Rieter Stock

Ladies and gentlemen, welcome to the Half Year 2026 Results Conference Call and Live Webcast. I am 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 Thomas Oetterli, CEO. Please go ahead, sir.

Thank you, and good morning, ladies and gentlemen. A warm welcome from my side. Thank you for joining us today to review Rieter's half year 2026 performance and discuss the strategic path ahead. The picture you see on the title slide is a man-made fiber mill, and this represents the new potential of our Barmag portfolio. I will outline the key messages, review the market and then discuss the progress of the integration of Barmag. I will then hand over to Oliver for a deep dive into the financials and the outlook. And last but not least, we then have the Q&A session. Now let me start with the key takeaways. Besides still challenging market conditions, the first half of 2026 was marked by the historical milestone for Rieter, the successful completion of the largest acquisition in the company's history. With the addition of the Man-Made Fiber Division, Rieter has entered the attractive and fast-growing market segment for man-made fibers, while at the same time, significantly strengthening our position in Asia.

The integration itself is progressing well, and we are already seeing the first tangible benefits. During the first half of the year, we realized initial cost savings in both material costs and operating expenses. Looking ahead, we are confident that we will achieve our synergy targets of at least CHF 20 million annually by the end of the 2028 financial year. It is important to note that the acquisition was completed on February 2, 2026. Consequently, the results reported for the Man-Made Fiber Division in the first half of 2026 reflect only 5 months of business activity. They, therefore, do not represent the full 6 months contribution. Overall, the acquisition significantly expands Rieter's strategic opportunities, broadens the technology portfolio and creates a stronger platform for sustainable growth and value creation.

So let me move on with the key messages, and I start with the green boxes on Slide #4. We achieved an improvement in our market performance. Besides a strong market in China, India's growth is accelerating rapidly. Order intake increased by 56% to CHF 554 million. However, this increase is mainly attributable to the first-time consolidation of Barmag as the Man-Made Fiber Division, which contributed to the growth with an order intake of CHF 261 million. But we also have seen acceleration of orders in the second quarter compared to the first one, and we expect further positive development in the near future. As a result, sales rose by 72% to CHF 576.7 million.

Regarding profitability, operating EBIT amounted to minus CHF 6.3 million in the first half of 2026. Due to the current capacity utilization and the fixed cost structure, operating EBIT in the first half year of 2026 was below the operating profit breakeven point. We expect a higher sales level in the second half of 2026 and confirm our guidance.

Moving on to the blue boxes. A particularly encouraging development is the change in sentiment we are observing in India, one of our key markets. Customer investment activity has now picked up, which supports order intake and also provides further evidence of a market recovery for the coming quarters. Within the Man-Made Fiber Division, we have successfully set up China's local-for-local organization, which helps us capture the country's strong market growth. In addition, we have completed the successful ramp-up of the winder assembly, which we have moved to China in the Short-Staple Fiber Division.

In June 2026, Rieter entered into a strategic partnership with Recycling Powerhouse. Through this collaboration, Rieter contributes its extensive expertise in the tiering of textile waste and the spinning of short fibers to help create the foundation for innovative and sustainable recycling solutions across the textile industry. I will further elaborate on the Recycling Powerhouse model in a few minutes.

Last but not least, let's turn to the gray boxes. From an operational perspective, the integration of Barmag is progressing according to plan. We remain focused on realizing synergies, aligning processes and leveraging the strength of the combined organization. At the same time, our new divisional structure has been well received by customers. The sharpened market focus and strengthened customer orientation are generating positive feedback while driving stronger customer engagement, and we especially have seen that in the second quarter of this year. We are also making good progress with our IT transformation program, which we launched in the summer of 2025. The SAP S/4 HANA conversion remains on track and represents an important foundation for future efficiency improvements, process harmonization and scalability across the group.

Overall, the first half of 2026 demonstrates that Rieter is executing its strategic priorities successfully, strengthening its market position and building a solid platform for sustainable and profitable growth. But I also have to say in all fairness that operationally, we still need further improvement, so let's move to the market, and I will first highlight the global economic and textile indicators.

Let me first provide a brief update on the current market environment and the key factors influencing customer sentiment and industry dynamics. Starting with demand indicators, we continue to see now encouraging operating levels in important textile markets. India remains a bright spot with spinning mill utilization above 80%, underscoring healthy industry activity. We also see early signs of recovery in our Components and Technology Division, where the demand for consumables, wear and tear parts and spare parts increased the first time since more than 3 years by 3%. This market segment is often a leading indicator of mill activity. It suggests improving capacity utilization and will pave the way for renewed investment in spinning equipment over the coming quarters.

Similarly, African spinning mill utilization has surged above 90%, reflecting strong production activity and solid demand conditions across several areas in the region. Through our participation in the Africa Textile Renaissance Plan, we -- where we contribute our in-depth textile expertise and have set up aftersales services, we are well positioned to benefit from this favorable development. On the geopolitical front, we have, of course, closely monitored developments surrounding the conflict involving Iran. Based on our current assessment, we do not have a direct operational impact due to our limited exposure to the affected region.

However, like for many others, indirect market effects are becoming visible. In particular, we have tensions around the Strait of Hormuz, and this has contributed to higher energy and freight costs, creating additional pressure across the global supply chains. As a result, elevated oil and gas prices continue to weigh on industry profitability, increasing operating costs for spinning mills and other participants throughout the textile value chain. Against this backdrop of geopolitical uncertainty and higher input costs, we are observing still greater hesitation among some customers regarding capital expenditure decisions. While underlying demand remains present in many markets, customers are still taking a more cautious approach to large investment commitments.

In addition, the strong Swiss franc continues to present a competitive challenge affecting export competitiveness of our components and market positioning relative to competitors operating from lower cost currency environment. So overall, the market picture remains mixed. Strong utilization rates in Africa and especially in India provide positive signals for industry activity, while geopolitical uncertainty, elevated energy costs, investment caution and currency headwinds continue to influence customer behavior and market development.

A word on the profitability of the spinning mills on Slide #7. Here, you see cotton margins in terms of U.S. dollars per kilo on the left compared with polyester on the right side. The spinner cotton margin is naturally quite slim and has come under increasing pressure in the recent years due to labor shortages and rising costs. Low capacity utilization further weighs on those margins. We see this in the rest of the world where margins dropped between 2021 and 2025. However, in India, the erosion has finally stopped and margins are starting to recover. In China, by contrast, we see stable margins, but on a lower level as the Chinese companies are pushing more for volume than for margin. And this is thanks to strong modernization activities in the country's technology base.

On the polyester side, polyester margins are under pressure too, but show a different geography picture. They have fallen in India and China, each around by almost 30% over the past 5 years, and in the rest of the world, they have stayed steady since 2021, while staging a strong recovery from sharp declines in the years '22 and '23. Here, Man-Made Fiber Division and Short-Staple Fiber Division pursue the same vision of fully digitizing and automating the value chain underpinned by strong sales and service networks, which in turn will help strengthen the margins.

Now a deep dive into the different markets on Slide #8. Market developments continue to show an uneven picture in the first half of 2026. The Americas showed a stable market environment overall with interesting opportunities in Central and South America. Brands finally are restocking after the tariff ruling, and we are seeing mill upgrade opportunities in North America. We are well positioned in this market, and we see real growth prospects for the near future. EMEA consists of Europe, Middle East and Africa, and this includes key markets like Turkey, Egypt, Uzbekistan and Pakistan. While Turkey and Uzbekistan have still not recovered from the downturn, we see some market improvement in Egypt.

You see that also on our press release where sales in EMEA and Americas have declined year-on-year by CHF 60 million, resulting in a CHF 20 million more or less decline of gross contribution. So in these markets, we can support our customers with automation solutions and energy-efficient products and systems to create an advantage in the conversion costs per kilogram yarn. India is ready for growth, and we especially have seen that in the second quarter of this year. As the capacity utilizations are still high, several larger projects are now in the planning and final decision phase. China has shown the greatest resilience in the market over the last 4 years of downturn. Mills put a focus on installing the latest technology, a trend which is supported by the central government's clear investment plan. Rieter has implemented a strong local organization in all the divisions to match the Chinese requirements. Our growth in the world's biggest textile market confirms that we are following the right strategy.

So let me now come to the Recycling Powerhouse model on Slide #9. This is an important element of our sustainability and growth strategy. We are seeing that the global textile industry is undergoing a fundamental transformation. Rising volumes of textile waste, increasing regulatory pressure and growing demand for sustainable products are accelerating the need for scalable, circular solutions. We believe that value creation will come from connecting all critical steps of recycling into one integrated process. The model first starts with sourcing. We call that the feedstock of waste where we support the procurement and in this case, it is, of course, textile waste.

The next step is sorting. Textile waste, both pre- and post-consumer is sorted by color and fabric type, while non-textile components are removed. This is a critical step to ensure high-quality input for the recycling process. The sorted material then moves into tiering where textile waste is transformed back into fibers. Through a gentle opening process, the fiber quality is maximized and as much value as possible is preserved from the original material. The recycled fibers are subsequently processed through spinning using state-of-the-art rotor and ring spinning technologies. This enables the production of high-quality recycled yarns that meet the requirements of demanding textile applications.

The final stage is marketing, where recycled yarn is sold back into the textile value chain. Product quality assurance is essential and the yarns will then be marketed under an established brand. Our strategic partnership is a key enabler of this model. Through this collaboration, capabilities across the recycling value chain are combined to accelerate the industrial scaling of recycling solutions.

This concept is built on 3 pillars. First, a franchise model, which allows scaling efficiently through strong partners. Second, a standardized blueprint, ensuring consistent processes and quality across all locations. And third, operational excellence, leveraging technology and know-how to achieve competitive performance and profitability.

Let's now finally turn from my side into an integration update of the Man-Made Fiber Division. One of the advantages of this acquisition is that we can pool resources and leverage our combined strengths. This is why we expect to realize synergies of at least CHF 20 million annually by the end of 2028. The first 5 months have confirmed that this is realistic. Through joint negotiations, we already have realized CHF 1.2 million in savings. In total, we have addressed more than 300 suppliers. We also have set the foundation for procurement collaboration for future joint activities.

We are stepping up our focus on costs and are accelerating our continuous cost leadership and procurement initiatives. Our local sourcing and best cost country footprint are being expanded. And at the same time, we are reviewing our suppliers and our value chain, our value engineering while looking into other operating expenses. The consolidation of the headquarters in Winterthur and Remscheid into one organization at 2 places is also progressing as planned. So this concludes my part of the presentation, and I now hand over to Oliver Streuli for the financials.

Thank you very much, Thomas. Good morning, ladies and gentlemen. Before turning to the financial results for the first half year 2026, let me briefly explain 2 important changes compared with previous reporting periods. On Slide #13, we show the new segment reporting and the alternative performance measure. First, following the acquisition completed in February 2026 and the new organizational structure that we announced last year, we have adopted our segment reporting structure. We now report the group in 3 divisions: Short-Staple Fiber, Components and Technology and the new Man-Made Fiber Division. The Short-Staple Fiber Division consists of the former Machines & Systems and the aftersales divisions. Components and Technology consists of the components business units and the entire R&D for the short-staple fiber business. And the new Man-Made Fiber Division consists of the Barmag brand and all the acquired business.

This reflects how we manage the combined group and also how resources are allocated internally. Second, we have aligned our most important alternative performance measure, which is operating EBIT. Operating EBIT now excludes restructuring costs, impairments, transaction-related items and purchase price allocation related to depreciation and amortization. We believe that this allows for a clear view of the true operational performance of the business and improves comparability across the 3 divisions.

Now let me turn to the financial performance of the first half of 2026 on Slide #14. As indicated by Thomas before, the first 6 months of the year were shaped by 2 factors: First, the integration of the newly acquired business; and second, the market environment that remains challenging for large parts of the legacy activities, especially in Short-Staple Fiber Division. Starting with the key messages. Sales increased by 72% to CHF 576.7 million. Order intake increased by 56% to CHF 554.1 million. Both developments were primarily driven by the integration of the new Man-Made Fiber Division.

Operational EBIT amounted to CHF 6.3 million compared with CHF 4.3 million in the first half of last year, but was on a comparable level when excluding operational real estate disposals in the first half of last year. Now despite relatively weak sales volumes and some pricing pressure in our legacy business, disciplined cost management kept operational profitability close to breakeven. Reported EBIT amounted to minus CHF 39.9 million. The difference is largely explained by purchase price allocation-related depreciation and amortization of CHF 26.3 million as well as restructuring and transaction-related expenses in the amount of CHF 7.3 million. As a consequence, the net result for the period amounted to minus CHF 54.9 million.

Free cash flow resulted to minus CHF 96.3 million. This reflects obviously the net loss and the temporary buildup of operating net working capital, particularly to support project execution and deliveries planned for the second half of the year. Especially in the Man-Made Fiber Division, we will face a significantly better second half of the year from a cash flow perspective due to the relatively high amount of orders being finalized and handed over to customers in the second half. Order backlog increased to CHF 760 million and provides a good visibility for the coming quarters. And last but not least and certainly a highlight, we successfully repatriated more than CHF 80 million of excess cash from China through dividend distributions.

Now let me dive into some of the details on the following slides, starting with orders on Slide 15. Order intake increased by 56% to CHF 554.1 million. The increase is entirely attributable to the new Man-Made Fiber Division, which contributed CHF 261 million of orders during the first half. Negative currency translation effect reduced group order intake by approximately CHF 30 million. On an organic basis, group order intake declined by around 9%. This confirms that the broad-based market recovery has not yet materialized. But we also have to point out a clearly accelerating trend in terms of order in the second quarter versus the first quarter of the year. The legacy Rieter business consisting of the Short-Staple Fiber and the Components and Technology division continues to operate in a mixed market environment.

Short-Staple Fiber reported an order intake of CHF 194 million, which is down 25% year-on-year. Components and Technology increased slightly to CHF 99 million. As outlined before, the regional development still differ considerably. India continues to develop positively and is a clear highlight. In the legacy business, order intake for new equipment increased significantly year-on-year and customer sentiment remains constructive and investment activity is healthy. China remains on a stable and high level and order activity continues to be supported by solid project pipeline and a comparatively healthy investment sentiment.

However, the picture is very different in EMEA and in the Americas. Customers remain cautious with larger investments and demand for new equipment, therefore, remains clearly below historical levels, especially in countries where Rieter enjoys a strong market position historically, such as Turkey, Egypt, Uzbekistan and the U.S. As a result, Asia continues to carry the recovery, while markets outside of Asia have not yet improved. In addition, this has a negative impact on our profitability as pricing pressure from Asian competitors is significantly stronger in India and in China and compared to the rest of the world.

The new Man-Made Fiber Division secured several midsized orders during the first half and keeps a very solid pipeline to further build on the gradual recovery seen in the sector. In terms of regions, India is the most attractive future growth region for Man-Made Fiber which is driven by local investments in the upstream chemical fiber installed base, which lays the foundation for local Man-Made Fiber production in India, which in turn is driven by sustained and strong economic growth and the prospering middle class.

