Good day, ladies and gentlemen, and a warm welcome to today's earnings call of Bertrandt, following the figures for Q1 2024-2025. I am delighted to welcome the CFO, Markus Ruf, as well as Head of Investor Relations and M&A, Björn Voss, who will speak in a moment and guide us through the presentation and the figures. Afterwards, we will move over to our Q&A session, in which you will have the possibility to place your questions directly to them. Having said this, I'm handing over to you, Mr. Voss.
Yeah, also from my side, a warm welcome to today's Q1 earnings call. We will have a discussion later on, but with this, I will hand over to Markus, who will guide you through the figures.
Thank you, Björn. First of all, let's start with the key figures from the first quarter. The first quarter developed as expected and as communicated, and we achieved around EUR 266.5 million in the first quarter. It's similar to the previous quarter, Q4, the third calendar quarter 2024. In comparison to the first quarter year on year, minus 13.6%, but we see the first positive impact from our cost optimization program. In the EBIT line, the last quarter, the previous quarter was minus EUR 7 million, now minus EUR 2 million, so we are in a good way. Employees, 13,605, and we reduced capacity, in particular in Germany and also further growth abroad. EBIT, as I mentioned, minus EUR 2.1 million, but including a one-off from EUR 1.9 million, a write-off from a receivable.
Here, in comparison to the Q4, we see much better. Q4 was with minus EUR 7.5 million adjusted without our one-off costs, and in comparison to the Q1, it's more worth here. We started really well in the last fiscal years, and the first quarter was the best quarter in the last fiscal year. Really positive, we generated a strong free cash flow from EUR 38.2 million, and we have a strong equity with more than EUR 361 million and the equity ratio from 42.3%. The automotive crisis continued in the whole year 2024, and we have seen a lot of profit warnings from OEMs and also from system suppliers. We see a lot of R&D budgets in the pipeline, but we see also need time, and we see for the future higher R&D volume, and really positive for Bertrandt.
VDA forecasted new R&D expenditures from EUR 320 million, so they expect a further growth, and this is also in line with what Porsche announced last week. Higher R&D expenditures, they will spend more money in R&D because there is more need for new models and also for more new technology. As I mentioned, we see total sales are similar to Q4, Q3, so it is stabilized in this view, but clear is also there is an impact from the underutilization. Today, the capacity utilization is around about 88%, and we expect a normalization with the beginning of the second half here, with the beginning of April, May, and now we see there are a lot of decisions in the pipeline, especially about the cycle plans, and the cycle plans we expect the decisions in February and in March.
Maybe to add, we have experienced another reduction in terms of revenues in Germany by 20%, while again, our foreign subsidiaries continue to grow only at 3%, but this is still quite nice, even when compared to the Q4 and Q3 levels.
We achieved the EBIT from minus EUR 2.1 million, but including a special item, a write-off of insolvency from a French customer which Renault holds a 50% stake, so EUR 1.19 million one-off, so adjusted we have a red-black zero. I mportant is in comparison to Q4 and Q3, we see a first impact from our cost optimization program, so after minus EUR 7 million in Q4 and Q3, we are on a much better way, and we see EBIT stabilized in Q1.
Thank you, Markus. Looking at our segment reporting, you see that almost all segments or all segments were impacted by lower revenues year over year, but the Electronic and Digital Engineering segment have also stabilized quarter on quarter. The reduction in the Physical Engineering segment is also linked to the partial idling of the powertrain testing centers, which we have announced in summer last year. We still had some revenues in that segment from the test centers in the last year, but yeah, as we communicated, we have partially idled it and also continued to generate now the cost-saving benefits of on a full year scale, EUR 8 million-EUR 10 million.
As the revenues were down quite significantly in the physical segment, we couldn't cover all the fixed costs, which is basically DNA in that segment, and we couldn't really offset this by short-term work quite naturally, in contrast to the other segments where the missing revenues could be partially offset by short-term work, which is not the case in physical.
Let's come to our cost optimization program. We are on track. We have more than 200 measures identified, and every measurement is tracked in a tool, and we see also we have agreed redundancy program with the personnel representative in the south part of Germany, and we implemented all the fast track program in Wolfsburg. Our clear intention is to finish the program until the end of March. The intention is really clear. Let's start with the optimized cost structure in H2 and also with the full impact for the fiscal year 2025-2026. Let's come to the profit and loss account.
Total sales, as I mentioned, and we see also cost optimization for personnel expenses because based on the reduced workforce capacity, and we see also in the operating expenses, we see also optimization and adjusted from the EUR 1.91 million one-off, we see also cost savings from 10%, and this is also helpful for the future. The program is ongoing, and we can see the first positive impact in our profit and loss statement. Stable balance sheet. Working capital optimization also, and we see also higher cash position with EUR 138 million based on the optimized working capital, and also strong equity with EUR 361 million and the equity ratio from 42%, and we see also optimized gearing with 47%. Let's come to the forecast for the fiscal year. You see economy and political environment bubbling in Germany.
