable or will not stop you at least to reach your targets in terms of end markets or...

As the world is already very, how to say, shaky. I would say this is included in our strategy if there is not a big war or something because this is what we cannot calculate. If there would be -- as some people are predicted, I wouldn't buy that, but if there would be a significant conflict between NATO and Russia, that could have an impact. But that would stimulate and maybe that sounds cynic then, but that would stimulate other areas where we are in as well. So that would shift within the industries, but it would most potentially not disappear. But that would be a potential I don't like to harvest.

And I think if I may add, what we were showing today is that how the portfolio of Oerlikon is set up today in terms of industry exposure, in terms of business model balance and also in terms of the levers in the bridge to achieve higher profitability on the very operational level, on the overhead level, it's a well-diversified and balanced mix of measures and businesses. So I think this is key for resilience as we highlighted.

And here, I would also like to add because I also had it in my speech on the resilience, not only the 10 industries, but also when I look back the 18 months, what has happened in the last 18 months is tariffs, it's wars, it's material shortages, and we were always capable of dealing with that. And I think that gives me confidence in the team that there are some unexpected things in the future. This will happen for sure, but it's how we deal with this risk and how fast we react on it.

Thank you. We could take one more short one. Anybody? Then I will just say thank you very much to everyone in the audience for your attention and for your questions. Thank you very much to all of our speakers and to everybody in the organizational team who helped put this event together. And dear audience, I hope that you will take with you some of the energy and enthusiasm that we've heard here today in this very informative and also very thought-provoking event from a company that has a long history and a new identity that has global reach and local roots. I think certainly, you've shared a lot of your enthusiasm with us, and I hope everybody will take that with them as they go off into this sunny day after we serve you lunch and you visit our booth. So please don't miss that.

A big applause to Melinda because you contributed a lot for this top performance of the people here. and a big applause to the team around here to all these people engaged that this could work today that smooth and soft as it worked. So thanks a lot for...

Ladies and gentlemen, welcome to the Oerlikon Half Year Results Conference Call and Live Webcast. I'm Matilda, the Chorus Call operator. [Operator Instructions] The conference is being recorded. [Operator Instructions] The conference must not be recorded for publication or broadcast.

At this time, it's my pleasure to hand over to Aymeric Jamin, Head of Investor Relations. Please go ahead.

Good morning, ladies and gentlemen, and welcome to Oerlikon's First Half Year Results Call.

My name is Aymeric Jamin, Head of Investor Relations, and I have here with me Marco Freidl, CFO of Oerlikon. Marco will start the call with a presentation, providing an update on our end markets, financials and outlook. We will then follow up with a Q&A.

With that, I would like to open our presentation and hand over to Marco. Marco, the floor is yours.

Thank you, Aymeric. Good morning, everyone, and welcome to our H1 '26 results presentation also from my side.

Oerlikon is able to report a strong financial result for the first half of '26. We continue to execute our strategic priorities to drive efficiency, strengthen our resilience and drive growth in a context of geopolitical uncertainties. These initiatives were supported by strong execution and positive market dynamics, in particular, in aviation, energy and general industries.

I will start with an overview of our first 6 months, followed by an update on our end markets, the results, including the new segment reporting and will conclude with our outlook. Order intake in H1 significantly increased year-on-year at constant FX to CHF 920 million, up 19% versus H1 '25. Hereby, strong execution and dynamics in aviation, energy in particular, industrial gas turbines business and general industries acted as main drivers. This positively impacted especially materials and equipment business.

Sales increased by 7% at constant FX to CHF 790 million. A key success factor, in particular, in the market just highlighted was that Oerlikon successfully leveraged strong demand and pricing power in the materials business. Hereby, we acted as a reliable partner to our customers despite geopolitical and supply chain uncertainties.

Operational EBITDA margin was at 19.7% in H1, up 300 basis points year-on-year. In addition to operational leverage, this was supported by the cost-out actions launched in '25, business mix, volume and positive pricing effects. The H1 '26 numbers are an excellent result and confirm the successful progress in executing our strategy of diversification, both in terms of geographies and end markets. This strengthens the company's resilience and enables us to capitalize on the exposure to markets with positive growth dynamics.

Looking into H2 '26. We remain committed to diligently invest in future growth while maintaining a strong focus on profitability and capital return. We also strive to further strengthen customer excellence, for example, utilizing last year's implemented shared CRM platform to maintain our role as a reliable and innovative partner for our customers.

Finally, we continue our path to further improve efficiency and resilience. We achieved this through balancing stringent cost focus with leveraging of our global footprint. This enables us to deliver growth based on a stable and flexible local service close to our customers.

With that, let me provide you with an update on our end markets. Oerlikon operates across 10 industries, and we are looking forward to providing you further details on dynamics and our solutions for customers in our Capital Markets Day on 8th September in Zurich. Particularly, the general industries and tooling markets show a close correlation to industrial production.

In H1, the PMIs in all 3 main regions improved, moving above neutral level. At the same time, geopolitical risks and supply chain disruptions keep impacting customers' behavior. For example, with regard to precautionary stocking. Also growth dynamics in semicon, a key growth market for Oerlikon remains strong. Overall, H2 '26 is expected to remain balanced between improving fundamentals and ongoing geopolitical uncertainties.

In automotive, global light vehicle production was flat in the first half of the year, with all 3 major areas showing a muted environment. In the EU, uncertainties generated by changing industrial policies continue to create a challenging environment for our customers and delay investment decisions. These dynamics are also relevant for our hot runners business, HRSflow, whose performance is closely related to car model launches, which experienced soft momentum in H1.

Looking ahead, industry agency forecasts indicate potential for a slight improvement towards year-end. All that said, Oerlikon continues to drive innovation in the industry, leveraging its strong customer relationships to make the future of mobility more efficient and sustainable, be it in the vehicle body, braking system or the battery. In aviation, the industry shows a record high of new plane production and order backlog, supported by increasing traffic and demand for energy efficiency. At the same time, manufacturing capacities and supply chains continue to improve.

In addition, the increase in flying hours is driving MRO activity and thereby, demand for our solutions. We also see aircraft manufacturers upgrading old equipment. Our products are supporting them to develop more efficient and more sustainable aircraft engine technology. The industry also expresses confidence in the ability to continue increasing production capacity over the coming years. At the end of June '26, the combined order backlog of the major aircraft manufacturers exceeds 10 years of production at current delivery rates, providing strong visibility.

In energy, the industrial gas turbines market, which from an Oerlikon product offering point of view is close to aero turbines, experienced strong growth in the first half. This is driven by the surge in power demand for data centers, triggered by the boom of artificial intelligence applications.

On oil and gas, we see the market broadly stable. In luxury, end markets remain subdued, mainly due to soft demand in China and to a lesser extent, tensions in the Middle East. On the more positive side, Swiss watch exports were flat in H1 '26 year-on-year, with an improving trend towards end of H1.

Midterm, the growth drivers for the luxury market remain well intact, with product quality, economics and the trend towards more sustainable products. Oerlikon with its unique offering is well positioned to capitalize on this trend. Summing up, we all see a generally improving industrial environment.

With that, let's move to Page 4, where we discuss the financials. Overall, our performance was supported by the generally improving market dynamics as just described. So, both our tooling and general industries businesses benefited from PMIs increasing above neutral level. Also, aviation, energy and general industries-oriented materials and equipment businesses performed very well. Hereby, Oerlikon leveraged strong customer demand and pricing power.

Despite geopolitical and related supply chain challenges, we showed strong execution by being a reliable partner for our customers and meeting their increasing demand. Automotive business showed a mixed performance with positive development in Coating Services versus muted performance of our hot runners and friction systems businesses in Components. Overall, our diversified end market exposure and balanced regional footprint were key enablers of these strong results.

As a result, H1 '26 order intake and sales were up significantly year-on-year at constant FX at CHF 920 million and CHF 790 million, respectively. The book-to-bill ratio remained well above 1 at 1.2, which is expected to support sales in the second half of the year and beyond. Operational EBITDA in the first 6 months of '26 amounted to CHF 156 million, representing a margin of 19.7%. The strong performance was the result of several positive effects, including volume, mix, pricing power and inventory revaluation effects based on the strong increase of critical mineral prices.

Additionally, the progress made in our cost-out actions initiated over the last 2 years led to a reduction in admin costs of 7% year-over-year. As a result, operational ROCE increased to 6.2%, primarily driven by higher profitability. Through our strategic and financial initiatives, we are committed to further improving our return on capital to a level that enables strong long-term value creation.

As part of our pure-play transformation, we have also implemented segment reporting, enhancing transparency and providing greater visibility into the performance of our business. We will discuss the individual segments in more detail at the Capital Markets Day in September. Our first-time financial reporting is available as of H1 '26.

With that, let's move on to the segment, Coating Services. The Coating Services segment comprises our coating activities that enhance performance and durability of demanding applications. Through a footprint of more than 100 coating centers in 38 countries, we deliver our large variety of coating technologies, ensuring the optimal solution for our customers' products.

At constant FX, the segment sales increased by 5.5% compared to H1 '25, with all regions contributing. FX remains a headwind. Looking at the markets, sales in general industries, in particular, semicon and tooling grew. In automotive, the Coating Services business showed positive signs of stabilization. Performance in the second half of '26 is expected to follow the usual seasonal pattern and to remain broadly in line with historical trends.

Operational EBITDA increased to CHF 57 million. This represents a margin of 18.8%. Hereby, margin improvement was supported by volume, mix and pricing. In addition, the cost-out actions launched in '25, including footprint optimization, strong cost control and efficiency improvement further supported margin development.

With that, let's move on to Materials & Equipment. Materials & Equipment segment provides coating systems, related aftermarket services and materials for thermal spray and additive manufacturing. Our broad portfolio of equipment ranging from single hand-held spray guns to fully integrated system platforms, enables us to deliver solutions tailored to our customers' needs.

Combined with our strong R&D expertise, deep material science engineering knowledge and close collaboration with our customers, we consistently provide best-in-class materials and application solutions. At constant FX, segment sales increased by 19.7% year-on-year, driven by strong dynamics and execution in aviation, energy and general industries. This strong performance is mainly driven by our materials business in which we proved our ability to meet increasing customer demand despite challenging supply chain conditions.