Let's continue with the top line on Slide 16. Sales increased by 72% to CHF 576.7 million. The increase was primarily driven by the inclusion of Man-Made Fiber, which contributed CHF 293 million of sales. Currency translation reduced reported sales by approximately CHF 24 million. The legacy business continues to reflect the relatively low order intake levels of previous periods. Specifically, Short-Staple Fiber reported sales of CHF 190 million, down 14% year-on-year. Components and Technology generated sales of CHF 94 million, which is down 18% year-on-year.

From a regional perspective, the center of gravity of the group has clearly shifted further towards Asia. China became the largest market of the group with sales of CHF 350 million and India being the second largest market also continued to perform well in contrast to EMEA and the Americas, which remained significantly below prior year levels. As already indicated, customers in these regions continue to postpone larger investments and capacity additions.

And now to the operating EBIT on Slide 17. Operating EBIT amounted to minus CHF 6.3 million compared with positive CHF 4.3 million in the first half of 2025. The bridge on this slide highlights the key drivers. The bigger group generated a higher gross profit contribution, but was diluted by increased pricing pressure and the negative mix in Short-Staple Fiber. However, the positive gross profit effect overall was almost offset by the additional operating cost base required to support the bigger group and the corresponding operational capacities. Specifically, research and development expenses slightly increased by CHF 3.4 million to CHF 32.8 million. And selling, general and administrative expenses increased by CHF 14.9 million to CHF 104.3 million.

Looking at divisional performance, Short-Staple Fiber remained heavily affected by low volumes, lower-than-planned part sales in aftersales and pricing pressure for new equipment. The division reported an operating EBIT of minus CHF 37.8 million and clearly indicates the requirement for further improvements. Components and Technology delivered a stable operating EBIT of CHF 4.6 million despite a slightly lower sales level. And the new Man-Made Fiber Division delivered operating EBIT of CHF 19.7 million after only 5 months of consolidation. This highlights both the profitability and the resilience of the division and confirms the strategic rationale of the transaction. Despite weak markets in large parts of the legacy business, disciplined execution and cost control kept operational profitability close to a breakeven.

Now a word on cash conversion on Slide 18. Free cash flow amounted to minus CHF 96.3 million. Three main factors explain this development. Obviously, a negative net result. Then this is the biggest driver, an increase in net working capital, which explains 2/3 of the negative cash flow. And third, also some investment into the business, although CapEx was handled very restrictively in the first half year as in the past. On working capital, which has risen and the main reason is that activity levels have increased and major projects are currently in production will be ready for delivery in the second half of the year. This will drive sales, but to a larger part, cash flow due to progress final payments according to the respective payment terms, especially in the Man-Made Fiber Division.

More than 2/3 of the working capital buildup is linked to the Man-Made Fiber Division. And we, therefore, expect much of the increase in net working capital to reverse as related orders will be delivered during the second half. And on top, we expect to conclude several large projects, which will trigger the respective advanced payments. Rest assured not only cost but also cash obviously remains a top management priority, and this applies both to the legacy business, but also the ongoing integration activities.

Now let me conclude with our financial position on Slide 19. Following the acquisition, the balance sheet of the group looks fundamentally different compared with year-end 2025. Not only these assets increased from CHF 1.5 billion at year-end to CHF 2.7 billion, but also the number of employees increased from approximately 4,600 to more than 6,400. Net liquidity of CHF 184 million at year-end moved to a net debt position of CHF 673 million at the end of June. This development is explained primarily by the purchase price consideration and the temporary negative free cash flow during the first half of this year. Equity amounted to CHF 745 million and the equity ratio stood at 27.8%.

As mentioned at the beginning, we have demonstrated our ability to repatriate significant cash from China. Obviously, our current level of debt is clearly above our midterm ambition. As a consequence, you can rest assured that we are in constant exchange with our most important stakeholders, and they continuously support the group and believe in the rationale and the value creation potential of the combined organization.

Now let me conclude with our outlook as we move to Slide 21. The market environment remains mixed. India, clearly the highlight, continues to show positive momentum and China remains stable at a relatively high level. Demand in EMEA and in the Americas in contrast remains very subdued. Based on current backlog, expected project execution in the Man-Made Fiber Division and the measures implemented across the group, we expect a stronger second half in terms of profitability and cash generation. And we, therefore, confirm the outlook communicated earlier this year for the full year 2026. Our priorities remain our customers, the continuous footprint adjustments and cash generation. And with that, I conclude the financial section. Thank you very much.

We now come to the questions. Ladies and gentlemen we will start with the questions of the participants in the conference call, then we'll take the questions from the webcast. As usual, the Q&A session will be recorded. Matilda, may I kindly ask you to open the line, please, for the first participant.

[Operator Instructions] The first question comes from the line of Amira Manai from ODDO BHF.

So I have actually 2 questions related to the outlook. So the full year guidance implies significant improvement in H2 sales. What gives you the highest confidence in achieving this acceleration? And excluding the contribution from Barmag, what level of organic sales evolution do you expect in H2? And which divisions or regions are expected to be the main drivers? This was the first question. And the second one is how much of the H2 revenue outlook is already covered by the current order backlog? Thank you.

When you look on our sales, we have achieved in the first half year, so roughly CHF 580 million, it would be easy just to double it, then you come to 150 million. Then you have to add one more month for Barmag so CHF 50 million to CHF 60 million, so you already end at CHF 1.2 billion. Then, of course, we know our backlog and the backlog has execution dates and delivery dates and billing dates, so the whole outlook is based on our existing backlog. In the aftersales component and so-called single machine sales, still some additional sales volume will come with order intake of July, August and September, but 3/4 of this additional, let's say, CHF 100 million to CHF 300 million is already in our book, so there is a high confidence that this outlook can be achieved.

And this is valid for all the 3 divisions. And you will see that it is especially a continuation of the strong performance in Asia Pacific. The divisional split, as I said, when you take our volume we had at all last year, CHF 685 million was our total sales value for the year. So you can calculate with plus/minus CHF 700 million, and you can calculate with probably a little bit short of CHF 700 million for the Man-Made Fiber Division because we will, at year-end, only have 11 instead of 12 months.

Yes. Maybe just some other questions. For the order intake in Short-Staple Fiber remains relatively weak, so when do you expect this division to return to sustainable growth?

Yes. It is true. We have suffered also -- I mean, we have suffered for many, many years now. And there are 2 things happening. Overall, the overall global market was down. It was just down. It was especially down in the so-called rest of the world. When you look on sales volumes, the sales volumes we are achieving today in the rest of the world, which is Americas and EMEA is 80% less than it has been 3, 4 years ago, and we have partially compensated that with higher market shares now in India and in China, thanks God.

Otherwise, it would have been much, much worse because historically, Rieter was especially strong in the Americas and EMEA region. We all know that in the past in Turkey, we made per year, 300 million sales volume and we are struggling to come somewhere between 30 million to 40 million per year now, so it has completely collapsed. So already 2 years ago, we started to move our organization more towards India and China and other Southeast Asian markets, and we have strengthened our local organization.

China was quite stable over the last couple of years, but we had a very low market share there. We have increased that, and we will also further increase it to benefit from this quite resilient market. Now India also went down a lot, but India now very clear is back. It's very, very clear. Especially the second quarter was very strong, and looking on the order pipeline, I have to say there's no reason at all why this should change. So the growth will be driven by Asia Pacific.

Now in all the other markets, we mentioned that we do see Africa, but it's quite a small one to bring some opportunities. And we see especially Middle and Latin America in order intake to grow over the next couple of months, but this will only impact our sales and margin levels next year.

The next question comes from the line of Tobias Klöpper from Zürcher Kantonalbank.

Just one question from my side. As you say, the restructuring is yet to be fully implemented. Can you give us some insights on what onetime costs you expect in the second half of the year and maybe going forward?

So we do have launched existing programs. We announced that last year. This was mainly regarding our component landscape. We had a very, very fragmented production landscape here in Europe. So over the last 6 months, we have sold our company we have in Belgium, we have announced to shut down our company in the Netherlands and we also are closing our company in France. Belgium and Holland have been especially -- they were part of Graf, so for combs and cards. And France was more -- was a participation of Bräcker, where we produce rings and travelers for ring spinning machines.

We also have closed our manufacturing at SSM in Switzerland. So we don't produce any more machines here in Switzerland, and we have moved that to Asia Pacific. So these are the, let's say, the actual activities in the C&T division. And the impact will be fully visible with the year-end with the yearly results of 2027 because we are now still in execution, so you don't see the improvement by 100%. But what you see is that we were able to keep our margins in C&T, although our sales volumes were roughly 15% less than last year. We kept the absolute amount of operating profit, and you will see an improvement for the next year because then we have the full impact.

On the other side, we also have in the area of SSF, we have at the moment 4 manufacturing sites, and we have a huge underutilization of our capacity. Two of those factories are in Europe, 2 of the factories are in Asia Pacific. And as the market now is 80% in Asia Pacific, we, of course, have to consider that we have to align and correct our supply footprint. It's not only manufacturing, it's also supplier base, so we are in the planning phase of that. And as soon as we have more concrete details, we will communicate this.

And then last but not least, in Man-Made Fiber, we have 2 factories in Germany, so in -- for Neumag in Neumünster, and for Barmag in Remscheid. And we have a strong manufacturing footprint in China mainly in Suzhou and in Wuxi. And Suzhou is our main manufacturing site, and we have started already 1 year ago. It was before Barmag belonged to us. We have started to move our winder production to set up also in China and to slightly reduce the winder production in Germany. This also will generate in the foreseeable future the one or the other adjustment case, so you can expect that we will communicate as soon as we have the final picture in the second half of this year. I cannot give you a clear amount at the moment.

[Operator Instructions] We now have a question from the line of Leonie Zirn from UBS.

Regarding the synergies that you mentioned that you secured in the first half, CHF 1.2 million, can you already give like an estimate what you would expect this to be in the full year '26? I think when I look at the chart, it looks like CHF 3 million to CHF 4 million approximately.

So we are targeting -- for the first couple of months, you are right. We are targeting a synergy level of CHF 3 million, and you always have to say this is a run rate. You don't see it already in the P&L, right? It's always a yearly run rate. And so we have achieved now in the first couple of months, we achieved already CHF 1.2. This was mainly driven by synergies in the area of material cost. What we have done, we were first looking at all our suppliers, who is supplying for all the Rieter and Barmag, so we brought those volumes together and have renegotiated prices.

Another topic we did is at Rieter, where we used -- when we saw that volumes for a certain supplier were above the level we somehow have indicated for them in a year. We went back and said, hey, you have made more business with us, I would like to have some extra money. And we have now applied that also at Barmag, so this was a learning Barmag took from the Rieter side. And now we are expanding, so we now go into the different components and say, okay, maybe we have 2 different suppliers, but we might be able to combine volumes and achieve better costs, so that's what we are doing now in the second half of the year.

The second topic we are doing, we are looking into operating expenses. So giving you an example, we are now monitoring what are our costs for audits, what are our costs for insurances, what are our costs for facility management, and we see that we can also here create quite substantial savings. And then last but not least, we are also working now on this topic of the headquarters, but this takes more time. And when you look on this specific chart we have in our presentation, this was the chart on Slide #11, you see that operating expenses and cost of personnel, they will start towards the end of this year.

And then last but not least, of course, we are also looking on our R&D facilities and on cross-divisional sourcing and manufacturing. So where do we have today a sourcing from a third-party supplier where in fact, we could supply also internally and get the margins into our book, so we are -- we have a good start. We have a clear plan, and we have clear accountabilities and responsibilities and those 3 million to 4 million run rate by the end of the year, I'm sure we will achieve that.

Okay. Then a second question on the advanced payments. So if I look at those, they have risen to 205 million compared to the 77 million from end of '25, but then Barmag also reported 140 million prepayments end of '25. So I'm just wondering how much of this 205 million is actually additional prepayments that you added in the first half? How much is effectively new or how much is just like a Barmag add-on? Yes, maybe some details here.

Hello Leonie, I cannot give you the detailed advanced payment breakdown by division as we do not disclose that, but what I can give you is some color on the development by division. The payment behavior has remained unchanged, but there is some difference between the regions. And more specifically, we see slightly lower advanced payments in the Indian market than especially rest of the world, so that is like-for-like, a slight drag on the short-staple fiber side, but other than that, the payment behavior has remained stable overall.

And with regards to Man-Made Fiber, we had a relatively weak month of June in terms of order intake, not because projects are postponed, but it's more a timing gap between June, July or maybe August. And therefore, also the June month was the weak month in terms of advanced payments, and we expect that to normalize then in the coming months. But overall, no significant change in advanced payment behavior.

Okay. So mostly a timing effect from what I understand. Okay. And then in terms of reversing net working capital, can you -- as you have seen quite some buildup there, how much do you expect to like reverse as you had deliveries in the second half? And then also in terms of free cash flow, can we already expect like free cash flow to turn positive at end of '26? Or will this still remain in negative territory?

Also there, we will not provide guidance for the full year, but a bit of color on that as well. We expect the net working capital effect in the Man-Made Fiber Division to largely reverse even more than that actually. And we expect Man-Made Fiber to be positive on free cash flow level quite significantly, which was not the case in the first half year. And in the other divisions, we continuously to work on those topics. Obviously, if you are below your sales, this does not help in the short term in terms of releasing net working capital, but we see quite some potential in the second half of the year on free cash flow.

Okay. And then just a clarification question from what we've been discussing before regarding like second half revenues and your expectations around that. You mentioned that you mentioned like this number of 700 million for short-staple fibers that we should take as a proxy, for what exactly? Can you just like elaborate maybe a second time? And from what I understand, so 1 more month of Barmag should give 50 million to 60 million and then existing backlog back the rest of the outlook. Is that correct from my understanding?

It is almost correct. The 700 million, I said, is the old Rieter. Last year, we had 685 million, and this was Short-Staple Fiber and Components and Technology, just that you don't mix it up. So it's like the old Rieter last year was 685 million, and in that area, we will also remain this year. We also said that you might remember the year-end call where we said we have a transition year where we have like a flat development in the old Rieter, but expecting better order intake. And then you take 11 months of a year for Man-Made Fiber. There's also here a little bit of seasonality, but not so much like in the Short-Staple Fiber because some accounting differences, we also have a percentage of completion method for certain projects, big projects in the MMF division, whereas at Rieter, it's really -- we show the sales in the moment where we were able to do the final billing, so -- but altogether, this range of 1.3 to 1.5, yes, it is absolutely valid. But to be also clear, it will be probably slightly below the midpoint because of the 11 months of Barmag.

Okay. But then if I recalculate what the organic growth of Barmag, was it probably from like double-digit down as well, maybe down between 10% and 15%. Do you really expect like Barmag levels to be comparable to those of '25 because from what it looks into the start of the year, it looks probably also below this number?

More or less, yes, maybe slightly below in sales and a good chance to be above in order intake.

Ladies and gentlemen, that was the last question over the phone.

Okay. Then we take the question from the next part. The first question comes from Dominik Feldges from Neue Zeitung, What was your organic growth in sales and order intake?