In addition to volume growth, we also leveraged our pricing power, including surcharges for critical minerals, in particular, tungsten and yttrium. In equipment, against the backdrop of the strong development of the before-mentioned end markets, order intake was strong. This is expected to support sales in the coming quarters.

Operational EBITDA rose to CHF 66 million, corresponding to a strong margin of 23.8%. The improvement was driven by operational leverage from higher sales volumes, complemented by pricing power and effects from inventory revaluation.

With that, let's move on to the Components segment. The Components segment engineers and manufactures precision parts for demanding industries. We improve customers' product performance, safety and efficiency for diverse sectors. This includes automotive with hot runner systems from our HRSflow business, TIS, our thermal insulation solutions for batteries and components for the luxury industry. In addition, we serve the aviation industry with aero engine components from Eldim and our additive manufacturing business is targeting mainly the aerospace and defense as well as semicon industries.

At constant FX, the segment sales declined 4.4% compared to H1 '25. From a regional perspective, the main business areas negatively affected were APAC and Europe. The main drivers for the decline in the segment are the friction systems and hot runners businesses, which were impacted by the automotive headwinds. Despite this, HRSflow is continuing to successfully diversify into PMCL, so packaging, medical, consumer goods and logistics industries from a lower base.

In our luxury business, we are seeing stabilizing -- stabilization in sales. On the positive side, we see clearly improving momentum in our aviation-oriented Eldim business.

Moving to profitability. Our operational EBITDA declined to CHF 26 million. This represents a margin of 11.9%. Cost-out measures implemented in luxury in '25 contributed to a year-on-year improvement in that business. In addition, the continuing ramp-up in Eldim for large aero engine programs, automotive diversification into thermal insulation systems for batteries and additive manufacturing show increasingly positive contribution. Profitability in components remains below our expectations. Accordingly, we will continue to focus on optimizing the cost base, driving growth and thereby, restoring target margin levels.

With that, let's move on to cash flow. Cash flow from operating activities of minus CHF 8 million as per our H1 report includes discontinued operations, means Barmag. Focusing on Oerlikon, excluding Barmag, pro forma cash flow from operating activities amounted to CHF 32 million in H1 '26, up CHF 25 million versus H1 '25. This underpins the strong cash flow management, which contributed to absorb higher inventories, which were significantly impacted by increasing critical mineral prices. In this, increased advanced payments from customers also acted as countermeasure. Overall, the usual seasonal inventory buildup in H1 is expected to support cash flow in H2.

With that, let's move on to the balance sheet and capital structure. The leverage ratio at the end of June '26 stands at 2.5x, reaching this level already 6 months ahead of the schedule communicated with our full-year results presentation. Both EBITDA improvement and net debt reduction contributed. We will continue with deleveraging towards our mid-term target of below 2x.

Throughout H1, we maintained a tight focus on cost control, working capital and CapEx. In the first half, we also actively managed our debt profile by repaying CHF 475 million term loan with the Barmag closing, leading to an interest rate saving of CHF 13 million per year. In addition, we issued a CHF 200 million bond in May and repaid a maturing CHF 220 million bond in June. The coupon is 75 bps lower, resulting in an interest cost saving of approximately CHF 2 million per year. This was supported by the reconfirmation of all of our ratings at investment grade in spring.

Our liquidity position remains strong with around CHF 900 million of cash and available credit lines at the end of June '26. In addition, we report an equity ratio of 41% for H1 '26, up from 24% end of '25. With a strengthened balance sheet and enhanced financial flexibility, we are well positioned to support strategic execution.

Next, to our '26 guidance. Based on a strong first half year, we are increasing our full-year guidance. We now expect a mid-single-digit percentage sales growth versus the previous guidance of low single-digit percentage increase. This reflects the strong H1, especially in aviation, energy and general industries as well as an encouraging outlook for H2.

Furthermore, we now guide for an operational EBITDA margin of 18.5% to 19.5%, up from around 17.5% previously, assuming broadly stable tungsten and yttrium prices. This also builds on a strong H1, supported by market momentum, strong operational as well as commercial execution and our confident outlook for H2.

Let us now recap the first half year on the next slide. Despite a backdrop of significant geopolitical uncertainty and ongoing trade tensions, Oerlikon delivered a strong performance in the first half. This was driven by aviation, energy and general industries, with Oerlikon successfully leveraging strong demand and pricing power, particularly in the materials business. Throughout the period, we acted as a strong partner to our customers, supplying mission-critical products and ensuring production continuity.

We are also making good progress on our efficiency measures and cost-out initiatives. These actions are on track and will further enhance our agility, improve our operational leverage and support profitability and value creation in the years ahead. At the same time, we remain committed to driving innovation and growth across the company. By continuously improving our competitiveness and investing in new technologies and growth opportunities, we are laying the foundation for further sustainable long-term growth and strengthening our leadership positions in attractive markets.

Looking forward, while the external environment remains dynamic, we are very confident in the attractiveness of our products, the strength of our business model, the quality of our customer relationships and the dedication of our teams worldwide. Our priorities are clear: supporting our customers, executing with discipline and creating sustainable value for all stakeholders. Ultimately, our objective is to deliver long-term value through profitable growth.

With that, thank you for your attention, and we look forward to sharing with you further details on the business and outlook at our Capital Markets Day on 8th September in Zurich.

With that, let me open it up for Q&A.

[Operator Instructions] The first question comes from the line of Tobias Klöpper from Zürcher Kantonalbank.

Could you give us some more insights regarding the effect that the inventory revaluation had compared to your cost measures? What was the effect on your operational EBITDA margin? How much of the inventory increase was due to the higher raw material prices? And then maybe going forward, what effect do you expect?

Thank you, Tobias. The effect you see on the margin is a mix of effects. So it is about volume. It is about mix. It is about the effect from the restructuring measures, which you saw in the last year and also previously. And on top of that, it's inventory revaluation. So it's a mix of effects and not just the revaluation that you mentioned.

When you look at the guidance, which assumes stable prices for the critical minerals that we referred to, you can work on that basis with regards to modeling.

The next question comes from the line of Alessandro Foletti from Octavian.

Can I ask one understanding one and then my 3 questions? I know I'm maybe exaggerating, but you tell me. The understanding question is on the ROCE calculation that you made, you show 6.2%, but this is not annualized. Is that correct?

Can you please repeat the question, Alessandro? I didn't understand that completely.

The ROCE calculation that you have shown 6.2% on Slide 4 of your presentation.

Yes, the...

So I was wondering 6.2% is not annualized, right?

It is the balance sheet as of period end and it is the last 12 months for the...

That's the last 12 months. Okay, good.

Yes.

That's the question. So I wanted to ask you on Coating Services and component coatings. Can you explain me how you sort of split the business there between what is purely servicing, I guess, servicing on tools and what you used to do on coating components for the automotive industry. Do you have like separate factories or separate lines inside your valves? How did you split that?

Yes, happy to provide the details on that. So on one side, the one segment, Coating Services is what you have to think about as the globally spread centers that provide coating services ranging from tools, that's coating tools, that's forming tools, that's precision components, which also go into semicon, which go into medical. So it is a very local for local coating center-based coatings business.

In Components, it's as the name states, it's much more about the component where we leverage synergies in terms of industries. As I stated before, we have very good dynamics in aviation through the aero components for aero engines from Eldim. We leverage synergies in the automotive industry into the thermal insulation systems and we have Luxury and HRSflow.

So the coating element in that segment is partial whereas the coating element in the segment Coating Services is ultimately the business model. So that's the key differentiator.

So when you think, for example, about Luxury, Luxury does coatings, but it's only part of the component offering.

So in this sense, like the value-add is bigger in Components or you have to manufacture more. Coating is only one element, one step of what you do. That's the deal.

...

That's exactly correct. Yes, exactly. In Coating Services, it's about the coating itself, of core which we develop, which runs on our own equipment. So I think we believe we have a very strong USP here combining these business models that's very unique. Whereas in Components, it stretches beyond the partial coating into whole components, which show our strong engineering capabilities. Yes.

Right. And my final question is on the Materials & Equipment business, which obviously had a very strong result. Typically, in the past, when you had the surcharges, et cetera, it didn't have a big effect on the bottom line actually. It was just more like passing on the input price increase. What is different here in this current situation?

Yes, it's a very good question, Alessandro. And I think it relates a bit to my answer to Tobias' question. What we have seen over the last half year and also before is the dynamics in the industries that I mentioned. Aviation general industries really allowed us to push our offering to beyond just pass-through of prices.

We developed, I would say, into a much more strategic partner to our customers or we were before, but now it became much more independent and visible to our customers. So it's literally a mix of volume and also the quality of our offering and the value that we can demonstrate to our customers. So it is a combination of factors that we have not seen in the years back. So it's a combination.

So if I may add on here. Obviously, the margin increase from 16.8% to 23.8% is huge, right? But are you telling me that because of this increased value add, the 28% is now the new level that you can keep? Or I should be maybe between the 2 numbers?

I mean what we guide for is stable prices. So in H1, and I'm sure you have looked at the tungsten and yttrium prices, they increased significantly. So if we assume stable prices, then at least that effect will not repeat unless prices start climbing again.

But the fundamentals, which range from operational leverage, how we operate the business, how we steer it from sourcing to shipping, I think that's a really comprehensive improvement that we have developed over the last couple of years.

So the 23.8% is not necessarily the new sustainable level, but you are away from the 6.9% (sic) [ 16.9 ] of last year, basically.

Right.

We now have a question from the line of Louis Billon from Baader Europe.

So my question is -- so when we take your midpoint guidance for operational EBITDA, it's at 19%. So it implies a H2 at around 18.3%, depending on sales. But should we consider that it will be the new standard going forward? Do you feel confident to reach 18.3% EBITDA in 2027 and beyond?

Thanks for your question, Louis. At this stage, we don't comment on '27, right? We will have a Capital Markets Day in 1 month where we will look into the midterm. There were the effects I just described to Alessandro.

But overall, we are very confident that the actions we took over the last couple of years that they have a sustainable effect and enhance the quality of the profile of the individual segments and the products we deliver. So yes, we don't comment on '27, but we have a sustainably positive development, which we control.

Okay. And maybe a second question. Could you give us more detail on the order in H1? Is it mostly prebooking from your customers? And also, is the lead time changing? So should we expect those orders to be converted in sales a little more later than it used to be?