Okay. Thank you for this question. I think the best is if you look on the Slide #15 and Slide #16 because you see the bridge there on the left side, half year 1 to half year 2, so you see there also Short-Staple Fiber and Components and Technology. So in order intake, Short-Staple Fiber was down by CHF 48 million, and the level last year was CHF 260 million, so when you take that, it's somewhere a little bit less than 20%, it went down in sales because you always have to adjust it for FX. And then you look at C&T went up 5.8%. Our level last year was CHF 96 million, so the order intake went up by roughly 7%. And so that's on the order intake level. So double-digit minus on Short-Staple Fiber and high single-digit plus on Components.

And then you then go to sales, you see that on the Chart #16. So on the left side, you see Short-Staple Fiber went down by 20%. And you see on the right side, last year, we were at CHF 222 million, so it's somewhere 8% to 9% or less than 10%. The sales volume went down. And at C&T because we have -- for every year, our components order intake went down, we have quite a substantial decrease of CHF 18 million on a baseline of CHF 113.9 million. So here, we also talked about a little bit more than 10% it went down.

Now in the second half, of course, those figures will look different because now the order intake, which is improving quarter-by-quarter, will also turn into improved sales values in the second half of the year.

Then a second question from Dominik Feldges. What is your view of textile and end markets, especially with regard to clothing, have they finally boomed out?

Well, for us, there are 2 elements, one is how much do people spend and how much clothes do they buy. We are more interested in meter fabrics than in millions or billions they spend because we are driven by volume. It is clear that there is a hesitation in some Western markets to spend too much money for clothing, and there is a trend to go to fast fashion or to ultrafast fashion. And this, of course, is fueling especially the textile industry in China and also Vietnam, so there, volumes are going up. That's a fact.

Now what is also a key indicator is where do you see that the so-called middle class is developing. And we clearly see the biggest growth of middle class, these are people who buy a lot of clothes and there are many people there. This is China and India. And one driver of this Indian growth is the economical growth, but also this middle class growth. So I see also in the foreseeable future that the demand of meters of tons, it goes continuously up.

The next question comes from Elia Geiser from Research Partners. What levels of CapEx are you expecting in the mid- and long term?

This is unchanged to what we have previously communicated. We expect that the combined group should be sufficiently equipped with roughly 50 million to 80 million of CapEx, depending obviously on maintenance CapEx and maybe some selected growth CapEx that will be possible in the future, but that is unchanged from our previous communication.

The next question comes from [indiscernible] regarding the partnership with Recycling Powerhouse; can you give more details on your rolling partnership? Do you mainly provide technology? Do you execute those steps yourselves? Or how does this work?

So this is, of course, the first time that we make this announcement of the Recycling Powerhouse, so let me explain a little bit more in detail what it is all about. Imagine today, the textile industry is consuming about 120 million tons of raw material, of it is in the filament area and half of it is in the short-staple fiber area. And so in the short-staple fiber area, 60 million tons, an incredible number is creating all those clothes we are wearing. Now more than 97% of clothes are thrown away afterwards, it's waste to landfill. And from an ecological point of view, this is, of course, not very sustainable.

So for that reason, many, many global initiatives have started to become more and more visible that the recycling of clothes back into fibers, then from the fibers again into yarn and from the yarn into clothes, so circular economy is a big, big, big megatrend. And so as a technology leader, we always said we want to be ahead of the curve and we want to jump on highly profitable megatrends. You do have recycling already today, to be clear. Very often in the spinning mill, nothing is thrown away during the processing of yarn production. But these are very small volumes mill by mill. What we wanted to do in the Recycling Powerhouse is to standardize so to have a blueprint factory, a recycling factory where all these processes are combined. So you bring in the material, then you are sorting, you are carding, you are spinning and then it goes out and it is back into the market. So these are those 5 in sourcing, sorting, tiering, spinning and marketing.

Now our competence, of course, is that we are very good in the whole spinning process, and we also have our experience in carding, and so we decided, we want to look for partners we can work together, so we took experts in -- we were aligned with experts in the carding area, in the sourcing area, in the sorting area. And in order to have a vehicle that at the end, those partners can be in, we founded the company Recycling Powerhouse. So there will be several shareholders in the future there, but we have done this initial step. But this is not foreseen that this is -- it's not a full-fledged Rieter company. So we are, of course, delivering machines, but we also deliver operational expertise how to run such a mill because those recycling mills, they are 5, 6x bigger than a normal, let's say, recycling department of the spinning mill. These are huge, huge, huge factories.

So over the next couple of days, maybe weeks, we will see, we will announce the first factory, which we already have agreed and which we already have done the whole planning, and we also have secured the feedstock, so the sourcing of raw material and the agreement in the textile industry to buy this yarn. So there are many, many aspects, but not all of them we can cover. That's the reason we do have harvest. And I personally, if you just calculate how many recycling mills you will need in the future if this trend goes on, then we talk about a 3-digit number of mills to be established over the next 1, latest 2 decades, hundreds of such recycling powerhouses, and nobody else has the complete value chain under control like us.

So if we are successful in this, this will become a business model which is really, really big. Now it's not only selling, as I said, machinery, it's also a franchise model. So the ones, the investors who build such a recycling factory, they will have a license fee to be paid to the recycling powerhouse. And so this will, over time, create continuous revenue streams into this recycling powerhouse and of course, then indirectly also to Rieter, so we are quite fascinated by that. I also would like to say that since yesterday evening, our website is open -- or not our, the website of the Recycling Powerhouse, and if you would like to know a little bit more about that, you can go into that.

So with this, I think I have seen we do not have more questions, so dear ladies and gentlemen, as we mentioned, the first half of 2026 was shaped by the integration of Barmag. This was for us a key, key, key focus point and it is progressing as planned, and it's already delivering now in terms of synergy potential, but also first realizations and earnings potential, we can say it was the right thing to do. This strategic move, we will have a lot of happiness at the end of the street. With the Recycling Powerhouse, we are now bringing to bear our in-depth textile expertise to help standardizing, industrializing and scaling textile recycling, and this will become a complete new revenue stream for us, where I have to say, depending how good it is, the limit will be the sky.

Nevertheless, let's also be honest, we still have to work on the short-staple fiber operational performance. We were lacking for a year in orders. It now starts to improve. But we also have this challenge of the shift from the rest of the world to India and China, and so we have to a sharp focus on our costs. We have to have a disciplined capital allocation. We have to build up stronger our teams in Asia Pacific to achieve sustainable margin expansion.

Nevertheless, I'm really confident. We are stronger. We are more resilient than we have been before. We are now well positioned to benefit when the market conditions now are improving. And with this, I would like to close our half year results conference. I thank you for your interest, and I wish all of you a great summer break. I mean the weather in Belgium, I can say, already shows that summer has started. Thanks a lot, and see you soon again. Thank you. Goodbye.

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 morning, ladies and gentlemen. A warm welcome from my side. Thank you for joining us today to review Rieter's full year 2025 performance and discuss the strategic path ahead.

Together with our CFO, Oliver Streuli, I will outline the key results of 2025, the progress of our transformation, our expectations for 2026 and beyond.

Before I begin the presentation, let me draw your attention to the picture on the cover page. That reflects the new Rieter consisting not only of natural fibers, but also of Man-Made Fibers.

So let's move to the agenda on Slide #2. We will briefly look at the key messages and review the market. I will then hand over to Oliver for a deep dive into the financials. Afterwards, we will take a more extensive look at the successful acquisition of Barmag, the medium-term financial guidance and the outlook for 2026.

And now to the key messages on Slide #4. Let me first start with the green boxes. 2025 was a year marked by cyclical weakness in the global spinning machinery market, influenced by geopolitical tensions, lower yarn margins and high volatility in investment sentiments. Against this backdrop, Rieter delivered an order intake of CHF 703 million, slightly below last year, but stable in local currencies.

Sales declined to CHF 685 million, reflecting the subdued market and the result of lower order intakes in the last years. Our operating EBIT reached CHF 2.5 million, affected by lower volumes and pricing pressure, yet supported by active cost management and the early impact of our restructuring measures. Despite a challenging market, we preserved strategic flexibility, strengthened our portfolio and positioned the group for accelerated earnings recovery once demand normalizes again.

Second, the blue boxes. The Asian countries delivered strong order intake, confirming the region's ongoing structural importance for our business model and long-term market presence. The most important structural development, of course, for the year was the successful acquisition of Barmag, a transformative step that expands our presence in the higher growth Man-Made Fiber market, enhances sales diversification across technology and end applications, adds scale, productivity levers, long-term synergy potential and strengthens our market position in the long term in the strategically important Asia region.

The soft integration is progressing according to plan. We expect to realize medium term a minimum of CHF 20 million in synergies, driven by portfolio consolidation, cross-selling, procurement efficiencies and optimized production structures.

One of the most significant regional developments was China. where sales increased by 32%. This growth was driven by a supportive investment environment, improved mill utilization and strong domestic demand. With our efforts to create a local for local organizational setup, we were able to participate more than in the past in this strong market.

Let's turn to the gray boxes. We continue to make tangible progress in sustainability and operational performance. The share of renewable energy used increased to 38.7% compared to 28.6% in 2024.

Women in management positions rose to 20.1%, up from 15%. This was enabled by systematically embedding a focus on diversity into all human resources processes and across the entire employee life cycle.

We were also able to reduce occupational accidents to a frequency rate of 2.7, down from 3.3 in the prior year. This was thanks to the targeted safety trainings in the year under review. These developments support both our ESG commitments and the long-term stability of our operations.

We now move to our group leadership team on Slide #5. To capture the full potential of Barmag and the wider group, we strengthened our leadership team with Georg Stausberg, who now heads up the Man-Made Fiber division. He brings deep industry expertise to this role and the whole combined company. This reinforced leadership setup provides the operational focus required for the successful integration, profitability improvement and long-term competitiveness.

And now to the Rieter full year results 2025. Let me start with the global economic and textile key indicators on Slide #7. This slide shows the resilience of retail sales, which confirms that people are still shopping despite of all the global uncertainty. Retail sales are particularly healthy still in Europe.

A look at the capacity utilization of spinning mills, however, paints a slightly different picture. In the rest of the world, capacity utilization is down year-on-year, while it is relatively constant in China. India maintains a healthy capacity utilization level of 88%.

And a word on the profitability of the spinning mills on Slide #8. Here, you see the cotton margins in terms of Swiss francs per kilo on the left compared with polyester on the right. The spinners cotton margin is naturally very slim and has come under increasing pressure in the recent years due to labor shortages and rising costs. Low capacity utilization further weighs on the margins.

Whereas the rest of the world stays quite stable, but with low volumes, India and China have low margins, but high volumes. A similar picture, you can also see on the polyester margins. So here, Barmag and Rieter pursue the same vision of fully digitizing and automizing the value chain underpinned by strong sales and service networks, which in turn will help strengthen the margins.

And now, a deep dive into the market situation on Slide #9. The 2025 market developed unevenly across the different regions. The Americas showed a stable market environment overall, being more positive in Central and South America, but more cautious in North America. Rieter is very well positioned in this market, and we see quite some growth prospects for the near future.

EMEA includes Europe, Middle East and Africa with the main markets, Turkey, Egypt, Uzbekistan and Pakistan. Whereas Turkey and Uzbekistan have still not recovered from the downturn. We see some market improvements in Egypt. Overall, we can support our customers with automation solutions and low energy-consuming products to create an advantage in the conversion cost per kilogram yarn.

India and the part of Southeast Asia is considered as ready for growth. The latest agreements between the U.S. and India regarding tariffs and the free trade agreement between India and the European Union have given more planning security for our customers. With the strong mill utilization, several larger projects are now in the final planning phase.

China has shown the highest resilience in the market over the last 4 years of downturn. Besides focusing on latest technology, which helps us, a clear investment plan by the central government supports this trend.

Rieter has implemented a strong local organizational setup to match the Chinese requirements and our growth in the biggest textile market indicates that we are following the right strategy.

This concludes now my part of the presentation, and I hand over to Oliver Streuli, our CFO, for the financials.

Thank you, Thomas. Good morning also from my side. I will now walk you through the key financial information for the full year 2025.

Sales amounted to CHF 685.1 million, a decrease of 20% compared to the prior year. Free cash flow came in at minus CHF 40.6 million versus a positive CHF 14.1 million in 2024. Order intake, as already heard, reached CHF 703.4 million, down 3% year-on-year in Swiss francs.

Despite the exceptionally low sales level, operating EBIT remained slightly positive at CHF 2.5 million, but below last year's CHF 33.9 million.

Restructuring, transaction and impairment effects totaled CHF 54.2 million significantly impacting reporting EBIT, free cash flow and leading to a net result of CHF 63.4 million.

Thanks to ongoing strong cost discipline consisting of structural and temporary measures, we were able to reduce overhead costs by another CHF 61.3 million compared to the prior year. And lastly, net liquidity improved to CHF 184.3 million, supported by the capital increase ahead of the Barmag closing.

Now let's turn to order intake on Slide #11. Order intake decreased by 3% to CHF 703.4 million. Machines & Systems recorded a slight decline. Components softened quite a bit, while After Sales delivered solid growth.

FX translation headwinds weighed on reported figures. In local currency, order intake was slightly above prior year. And overall, we achieved a positive book-to-bill ratio when compared to sales, which brings me to the next slide.

Sales declined by 20%, closing in at CHF 685.1 million. This was driven by the continuously low market and certain customer-driven deferrals, especially in December. Machines & Systems saw the steepest decline followed by components. In contrast, After Sales remained relatively resilient in absolute terms. FX headwinds reduced sales additionally by about 2.5 percentage.

Regionally, China grew by 32%, clearly the highlight, which underpins our local strategy. Americas was stable, while in contrast, Turkey, Africa and several Asian markets where Rieter historically holds a strong market position declined sharply due to the subdued market.

Now let us continue with the operating EBIT on Page #13. Operating EBIT remained around breakeven at CHF 2.5 million, thanks to strict cost discipline. The negative gross profit impact of around CHF 92 million due to the lower volume was largely offset by overhead savings.

Now allow me the comparison to 2023, our last normal or good sales year. In total, we have now reduced our overhead costs by almost CHF 120 million or by more than 1/3, which mitigates the continuously difficult market environment to some extent.

Regarding nonoperating EBIT and net income effects, restructuring and impairment costs totaled CHF 37.8 million and transaction-related costs, including financing amounted to CHF 16.4 million.

For the sake of completeness, some real estate disposals, most prominently in half year 1, as already communicated, also supported operating EBIT as part of streamlining our production and administrative footprint.

Now let's turn to an update on the announced restructuring programs on Slide #14. As outlined in Q3 2025, we expect the announced measures to deliver a run rate benefit of around CHF 27 million against onetime costs of around CHF 36 million. These benefits are expected to fully hit the P&L in 2027.

Now on to some details. On the Short-Staple Fiber division, as we newly call our natural fiber business, we implemented targeted capacity adjustments and shifted parts of the winder assembly to China. We also transferred repair services to Rieter India and Rieter Czech Republic and optimized the indirect to direct labor ratio across the supply chain in India, the Czech Republic, and also China. We also optimized the cost structure in India, Czech Republic, China and in the U.S.