Well, I mean, on the order intake, what is important is here that we have a very strong contribution also from equipment, right? As I said before, on the sales level, it's mostly materials. But on the order intake, we see very good dynamics in equipment as well. And this is driven by the same industries in aviation, but also in energy.

I mean if you observe the industrial gas turbine markets, the OEMs, the order books, how deep they are, how, I would say, stable for the next couple of years. You can assume that on the order intake one, this is also significantly impacted by equipment.

And here, one element to consider also looking a bit ahead is that we have a significant share of aftermarket business in our equipment business. So any system we place is an opportunity to generate aftermarket business after sales and also to generate materials business.

So this is the power of the combination of these 2 businesses is to create a sustainable and very sticky demand after you place a system in the market.

Okay. And maybe a last question. Like your stock of the tungsten and yttrium, has that changed since the full year 2025 as you -- maybe do you have less stock? What are the new rules for the stock of tungsten and yttrium?

I mean, overall, we don't go into details on the volume as such, but the supply situation in these materials is something that you need to be very capable of in managing.

So it's about securing and being able to ship to customers. So yes, there is an effect of volume because volume grows on the sales side. But yes, that's about it.

Next question comes from the line of Leonie Zirn from UBS.

I have 3 follow-ups. I'll start with the first one regarding your new segments. You mentioned Coating Services and that you expect for the second half to follow the typical seasonal pattern. If I look at the H2 '25, then this looks a bit softer than the H1. So is it fair to assume that coating service revenues will be softer as well into this year?

Thanks for the question, Leonie. The seasonal pattern we referred to is not about the underlying dynamics of the fundamentals. We are very confident on that end. It's just a simple fact that with the summer break in the H1 and with the December holiday season, you have naturally a lower share of, let's say, working days. But the fundamentals are very much intact, and we see actually good trends in the underlying business.

Okay. And then the second question, I think, on free cash flow, it is very important to clarify. You mentioned that operating free cash -- that the reported free cash flow contains like CHF 42 million impact from Barmag. Will this impact be limited only to the first half, I assume, because you consolidated also in the first half?

And then what are your expectations also around net working capital normalizing? What would be like a good ballpark range to assume where inventory and receivables end by end of the year, so we can make an estimate on free cash flow?

Thanks. So first, we still report Barmag within our financials because the closing only took place in February, right, beginning of February. That's why on the cash flow statement, you still have the whole group, including discontinued operations, whereas in the balance sheet and the income statement, it's Oerlikon only. And we'll see that for the rest of the year to come. The effects that we observe here, I mean, is the effects from the January result of Barmag. So after the closing, there is nothing to be expected anymore.

When we look at the working capital, as described before, we have at the moment, obviously, a high impact on inventory buildup. This is materials, but also very important to mention also when you look at the last couple of years, cash flow-wise, H1 was usually weaker because we build up also inventory and prepare for shipments of equipment in the second half.

So the end of year cash flow profile and also working capital profile will look different than from H1 as it did in the past couple of years. In the working capital, there are some one-offs at the moment due to the factors I described. We work on countermeasures. I think we were quite successful on generating advanced payments and we keep our focus on that.

Okay. So is it fair to assume a similar cadence that we've seen in free cash flow last year, where we've seen around minus CHF 50 million in the first half and then plus CHF 150 million in the second half? Is this fair to repeat this year as well from what you've just described?

Well, I mean, the order of magnitude always depends on the business mix, right?

Yes.

But directionally, as I said before, H2 is stronger because of the factors I described.

Okay. And then last question. I wanted to check regarding cash flow because you initially mentioned for cash flow around CHF 100 million for '26. But now the first half was actually quite soft at just CHF 33 million. Does it mean the remainder will come in, in the second half? Or will CapEx for the whole year be low?

Yes. Thanks for the question. So CapEx was indeed low in H1. It's a combination of factors. Number one, we remain very, very diligent on assessing the opportunities to invest. But in that case, it's simply also backloading of the CapEx. So we keep our previous comment that we expect around CHF 120 million of CapEx for the full year. There is some backloading in particular also from the large onetime investment we have this year in Switzerland for the technology Campus Reichhold.

So to answer your question, the result of H1 is because, for sure, we were diligent, but secondly, it's simply seasonality and CapEx being backloaded into H2.

Okay. Perfect. And then just to check on the margin guidance that you gave, the midpoint of 19%, will this mostly be supported by the similar drivers for the second half as we have seen in the first half?

Well, I mean, what will ultimately drive the business, we will find out in the course of H2, right? But we see the fundamentals in terms of industries, in particular, the ones I mentioned, aviation, power gen as very sustainable.

So yes, we expect that generally the industry dynamics that we've shown. I think on the slide, you also see that in some industries, we expect H2, even with potential upside, to remain intact. And the guidance as such, what I mentioned is that it assumes the stable prices for the critical minerals.

[Operator Instructions] We now have a question from the line of Christian Arnold from ODDO BHF.

One question on your segment reporting. Looking at your half year report, I see that for the Components segment, the operating assets declined quite significantly by midyear versus the beginning of the year with stable operating liabilities.

On the other side of Materials & Equipment, operating assets increased a lot. So have you seen here -- have you shifted some assets from one segment to the other? Or what's behind this development?

Christian, thanks for the question. Yes, and you see that in the footnote on the respective page in the report, that with the start of the segment reporting, we reallocated goodwill, based on the relative fair value principle. So the majority of that shift is related to the reallocation of that.

Okay. And can you give a little bit more detail? So we are talking about the acquisitions of Riri, which moved from one segment to the others?

It's not acquisition based. It's about the relative fair value of the individual segments that determine the distribution into the asset base.

The next question comes from the line of Remo Rosenau from Helvetische Bank.

I just noted that the spending for research and development were down from CHF 58 million to CHF 38 million. It looks like quite a steep decrease. Is that -- what is behind this number? And where do you expect the full year number to be, and then going forward?

Yes. Thanks for the question. That is a baseline effect. Last year, as you might have seen in the full year or last half year report in '25, we had significant restructuring and impairment costs. So the delta that you see is not that we spend less on R&D.

We are committed that R&D in the area of 4% up to 5% is a very important driver of our success. So the delta you observed is a baseline effect because we had onetime costs in last year, which this year, we don't have anymore, as you might have seen between the reported and operational figures, we don't have gaps this year. So that's the reason.

We have a follow-up question from the line of Leonie Zirn from UBS.

Just one more follow-up regarding the Components. You also mentioned that profitability remains below your expectations or below the target level. Can you qualify a bit what that target level would look like?

I mean, we will look into the midterm in more detail in the Capital Markets Day on 8th September, Leonie. But obviously, we want to have all the businesses contribute to the margin of the group. And what we see at the moment, that's not the case.

What is encouraging is that, as I described before, we have also very encouraging dynamics in that segment. In particular, the aero engine business in Eldim, but also the e-mobility-oriented TIS or additives. So we have positive drivers on the other ones which are struggling, you have seen over the last couple of years that we will have a very diligent look on opportunities to improve margins if growth doesn't come. But more details on the midterm outlook we'll give you in the CMD.

We have a follow-up question from the line of Louis Billon from Baader Europe.

Could you give us more color on the split in the Materials & Equipment division, the split between fixed costs and variable costs?

Please repeat.

Can you give us...

The split between...

An idea of the split between the fixed costs and variable costs and maybe an idea of what are the main costs in this division?

Well, we have a mix of 2 very different businesses, right? One is the materials business and the other one is the equipment businesses, which has very different structures. I mean, as part of the report, we don't share further detail on that one. Potentially, you can follow up with HR to get some more generic guidance. But in the report, we don't go into that level of detail.

We have a follow-up question from the line of Alessandro Foletti from Octavian.

Just 2, if I may. First of all, on the Coating Services business, when I look at your split of sales by region, we see Americas is still the lowest. And you did mention that you wanted to reallocate some capital towards that geography. But still, it doesn't seem that it has happened yet. Maybe you can explain why and what's the direction there?

Yes, I think one fact to comment on is that there is still, as you know, FX effects in the portfolio. And in particular, the U.S. dollar has seen quite some weakening over the recent 12-plus months.

Very recently, as you've seen, some of the country pairs, they're moving a little bit more in the favor of Swiss franc or an actual FX reporting. But there, you have FX effects that are significant.

Fair enough. But does it mean that...

Increase, yes.

I didn't think about that, honestly, not in this context. But does it mean that you have -- you did actually open more coating centers in the U.S. And well, you mentioned that you closed some here. So is this happening basically? I mean, the U.S. is very strong. I mean, there are areas, I don't know, Houston. There's a lot going on.

I mean, generally -- yes, the dynamics in the market are positive. So if we look at constant FX, that's a positive. In terms of sites over the last 12 to 24 months, we have closed 15 sites, 15 or 16 sites. So the general trend is into concentrating footprint and optimizing utilization of our assets, our coaters in that case, to improve capital return.

We believe that the footprint and the utilization of our assets in the individual centers, and these assets are mostly our own coating equipment that we know very well, is an asset base that we can very dynamically shift between the centers.

So to your question, no, it's not about an increase in number of sites in the U.S. The main focus is about utilizing the existing sites, potentially rightsizing the footprint as required and as we did a couple of times in the last years, and to optimize the utilization of the individual assets.

Right. And so the -- but the 15, 16 you closed were not all in the U.S., right? It's a global number.

It's global. I mean, the FX headwinds we observed in most of the currencies, in particular, also in Asia.

Ladies and gentlemen, that was the last question. I would now like to turn the conference back over to Aymeric Jamin, Head of Investor Relations, for any closing remarks.

Thank you very much to all of you for having joined this call and for your questions today. I remain at your disposal, of course, later to answer any further questions you may have. Thanks, and have a good day.

Ladies and gentlemen, the conference is now over. Thank you for choosing Chorus Call, and thank you for participating in the conference. You may now disconnect your lines. Goodbye.

Good afternoon, ladies and gentlemen, and welcome to Oerlikon's Full Year Results Presentation. I am Aymeric Jamin, Head of Investor Relations. I have here with me Michael Suess, our Executive Chairman; Marco Freidl, CFO; and Dirk Linzmeier, COO. Michael will start with the strategy update and an overview of 2025. Marco will then highlight our financials and outlook. We will end with a Q&A. With that, I would like to open our presentation and hand over to Michael. Michael, the floor is yours.

Aymeric, thank you. Good afternoon, ladies and gentlemen. Let me give -- take the opportunity to get with you through a little bit to the year '25, what we have done, what we have achieved and give us all the outlook for '26. So as announced in 2024 in February, 2 years ago, we have executed by spring -- not to spring, but February this year with the closing of the sell of Barmag, a longer way to become a pure-play company. A pure-play company means that we are material science engineering company. We're doing PBD, CBD coatings, 3D printing, building the machines for all these procedures and produce our own and develop our own materials.

This out of a widely spread out organization internationally, 37 countries we are covering with a lot of service centers. So this transformation is somehow where the sale of Barmag is done. What's still on the way is where we have started with 3 industries, we are now in 11 industries. We deepen our relation industries, and we're sharpening our setup of the management team by profession and by age in the right way.

We built a pretty resilient value growing from our markets, not all our markets moving in the same direction, as we will show you later on. And everything is built on a strong innovation pipeline where we have, especially in that industry, where we are still remaining, we have always invested 5% or 6%. As a group, you remember maybe before, but the investments we have done in OSS in the past was closer to the 6. Meanwhile, with a more efficient way of R&D, we're somehow in the 5%, but we have not lacked any innovation power.

What is very important is that the strategy to become more agile and leaner as well in administration but not only. We're still working on getting our sales forces leaner and closer to the customers and other areas where we use all kind of technologies which are available from our ERP systems, which we have harmonized the last couple of years, CRM and others. But we have almost half -- but Marco, you will touch that point a little later, we have almost half of the cost for administration since 2019.

So taking that, having a look on where we are and where we want to go. You remember as well that we part mainly tooling or cutting tools and forming tools story, some automotive, but not And we had PVD coating, not really CBD not not that much material science, which we all built in the last years together as a core of a company which is unique. Sometimes it's good to be unique, sometimes is a disadvantage because, especially for you to compare us with someone, it's always difficult because we are the white unicorn with that technology strength with that technology combination, there is no one out there.

There are some people who are playing in the field of material. Others are building machines. Others have some thermal spray services, but the combination of technologies in that way as we are doing it, it's -- if I'm allowed to say, is awesome and there is no one else. And as we have spread out the last couple of years and diversified this competence in more fields. We are today with energy, which stays for oil and gas industry and power generation; tooling, as I mentioned, performing tools and cutting tools.

Automotive; aviation, including aerospace; travel industry, which today as well covers semiconductors, medical and others, we have embarked now to make semiconductor medical more visible better size and better accessibility for us to the markets now. So industry will always cover that industries, which are not big enough yet to show them as on their own.

Luxury, we will touch that a little later in my presentation. And last, but not least, defense. We are still in the defense industry in the past, directly with Oerlikon indirectly over decades as well with the coatings and the powders for the clad engines and for some technologies where we supply powder as well, but not so much directly, which we are now more considering but we have to see where our competencies and our capabilities could contribute in the best way to defense, and I have to reiterate, we're talking about defense and not attack, to defense a society where we are living in or we want to keep it liable.

So to get closer to the customers, we have embarked in 2022. So we started '21 the process; '22, we roll it out. And within Asia Pacific, Americas and Europe, we have the 3 major hemispheres. Europe still is bigger than the other 2. You should consider that for example, revenue is fully in Europe and is not spread out in Asia Pacific and Americas, and as well as a certain proportion in Europe. So if we take more the core of the core business, we are already more comparable between Europe and Asia Pacific.

Americas is still a little smaller. One of the major reasons is we are a long time in Americas with thermal spray. We are probably 20 years now in Americas with the PVD business, and there is more service business to come on PVD. But was never strong in tooling industry, or less than an never, but at least in the last 2 or 3 decades, there are more other areas like semiconductor industry where these competencies and capabilities will play a role in the future.

By that saying, as I mentioned, in the third bullet as introduction, innovation for us and to be leader in innovation is key for everything what we are doing. And you have here some examples on equipment, on components and on coatings. By the way, this is the way how we in future as well want to present the company. But maybe Marco as well we will touch that point later a little bit.

The Equipment and Materials business is mainly driven by thermal spray, equipment as well for PVD, but the most PVD equipment stays in our own service centers. Components, either its aircraft components by or its components for HRSflow or others. And then at coatings -- and the coatings a lot of these coatings are PVD coatings or CVD coatings for our service centers.

With all of that, and in line with the digitalization strategy where we can use new ways of technology to strengthen our footprint, I give you only 2 examples. One example is that we have a virtual coating center program which means we link in real time the coders together, the ones who are not that capable to do that, we have it at least on a daily base, but end of this year, we'll have 200 out of our 450 coders real-time linked and then to use these technologies to optimize utilization, the way of maintenance, the forward-looking planning and to get -- this will have a strong contribute as well in the way how we use our capital.

The other one, total different way. We have in San Diego Scoperta. In 2016, Scoperta was a carve out of the University of San Diego and was at that time, already leading in the AI-based development of materials. Now in our geopolitical days where yttrium, for example, sits on the export control list in China since April, it makes a lot of difference if you have the capabilities as we do actually to develop 16 new alloys per week and to test them and figure out what kind of elements and what kind of alloys could help us to reduce or even to eliminate yttrium is a rare earth material in a lot of our applications.

And why are we talking about yttrium most of you may never heard about that, that's 1 of the 17 rare earth and it's the material which you need in any hot segments of gas turbines. So either gas turbines for power generation or gas turbines or commercial flights or gas turbines for military flights. All the hot sector has thermal barrier coatings and bond coating based for yttrium. And these are life-limited parts. It's not that you have it built once and then it's done forever. You needed them on a consistent base.

And in '25, we had significant issues to get yttrium for our customers, but we could make it. For '26, we're almost assured that we can make it, so we have it covered. But nevertheless, we have now entered away to find different elements and different alloys to either, as I mentioned, to reduce or even to compensate rare earth materials which are today mainly coming from China. And it's not because China is the only place to have these materials, but as well, the China, has last 20, 25 years, took the opportunity to get all the refinery processes into China.

So even if you have yttrium from other countries, that typically walks or moving through China. So I don't want to deepen that more, but it shows you how important this material science competence is and how long term we have thought about that when we already entered that field in 2016, 10 years before people even have thought about that this may have a strategic value to secure our supply change in the future.

And based on this competences, our customers gave us this year. We cannot mention them, but big customers in the U.S. gave us a supplier award. Our customer helped us to come with is the laboratory of the Navy to help us, and it will be financed by the U.S. Navy and U.S. Marine to finance a new group of alloys, high entropy oxide is a coding, which helps to reduce significantly on air falls the erosion and in parallel, you get -- on top of that, you get high turbine intake, which is more power.

So I'll give you some examples. I need to understand because we are a tech-driven company. And a lot of things what we are doing is not very obvious for people. So as a at my office, the flame for the Olympic games, which we have coded but we couldn't talk about otherwise Olympic administration would have take as a huge amount of money, but it's where we behind. So there is not, as we always say, there's not a single day in life without but maybe you're not even aware about.

But that makes our story that's strong. So why we bought in 2023 Riri and why we have bought in 2021 because we are convinced that the luxury coatings, the coatings in luxury products, which are today almost not 100%, but mainly by electroplating is a fantastic field for us to transfer that into PVD technologies or to replace that with PVD technology. And there's 2 major reasons behind. The one reason is a simple one, you need up to 90% less material, which is simply a cost question.

The second one is that these materials are dirty materials. So to get a kilo gold or even a gram of coal, you need 1 ton of gold ore. By the way, in rare earth, it's similar, you have 3% to 5% of rare earths in a tonne. So you need for 30 kilos, you need 1 tonne of ore. That tells you that to avoid these procedures and even to think about to use it in much similar layers, an economic, but is well an environmental effect.

And last, but not least, why we use tungsten today out of recycling is because tungsten as well at least one some of tungsten on the export control list as well from China. And here, we have found solutions to take recycle methodology tungsten from drill heads and to use it to be working. So these are all areas where we are in. So luxury we bought, we had to restructure somehow a little bit because after COVID 2022 and I have to mention, the timing was probably not the most luckiest one because when we bought the company after COVID, everybody was expecting then the luxury market bounces back and comes back strongly.

But unfortunately, the real estate bubble, which is still a big issue in China for the consumers in combination with a lot of small and midsized companies suffered a lot or even disappeared in the way of how China has handling the coverage record funding me. has led to the situation that there is not the highest consumer trust in the market in China yet. So the growth you see in China today is probably by 2/3 driven by infrastructure investments and less by consumer.

This will come back, probably not in '26, but there is a certain indications that in '27-'28 this story comes back and then we are very well positioned and in between, we do our own work. And we typically always have done if markets been not in favor for us, we made our homework. So some markets as aerospace, as energy are in favor for us. Some markets like automotive and some parts of the industry and the tooling are under pressure to one extent, because of the tariff policy is never good because tariffs are not good for trust.

And if there is no trust, it's not good for economy. And as I'm actually convinced that a tariff only helps -- doesn't help nobody. It makes a strong economy weaker and makes the weak economy even more weaker and more dependent. So there will be finally a better understanding that this doesn't help, but it will take a while. In between, we have suffered by that indirectly because the tooling industry, the channel industry, the automotive industry, they are taken by some unsecurity. They don't know where to go.

But this is not only the tariffs, this is as well what's happened in the last 5 years from EU, given total different directions in the way how we want to handle our energy policy, how we want to handle our car policy to get out by 2035 and say we're done driving ICEs anymore is simply its nonsense. I don't say stupid, that would be ready to hard, but it's nonsense and it's not well thought through. And it's harming massively our own industries in Europe and doesn't help anybody. But nevertheless, it's impacting markets.

So the tariffs, this you story in combination then with a question mark, who is with whom in a partnering process in the future? Is it China, Europe, China, U.S., U.S., Europe, who is together in which sense this has an impact on our business. And if there is no trust, people keep their money a little bit more together, that has an impact on luxury, it has no impact on aviation because the aviation is driven by recovery and more demand on aviation and commercial, but as well by aviation and military.