In the Components & Technology division, we selectively transferred R&D and SG&A capacities to best cost countries and reduced the overall cost base.

Several footprint adjustments were also executed such as the sale of the Graf company Gomitex in Belgium, the closure of Graf Netherlands with production move to China. And finally, we executed a plant consolidation in Germany at Suessen and initiated the closure of Bracker France at the beginning of this year. These measures significantly simplify our footprint and structurally reduce costs, marking another milestone in improving our overall competitiveness.

Now on to cash conversion on Slide #16 (sic) [Slide #15]. Free cash flow reached minus CHF 40.6 million, reflecting the negative net result and transaction and restructuring-related cash outflows.

Lower advanced payments from customers also weighed on cash flow, while operating working capital improved to some extent through reductions in receivables and inventories, which was partly offsetting. Strong cash discipline obviously remains a key management priority also in this year.

Now a word on our financial position on Slide #16, which is my favorite slide, but has to be taken with a pinch of salt, obviously, given the pending Barmag closing at year-end. Our financial position improved during the year and the equity ratio stood at 53.3% and the net liquidity reached a positive CHF 184.3 million at year-end.

Which brings me to my last Slide #17 on liquidity headroom. Given the still muted market environment, debt levels will be elevated during the course of 2026 following the Barmag closing. However, it's important for me to state that available liquidity shows a combined liquidity of more than CHF 300 million, which consists of current accounts, deposits and money market funds.

On top, Rieter has access to a CHF 375 million revolving credit facility and more than CHF 100 million in bilateral credit lines. This means that our financing is fully secured and provides a sound base. This concludes the financial section.

Back to you, Thomas.

Thank you, Oliver. Thanks a lot. So let's have a look at the today's Rieter, a new global leader in the textile industry. And let's look at this new animal on Slide #19. With Barmag included, Rieter is now the global leader in both Short-Staple and Man-Made Fiber solutions.

We are present in 31 locations across of 9 countries. We now have more than 7,000 employees with leading-edge expertise in fiber technology, and we are offering technology coverage across the entire spinning and filament value chain. This expanded footprint is a key driver for the future, operating leverage, cross-selling potential, market share gains and profitability improvements over the cycle.

Here, you can also see the locations divided by the different regions, Americas, Europe, Middle East, Africa as well as in Asia Pacific. And on the right side, the 3 new divisions, Man-Made Fibers, Short-Staple Fiber as well as Components & Technology.

Now let's have a look at the global textile landscape and the value chain on Slide #20. With the integration of Barmag, Rieter enables the full spectrum of yarn production. On the left side, the raw material, which is used in the whole textile industry. This amounted to around 113 million tonnes of raw material per year. This 113 million tonnes are divided into 54 million tonnes of staple fibers and about 59 million tonnes of filament.

When we then deep dive into the figures for staple fibers, we see that roughly 1/3 or maybe a little bit more than 1/3 comes from cotton and 1/3 comes from polyester. These are filaments, which are cut afterwards into fibers and then are spun on our machines. The rest is made up of viscose and other products.

Now let's jump to the Slide #21. Rieter covers now the entire textile value chain from fiber to yarn and from polymer melt to filament, fiber and nonwoven products and covers the complete process from fiber preparation through to all 4 and spinning technologies in the spinning mills.

You see on the left side, the mentioned 3 divisions. The Short-Staple Fiber division unites Rieter's global expertise in short-staple fiber spinning systems across operations, sales and services. The division covers the full portfolio from fiber preparation to spinning preparation and to end spinning and winding.

The Man-Made Fiber division covers Rieter's complete solutions for processing polymers into filament yarns as well as systems for the production of synthetic staple fibers and nonwoven. The portfolio also includes the design and engineering of complex spinning plants, the manufacturing of core components and a comprehensive range of After Sales services.

Automation and digital solutions complete the offering, enabling efficient, high-quality and future-ready production across the entire textile value chain.

Through our third division, Components & Technology, we offer our customers specific textile components. Our brands are Accotex, Bracker, Graf, Novibra, SSM, Suessen and TEMCO. The division is the backbone of Rieter's technology leadership, bringing together in-depth expertise with forward-looking research and development.

The division drives the advancement of high-performing short-staple spinning machines, systems and components. The wide range of end applications from the 3 divisions varies from apparel to home textiles, technical textiles and nonwoven.

A word on the higher growth and more diversified end application on the Slide #22. Overall, and you see this on the left side, the consumption of raw material will increase from the already mentioned 113 million tonnes to 133 million tonnes in the year 2030. All end consumer markets will contribute to this higher consumption and production.

On the right side, you see the impact on our different business segments. All business segments will grow over the next 5 years. So the question is not that the markets are coming back. But the question is when markets are coming back.

From a macro perspective, the new investment cycle is overdue. But for this, we also need some political and economic stability to motivate our customers to start to invest again. Projects are there. Our offer pipeline is the highest since 3 years. And I'm sure a lot of those projects will be executed. But still, customers are hesitating to take the investment risk in this very challenging environment.

Now let's have a look into the future. What does that mean for us? And I hand over to Oliver for the medium-term guidance and the outlook for 2026.

Thanks, Thomas. Now let's do a deep dive into the new midterm financial guidance on Slide #23. It's clear that as a new combined group, we had to reconsider our midterm guidance for different market scenarios.

Now based on feedback received, we concluded that the market scenarios are a valuable approach to provide the capital market with our view on financial targets over the cycle. That is why we stick to this approach and adjusted our former low, mid- and high market scenarios, which now include the new division Man-Made Fiber, Barmag, an adjustment of the top line scenarios of the old Rieter Group, where we have to admit that we have been too optimistic in the past, and we had a hard reality check of what low really means over the last 2 years.

We also consider a substantial PPA impact in our profit and loss statement due to the acquisition of Barmag. Therefore, we will adjust for all PPA impacts to reflect the operating performance of the business in operating EBIT. And finally, we included our midterm synergy target of CHF 20 million stemming from the transaction.

In summary, we see strong potential for a combined company beyond 2026. However, our markets remain cyclical in nature, which brings me to the specific revised scenarios.

In a low market scenario, we now expect sales of around CHF 1.4 billion at an operating EBIT margin of 2% to 5%. In a mid-market scenario, we expect sales of around CHF 1.8 billion at an operating EBIT margin of 5% to 8%. While in a high market scenario, we expect sales of around CHF 2.2 billion at an operating EBIT margin of 8% to 11%.

In addition to our market scenarios, we would like to provide an update on other key midterm financial targets on Page 24. We target a leverage of below 2.5x net debt to EBITDA. It's clear that in the near future, capital allocation will be focused on deleveraging while our long-term ambition is to achieve a net cash position.

CapEx is expected at around CHF 50 million to CHF 70 million for the combined group in a more normalized environment. Short term, it will most likely be lower. And we adhere to our fundamental dividend policy of maintaining a payout ratio of at least 40% of available net profit.

As mentioned before, in the short term, our priority is to deleverage and strengthen the balance sheet, while in the long term, we aim at stable absolute payouts per share. We also continue to aim at an equity ratio of more than 35% by means of deleveraging and shortening the balance sheet by effective use of excess cash.

To sum it up, our new midterm targets position us well for margin expansion, stronger cash generation and a more stable and diversified earnings across the cycle.

And now to the outlook for the full year 2026 on Slide 2026 (sic) [Slide 26]. 2026 will be a transition year, shaped by the integration of Barmag, the full execution of the announced restructuring measures and a delayed market recovery.

In addition, we will not yet fully benefit from synergies in the combined Rieter Group. Therefore, in 2026, Rieter expects sales in the range of CHF 1.3 billion to CHF 1.5 billion. Please keep in mind that this includes only 11 months of Barmag given the closing on the 2nd of February.

The outlook for 2026 reflects the integration of Barmag and the restructuring measures announced in 2025, of which the positive effects will not yet be fully effective. As a result, a positive operating EBIT margin in the range of 0% to 3% is expected.

And with that, I conclude my presentation. We now welcome your questions. And for this, I hand back to Relindis for the Q&A session.

Thanks, Oliver. Ladies and gentlemen, we will start with the questions here in the conference room in Winterthur and afterwards open the lines for participants in the conference call. [Operator Instructions] Then we will take the questions from the webcast. As usual, the Q&A session will be recorded. I kindly ask the participants here in the room to wait for the microphone to mention your name and the company you work for before asking your question. There's a question, Ingo. Thank you.

This is Ingo Stossel from UBS. Can you maybe give us some more color on the divergence between your After Sales order growth and sales decline on the one hand? And looking at your leverage guidance, can you give us your estimate for the end of 2026? And then maybe a time frame, you say medium term below 2.5x long-term net cash. Can you give us maybe that in years or months ideally?

Thank you for the question. And maybe I answer the first one about After Sales, and then I will hand over to you, Oliver. So it is true in After Sales, we have -- we already presented in the past a lot of initiatives how to strengthen our business model. So in fact, there are 2, 3 key drivers we have taken up. One is we are more and more localizing our organization because service business is local business. You have to be very close to the customer. So we have strengthened our service organization all over the world.

The second part was availability of spare parts and delivery times. So we're working very hard to decentralize our warehouses and our spare parts to be fast towards our customers. And the third element goes a little bit with our overall strategy of digitization and automation. So we are pushing a lot to automize existing spinning mills. And there, we call this engineered solutions. So these are the three drivers that we have a better order intake.

Now the reality is that we concluded many orders or better orders than the year before, but still the execution of the orders is lagging because customers do have certain financing issues. So they close an order, they make a down payment. But then at the moment, with this very wobbling political environment, they don't invest yet, because some of those topics are also quite big investment amounts. So that's one key reason.

The second topic is that in After Sales, we also have the installation of new machines. And this part has been reduced in 2025 compared to 2024 because you have a certain time lag. When we deliver the machines in the next 12 months, you finalize the installation. And with the reduction of order intake and sales volumes in the new machine business with a certain time lag also our installation revenues are going down. So there is a little bit of mismatch between order intake is, in fact, positive, but we don't see it yet in our sales volumes.

And the second question, I think, Oliver, it's your turn.

You may understand that, we don't provide a guidance on leverage for 2026. However, I can help you with some indications. As you know, we financed the transaction roughly 50-50 with equity and debt. For that portion, we initiated a CHF 375 million term loan on the debt side. And on top, we had existing debt of around CHF 250 million at Rieter, so to say, which means that you may assume that our debt position is around CHF 500 million to CHF 600 million at the moment.

With regards to the phase-in of the midterm targets, that's usually to be understood over a time horizon of 2 to 3 years, probably around 3 years and the path to net cash comes thereafter.

And maybe to add on that, it also -- the speed of deleveraging also depends a little bit on the market recovery because usually, when the market is recovering, what first happens is you have a lot of order intake. And with the order intake, you have a lot of down payments. And history shows in both areas, let's say, the old Rieter, but especially also at Barmag that this cash generation happens extremely fast.

So if -- and we all pray for that, the markets in the near future now are picking up, then this can go very fast to deleveraging. It's not only profitability, but it's especially also net working capital, which improves substantially in the uptime or in the process where markets are picking up.

[indiscernible] Capital. I got a couple of questions. First one on the market. We can see retail sales increasing steadily in your presentation, also spinning mill utilization is increasing, yet the yarn fiber margins are coming down still. Why is that?

So what is happening at the moment is the following. I try to explain, of course, I'm in contact with many, many customers all over the world, and we have regular monthly, let's say, market updates. So we have to look a little bit on the 3 different areas. So China, India and the rest of the world because it's very different what is happening.

The end consumer market is there. That's the good news. The end consumer market even is picking up. So it's not so depressed like the machinery part. The end consumer market is, in fact, quite, quite stable, especially in the apparel side, whether this is the U.S., whether this is also in the European Union. Now what happened is that we had a substantial increase due to the inflation after the COVID crisis, mainly in the rest of the world. So labor costs were increasing a lot.

On top of it, the biggest market we had was Turkey. Turkey was destroyed after the earthquake. The reason why the spin utilization is so low in the rest of the world is especially driven by Turkey. If you go back 4, 5 years, our sales volumes in Turkey were like CHF 250 million. Now we talk about CHF 25 million. We were absolute market leader in this market, and the margins were very healthy.

Now Turkey never recovered from this earthquake. 70% of the installed base was affected by the earthquake. And people left the industry and the mill utilization in Turkey is slightly above 50%. So this in a mix impact for this rest of the world has a huge impact.

A little bit similar was Uzbekistan. They probably have overinvested in '21 and '22 like some other countries in the rest of the world. And it takes some time until all these overinvestments are absorbed by the increase of the end markets. And we believe that this is now the time where we see, okay, the good ones, the big customers, they are at full capacity and the small ones who have not the funds to invest in new technology, automation, they might go bankrupt. So there's quite some tension in this rest of the world.

Now India is different. India is split into North India and South India. North India are the big spinners. They are all above 90%. The biggest spinners in India are very healthy. They have very good net profit margins. They are -- they have full capacity. But again, in this country, the South, these are all small spinners. And they have been partially Indonesia, partially it was like a part-time spinning mill they had, and they are not competitive anymore.

So this is a small -- they still produce because their cost can be -- the fixed cost can be absorbed. And the domestic demand is now picking up. India as a country, we see there will be a shift from export activities much, much more into domestic demand.

And China is China for China. So China, even if we only see something like 70% spinning mill utilization, also there, there is not a north and the south, there is a east and the west. The east part along the coast, the traditional market of China, there is almost no investment anymore. Everything is investment in the west because costs for energy are much lower. You have CHF 0.04 per kilowatt hour and also the labor costs are very low. So that's a little bit how the market is there.

So rest of the world is still suffering, although markets is there, they are too expensive because labor costs are so high. And India and China, India is very good and China, in fact, is also good. We have 2 strong markets with China and India and the rest of the world, there is not yet light at the end of the tunnel.

When we look at Barmag's results in the last quarter and in H2, we can see a slight pickup in orders there, orders higher versus sales. Maybe you can talk a little bit about what you've seen for Barmag, but also for you over the last few months in terms of order intake.

Well, I don't want to comment the result of Barmag of last year, but I can maybe give an outlook. I'm not so much discussion about others like others are doing. So I more look forward into 2026. And let's be honest, Barmag is part of our group since 24 days. So I don't know everything because before we were not allowed to talk about any market or pricing or product topics due to regulations.

However, in the last 24 days, there were already a lot of meetings happening. All the different expert teams already have met the first time. I was 2 weeks ago at Remscheid. I will go next week to Suzhou and Wuxi to the Barmag factories in China. And what I can say is, first of all, we are impressed and got a confirmation about our good impression we had in the past. It's a very solid company, very well managed and have a similar strategy like us, technology leadership in order to achieve higher prices and margins.

And the pipeline we see is somehow also increasing. I know now after 24 days, several larger projects in the pipeline to come. The question is not if they come, it's again when they come. And this is not only in China, it's also in some other parts of the world. So I'm optimistic that Barmag is delivering good results towards our group.