Only Boeing and Airbus wants to go higher amongst the production rate for a narrow-body aircraft that short and midterm range from 60% to 75%. If you sum it up with 1,500 engines additionally per year, which all of them needs coatings, a lot of them. And need equipment, which is driving actually somehow our business on the material side and our equipment side.

Same is for big in industrial turbines. There was the last 10 years, and it was in that industry until 2015. At the peak where the 2008, 300 plus. Then it dropped and in the last 10 years was around 100, 110. Now we are above 200. And this is for several years now. If you talk with GE the if you talk with Mitsubishi with Siemens, that's the big 3 as gas turbine players. They're all from firm. We have 200-plus and this will last for a while because gas-fired power plants, even in a combined cycle or even combined heating power are the best alternative to replace coal and to have a massive impact on carbon emissions because they are not 0, but they are low and they're always available.

So taking all that, it's a mixed picture, but still that's where we see went playing and not up in our sales top line -- on top of that, I would like to hand to say without the strong Swiss franc, we will be CHF 0.5 billion stronger. And some people would say about that control companies in Switzerland, yes, but we are different to some others have even a certain cost position in Switzerland. We still employ in Switzerland and Eastern span more than 1,200 people.

So this is a certain amount of money. We do our R&D mainly in Switzerland. We have a lot of our equipment manufacturing in Switzerland So Swiss franc harms us somehow. On the other hand, it gives us benefit when we do refinancing and other stories. But is it a tailwind for us, it's not. So very often, we've been growing 5%, 10% the last couple of years in certain markets and it was more or less eliminated not because only of dollar weakness, but because of dollar, euro, rupee, RMB, yen and whatever you have, let's face it. They're all somehow even towards the Europe, but especially to the swiss rate, they all have reduced significant under the currency rate.

And this is an effect which we managed. And by that, it can even consider very strong that we kept our top line and sales neutral and we gained 6.5% of order intake, which gives a positive outlook. We're still a little bit careful. That's why we said what we said. But throughout the year, there is a certain optimism that in '26, we maybe start running and in '27, we start even running faster.

By that, the key figures, you will touch them even more. The only important part of that is 6.5% more order intake, almost flat in sales. Leverage ratio comes down from 2.4% to below 2.5 by end of the year. But here, again, Marco Freidl will explain that more and the book-to-bill is with our 1.08 is -- for a given market environment in a very good level.

So ESG-wise, not so much to add. We are a company where ESG is part of our DNA. Why? Because we make products better either less consuming, a softer -- better surface, harder, whatever the case is, whatever we do and we use our products, it drives the sustainability of our customer products. And this is then expressed in the way how we do -- when you compare that, that we're saving only with in an aircraft, we're saving almost 1 year of Swiss carbon emissions.

But as you have significant amount of -- by the tooling industry simply on metal coating is what we do here. But this is sometimes difficult to understand. You should go a little bit deeper in the strong way of our sensor sustainability. Finally, I would like to conclude and then we will have more time for the Q&A. We successfully divested Barmag. After said, probably we could have made it even a little faster, but there was some dispute how to what is the best way to.

But in the end, we did it, and we closed it by February this year. There was a chance even to close it in August, September last year, out of last year and '24, but it did it in a very difficult market environment. for a more than fair value, and we help both for us with a pure play and for retail to get a real future with that technologies because being only in cotton business is not a real future.

So we have another Swiss company, which is important and high traditional, and we help track now on pure-play execution, I think I mentioned a lot we can deepen that when we have the Q&A. The strong '25 is at least a certain -- a little tailwind, whether it's more to come, but with our customer measures with everything what we have driven in the last couple of years, I'm sorry to say there is sometimes some restructuring in some write-offs. When you're in Europe and when you have sites to correct in Europe, in France, as we have closed the site in France, we've closed a site in Germany. This doesn't go in line without spending.

So now we could simply stay with that and live a little lower and leave it to someone else or we discover it and resolve it. And sometimes, maybe it's not seem super nice, but it's necessary. And we have always done that what was necessary in this company in the last 10 years with all the disinvestments and differentiation into different markets with our core technologies, all that didn't came for free. All the engagement and digitalization, that did not came for free.

The 3D printing capabilities where we are now a strategic partner for Northrop Rommel and others are to come in the U.S. where we make money now in the U.S. after learning all that, development in the industry, making mistakes as well. But it is an R&D program, but this is what describes future. If you don't do that, you can harvest, you're going to have nice numbers, but then some when you don't have a future. And we are here to have a historical obligation. We are celebrating this year 150 years of And was up and down in this 150 years, but it was at only surviving, it was always contributing to the Swiss society.

And this is what's our intention as well. That's why we invest in Switzerland despite a strong Swiss franc, that's why we have R&D and machine building in Switzerland. And we are sure that we can afford it, even if sometimes harming. This is always nice? No, it's not. Is it doable? Yes, it is. And if a tech company like us cannot do that, then we can give up Switzerland as an industrial base. We are not ready to do so. That's why we are here. And in the end, we are paying a dividend where some of you may say that's too high. We say, as we have done the last 10 years, when we sell a big asset, we use portion of 2/3 typically stays in the company.

And either it helps to grow with some of the dividends in the past, we not to dividends was one of the -- some of the money at the past of divestments, we bought new stuff and some of the money went into dividends. And I think that's more than fair and unreasonable because as a shareholder, our shareholders own a part of the company. If you sell it out, it doesn't belong to the company anymore.

And they have the right to take a part of that, that we contribute to that. And the logic to give 1/3 to the shareholders and 2/3 in the company was a healthy one in the past and is a very healthy in the future. And that's why we came to the CHF 0.85 for this year, you can say maybe even because of 150 years, but it was maybe insist on, we sold something, it's not ours anymore. Part of that is the shareholders and part of that stays with the company. And Marco, you will deepen that thought as well.

But we have taken almost CHF 500 million of that to dilute or to reduce our debt. And with that, what we have seen, we are in the right way to get by '27 on a 2 to 2.1 -- sorry, 20 EBITDA debt ratio. We are absolutely clear that this is not only achievable that we can make that. And that's why we are as well very convinced that we have to and we want to pay that dividend. So because the company now with the book value we can we made with more equity with a strong cash generation base with a fully filled pipeline on innovation with a strong positioning internationally in the different regions in the growth market in all the industries we are in. This is a very resilient company, and this is why we can pay the dividend.

Thank you so much for now. Now Marco, maybe you go deeper in numbers. And then we are all ready, and Dirk as well. He is here today with us because Dirk is -- since 1 year now on board is COO. COO has to do a lot of these operational stuff. So if you have the one or the other question to him as well, highly welcome. Thank you.

Thank you, Michael. Good afternoon, everyone, and welcome to our full year results presentation also from my side. I will start with our results, then provide more details on our key initiatives to strengthen financial performance, and we'll finish with the outlook for '26.

First, as Michael mentioned, Oerlikon closed the sale of Barmag 2 February '26. Accordingly, Barmag is presented as discontinued operation in our '25 balance sheet and income statement. The cash flow statement remains fully consolidated, meaning it still includes Barmag as of year-end '25. Detailed information on the discontinued operations can be found in Note 2 of our annual report.

In '25, we delivered strong order intake at CHF 1.655 billion, up 6.5% versus prior year at constant FX. We saw momentum improving towards the end of the year, which helped us to close with a book-to-bill ratio at 1.06, driven mainly by strong orders in materials and equipment. Sales remained stable versus '24 at constant FX at CHF 1.568 billion. A slight growth in second half, supported by low comparison base, offset the decline in H1.

This achievement in a weak economic environment proves the resilience of Oerlikon, which has -- was also achieved through the execution of the strategy of end market diversification. Aviation industry dynamics, we're supporting our performance and also in energy we saw a positive trend driven by our industrial gas turbine business, supported by AI data data centers, extensive energy needs. Nevertheless, most of our other end markets remain subdued. The volatility generated by global trade tensions and geopolitical uncertainties weighed on top line growth, in particular, in tooling and automotive.

In luxury, the weak customer purchasing behavior, especially in China continue to impact the sector performance. These industry dynamics required us to take actions and restructure some activities, in particular, in Europe. I will come back on this later in the presentation.

From a regional perspective, APAC outperformed, especially India. Our long-standing presence in industrially developing countries enables us to support global customers as they expand their operations. We are benefiting here from the new geographical organization introduced in '22, which has strengthened local coordination and commercial execution. Our global footprint also helps reducing exposure to trade tensions and ensure optimal service to our customers even in uncertain environments.

Operational EBITDA decreased by 11% to CHF 271 million and a margin of 17.3%. Our profitability was supported by innovation, pricing and efficiency measures, which counterbalance the negative mix impact from our short cyclical service business and from FX headwinds. Our cost-out actions related to headquarters downsizing are on track with more than 50% having shown financial effects already in '25. The remainder is expected in '26 and '27.

Moreover, structural cost-out actions in the business taken in '25 will increasingly produce effects and support return to positive net result in '26.

With the next slide, let me provide you with more details on our continued actions to drive profitability. Our commitment to strengthening the profitability of our businesses remains a clear priority, also with the target to improve capital return. Alongside driving organic growth, we are putting equal emphasis on establishing the right structural cost base and optimizing our portfolio of products and technologies. Since 2019, we have reduced overhead expenses in admin by 45%, representing a substantial improvement. The decrease further accelerated in '24 with the announcement of the divestment of Barmag.

We saved with these cost-out actions more than CHF 60 million in the last 2 years and structured Oerlikon as a smaller, more focused company. Digitalization, automation and footprint optimization of our coating centers are driving operational simplification and efficiency which are key drivers to ultimately improve profitability. For example, we increased our number of coaters, which are real-time collected to around 125 and aim to further extend this year by up to 100 more. This helps to optimize equipment maintenance schedules, utilization rate, which also enables better reallocation of capacity to coating centers with higher demand.

The better data transparency for our operational assets and the optimized asset allocation logic will be a key contributor to further support operating leverage and thereby improve capital returns going forward. The regular review of our portfolio using our capital allocation framework ensures that resources are directed towards profitable and growing businesses. This review resulted in restructurings in H2, primarily affecting our combustion engine-related automotive business in Europe as well as a smaller part of our luxury business.

These actions aim to sustainably improve profitability and ensure that resources are allocated adequately to support profitability in the medium term. We are also sharpening our R&D approach with a much stronger focus on commercialization. Starting in '26, we incorporate the adoption readiness level approach into our processes. This aims to focus more effectively on customers and market adoption of our new products. At the same time, we are streamlining our offering by eliminating subscale and dilutive products and replacing them with more efficient solutions.

This shift enables us to price upcoming innovations at meaningfully higher margins compared with our legacy portfolio. Overall, these actions are future proving our company and position us to deliver sustainably higher profitability and improved capital returns going forward.

With that, let's move to the balance sheet on the next slide. Let me now walk you through the balance sheet and the pro forma impacts of the Barmag divestment. At closing, 2/3 of the paid purchase price of CHF 716 million were used to repay our CHF 475 million term loan, significantly reducing Oerlikon's leverage ratio. The closing also generated a net book gain of CHF 287 million, which will be booked in '26 on the result from discontinued operations.

Pro forma of the proceeds and net of proposed dividend, this reflects a strong improvement of our equity ratio from 25% to 41%. We Leverage at the end of March '26, considering the proceeds of the divestment of Barmag and after the proposed dividend is expected to decline to 2.7x net debt. Looking ahead, we plan to further deleverage in '26 and '27 towards our midterm target of below 2x.

In '25, we also actively managed our debt profile by issuing CHF 350 million bonds in September and repaying CHF 250 million bonds in November. Our liquidity position remains strong with around CHF 960 million of cash and available credit lines at year-end. Going forward, liquidity management will benefit further from the Barmag divestment. Our restricted cash mainly in China has decreased by around CHF 185 million following the closing, improving cash availability and lowering financial costs.

With regards to distribution to shareholders, we are proposing a stable ordinary dividend of CHF 0.20 per share, supplemented by a onetime extraordinary dividend of CHF 0.65 million as a result of the Barmag divestment with the strengthened balance sheet and enhanced financial flexibility, we are well positioned to support strategic execution as markets recover.

Next, on to our ESG ratings improvement. In '25, we maintained or improved our ESG ratings across major agencies, keeping us within the top 20% of the industrial sector. external partners and agencies recognize our leadership in sustainability and innovation. Our MSCI rating remains at the maximum AAA rating, placing us among the leaders in our industry. Our CDP scores for climate change and water security improved to be demonstrating progress in transparency and emissions management. These results validate our long-term commitments to responsible production, energy efficiency and sustainable innovation.

For example, in 25, we invested 85% of our total R&D expenditure in sustainable products. Our solutions significantly improved the efficiency, performance and sustainability of our customers' products and operations. Overall, our BSG performance reinforces trust with customers, employees and investors and supports our competitiveness.

Let's conclude the presentation with our '26 guidance. Turning to our '26 outlook. We expect the year to remain influenced by geopolitical uncertainty and soft end market dynamics. Sales are expected to increase by a low single-digit percentage organically at constant FX, reflecting the expectation of a continued soft food environment in general industries, tooling, automotive and luxury markets. These headwinds will be partially offset by continued strength in aviation and selected energy applications. We also anticipate the continuing negative mix effect, particularly from service activity, which impacts margin in the near term.

Besides this, we expect an operational EBITDA margin of around 17.5% for the full year. This is supported by the structural portfolio and footprint optimization actions initiated in '25, which will increasingly contribute. On this basis, we anticipate a significant improvement in ROCE, advancing in the direction of our weighted average cost of capital. Our '26 guidance reflects both the realities of current demand conditions, and the benefits of the actions we have taken to structurally improve profitability.

With that, let me open for Q&A.

[Operator Instructions] The first question comes from Sebastian Kuenne from RBC Capital.

I have a few, actually. First, I would like to better understand the volume price/mix situation that led to the very strong order intake in Q4. You mentioned some shortage of rare earths and tungsten and the sharp price increases. How much of that growth that you saw in Q4 is actually just a pass-through basically raw materials going in and going out without any effect on profitability, that would be my first question?

Thank you for the question, Sebastian. The strong order intake in Q4 was mainly driven by our Materials & Equipment business. And to the second element of your question, yes, there is an effect of that, but it's also in organic terms, the orders are increasing significantly, so it is not just the price dynamics you were describing.

Thank you very much. Then on the restructuring, can you give us an idea of the scale of it and how the cost savings will come through in Europe in the next 12 to 24 months?

Yes. So looking at the restructurings in H2, they were mainly focused on our combustion automotive business. In Europe means, first and foremost, Germany and France, also some restructuring in that area in the United States. In Luxury, we had a smaller restructuring of one business in Italy. In terms of materialization, we saw first effects coming through in '25, but expect them to further materialize as we finalize the execution measures in '26.

And the scale of the savings? How many staff is involved?

Staff is in '25 in Europe was around about 300 people, and there is some more to follow in '26 when we execute the measures.

Understood. And then finally, can you give us an idea of the current capacity utilization in your service business in the the tooling business in Europe. You have a high automotive exposure here. How much more could you in theory pass through the equipment annually compared to where we are now? Are we talking 50%, 40%, 70%, where are we spending currently?

Maybe I take that. The utilization is different if you take the service centers and if you take equipment materials. In materials actually somehow at least in it's the supply base, which is limiting us how far we can grow. But utilization is meanwhile on a level that we have ordered an additional contract for and we are considering a third one to come because it's a sustainable long-term lasting demand on certain materials what we are doing.

In addition to that, what we do since 2 to 3 years now is that we monitor our fleet of coders which is roughly 500 and where I said 450 of them are monitored easy in real term with time or at least on daily period that we even send them from service centers in one region to others, where the demand is higher. So you don't do that on a weekly base, but we really see -- and you have utilizations in some areas where only 40% and in others you have 70 to 75.

But be careful, even the 40% can be a very high profitable business, it depends then how we can add to this business more to utilize that equipment and what we have decided 2 years ago, 2.5 years ago, that wherever there is equipment is in the system available, we have to consider that first before you build or buy new ones. What I have to mention, we built new diamond coater new graphite coater, which in the past was technology, which we have acquired. We have developed that and introducing that, and this was pushing a little bit the CapEx in the past.

And this year, we have a certain CapEx by Plymouth put together a consortium and to reallocate the 3 sites in Switzerland, where we combine which would start somehow in summer '26 and we finished the end of '26, early '27. So please keep different. Those materials capacity very well utilized, still some headroom in some areas, but next capacity already to come. There is equipment where we can -- we are producing somehow not on the top line, but we can, let's say, do a little more. So there we are almost fully loaded.

And then there is -- this is, by the way, already that we're talking about order intake for '27 and even beyond because there is a pipeline even from our customers that don't need it tomorrow, but they see a consistent growth and they see a consistent growth as well in a way to coat parts. And then there is the service centers where, again, within the service centers, we have different clients, and you can remember what I've shown in different coatings. Not each coating runs on each coater. And here, the digitalization helps us lost a lot to optimize. Does it answer somehow your question?

Yes. It does.

Perfect. Thank you.

The next question comes from Tobias Kl pper from Z rcher Kantonalbank Bank.

Two questions from my side, if I may. I will take them one by one. The first on the margin guidance, is that for an increase of roughly 20 basis points compared to '25, with stabilizing end markets, corporate cost savings and restructuring benefits, which might seem rather conservative, as you already mentioned. Can you give us some more light on why this might seem that way? Is the mix effect expected to be even more negative in '26?

You want to add, Dirk?

You can start.

I'll start and maybe Marco has a better idea than to answer than I have. The 7 5 is that what we see it for the year with that what we have on hand. some indication it could become a little bit stronger, but we are not in a position to do so. Maybe we have to see since half -- when we have the half year results to give let's say, better guidance. We definitely want to avoid that last year, you remember '24 was a very strong year for us.

And we look to markets and so, okay, these markets are doing well that's why we made a budget for '25, which was very aggressive. And then we had to correct the consensus and to correct the guidance in mid of the year because all these turbulence is by tariffs. All these turbulences that in February and April because we first had to react them. When you get told certain alloys in tungsten cannot be explored anymore, blocked, you have to work on that. And you get somehow, some hits.

And we want simply to want to avoid that. So is it conservative? No, I think it's a good base. Could be more in, if it works as we think it works, yes.

I also think of as that we -- on the elements that we have on the food control, we haven't taken our own work again in '25, positions the company very solidly restructure where it was necessary. And now given the geopolitical situation, there remains some uncertainty. Some of our businesses can react quite quickly, but overall, I think that is what we currently see as an outlook.

Yes. And maybe I think we are all in the same boat. We have a Supreme Court decision on tariffs and you have an administration who are completely different than anybody would expect. Typically, you respect the Supreme Court decision and not counter that with violating another law and phrasing new tariffs. So this is the environment given where we are in.

So -- and to touch that and to build that in the business plan, sorry to say, not only for us, for a lot of others. But as we are in certain sensitive areas with the materials with aerospace or all this stuff, it's the case. And that we have main industries still significantly tackled by these tariffs. And here, I really talk about automotive and our automotive supply industry. which is a strong consumer in tooling and coatings. By the way, there is something which will replace partially that because aerospace becomes more and more market for coated tools, which in the past was always a little bit high because there was always the fear that the coatings could have an impact on a surface on -- for the materials where they're working on.

So defense has not embarked fully yet. So defense that we're talking a lot about theoretical orders, but the supply base is not ramped up. The supply base is not there. So these are areas where we position ourselves as well, for example, in coating. If you have to have more how much new to mix to a machine, you need topnotch coatings. If you have to composite to machine, they have to have topnotch coatings. Does that happen already? No, it does not because the supply base is not there yet.

The orders are placed, the willingness is out there. Now that the supply base has to get ramped up and then it has to start the industrial operations. This is the environment we are in. And probably after lessons learned '25 towards '24, we try to do something balanced in '26.

Very helpful. And then to my second question on the leverage, where do you see the primary lever to achieve the leverage ratio of 1.2x by '27. Is it primarily EBITDA growth or debt reduction?

Yes, I can take this one. It's always, right? At the moment, we are operating at at the EBITDA profitability that we certainly don't see as the as a midterm target where we want to adopt. So that is a clear lever there. That is, of course, the cash flows that we expect to generate as we move ahead. And also on the CapEx side, it's further diligence by better using asset reallocation. Martin was describing it before looking into our utilization, how we operationally and see that we can allocate the assets to the markets that really need them. and also innovate based on the existing coater base, right? We don't have to to the new coater during the field for every new product we bring to the market because a lot of our innovation happens in the process itself. I think it's that.