We have a similar expectation in terms of sales volumes. So overall, we see in sales more a side step '25 to '26 because it takes some time until order intake will materialize in higher sales volumes.

Barmag even has a higher cycle time than the old Rieter part, whereas in Rieter, it was maybe 9 to 12 months. At Barmag, it's more like 12 to 18 months. So whatever we have as a pickup in certain markets will only materialize in sales volumes and EBIT at the end in 2027.

So Barmag, everything we have seen, everything we have discussed, I have to say, it's like they already belong to us in certain years. It's a perfect match. It took some time until we married, but now we are both -- we are altogether happy couple.

Now the Rieter part, when I look at Rieter, I clearly have to say China is stable, and there is no reason why it should not stay stable. China tries to create a lot of production volume with low margins because they are very cost competitive in the Eastern part of China. And we have changed a lot, and we are benefiting. We have quite substantially increased our market share in China.

And India, we are convinced with the latest agreements and a huge local demand increase because the middle class population in India is over proportionately increasing. All these textile activities will more and more focus on Indian demand and not anymore just for export. So we are convinced that India now is ready for growth.

Now, this is a little bit a change to our historical footprint. Historically, we were super, super strong in the rest of the world. We had the highest market share in the rest of the world, and the rest of the world was also more than 50% of the worldwide market. If you compare our sales volumes in rest of the world in '25 compared to '22, it has been reduced by more than 80%.

So we lost 80% of high-margin business and had to compensate now with more competitive businesses in India and China. And that's the reason why we have started to do all these transformation programs without Barmag.

We have to be where the new markets are. So this shift to Asia is a structural shift, in my opinion. Some areas in the rest of the world will pick up. Egypt, we are convinced. Latin America, we are convinced. And we also see now Bangladesh, Pakistan coming back. But some other areas, we are very hesitant like Turkey, Uzbekistan, countries where we had the highest market shares in the past.

And that's a good market overview, but more in terms of month-over-month over the past few months, maybe you can tell us, if you see a further pickup. We heard the pipeline is good, about firm orders. Maybe you can tell us something about that.

So starting to the year was okay, was okay. We saw that -- and a very early indicator is besides the parts business, it's also part of our component business. So we saw that in the last 3 months, our component order intake has substantially improved. So these are consumables, spare and wear parts where we saw a pickup. Another early indicator is also our company, SSM, who is also in the Man-Made Fiber business, but more in specialized areas. There, we had very good order intakes as well.

And our offer pipeline of new machines is the highest since I'm here. And this is now 3 years. These are not yet orders, but all these offers have to become orders and the question will be what is the share we can really get for ourselves.

I have to admit pricing over the last 3 years has been heaviest under pressure, because the cake has become smaller, and everybody had empty books and everybody was jumping on these orders. So we are mitigating that with very consequent cost management, Oliver.

And last one, then I'll go back in the queue. On the guidance, I can see that despite at least a little bit higher order intake, it's prudent to guide for basically stable sales and midpoint. When I look at margins, maybe you can tell us a little bit, how you came to the 0% to 3% Barmag alone roughly made 3% for the combined group. Maybe you can give us some more insights into that.

Sure. Perhaps I try to explain the bridge of the 2026 guidance towards the midterm guidance. And there are 2 main effects. One effect being that at Rieter, we still adjust our capacity, and also our cost base to the market realities. That's also why we announced those restructuring programs in Q3. So these effects will only fully materialize with the full year 2027.

And the second part is that the integration of Barmag has only started 2 weeks ago. And that's why we expect those synergies only to fully hit our P&L with the full year 2027. That's the reason behind that gap between the 2026 and the midterm financial guidance on that low scenario.

But what I more meant was the Barmag made roughly CHF 40 million, if I'm not mistaken. If we put that on to CHF 1.4 billion, we would come to the 3% already. And obviously, you did a lot of work for Rieter, too. So is it just being very cautious and that's fine? Or are there other things that we should consider which will push the margin down a little bit in '26?

I mean, Thomas mentioned it before. I don't consider this guidance as cautious, but that's realistic. We are in the middle of adjusting to the new market reality, plus there is also some margin pressure in the market and the market success that we have in China, we fully believe that it's structurally the absolute right thing to focus on those markets, but these markets are more competitive than the rest of the world markets in the past. So there is some pricing pressure, which is also reflected in the 2026 targets.

But Thomas, perhaps you want to elaborate on that as well.

I think the question is, what is the performance of the old Rieter? Are we contributing? When you take an operating EBIT of CHF 2.5 million, and we mentioned that some of it also was onetime because of real estate changes.

In all fairness, if you would deduct that, the run rate was negative in 2025. So we tried with everything we could do to compensate. So you first have to catch up. This will come mainly with the restructuring programs we have launched in the quarter 4 2025. And this CHF 27 million improvement, you can calculate half of it will come in '26 and the other half comes in '27 because some of it are production closures, and this is not from one day to the other, it takes a little bit of time. So that's the catch-up we have.

Then we, of course, in 2025, we had a drop in the margins for our new orders for new machines. So margins came under pressure because of the shift of volumes towards China and India. So this we also have to catch up with more cost measures.

Structurally, the old Rieter is not set up for a CHF 700 million business. This is below our real internal breakeven point. So we are doing that, and we probably will continue to adapt our footprint because we have far too many locations, clearly.

But at the moment, we are not ready to make high margins with a plus/minus CHF 700 million volume. So the Rieter part with that low scenario without any synergies is contributing almost nothing. Now you can say, well, combined, but you still would go maybe to 2% or 3% -- you might not be wrong there. And in year 4, even myself, I have learned that sometimes you have to be cautious because future is very unpredictable. So we rather prefer -- if it comes better, we will take that happily.

[ Thomas Litto from NZZ ]. I have 2 questions. First, like you have been cutting a lot of costs in 2025, especially like in Europe and Western Europe and Switzerland. And I'm wondering what will be like the long-term consequences of that, for example, if it comes to innovations and so on. I mean, these people haven't just been hanging around, I guess. So there has to be like an impact somehow.

And second question, you say like more or less the future is in Europe, is in China and in India. And you also say, like the margins are very low over there. So I'm wondering like, will this change like somehow in the future? Is there any chance that will change? Or you just have to live with that, that you will operate like in markets with very low margins?

So maybe I take that up as an answer. And it's, of course, something which is heavily discussed also within the company. This is -- it's a very valid question. So we had to adapt our cost structure to a new reality. This is the minimum everybody can expect from us.

And of course, we are segregating our workforce into different clusters. We say there are high-cost countries, there are mid-cost countries and there are lower-cost countries. That's point number one.

Point number two, whatever is a customer-related activity should be as close to the customer as possible. Many Swiss medium-sized groups have had the same challenge that it was more -- everything was at the headquarter and all the new Asian markets have been export markets. But this is not accepted by customers anymore. They want to have their local teams. So a lot of the shifts were customer-related functions we have moved into China, into India, but also into the U.S. away from headquarter, point number one.

Point number two, then in R&D and production, you have certain transactional tasks. Not everything is innovation. A lot is executing certain programs for customer-related products. This also should be where the customers are sitting because these are amendments to specific market requirements you might have in China or in India or in the Americas. So that's part of, let's say, R&D, we have started to shift to those markets.

And then the question is what's left for Europe, and especially what's left for Switzerland. And here, I want to make a very clear statement. Europe and especially Switzerland has a fundamental meaning and importance for us. And this is the innovation. I don't know another country who has such an innovation DNA like Switzerland.

I mean, we have the best universities. We have fantastic people coming from the universities. We are a very attractive place for many high-caliber brains outside of Switzerland. Innovation is the key driver. That's the strength and the survival package of Switzerland and this is also valid for Rieter.

So in our different places we have, for example, our 3 component companies, SSM, Bracker and Graf, the innovation is all in Switzerland and will remain in Switzerland.

If I look on our R&D department we have here, we have now a new department, which is called new technologies. This is all based here in Switzerland. Digital automation brains are all based here in Switzerland. So the core innovation will be made here in this place.

If you then have to execute a development plan with milestones planning, you have to purchase the material, you have to work with suppliers. Some of those tasks are then in our customer markets. But that's super important. Europe and Switzerland, it's driven by innovation and value-added tasks. And if you have more repetitive transactional execution tasks, you are more on the customer side and therefore, more in the customer markets.

Does that answer this first part of the question? The second one, you have to repeat once again. I somehow have forgotten with all my enthusiasm.

The margins in India and China, how this -- is there any chance that they will be higher like in the future or if you just have to be with that?

Margins are -- margins are very simple. It's price minus cost. And the price is driven by the market, and those 2 markets are very competitive. So you have to work on your cost. And working on the cost is that you have to follow a China for China strategy and an India for India strategy in the production and the sourcing.

And you might have the one or the other area where in the innovation, you have to say, wow, does the Chinese and an Indian customer exactly need everywhere that premium package? I believe, yes. But the premium they are willing to pay for it is maybe lower than in the rest of the world.

So our answer is prices, we get better prices in China and in India than competitors. We do get that because we are considered as a technology leader. But we have to work on our cost competitiveness. And this means, you have to source out of China for China, and you have to source out of India for India.

And the rest of the world, by the way, I also believe that in the next 2, 3 years, some rest of the world markets will pick up. I'm sure about that. And there, we also have enough production capacity here in Europe. We have 2 major sites in Czech Republic and in Germany besides the component factories where we serve more the rest of the world.

Any more questions here from the room? I don't think so, really.

[Operator Instructions] So Valentina, may I kindly ask you to open the first line, please.

Sure. The first question from the phone comes from Amira Manai, ODDO BHF.

I have actually 2 main questions. First one is regarding the 2026 guidance of CHF 1.3 billion and CHF 1.5 billion in sales and an EBIT margin between 0% and 3%. Could you break down the underlying assumptions for return on a stand-alone basis versus the contribution expected from Barmag? And what would be the main risks that could jeopardize your scenario this year?

Oli, that's your turn.

I mean, the main assumption is pretty simple one. So we don't expect a significant recovery in the market to be reflected in sales. There might be some recovery in the market reflected in order intake, but not in sales. That means for both entities, more or less similar numbers than in 2025. That was the main assumption.

And on the profitability side, as we outlined before, 2026 will be a transition year on the way to achieving the midterm targets in a low market scenario. I hope that answered the questions. The line was not very good.

Yes. And what the main risk that could jeopardize your scenario this year? What are the main risks?

Well, it's a very good question. It's not so easy to answer because in the last 3 years, I could not count anymore all the risks which have arose unexpected, and then even materialized within 1 week. So I think one risk is that, the biggest risk is, in fact, that all this tariff situation is not somehow now fixed.

Now I don't want to challenge any Supreme Court decision, and I don't want to challenge any company decision, whether they want to claim back or not any tariffs. But finally, we achieved somehow now all over the world some stability that everybody knew what the tariffs are.

Now -- and it seems that U.S. government somehow stays with the 15% more or less now on this level. Whatever law you need to do that, I cannot exactly explain to you. So I think that's the biggest risk is really this tariff situation.

There is a second risk that's a supply chain situation. I'm not aware -- or I don't know if everybody is aware, but with the increase of artificial intelligence with KI [ Foreign Language ], how you say in German, and all these new demands for chips, chips have become short again. So chip prices are going up, and this could disrupt all over the economy again. I don't want to see anymore cars where you don't have any navigation system because they don't have chips anymore or machines from us who cannot run because there is no electronics available anymore.

So that's another risk which we have foreseen and mitigated. We secured all our supplier contracts. But that's a second risk. And I think the thirdly risk in all fairness, could be wherever a new war will happen, because with all the peace activities we had in the last 12 months, I could not say that, the war activities have been substantially reduced. And there is always in the one or in the other place, certain uncertainty. That would be more from our side. I don't know if you see more risks on financing, on banks, on financial markets.

I think something which obviously was a risk in the past, but where I see more ease on the financial markets is basically that we see a global trend towards lower interest rates, also driven by lower inflation and that could be a bit of a tailwind. But yes, I think, it's good now with the risk section.

So to come to a conclusion, I see much more opportunities and chances looking the next 3 years ahead than I see risks.

Okay. Then we will take the next question, please.

The next question comes from Walter Bamert from Zurcher Kantonalbank.

Can you hear me?

Very good, loud and clear.

Perfect. So I'm asking a lot of questions that help me in modeling. Can you give me the pro forma net debt figure after the closing?

Walt, as I said before, we don't give a specific guidance, but you can take as a rule of thumb that we took a term loan of CHF 375 million to finance the acquisition, plus we had existing debt that so-called old Rieter of around CHF 250 million. And if you combine that, you ballpark where we currently stand. What I did not mention before, I mean, this number is obviously elevated and is not in line with our deleveraging plans. This is also why we have discussed that with the banks, and we have found the consent with the banks. They know about the risks and opportunities over the next 18 months. And as we said before, the financing is fully secured.

The challenge is not the figures you mentioned. The challenge is the net cash situation of Barmag, which is not very transparent to me. But okay, I can work with it. And the other question is, you indicate somewhere purchase price allocation effect of about CHF 50 million. You mentioned mid-double digit. So that would eat up the entire EBIT of 5.5% indicated by Oerlikon on Barmag in -- if that stays about at the same level in this year. Is that correct? Or is there something wrong with my assumption?

No, that is more or less correct. As you may assume, if you acquire a market leader and an asset-light business, then the purchase price allocation consists of a lot of intangible assets and goodwill that is just normal.

Now in the first year following the closing of the transaction, you have extraordinary purchase price allocation driven by the step-up on inventories, for instance. And so in the first year, it will be slightly elevated. And in the following years, we will be in a run rate for the combined group of around CHF 40 million to CHF 50 million.

You mentioned CHF 40 million to CHF 50 million run rate in the coming years, phasing out over about 5 years. Or what would you assume there?

It very much depends. For brands, we take a longer period. It's very much a mix on the different elements of the purchase price allocation. We will provide more details on the purchase price allocation with the half year figures. You may appreciate that we just closed the transaction 2 weeks ago and any PPA assumptions at the moment are provisional in nature.

What is very important to understand that this PPA effect, this is normal if you do a big transaction, these are noncash costs, and they are also not reflecting of the operating performance. That's why we normalize. Obviously, over time, they ease, and it is also our target to, at some point, come them back to a more reported figure.

That brings me to the next question. When you say you guide for 0% to 3% EBIT margin, that would be lower on a reported base due to the purchase price allocation, or you have that reflected already in there?

No, that's operating EBIT margin guidance. This is adjusted, and you can find the slide in the appendix, Walter, on the details that is adjusted by purchase price effects as well as restructuring and any incremental transaction costs. We had some transaction costs with regards to the closing, but they are much, much lower, obviously, than what we had in 2025.

In Slide #30 in the appendix of the presentation.

Okay. And that would mean you're rather assuming operating performance in line with last year where Oerlikon reported 5.5% EBIT margin overall.

I think that's a fair assumption. I think that is a fair assumption.