And then last but not least, it's the working capital. I think if you look at the numbers, we already made a good step in the end of 2025. using the working capital in it by the way, optimizing cash from there, and we see also further upside on the working capital from -- as we move ahead.

So there is not a big -- if I may allowed to add that. This is not a big blockbuster the one and only to the story you have to post a lot of stuff until you make CHF 1.6 billion revenue. And you have to optimize. And if sometimes in our business, it's the little things which counts. That's the way how we manage overdues, our payable receivables and even inventory. In inventory, we have achieved the loss in the business. We cleaned up 2,000 material numbers, 2,000. There's still some headroom, but we are still -- we're operating on that. We have a CRM system, which was not there in that quality in the years before. We got it fully operational in '25, we're using it now. We have harmonized continuous improvement systems, 3 different ones in 21, and it gives you very strong transparency where continuous improvement works better than some -- comparable to some other places.

And to have this best practice sharing. So what we are doing, we're using the technology available, together or a highly spread out company virtually like it would sit on 1 place. And this gives a lot of optimization potential, which was not available simply in the years before, and a lot of things had to happen. Cleaning up 21 ERP systems, which we had into 1. And it was -- believe it, it was a very sad and severe operation.

And it costed a significant amount of money to get there. CRM was the same. Continuous improvement, same. Digitalization. The hub, meanwhile, is really paying back that what we have invested because we have systems which we even now from customer -- from competitors and others getting asked if you don't sell that. We have reduced in -- as flow the typical time for an offer of 4 weeks to 2 days by using digital solutions.

We have an early -- was the early Q system developed where now our OEM customers from the aerospace industry are asking to get their systems. So we have a technology position, which is not falling out of the blue sky. It's hard work. consistently over years, not over months to get that. But this gives you then the resilience and the leading position because nobody can follow you because with a finger snap, you don't get there.

You have to go the same hard way as we have done. But this gives me as well the confidence with the team which we have built up with the lean mill. We have an ACO. We have an NBM of 50, including the We have a tough management team of 40, that's it, on 10,000 people. And this is the way that all these small stuff on operations, on inventory, on the sales side, for sure, pricing was as well an issue. We had some issues in 2021 to get the prices on a level. But if you look in, we have done the pricing story pretty good.

Meanwhile, we have to see that we don't overstretch them. It's the combination out of a lot of things. And for sure, if there is in the 2, 3 industries where we are very strong and we have headwinds, if that will turn into a little tailwind, then you see significant additional effects, but even without that, we are convinced that we can improve the company further on and don't nail me in the end is a 20% EBITDA margin or 19.5% or 20.5%. Midterm, we are sure we have 20%, that we go for that. but we go as well as a combination of margin and investments and by the way, top line.

And this combination will drive the company. We slimmed down the company. We have to be aware that now with CHF 1.6 billion. We are not the CHF 3 billion company anymore, which we have shown in our cost positions. We have somehow now to grow. We're growing massively and mainly organic, not too much inorganic, but we would have a way to finance inorganic as well. But we're not looking for that because as I initially explained, we are unique. There is not the 1 and only target which would help us a lot. This is a specific solution.

And what we learned now in this challenge, I would not now we mention a crisis, but in the challenge is around rare earth and critical minerals, our customers unanimously given the feedback that it is covered how dependent and how important Oerlikon is for their key components and for their supply base, which gives us as well a pretty strong position. hopefully, it was not too long, and hopefully, we have touched your point.

The next question comes from Sebastian Vogel from UBS.

My first question is with regard to the organic sales growth guidance for 2026. Can you elaborate what sort of pricing assumption is going into that one?

Dirk?

We don't give further details on the inclusion of price increases, but you can assume that it is not mainly driven by pricing, it's 0%.

Got it. My second question, again, they're not hard numbers, but more of a rough indication, just understand a little bit more the margin effect of business mix. Can you give us the sort of indication where you stand in terms of equipment versus material versus service of your top line there, that is some sort of rough indication?

A rough indication is that service business typically is in the higher double digits than others, but equipment and materials is as well in double digit and we have cleaned up. That material business was 3, 4, 5 years ago, was single digit or even negative. Equipment business, when we got this story in 8 to 9 years ago, was negative as well and it was highly fragmented. Meanwhile, we have with solution 1 and solution 2, 2 modulize systems where we can even do customization in a much better way as in the past. We have -- it was difficult even to figure out how much equipment we have out. We've discovered some 2,500 systems.

But probably there is a dozen more out there, which we don't even know. By this 2,500 systems we -- most of them, we have some service for. But a lot of them are not equal. They are not even something in mind, but they put together. But now with the new setup, we have that for both businesses or, let's say, all these businesses are in double digit now, but it's different quality of double-digit, and that's why the mix of service, cutting through services is still one of the best businesses in quality of earnings. And if you compare that with the mature business, do you have a mix effect in the numbers and I want to disclose it. Do you want to add something?

No. There was a question from Sebastian regarding the sales distribution that was on the Do you want to...

You can take it.

So on the sales distribution, so 1/3 is roughly the coating services and the other 1/3 is the material equipment and the rest of the is the component business in terms of sales.

And Sebastian, 1 thing to add on the margin and we plan to have a CMD later this year as we announced. And one element is that we have communicated mainly on the level of EBITDA. But if you compare the 3 businesses that Michael and Dirk describing, of course, we have different levels of capital intensity in these businesses. And as we want to strengthen our capital return ROCE going forward, there will be certainly internally and potential also externally more focused on that gap and narrowing it to improve returns.

I think it's good that you mentioned the capital market, which is some are planned for the first half of September, where we would definitely fill deeper details as a, let's say, follow-up to the capital market of '22, a lot of things have changed. So I think it's necessary to give you somehow an impact where we are and where we come from. And it's mainly driven by 3 elements. The 1 element is the regionalization, the second element is the field industries. And if you take tooling into and energy then we're serving actually 11 industries, including the defense.

And so the test which we're serving. And then in the end, the segments, that's the surface the coating services, materials equipment and components. And so this is kind of a That's kind of model. And I think after -- let's say, the Capital Market Day we will give you some more insight, we cannot disclose everything today.

Got it. And just one tiny follow-up as my third question. Your a little bit into that direction anyway. On the energy side, you said, right, the turbine business was doing really well. What sort of share is that as part of your energy roughly to have a little bit of a better understanding there?

From energy, how much is power generation? I have to guess because I do not even fully memorized. But I would say that if you take oil and gas and this one, it's 70-30 towards power generation, 30% probably oil and gas. That could shift, by the way, because actually, we are -- when we talking about oil and gas, we are in the upstream. So we are in the drilling business. Actually, only 50% of the drilling rig side operation because oil prices on $60 or $65 if I'm right. So if that goes up, drilling rigs goes up, but this could shift from the 30 to 50-50. But for the moment, it's the big gas turbines which are driving, and it even has started, so it will enlarge. And then it's -- don't forget about there is industrial gas driven to smaller range, so like the SGT-800 of Siemens, which is running very well.

It's an industrialized from GE. Don't forget about there is coming in the market or the big 3 is Mitsubishi is the smallest, then Siemens and GE and then there is Dusan that is in Italy. And there is not really in the market yet, but the United Gas Turbine of China, which had the first fire in '24. These are the 6 more major players. But then there's still a there is a Caterpillar with solar, which is doing in that area.

But the market is very transparent for us because as some people of us worked there, the energy and is and believe me. There's not too much else others can do than we do. So from the equipment side, we have a very strong market-leading position from materials, where we still help some companies are doing better than us, for example, in the AM powers is dimension-wise bigger because the focus more on the material done. We have done more -- we have more focus for applications. They are focused more in the materials. This will not turn, but this will give us more headroom in the in the future, running that material consumption through our own applications, which are mainly suppressors put in place for any mobile data centers.

What I'm saying that, our final is a data center. A big trend is a flying data center like when they do reconnaissance. If you have a radar station, it's a mobile data center. They need all very efficient cooling systems, where we just haven't worked on that, but we have a strategic partnership with Northrop Grummen. I'm convinced there will be more to come with others because we have a technology proven in 3D printing with Airbus for the satellite RF antennas where they have proven that the 50-kilo antenna in the past is now 5-kg antenna.

And so with the concentration of our AM business, we have started to make money on. We could have done a little bit more last year already, but there was certain bigger volumes shifted into '26, but then we see that in '26. So that's the overall picture.

The next question comes from Loius Billon from

My question is about the -- it's a follow-up on the Energy segment. And I'm wondering as you increase your price given the strong demand of the growth is only driven by an increase in volume? And also, could you give us an idea of the of the breakdown by geography geographies? And where do you expect the strong growth maybe in the U.S., but is there other regions?

No, we don't disclose geography, but what we can do by ourselves, the big 3 players in that sequence General Electric GE Siemens Energy and Mitsubishi Energy, they are the top 3, they cover 80% of the market. So -- and they place their service globally. So we sell to them. They make the gas and they ship it. So when you say geography, mainly in the U.S. Siemens is mainly in Europe for the half side in the U.S. and they have site in Saudi Arabia. And Mitsubishi sits mainly in Japan.

And the sales-wise, has twice the amount of running gas treatments above 100-megawatt than Siemens has, and Siemens has probably 3x more than Mitsubishi and this gives you as well as I mentioned. So more I cannot disclose and I will not disclose it. It's mainly driven by volume, something by price but believe that these customers are also price sensitive. They only pay more if you really contribute significantly more in materials, were good in materials, but there are alternative sources as well.

Besides the coatings. But here as well, we cannot that because it's a long-term relation. If you screw them once, they have a long memory. So you try to do a fair deal and going more with volumes and with the growth because that's much better than to squeeze the last drop on pricing. But for sure, we look on our pricing power. I have to say, we have done a lot between '21 and '23, a major position because we've been in some areas to and we have taken out even certain materials where we say, okay, that's interesting to do so. But the volume-wise, it's not worth to do it.

add something?

yes, maybe to add something, Louis. I think as we move ahead, right, we should look at our equipment and materials business much more as one, right? Because with an equipment sale, your number one, you have great opportunity to lock in aftersales business, which is a very important and number 2 our materials run largely also on our equipment. So looking at these businesses in combination is actually a very important element of how we look at that...