Yes. And then -- can you give a figure for the one-offs you expect in the staple fiber business in this year?

Well, obviously, we will have some cash outs with regards to the restructuring activities that we undertake, mostly consisting of severance, which unfortunately are pretty high in France and also in Germany for the measures we undertake. That is one element.

Then we also plan some incremental restructuring, not in the amount announced in Q3, but there will be most likely further measures. And then as mentioned, it's the transaction costs minor in nature, but I would say, those are the 2 main areas, apart, obviously, from the purchase price allocation effect.

With parts of it already provisioned in last year.

Exactly. Exactly. So all the programs, that's important -- from an EBIT point of view, all the programs we knew and where we have a very clear plan what to do has been provided in this quarter 4 last year. But of course, this has not been cash effective as we have certain closures now during the course of 2026. The cash impact comes in 2026. And the P&L impact we had in 2025.

Okay. We will now move to the questions from the webcast. The first question comes from Andreas Meier, Finanz und Wirtschaft. What is the future of the Turkish market?

So I mentioned that before, the market in Turkey for us was shrinking by 90%. It was the strongest market we had in the past and it's the weakest market we have today. And it all happened, in fact, with the -- it was a combination of elements. One was the earthquake on February 6, 2023, where 70% of the installed base has been impacted. Not everything has been destroyed, but people left.

The second topic is, of course, that from a macro economical point of view, it's not so easy to understand what exactly the target of the Turkish government is. They have imposed very high minimum salaries. So to give you an idea, a worker in Turkey costs about $1,500 per month. A worker in Egypt costs $250 per month. Labor costs are roughly 15% of total cost in a spinning mill. And if you have 5x or 6x higher costs, you just become totally uncompetitive.

So this means the Turkish spinners make no money. The large one have economies of scale. They are maybe serving around the 0 line, but the small ones, they make all a loss. Then they have not the fund to do the necessary investment and the necessary investment for Turkey to survive is automation. They have to automize their spinning mills. If they do, they don't have this handicap of labor cost anymore. And this is why Turkey for us in terms of automation is the key market we are now focusing on. We have launched now several programs. But of course, if you don't have money, it's also difficult to invest into automation.

So it's a little bit chicken or egg and the government has promised certain support, which has not happened in full. And so Turkey is really struggling. And if this, let's say, government controls are not eliminated in terms of minimum salaries, if there is not a support to invest into automation, I think the textile industry of Turkey is really under pressure.

Now the Turkish customers do the following. They go to Egypt. So the biggest investors now or some of the biggest investors in Egypt are now Turkish spinners, who have all the know-how because Turkey has a huge know-how in the spinning industry or textile industry, but the home territory at the moment is not affordable anymore. So they go to Egypt and they wait that, Syria becomes stable. And then they just jump over the border.

And so the country itself, Turkey, I see very challenging in the next 2, 3 years. There is the one or the other project coming up, but it's very, very difficult for them. And it's homemade and an external factor with the earthquake.

Okay. Then I move on to the next question from Dennis Piretra. Retail sales decreased by 20% in 2025, falling to CHF 685 million. Is this drop attributed to a loss in Rieter's market share? Or is it a result of a broader downturn in the global market?

Maybe you can say a few words then to the one or the other shift from '25 to '26. I think it's both in all fairness. The market was still down and even went down a little bit more. That's one element. And then, of course, sales is always the result out of orders you had. And still in '24, we still had some orders from the good times '21 and '22. So in '25, we were just living from orders we got in '23 and '24. So it was now the real new normal. That's one point.

So there is a book-to-bill topic. It's the first time that our bookings are higher than our billings. It's a turning point we have seen on a low level, by the way, but it's a turning point.

And the second topic is, yes, the market has not recovered. But the third topic is even more important. Historically, and that's why globally, we probably have lost a little bit of market share because the market who was the strongest one was China, where we have the lowest market share, although we improved tremendously our market share there, but the mix shift to China was bigger. So from a mix impact, we improved in China, but China became more important, and this has dampened our global market share. And where we have a super high market share in the rest of the world, this market has disappeared.

So it's especially an outcome of tectonic shifts from the 3 or 4 regions we have in the world. When I look on our order intake figures, I'm confident that in the future, our market shares will go up. And I think the reason why '25 was especially low, we also had the one or the other shift, Oliver.

Yes. I think it's very, very difficult to differentiate between underlying market performance and market share. It is my strong belief that the market has the much bigger effect than the relative competitive situation. On top came also that in 2022 and 2023, we had very high sales levels because we took a lot of orders, our competitors did not take anymore. So that also distorted the picture to some extent.

Now, when I look at the different regions, I'm referring to Page 33 in the presentation. For me, the highlight, clearly, if I look at the difference in local currency, which is reflective of the underlying performance, China increased sales by 38%, which is clearly a highlight. The market was not up by 38%. So we gained market share there.

Then North and South America, we expanded slightly. So we at least kept our market share stable over there. And then we had a couple of very, very difficult markets. As mentioned before, Turkey, minus 76% because the market is just inexistent at the moment in Turkey due to the challenges we've heard. And then also in some other Asian countries, which were heavily affected by tariffs, such as Vietnam, for instance, where we declined by 20%. And there, it's very much driven by the underlying market.

Okay. Thank you. Then the next question comes from Leonie Zirn from UBS. Three parts. I will start with the first one. Your numbers suggest good positive order intake in machines end of 2025 and slightly positive for components, while negative for aftersales. Can you give a bit more color here? What exit rates do you currently see in 2026 in machines and components similar to the fourth quarter?

Exit rates.

Cancellations...

Cancellations. So it's true. We had a better fourth quarter than what we had the 2 years before. That's point number one. And this is a good sign. And the reality is it really was driven by new machine sales and also by order intake and components. I mentioned that before, it started in November that we saw that our component business is picking up.

Now the aftersales business, we had this trend of the installation part of our aftersales business. This still was shrinking. And we also saw that, Engineered Solutions, which are mainly focusing the Turkish market at the moment and some rest of the world markets, there was no money availability to invest. So it was a little bit counterintuitive that although, they have the need for that, and we are doing a good job in the aftersales business, but especially for this topic of Engineered Solutions, it was not really picking through in Turkey. And that was the main reason why we had a difference in the development of the 3 segments.

Now, when we talk about -- you mentioned exits, and I take cancellations as a word because this is usually what we had. So we were having more or less the same level of cancellations like in the past.

Now, of course, what we have to do and this we are just starting, we have to look how order intake are booked in the new Rieter Group and how we deal with cancellations, because we now have a certain history and procedure like Barmag is doing that, and we have a procedure how we did it in the past. So we now have to align that, and this might give the one or the other cancellation during the course of 2026 in the first half year when we align all that.

So cancellations were on a similar level, like in the past. Now we just said only that we want to review our backlog. We still have some orders of '21 and '22 in our books where we have the down payment. But you can imagine, I was also asking the question, well, are you sure after 5 years that they still will execute the job. And we have -- this we will check. But it will be the last year of such reviews.

Okay. Then I move on to the second question. Aftersales margin dropped from 17% in 2024 to 11% in 2025. Can you please give some color here?

Well, I think it's mainly volume driven because you saw that our volumes were going down in sales, not in order intake, but in sales. Now our gross margins in aftersales are extremely good. So this hits us a lot in the bottom line, which you cannot compensate with any structural cost adjustments. It's not possible.

Aftersales is damped to grow and to achieve a certain volume. That's one part. I think that's true. And there was within aftersales, we also had some more engineered solutions in our sales volumes than we had in the past. The margins of engineered solutions are a little bit lower than maybe in spare parts and in repair. So there was a slight mix impact. This also has hit us partially.

And then, of course, as rest of the world is heavy under pressure, where prices are much higher than when you go to China, or to India where the landscape is more competitive, you also have a little bit of negative mix impact on the aftersales margins. But we are quite confident that we will have a good result in 2026.

Okay. And then the third part is concerning guidance. Does your guidance price include further downside risk? Or do we still need to add a buffer in case markets remain weaker than expected? Also, your margin guidance of 0% to 3% is below the low scenario of 2% to 5%. How should we understand this? Any drags likely to be expected on the 2026 margin you would like to mention?

I mean, obviously, guidance always includes ideally a balanced view on risks and opportunities. I think we elaborated on our assumptions. So no significant market recovery materializing on sales level. So more or less the same picture like in 2025. If that was to further deteriorate, which again is not our current understanding, and also not the market indications, that would pose some downside risks. But otherwise, we believe that is a very balanced view.

With regards to the difference between 2026 and midterm, I think we have also elaborated 2 main drivers. First, the full integration of the Barmag business, and also the phasing of the synergies that we expect.

And the second one being that, at Rieter, we still need to fully execute the announced restructuring measures. It will become effective fully with 2027. And as we heard before, for 2026, we expect roughly half of the CHF 27 million run rate benefits to materialize, and that gives you the gap.

Everybody understood. Good.

Thank you very much. There are no more questions. Back to you, Thomas.

Okay. Thank you very much. Ladies and gentlemen, I would like to conclude now this call. I think it's clear 2025 was challenging. But on the other side, strategically, it was super, super important for us and transformative. And the acquisition of Barmag will strengthen our market position, and it will also create or is creating a lot of earnings potential.

Our medium-term value creation levers are very clear. We will realize the synergies of minimum CHF 20 million. The market will recover. I think we have done a lot in operational excellence, but I believe we still can do a lot in operational excellence. This journey never comes to an end. And we have started to work on our widening portfolio on one side in terms of customer markets.

But on the other side, we also -- internally, our portfolio where we do produce what, we also have been very clear and consequent in execution. We are committed to a disciplined capital allocation. So in terms of expenses, CapEx, we are still pushing the brake because we want to use cash to generate a better EBITDA net debt ratio.

So we also will work on a sustainable margin expansion. I have no doubt about that. If you have done so many things in operational excellence, cost structure, efficiency, once markets come back, then you have an operating leverage which immediately jumps up your profitability. And with this more diversified portfolio, we are now also very well positioned that we can unlock long-term shareholder value.

So thank you very much to all of you online, but also here in the room. I would like to close this annual press conference. And thank you for your interest. Goodbye. It's a very warm day today. So spring is coming back, and we should take that as a very positive sign for our market developments.

Thanks a lot, and goodbye.

Thank you, and good morning, ladies and gentlemen. A warm welcome also from my side. This is the agenda. We will briefly look at the key messages, deep dive into the current trading results, review the status of the planned Barmag acquisition and provide an update on our strategy execution and close with the outlook. Before we look into the details, let me say a word about the current environment. The market situation continues to be characterized by investment restraint due to trade policy uncertainty in key markets.

Although Rieter registered growing interest for new machine projects, many requests did not yet lead to binding orders intake as customers postponed their investment decisions until the 2026 financial year. Lower volumes in the machinery business and the associated weak demand for installation services, along with cost-saving measures by customers are delaying the conversion of orders into sales and they are also waiting on the earnings of the aftersales and component divisions.

So now to the key messages on Slide #4. Let's start with the green boxes on the left. Order intake at CHF 559 million was only 11% lower than the prior year period. However, if we exclude the exceptionally high purchase order of our Chinese customer, DIW, in the financial year 2024, order intake in the first 9 months of 2025 was 11% higher than previous year. The improvement was driven by a strong third quarter in 2025. Sales at CHF 458 million were 22% below the prior year period. Maybe a word on orders above sales. Longer book-to-bill cycles can be observed in the aftersales business in particular. And on the blue boxes, as mentioned, the market outlook remains challenging.

This is also why we continue to relentlessly push performance improvements across the group to reduce costs significantly. At the upcoming ITMA Asia exhibition taking place in Singapore next week, so end of October 2025, we will be presenting novel automation solutions that pave the way towards fully automated production. And last but not least, the gray boxes. The Barmag acquisition is on track. The capital increase has strengthened our balance sheet and the necessary financing for the acquisition has been secured. And now to the market. Slide #6 shows the market situation at a glance. After a promising first quarter 2025, macroeconomic turbulences strongly impacted market sentiment. Let's start with the rest of the world, which you can see on the left side. There, the overall market development in Europe and Turkey remained flat. However, we are seeing positive signals in some Asian countries as well as in the Americas. Particularly in the Americas, Rieter was able to record new orders.

In addition, additional promising opportunities for new machines are arising in Latin America. This is the result of the reshaping of supply chains and nearshoring. The demand for automation solutions is on the rise, which validates our strategic approach and the efforts we are making to realize a fully automated mill. Let's go to India. If we look at the overall Indian market, which is dealing with the fallout from the tariff dispute, we see that mills in general continue to struggle with low margins, especially smaller ones in the southern part of India. Given the significant role the textile industry plays in the India's economy, the government is stepping up its support for this vital sector. We are seeing strong mill utilization among Rieter customers and have signed now several large contracts. And what is also important, automation solutions are more and more in high demand. Last but not least, China. China remains the strongest market. The investment sentiment is particularly positive for the domestic market, and the government is providing targeted support for the Western territories.

So let's move to order intake. Slide #7 shows our quarterly performance since 2023, excluding the mentioned big, big order from the Chinese customer, DIW, which we recorded last year. If you see on this -- if you look at this chart, you see that without the DIW purchase, we see here that order intake has steadily risen by 11% during the first 9 months of 2025. If this trend persists, we would expect this year's fourth quarter to also exceed last year's final quarter. This concludes my part of the presentation, and I will hand over now to Oliver.

Thank you, Thomas. Good morning, all. Let's look at order intake on Slide #8. Order intake stood at CHF 559.3 million in the first 9 months of 2025, which equals an 11% drop to the prior year period. As we saw on the previous slide, the year-to-date order intake level is clearly unsatisfying and below expectations, but we saw an accelerating trend in the third quarter 2025 with a run rate which is much closer to a normal market than we have seen in a long time. A month does not make a quarter and a quarter does not make a year, but we take this as a positive for the time being.

Now to the divisional details based on year-on-year performance. The Machines & Systems division recorded a particularly large decline of CHF 49.1 million because, as mentioned, some commitments did not materialize or customers postponed their investment decision to 2026. The Components division's order intake fell by CHF 19.6 million, mainly as a result of the soft machines business. The After Sales division by contrast, continues to deliver a solid performance with an increase of CHF 16.8 million in order intake. This positive development once again confirms the strategic growth initiatives that we initiated. The decline in order intake was further accentuated by some foreign exchange translation effects in the amount of CHF 18.6 million, which takes me to Slide #9 on sales.

The realization of sales remains challenging as a result of the geopolitical uncertainties. Many customers are reluctant to adhere to previously fixed schedules and push out their investments by changing the delivery dates. Sales, therefore, were CHF 457.7 million in the first 9 months of 2025, which represents a 22% drop compared to the prior year period. Sales in the Machines & Systems division fell by CHF 76.5 million (sic) [ 67.5 million ] and the Components division by CHF 27.7 million and in the After Sales division by CHF 19.8 million. Similar to last year, we expect a significantly stronger fourth quarter this year when it comes to sales generation. The negative FX translation impact amounted to CHF 11.6 million.

Let's turn to the planned Barmag acquisition. The planned acquisition of Barmag makes us a globally leading system provider for natural and man-made fiber. We are confident that all required regulatory approvals for the completion of the acquisition will be obtained in the fourth quarter of 2025. This step represents an important milestone in the implementation of the company strategy, which was announced in October 2024. The last weeks were extremely eventful as we successfully secured the long-term financing of this landmark transaction under challenging conditions. We are grateful for the strong investor support and the commitments of our financing partners. Without those two success factors, this historic transaction, and I will come to that, would not have been possible. We, as a team, are convinced that Barmag will unlock significant value for our shareholders and other stakeholders in the coming years.

I would like to share a couple of facts and highlights. Ladies and gentlemen, this was the largest public equity raise relative to market cap in Switzerland ever successfully completed. The numbers say it all. The deal earned 79% -- sorry, a 79% (sic) [ 97% ] approval rate at the Extraordinary General Meeting in September 2025 with a 99% take-up for the rights issue. This is truly extraordinary, and I can't thank our shareholders enough for this amazing endorsement. The rights issue enables the diversification of the shareholder base, which will also support the next chapter of our equity story. And on the debt side, we were able to sign a CHF 750 million syndicated credit facilities with a group of Swiss and international lenders.

To conclude with, all the temporary bridge facilities have been successfully refinanced and that well before the closing of the transaction. In short, funds are ready. On the right-hand side, you can see the status of the regulatory approvals. All filings and approvals are according to schedule and clearing is still depending on some competition authorities, especially China, Egypt and Turkey, whereas approvals have already been obtained in India and Portugal. Consequently, we expect the transaction to be approved in the coming months, which will then trigger the closing of the deal. That's it from my side. Back to you, Thomas.

Thank you, Oliver. So let's talk about strategy, and this takes me to the update on Slide #12 and 13 and onwards. This is our strategy house, which we unveiled at last year's Capital Markets Day, and it still relates to the actual Rieter company. After a successful closing of the Barmag acquisition, we will have to refine the strategy to make it valid also for the whole new Rieter Group. Let me highlight 3 areas: automation and digitization, supply chain excellence and agile structures. At the ITMA in Singapore next week, we are presenting novel automation solutions that pave the way towards fully automated production. Imagine a fully manual mill today. It takes around 20 operators to produce 1.9 tonnes of yarn per shift and 10,000 spindles. In a fully automated mill with cutting-edge Rieter technology, which we will present finally then in 2027 at the ITMA in Hanover, it only takes 3 operators for the same output.

Now at ITMA in Singapore, we are presenting 3 technologies that will be key to achieve full automation. According to our sample mill calculations, we are now already achieving a ratio of more or less 6 operators per 10,000 spindles. So great progress of the team. You can see these innovations on Slide #15, and let's start with SERVObale on the left side. SERVObale is a system for the automated transport of cotton and man-made fiber bales. The system adapts to different packaging sizes and enables customized laydown. SERVObale can also be easily integrated with an existing bale management system.

In the middle, you see SERVOcan. This is our fully automated can transport system, which automatically guides cans from carting to spinning. SERVOcan replaces manual transport, lowers the labor cost and ensures continuous and consistent material flow. And last but not least, at the end of the whole line, SERVOpack. The fully automated packaging system is the comprehensive solution for the efficient processing of packages, including transport, quality control and packaging. It ensures final production stability, thanks to the quality control system. And SERVOpack also enables the customized design of pallets, boxes and bags to meet customer requirements. At the end, for the whole packaging activities, you don't need a single person anymore.

The next chapter you see on Slide 16 is agile structures and supply excellence. We continue to push for performance improvements across the group. This means we are relocating functions to customer markets. This includes the decentralization and strengthening of the sales organization to improve customer centricity. We are also establishing P&L responsibility for regions and branches to increase accountability and entrepreneurial spirit. We are improving our production footprint. This means we are optimizing production to increase efficiency and leverage economies of scale. We are executing our China Plus One footprint strategy for all machinery types to reduce dependency on global supply chain. We are optimizing our supply chain. This means we are rolling out and completing right at the moment our global procurement organization, and we reduce key dependencies in supply chain with a dual sourcing concept.

And last but not least, we are heavily working on production cycle times to be faster and much more improved time to market. Last but not least, we are simplifying our organizational structure by increasing efficiency by reducing organizational complexity and redundancies. And last but not least, you will see that also by the end of the year, we continue to manage our overhead costs very, very tightly. Now let's have a look on our adjusted outlook for the full year 2025. As a number of projects have been postponed for deliveries to 2026 due to the macro political uncertainties, Rieter, and this does not include the Barmag division, now expect sales for the full financial year 2025 of around CHF 700 million. Previously, our guidance was CHF 750 million to CHF 800 million. Despite these lower sales volumes, we still expect an operating EBIT margin at the lower end of the range of 0% to 4%.

This excludes restructuring costs and costs associated with the acquisition of Barmag. In that area, we would like to give a little bit more insight. For the full year 2025, Rieter expects transaction costs with an impact on EBIT of around CHF 15 million. We also see significant additional restructuring costs with an impact on this EBIT figure. And then net financial expenses, including the expenses associated with the acquisition of Barmag will be around CHF 20 million. As a consequence, if your operating EBIT is between 0% to 4% and at the lower end and you take into account all these extraordinary costs, our net result is expected to be negative and thus will deviate significantly from the prior year figure.

With that, we conclude our presentations, and I hand over to Relindis for the Q&A session.

Thanks, Thomas. Ladies and gentlemen, we will now open the lines for the participants in the conference call. Then we will take the questions from the webcast. As usual, the Q&A session will be recorded. [Operator Instructions] I will now hand over to Maria for the questions from the conference call. Maria, please go ahead.

[Operator Instructions] The first question comes from the line of Amira Manai from ODDO.

I currently have some questions that I will ask one by one. First one is, could you precise which country is more affected by customer postponements and if you have seen any order cancellations or maybe further delays since end September?

Okay. Thank you, Amira. So the major countries impacted by the tariffs has been mid of the year India. You will all know that Trump due to the oil deliveries from Russia to India, he has imposed 50%. So a lot of Indian customers are exporting the yarn or their fabrics to the U.S. and the U.S. is the biggest consumer market for textile. So India has been impacted and some of the Southeast Asian countries. China, not so much. And Latin America, although they have partially some tariffs, in fact, is progressing quite well. And regarding cancellations, there is no new level of cancellations. We always have the one or the other maybe order which is canceled, but it's more about postponement of deliveries and in the order intake, postponement of decisions.

And could we have the impact of the Chinese contract in Q4 2024?

This was very small. The fourth quarter, if you look into the presentation where you see this quarterly result, this Chinese contract has been issued to us in 3 quarters. A big chunk was coming in quarter 1. The second big chunk was coming in quarter 3 and then a small part was coming in quarter 4. All in all, if you take these dotted lines on the Slide #7, all in all, it's roughly CHF 150 million.

Okay. And can we have also the current spinning utilization by geography?

Could you repeat it once more? I did not understand fully.

It's about the spinning utilization rate by geography.

Yes. Okay. So spinning utilization in India is -- and we measure that per year per customer. So we don't have it for the whole country. We're measuring that with our customers. So in India, it's around 90%. So very strong because the majority of our customers are in the North. And the Northern customers are bigger and not so much suffering because they're also vertically integrated. In the south, you have smaller spinning mills, and they are struggling much, much more, but that's not so much our problem. In China, we are quite stable on a level of 70% with our spinning mills. Turkey is still struggling also there. The big ones are quite well occupied. And the small ones, there are a lot of small spinners in Turkey, they are struggling, but they are not so much our customers. And then when you look on Southeast Asia, it's a mixed picture, stay somewhere at 70%, 75%. The U.S. and Latin America has improved, has become better. And so all in all, we are still globally slightly above 70%. A real good figure would be 80%.

And now for 2025 guidance, on which key assumptions it is based by business unit and by geography? And do you anticipate or is there any risk in Q4 related to postpone maybe projects? How confident are you in achieving this new guidance?

Maybe Oliver, that's a good question for you.

Yes. Thanks. Obviously, that's the key question on the confidence level. Of course, it might well be that we still have some postponements as we had throughout the year. Nevertheless, if you compare the implied sales level that we plan to do in the fourth quarter, it is slightly below what we achieved in Q4 2024. So that is certainly something that we have delivered already. And a large part of the orders that we still need to deliver is today in our backlog. And as we move forward in the year, the risk decreases, obviously, when it comes to sales execution. That's what we can say for the time being.

And do you anticipate further restructuring cost for 2026?

Well, maybe I can start with the general trend and then maybe a little bit more in the details, Oliver can answer. Everybody asks when is the market coming back. So -- and I have mentioned that many times, the investment cycle is overdue. It's just overdue. And in the last semesters, each time we thought it's now coming back, there was another hit somehow coming from the outside world, whether this was an earthquake, whether this was now the tariffs, whether this was a war. But the fact is that it is the longest phase in the market ever. So it's 4 years now in a row. And all these machinery is becoming older. It's not latest state of technology anymore. The ones who are investing now, they have better machinery, so they are more competitive. And this, of course, creates a handicap for the ones who have not done any investment. So investment cycle is overdue. That's very important.

Second, due to the fact that we experienced one or the other negative impact in the last 2 or 3 years, we take a conservative approach for 2026. So if then the market is better, we take it with pleasure. But our planning assumption is more conservative. So if we have this conservative approach, we have to prepare a successful but still challenging 2026. And this requires that we continue the execution of our performance program. Now what it means in times -- in terms of facts and figures, we can give you maybe a little bit of a guidance, but this is still subject to finalization of plans and also Board approvals. And maybe Oliver, you can elaborate a little bit on that.

As you may understand, we are at the moment in the middle of the planning for next year. Now as Thomas said, that the underlying assumptions for next year will be cautious. And if the market then develops better, we take that, obviously, with pleasure. That means that the strategy execution, as we explained on Page #8, will require additional funds. Whether we will book that in this year or in next year is not yet decided and not yet approved, but our directional preference would be to book the majority of any additional restructuring expenses in this year.

Now what does that mean specifically? As I mentioned, neither have we taken a decision on all the measures yet nor do we have approvals on the internal side for it. But for the half year, we had restructuring expenses in the amount of CHF 10.4 million and as our planning goes, you may expect additional restructuring costs between CHF 20 million and CHF 30 million for this year. And if we were to do that, that would then be the majority of the costs and no significant additional costs in the same magnitude could be expected for next year. That is our current status of planning.

And maybe to add one comment here, just to add one comment. The year 2025 has so many special impacts. So we have restructuring, but we also have this huge transaction costs, which, of course, impact our net result. And in our favor is to have it clean by the end of the year. So we don't have to have all these different type of profitability levels and all the explanations, what is in and what is out, but to have it in one wash all done. And then we don't have all these alternative measures or performance measures for 2026.

Okay. And my last question is about monthly performance for July, August, September and maybe start of October and the measures that could be taken to limit ForEx impact?

So quarter 3 was a good quarter in order intake. You have seen that it has been better than last year. It has been substantially better also than 2023. Within the quarter, it was an extraordinary good month of September. But as Oliver mentioned, a month doesn't make a quarter and the quarter doesn't make a year. Now October looks so far good. And let's wait where we end up the year. Maybe the next yes.

Just about the ForEx impact and measures that could be taken?

FX impact, Oliver.

Yes, sure. I mean, just for the avoidance of doubt, that is a translation impact predominantly that we show and translation impact always occurs if you consolidate in a different currency, then you book your sales and that cannot be mitigated. And every other impact, we are well under control with our hedging strategy. I think we need to speed up a bit. We have a lot of questions in the call. I hope that was helpful for you, Amira, and then we will go to the next one.

The next question comes from the line of Walter Bamert from ZKB.

Let's start with the guidance you give for the financing cost, CHF 20 million in this year. Can you also indicate what to expect as a run rate in the next year?

Oliver?

Thank you, Walter. That is premature to provide you a guidance on. As you may understand, we have not closed the transaction yet. Also, we are not allowed to talk to the target at the moment on sensitive information such as current trading, financing structure and so on, and we will provide you with that in due course post the closing of the transaction.

Okay. You didn't give the Barmag trading update. And here, perhaps you can explain us how you track what's going on with Barmag these days? And if we have to read from your indication of trade uncertainties impacting your incumbent business that you also have to be more cautious on Barmag into the next year?

As I mentioned...

Please go ahead.

We are between signing and closing, and we operate in similar markets in the textile industry, and it is highly sensitive and actually forbidden to talk about the details of the business unless we have closed this transaction. So we are not in a position to provide you with a trading update. You may please reach out to Oerlikon if you want to know any more details on Barmag on current trading.

Okay. Then you indicated that the book-to-bill cycle in aftersales is extending. That's for me somewhat counterintuitive. How should we interpret it that people are booking earlier or they just delayed the delivery because they don't have the financing to pay for it? Or what is causing that lengthening of the cycle?

So there are 2 elements. It's a very good question. There are 2 elements. One element is that in the After Sales business, we also have the installation of new machinery. So we book the order, but the execution of the new machine business has been delayed. Then also the installation is delayed. And that's quite a substantial amount. So this is almost half of this negative or it's even more, let's say, half of this negative sales development in After Sales. So there is a time lag due to the installation.

Then in After Sales, we also have modernization and upgrades of the -- of existing spinning mills. Our most famous product is the ROBOspin. And they have a similar trend like new machinery business. So we booked all the orders, but customers at the moment are delaying the delivery. They don't want to cancel, but they somehow do very strict cash management. And then in the rest, so which is parts and repairs. In the repairs, there is no delay. And in parts, they know as soon as they have the full mill utilization, let's say, above 80%, 85%, they will need spare parts. They at the moment, use spare parts internally from machines they don't use, but they know they have to have it once the mill utilization is ramping up. So they already ordered to be ready, but they wait -- some of them wait with the delivery. Over time, this should balance out then.

Okay. Then regionally, I only saw the revenue generation, but not the orders. Is that a good indication also for the order development regionally? Or are there important differences in there? For example, in Africa, I see low revenues, but probably that market is picking up.

The major market we still have is China. Thanks God, we were putting a lot of emphasis to strengthen our organization. So China is developing very well. Even according to our internal targets, they are doing good. The second strong market in order intake is India. It's also improving compared to the last year. The so-called rest of the world is more quiet, but there are a lot of -- there's a lot of interest into new projects. So companies like -- countries like Vietnam, we see a lot. Also Bangladesh is coming back. Also Pakistan now with certain stability is improving, but it's not yet in our order book. The only region where we can say they are already improving in the orders is Latin America. The others are very busy, but they have not yet pushed the button.

Okay. And then I got different -- I picked up in your presentation that Q4 revenues will be significantly higher than last year. And I think in the last question, there was somewhat lower than last year. So can you repeat exactly what you said on Q4 revenue generation, please?

Maybe, Oliver, you can repeat that once more.