And to be fair enough sense, we've been pretty good in locking in the aftersales business. So 50% of our equipment business today is already aftersales. What we haven't done is with the longer or the album machines to see how it's doing is, who is doing it aftersales and this, we started to investigate in to offer packages, which are for the customers more attractive instead of going to some field and field and forest suppliers.

But if there's a translation in a proper way. The other element is the material story. And here, we did not enough because we are selling equipment, but our equipment runs really better with our materials. And this -- we haven't shown the customers in a proper way. We've been very often selling equipment. -- the businesses together now since 2023 under 1 roof, but we have further that strengthened.

And there is more and more now than materials sell wire the equipment. So when you get equipment, you get all the materials and we can prove that it creates additional benefit for the customers -- for us, it's an additional field for future growth, which we have not utilized in the past proper.

Okay. That's very clear. And maybe a last question. Could you give us more details on the competitive landscape in China for the automotive market? And to what extent are you able to shift from your European automotive business towards market in China?

So I will try to answer that and then colleagues you can jump on. First, Chinese automotive market is totally different to the European one. where the mission profile is totally different. In the past, we had the big ICEs, luxury brands because Chinese successful people wanted to show their success. This is still somehow the case, not that strong, but don't underestimate that. But the mission profile in China is to go 30 kilometers and 40 to work and then back home.

They don't have holidays, they don't go out for the weekends, that's why the electrification China took that fast speed. And by the way, it was supported because of very aware to get a place for ICE in China close to $15,000 and to electric car was for free. So it was really a penalty to get an ICE. Now they're coming to the limits with 50%. But why I'm while describing that, a BYD with that, what they're doing today is not a clear target for us because they don't cover their batteries with a good protection system.

There are 6 -- not BYD, but the Chinese electromobility industry they have a couple of hundred, 600, 700 killed people every year but battery burn ups, they don't care. I have to say that's hard, they don't care. So a total different if you go in Europe, and we do for the Q6 and A6 already with system, which is very protective, much better than any mica. We have projects with BMW, with Mercedes, but these companies are still targeting more the premium segment. And we, with our technologies are more focused on the premium segment.

We are not a mass segment player. We've been and we will be on and other stuff. You have in cars, maybe even in Chinese cars where we have some of that. But do we get out with or with BYD for $20,000 car, no, it's not our business. And they will -- they can only maintain that if they still further utilize the low labor costs, low social standards, low environmental standards, low energy costs and now building and other construction obligations. If they would follow that what we have in U.S. or in Europe, the prices would be double or triple.

So by the way, that's -- it is to follow -- this is not the right way to follow them. It's not the way to ignore them, but it's not the right way to follow. We have to position what we do and we have a good market in China with good margins. But we have to stick them to stay with our technology position as more than looking for a higher technology as more they are our customers. But be aware, the mission profile, how people are using a car in China with 5-days holiday and even after 10 years, you have probably 50-days holiday.

They use it for the Moonvest and they use it for the Chinese New Year and it take a same or plan and getting to get it all together. Europe or every longer weekend people getting all their cars and driving across Europe like hell. And in U.S., you will not find that. We have somehow difficulties to see the real electromobility in U.S. because whenever you are in U.S. the distances and the availability of electricity to reload is simply not given. Latin America comparable, Africa comparable. So it's simply how to say a toy story that ICs will disappear, but the trust level is to come back. There is an open technology race, not driven by funds by governments because the governments will not have the funds.

Whatever EU has done in the past, saying I put 5,000 or 10,000 on a car and then you buy it, for sure, you buy it. Why people are buying actually hybrids because they have half fixation in Germany corporate car. That is a small solution to run a car, which has 2.5 tonnes and has 2 engines and 2 electric system, no it's not. But this situation is where we are in, we're playing on the e-mobility side as on the ICE side.

Playing both, but we're not likely going to China and say, all be in China to make money because the solar industry doesn't make money in China since the decade. We have to see how much Chinese outlook manufacturers and especially their supply base will make money because we are part of the supply base. And if only the OEM makes money in supply base doesn't make it. And that's from 1% or 2% EBIT margin. It's not the market to be.

The next question comes from Alessandro Foletti from Octavian.

I would like to also dig in a couple of segments, starting with Tooling, if possible. Is this basically one-to-one exposure to the machine builders and particularly than in Europe. So we need to see, I don't know, the Gildanized the room of this world to have bigger orders for that business to come back?

No. It's not only -- it was very strong driven historically why we have the strong footprint in Switzerland and a of region because a lot of this machine building industry was here. And the tooling industry was a demand how of Central Europe. Now that's weaker, but -- there is a replacement ongoing. When you look into the aerospace industry, as I mentioned it, a lot of tooling in aerospace industry was and is uncoated.

There was always this the thought that it could poisoning the surface or the quality of the material being machined. Now -- more and more of these companies are reconsidering that position and are working on, and we have tests and even already achieved certain coatings in their cutting tools and in the performing tool will that replace completely the demand of ICE? Probably not.

But it has a different quality. It is higher position. But even today, we are not supplying our holdings also beating everybody but more for the sophisticated applications. And this is a market where you would look by far too short, if you look only in the machine building industry. And especially now with a defense sector with a lot of deal with a lot of new trucks, new military trucks, tanks, composite materials even They all have metals, which have to be machined, which was not out there.

So there is somehow and how much that replacement is I cannot answer. If I could, they probably would not, but still cannot. But there is a replacement. And by the way, the cars are not disappearing. So whatever you need in forging, whatever you need in trustee, whatever you need not in the powertrain that stays. So even if you have looked at the base of an electrical, there's a lot of machine parts as well. But there was the unsecurity of the industries where to put the money on. And this still stays, and that's why they have to be hesitant.

I'll give you an example of our is depending a little bit from how much new models are coming to the market. So -- and there was models planned of 180 to 190 in the last 2 or 3 years, in average, that was 150 only because the models are pushed pushed into the future, not knowing will they launch them -- they will want and they want to launch them, but when the right timing to launch them when to bring them and then with which kind of powertrain. And this unsecurity is some are in our business today, wherever it's automotive or tooling. Does that answer your question?

Yes, a little bit, yes. .

expected more?

No, we can discuss that in the -- well, I would like to know what you think about the numbers. We are now sort of below CHF 300 million in tooling and maybe around CHF 300 million in automotive as well, so CHF 600 million the 2 of them, if I calculate correctly, it was much more than that in the past. And I just wonder how much it can go back to what level it can go back to?

I have to check, but I think it was not that much more in the past, but maybe you are more aware than I even -- and there is a recovery definitely -- how much that will be? I cannot say -- I would guess, and I don't want to guess too much around.

No, that's fine. But maybe...

And I've shown there are more areas which have been definitely not there in the past, which will have a significant requirement on tooling. Even if you have 15 Airbus per month and 15 Boeings per month, all the winds getting built out of aluminum. So it's not that there is no -- there are no industries which are not a demand on cutting tools. And when you have cutting tools, the #1 address to build is us.

Okay. Good. The second question would be more in luxury, maybe that one also a bit of a detailed question. I'm referring to your Slide #6, where you showed the number of expected number of pieces with PVD coating. And I'm aware that this is probably still a very low amount part of your business, but it's also as you mentioned, part of your story, why you entered in luxury. So can you give an indication of how relevant the PVD now within luxury is already now?

First question myself if we should disclose, but I think I can give you a direction. We are somehow in a range of 7% to 10% today, and we would -- we see pretty fast getting to 20, 25 then there's a further way to 50. And then they come to big hold point. The question is then, will there be some application, which is simply not worse to go for PVD?

But then is potentially not even our application. And second, we have new developments like deep black, which is there is a scale. Today, the deepest black is a black 32. Don't ask me how to scale it. Our deep black is 22. So significantly more flag. We developed that for the luxury industry -- but now meanwhile, we have requirements or, let's say, potential projects with the of automotive because they look for this black, with designers from what industry they look for more deep black, which is still at luxury and get it or not for surgery instruments because we close most of the surgery instruments today already with black and they don't want to have any light reflections.

And as deeper the black is, less reflections they have and the better the surgery can happen. So you develop something, and this is exactly the way how we want to operate. We developed something for 1 application and then we see where this application makes sense to get further up.

The story is growing, and it's growing because there is a massively move from based electroplated materials to make stainless steel PVD coated materials. By the reason I mentioned, much less mature much, much more sustainability for the customers. If you buy something expensive, you want to have it sustainable. And you don't want to be mixed up with all the things coming out of Asia. So there the drivers for that are our customers, which are the guitar, the old channels from less and so on, but they get driven by their customers to show them that their products are more sustainable and special. People who buy luxury was there something special.

You don't buy an expensive watch to get the time because if you get from the iPhone. You buy it because you want to have something special. And this is with which is, for us, not a market yet because simply the volumes are too small, too much individual. And -- but to the luxury goods where we are on today, this is a story where we see significant growth. It took a while, by the way, and it takes a little longer because the overall rebound of this industry has not taken place yet.

All right. Good. Maybe I can ask my last question, maybe the CFO. Can you give an indication of your CapEx expenditure for this year and maybe next year as well if you already have it?

Yes, sure, Alessandro. We plan with a CapEx envelope of around CHF 100 million overall for '26, this will be higher by round about CHF 30 million because we have an expansion project in Switzerland. Michael was talking about it. It's a technology composing which actually consolidates 3 sites we have in Switzerland and build the technology center for our thermal spray business, and this is currently in construction. So there is a CapEx element a significant one in '26. But in the long run, you can assume it's in

[indiscernible]

Right. And there is a material project in Michigan in the U.S., which also absorbs some of the additional CapEx. But the midterm you can assume around about 100.

Right. And around about CHF 30 million, CHJF 35 million in intangible assets sort of always in the past or...

Yes. I mean if you look at the R&D side, it's around about 25% of our R&D spend, we usually capitalize and then there is some IT on top.

Ladies and gentlemen, that was the last question. I would now like to turn the conference back over to Aymeric Jamin for any closing remarks.

Thank you very much for your time today. I hope you enjoy the presentation, and I remain at your disposal in the next days to come more into the details and further answer further questions. Thank you very much.

Thank you. Bye-bye.

Thank you. Bye-bye.