Yes, happy to take that. Walter, if you look at the last year's numbers, the 2024 numbers, you see that we did in Q4 around CHF 270 million in sales. And if you look what our implied Q4 sales number is, if you assume the CHF 700 million top line guidance, that is slightly below that number. So we expect sequentially stronger sales in Q4, so more than in the previous quarters, but on a year-on-year basis, slightly lower sales versus 2024.

The next question comes from Alessandro Foletti from Octavian.

Just a couple, again, a little bit on your confidence. You mentioned that you expect -- the customers have pushed out the orders, no cancellation pushed out and that they will decide in '26. What gives you the confidence that they will then really decide at some point in 2026 and not keep pushing out?

Well, I'm very close to our customers. I spend about 1/3 of the time with customers. In fact, I'm sitting at the airport jumping to a plane to Indonesia. So I will step out at 10:00 a.m. and Oliver will finish everything. So it's very clear, customers, they want to get rid of this overdue investment cycle. They know that. They are just a little bit like -- it's a little bit like Mike Tyson once said, everybody has a plan until you are punched into the face the first time. So -- and they had some punches. So they are somehow recalculating when is the best time to do the investment. I see that they start to organize themselves. They recalculate.

And it's also interesting, they have a little bit the benefit of reduced interest rates as these are huge investments they have to do. They say, wow, okay, I have a negative part of the trade, the tariffs. They have now more clarity how much they have to bear by themselves, how much they can pass on to customers. So this gives them more confidence now. And then they see, okay, financing becomes cheaper. So they are a little bit opportunistic before they now really push the button and close the deal. And that's what I see in many -- on many customer sites who are depending also on external financing. Those who are very strong with their financing accounts and have a good balance sheet and do not depend on external financing, they now already do the investment.

Okay. I would like to ask you a bit of a clarification on something that you mentioned earlier. When you said that about the capacity utilization that is still around 70%. But in some areas, you mentioned China and India, where you are active with the largest clients and the smaller have troubles. So in a way, I don't understand if your clients are only the largest one that are doing well, why is still the uncertainties then reflected in your numbers?

That's a good question. It's not that we only have large customers. We are also dealing with the small ones. As we are a market leader, we have all type of customers in our book. But of course, the share of the large customers is bigger than maybe with some competitors. So this is a benefit for us. And most of the orders we have booked this year in the new machine business have been dominantly been booked with larger spinning mills. But the smaller ones we have, they are still hesitating. And so that's the reason why we say we want to be -- we don't want to overpromise. We would like to overdeliver. And the history has taught us that I don't know what happens in a month or in 2 months. So we take a conservative approach looking forward with the hope that it really becomes better, and this we will take then with measure.

Right. Maybe my final question on the gross margin of your clients, which you also mentioned. Can you give a bit more indication maybe regionally or how big is the squeeze or that they might have between cotton and yarn prices? Or how are these moving?

So the margin of a spinning mill over a cycle is usually less than 5%. Operating profit of a spinning mill is less than 5%. So it's quite a thin margin spinners are working with. As soon as they have higher volumes, then they have an operating leverage. The margin goes up because they have much more fixed cost absorption. Now large customers are usually integrated. They do not only spinning, they also do weaving, knitting, dyeing and garmenting. And you see that the profitability of the bigger ones is better than of the smaller ones.

Now in a down cycle, the smaller ones are more serving around the 0 line or some of them even do a loss at the moment. But they know almost like us, when the market is coming back, then this can turn very quickly. So the size is important. The utilization is important. The vertical integration is important. And of course, at the moment, where are you located and what kind of tariffs do you have.

We will now take some questions coming from the webcast. Relindis, back to you.

The first question comes from Reto [indiscernible]. Did I understand that correctly, you expect the order intake in Q4 2025 to be higher than in Q4 2024, even without the DIW effect. Can you quantify the postponed orders?

Well, we cannot give you now a clear figure for the order intake in the fourth quarter. But as we mentioned before, September was good. So far, October is good as well. So this would mean that we do have a good confidence that orders -- total orders for the 3 quarters will be higher than in the previous years. However, I have to say when you look on this chart on Page #7, both in '23 and '24, the reference was quite low. But still, if we go into a magnitude of maybe CHF 150 million, plus or minus, this depends, of course, of individual projects. Then finally, we come to a region where we can say, okay, now we really have a substantial improvement year-on-year without this extraordinary DIW order.

Good. The next question comes from Eugen Perger Research Partners AG. Are there other countries to mention in Asia, for example, Bangladesh, Vietnam, may they take over business from India if the letter states under tariff sanctions for a longer time because of the Russian crude oil issue?

It's a good question. Bangladesh is especially strong in the weaving and garmenting. So especially in garmenting. What happens today is that a lot of yarn, which is produced in India is exported to Bangladesh and then they make clothes out of it. Now India, in our assumption is more and more now challenged that they have an increasing domestic demand. So this is a good challenge. And I believe that the Indian spinners and weavers are more and more focusing to satisfy this domestic demand. So this might be that someone else is jumping in into more export activities and Bangladesh definitely is one of those countries who could benefit from that. Another one is in Southeast Asia is Vietnam. Vietnam has a lot of large spinners and also working for U.S. companies, so U.S. textile companies. And after the first shock in Q2, they now start to plan more projects to expand their facilities. So I'm slightly optimistic for the Southeast Asian countries.

The next question comes from [indiscernible] from UBS. In light of your guidance for negative result, can we expect the dividend to be suspended for this year also to help with deleveraging.

So good question. I think a dividend is decided by the Board of Directors. I'm now here not as a Chairman, but I'm here as a CEO together with my CFO. So in the history, Rieter always has been very meaningful with the dividend policy. And we want to satisfy all stakeholders. So shareholders, but also our credit facilities. We are interested in a strong balance sheet. And so we will take all this into account when the Board will have the final decision. But the reality is that we have a dividend policy, which says we are paying 40% or more out of a profit. And so if there is no profit, we will have to rethink whether it is meaningful or not to pay out the dividend.

Thank you, Thomas. I have two questions from [indiscernible] Asset Management, I will read question by question. Any outlook for 2026?

So I mentioned before, we take a conservative approach. We had a good September. Oliver has said it very well. September does not make a quarter and the quarter does not make a year. Definitely, we see -- I come always back on the Slide #7. We see that year-on-year-on-year, our sales team has improved the performance in a challenging environment. Our assumption is -- our planning assumption is that '26 remains challenging. So we are preparing from a cost point of view, all our cost measures to be successful in this challenging 2026. And yes, there is some hope and there are signs that '26 becomes better than '25, but we prepare for a conservative approach.

The second question from [indiscernible] is takeup of rights issue may be okay, but a big part of the new shares seem to create selling pressure in the stock market.

[indiscernible] for that question. Explaining the share price, it's always very difficult, and it's not my core profession. I would rather trust in you dear attendance of this call to explain that better to me. What we can clearly see is that today's share price does not reflect the strategic value of this transaction. It also does not imply a closing of the transaction in due course. And very honestly speaking, we're also a bit surprised by the share price reaction because during the road shows that we had both of the announcement in May, but also in the lead up to the capital increase, we had predominantly and actually exclusively positive feedback from the investor base. Everybody was understanding the strategic rationale most of the people said it makes absolute sense. And that was also reflected then obviously in the content at the AGV and in the take-up of the shares.

Now is there some short-term speculation in the shares? The right was probably a bit too cheap when just assessing market dynamics, and that led to rather low entry prices for some shareholders, and they might realize now some short-term gains and lead to certain share price pressure. We all hope as a team that very soon, the focus shifts towards the long-term perspective of this company. And as a good wine, usually a good strategy and also a share price takes time to ripe, and we are very confident that we can be more successful in the future with this transaction, and that will also then reflect in the share price. That's all I can add to this point.

Thank you, Oliver. I have three questions from [indiscernible]. I will read it question by question. When it comes to future procurement savings, can you confirm that probably the CHF 20 million savings are rather conservative?

I can confirm that.

Okay. Then we move on to the second question. What is your expectation when it comes to future EBITDA margin levels during a downturn, 6% question mark and in better times, 10%. Are this level realistic, sorry?

Please, Oliver. Yes.

Obviously, I understand the question, but you may well understand that we need to rework our midterm margin guidance and come up then with a proper framework post closing of this transaction, which as mentioned, you may expect in due course, and we will update you then on time on what you may expect in terms of margin framework in the future. I think for Rieter a stand-alone case, it's still valid what we have announced in the past. And for the combined unit, we want to close first.

The third question, as even the best company like VAT are rather given cautious outlook announcements regarding the next 1 to 2 quarters, do you think that you have to go further reducing your overall costs? Or are you already gone quite far?

I mean on the outlook, as you may understand, we have just decreased our sales target for this year. So the cautious approach of other companies seems to be mirrored as well in our industry. On the cost side, I can reassure you, and you can also find it in the press release, we have reduced our overhead costs by more than CHF 100 million in the last 2 years. So we are actually ahead of our next level cost saving target, and we are not finished yet in optimizing our structure, as was also presented on Slide #16. So we will continue to improve on that end. We continue to improve the company, and you may expect further improvement on that end as well.

Okay. The next question comes from Andrea Frey. Can you provide the guidance on net leverage for financial year 2025 and 2026?

Oliver?

We do not provide guidance on leverage so far, and we will also not change this policy. You can rest assured that we are closely monitoring the situation that we are working heavily on the various levers that you have to improve your leverage situation such as net working capital optimization, et cetera. And with regards to 2026, since we do not know the details of the Barmag current trading and their immediate future for next year, given we have not closed the transaction, we can also not provide you with the guidance for the combined unit.

The next question comes from Andy. Is there a financial outlook 2026, including the Barmag acquisition?

I think that was answered already.

There's another question from Andy. Is there any comment that existing shareholders considerably lost out the transaction basically raised the value of existing shares?

I could just reiterate what I mentioned before. And honestly speaking, Thomas and I and the entire management team, we are significant shareholders as well, and we fully participated in the capital increase. We don't see that the current share price level reflects the value of the company from a long-term perspective and the relevance of the transaction in a meaningful manner, we don't see that. Now what can we do to change the share price levels? We just need to continue to work on the strategy execution on our core business and then hope that it will over time reflect in the share price. But in the short term, it's clearly disappointing.

The next question comes from Claudia. As of September 30, 2025, Rieter's order backlog was around CHF 590 million in September 2024, CHF 690 million. Well, 9 months in '25 book-to-bill ratio is smaller than 1.0x. What does that mean in terms of revenue evolution for the next 6 to 12 months?

Well, we calculate the book-to-bill and in a way that we divide the order intake by sales. And if you win in the same period. And if you win more orders than you book sales, basically, you may expect that your sales level in the immediate future is going to rise. And otherwise, you may expect that it's going to fall, neglecting any changes in trends in the immediate future. As we outlined previously, the order intake figure on absolute terms is below expectations. That's clear. All we can do is continue to work on the various initiatives. And as mentioned, we had a solid September, and we continue to work towards the further materialization of our order pipeline. And then we may expect also a change in the sales development. But I can assure you that normally in this business, you have a visibility of 6 to 9 months ahead. And so this order backlog level, which is slightly up is not usually on normal level.

And there is a second question. Net financial position, you closed half year 2025 with CHF 286 million net debt. Meanwhile, received net cash of CHF 460 million, CHF 470 million from the concluded capital increase. Then you are in the process of acquiring Barmag for an enterprise value of CHF 850 million. The calculation would suggest a pro forma net debt of roughly CHF 670 million after the deal closing at year-end 2025. Is this a fair assumption? And the second part is, I would assume that leverage will go up well above 3.0 and will stay there for several quarters at least. What are your plans and strategy in terms of leverage and deleverage?

As I mentioned before, and I am now not in a position to fully challenge or give a comment with regards to your estimates. It very much depends first on our trading and our business development, but also on the situation on the Barmag side. And given we have not closed this transaction yet, we do not know those details. We're not allowed to know actually to be precise. But you can rest assured that we are at the moment, intensively working on different scenarios. We will prepare for different scenarios. And our strategy is unchanged that we want to deleverage this business as fast as possible. Even a leverage, as we mentioned during summer of around 3x, we believe is too high on a mid- to long-term basis, and it should be significantly lower. Now you may also understand that a strategic transaction of this magnitude was not possible to conclude without debt. So we had to accept the temporarily higher debt level, but with a clear strategy and intention to deleverage over time.

Okay. And there is a question from Martin from [indiscernible] Invest. Mr. , allow me to correct you. The theoretical cheapness of the subscription rights is irrelevant now. Even with the rights issue, there is no short-term gain left for any shareholder who participated. Your share price is now trading near its all-time low and significantly below the capital increase price. So the capital market foresees a negative strategic value on Barmag transaction. So will we see an extra Barmag, Rieter signing call with the new details?

You may expect that we will provide you with an update as soon as we have them post closing of the transaction where you may also expect the results for the full year in due course from Rieter and then also a view on the combined guidance. And as I mentioned before, speculation around share price and why it, is where it is. I think about that, we have talked sufficiently. But in principle, I agree with you, at the moment, the capital market is not assessing any value to this transaction. And -- but on the other hand, we are convinced about the strategic rationale and about the value of the Barmag business. And you also seem to be convinced as was the feedback during the various road shows. And so we leave with this discrepancy at the market, obviously, at this point in time.

There is a similar question from Christian of ODDO. Since the start of the capital raise, October 23, the share price has fallen by 1/3 corrected for the theoretical excise price. In your view, what are the reasons for this heavy drop?

I can just speculate. But first and foremost, you have to consider that this was the biggest capital increase in relation to market cap ever conducted in Switzerland. So the fact that you were able to execute is a significant success if you look over the medium and long-term perspective of the combined company. That has to be said first. Then on the mechanics of this capital increase, I could just speculate. But one of the reasons mentioned was that the right was probably rather heavy given you had to subscribe for 25 new shares if you own one right. That led to certain selling pressure on the right side, which was then not reflected on the share price level and so on and so on.

But I see it from another perspective, actually, unless you need to realize your loss now unless you absolutely have to, you have not lost anything. It's just the book value. And if you are convinced about the medium and long-term strategy of this combined company, and as I mentioned before, a transaction, a good strategy needs time to ripe, and you may not expect the reaction after 2 or 3 weeks' time, then I just ask for a bit of patience, and that's what I read into the share price. And honestly speaking, and I can just repeat myself, me, Thomas and the entire management team, we are exactly in the same boat as you. We are all core shareholders.

Thank you, Oliver. There are no more questions. Back to you, Thomas, for the closing words.

Okay. As Thomas mentioned before, he had to leave as he is seeing customers in Southeast Asia, he had to leave for a plane. So let me address the closing words. Now with the planned acquisition of Barmag, we are accelerating our growth strategy to become the undisputed leader in the textile machinery industry with a strong presence in both natural and man-made fibers. By broadening our range of applications, we are convinced that we are ideally positioned to seize the opportunities in expanding markets and to generate more resilient returns. And this will create value for customers, employees and also for you, dear shareholders, in the coming quarters and years ahead. About that, we are convinced. Now we will keep you informed on the status of the closing and the opportunities this opens up for us and our stakeholders. Thank you again for your patience and for your interest. Goodbye.