We are really hopeful for the next voting, and we see also ongoing and accelerated transfer of R&D into international locations, and we are also in China in dialogue with our customers, especially Volkswagen Group. We founded a new subsidiary in Hefei for Audi for summers, and we are also in the United States in dialogue with the new brand from Volkswagen, Scout, and also with Rivian, a joint venture from Volkswagen for the software stake in the United States. I t's an ongoing process, but we are well positioned. We expect normalization of our capacity utilization with the beginning of April, May, and we expect product and project decisions in February, in March, and then we expect a higher capacity utilization for the second half year. Normally disclaimer, external factors is clear, geographical trends, and so on.
It's the same disclaimer like last time. Helpful for Bertrandt regulatory requirements, competitive and innovation pressure drive investments in R&D, and we, as I mentioned, we see a lot of signals and a lot of measures, and everybody expects higher R&D volume for the future, and we hope for normalization with the beginning of H2. Our RFQ volume we see in comparison to the previous year, our RFQ volume is even higher, EUR 9.7 billion to EUR 9 billion. Only we are waiting for the decisions, and the decisions come later or need time, but today we expect more project volume for the next months, as our customer announced. We see also higher R&D budgets, but we see also a lot of budgets outside from Germany abroad, and the intention is clear. Let's get a major part from the new decision.
In total, we confirm our guidance, and we expect our revenues moderately declined in comparison to the previous year, and we expect a much better EBIT, especially positive for 2024-2025, also positive operating cash flow, and with the finalizing from our cost optimization program and with higher utilization, our intention is clear. Let's come back to EBIT margin level between 6-9% in 2025-2026. In summary, first quarter expected as expected, developed as expected, and communicated. We see continued growth internationally. There's much more potential also for Bertrandt. EBIT was also much better in comparison to the previous quarter, including a special one-off item, and we see also the first positive impact from the cost optimization program in our profit and loss account. We have a strong balance sheet. We have a strong cash position, and we expect a positive development with the beginning of H2.
Thank you for your attention. Now we are ready for your questions.
Thank you very much for your presentation. We are going on now with the Q&A session. For a dynamic conversation, we kindly ask you to ask questions via audio line. To do so, please click the raise your hand button. If you are dialed in by phone, you can use the key combination star 9 followed by star 6 to enter the queue, and if you do not have the opportunity to speak freely today, you can also place your questions in our chat box, and I will read them out for you. So far, we have no question yet.
We made a good job and answered all questions already.
Yes. Ladies and gentlemen, please don't hesitate to place your questions, and there's the first one. How much of the planned run rate of EUR 70 million-EUR 90 million of cost savings were realized in Q1 already?
In Q1, we leave a small block because we have the personal cost in the profit and loss account, and those only small costs, I think, around about EUR 5 million or EUR 6 million, and we expect a major impact in H2 because we will finalize the program and the redundancy program until end of March, and then we will see the impact in the second H2.
Maybe one remark from my side. We haven't used any of the provisions we've booked for the restructuring program yet. The headcount reduction we've realized was basically driven by normal fluctuation, some negotiations here and there, but out of the EUR 50 million provisions we've booked last quarter, we haven't used anything yet.
Thank you so much, and I will hold the room a few more. Yes, there's the next question. Can you remind me, please, on the reason for isolating the test centers? Will this be permanent?
This is open, so we are discussing the capacity utilization and the demand with our customers every month, so this is open, and today we are in negotiations with customers for more capacity and for more projects, but this is open. Today, last year, it was a decision to save costs and to reduce the losses.
At the same time, to safeguard our capacities if in the European Union we might see a renewed discussion about the ICE ban because when this will happen, this will probably come along with tighter or different emission standards so that you can use our test centers again, maybe sooner than later. From our point of view, it was a good idea to just idle them, not to, I don't know, scrap them or sell them, but to keep the capacity and take a wait-and-see approach how the European Union will react towards the ICE ban.
Thank you for the question. Following, what is the remaining book value and balance sheet risk of the remaining test centers?
It's around about EUR 9 million is the book value, and but this is on a safe level . T here's no more risk for Bertrandt because this is on the way so far maintenance level.
Was the profitability of the test centers in Q1 already on the new run rate after idling, or are you expecting an incremental improvement in Q2?
In the first quarter, we received losses from around EUR 1.52 million, and we expect further optimization in the next months.
Why do you believe projects that were put in pause will be relaunched in February or March 2025?
Because we received the information and the clear statement from our customers. They will decide the cycle plans in February and in March, and we received also some inquiries for those, so we see now it is coming.
Some of our customers who have delayed these projects were in kind of a restructuring mode last year. They had to redefine their entire group strategy with regards to e-mobility and so on. They were concentrating on their general group strategy. They were negotiating with unions last year, and as they have settled everything in December, they now can concentrate on products and models again. To be honest, after delaying projects by one year, they need to speed up because the competition isn't sleeping, the innovation pressure isn't sleeping, and it's really a question of time that they will release these projects so that they come to the market with new and better products.
Thank you so much. On downsizing German operations, does Bertrandt own any real estate that may no longer be required and therefore sold?
We have own facilities, clear, and we are checking this the whole year, and maybe this is one open topic for the next nine months.
One question to clear up. What exactly are cycle plans?
Cycle plans is the plan who the customer decides model one, model two, model three, model four in which period.
Sorry. No, our customers, of course, do not only decide on, I do not know, the next one or two years which models will be launched in the market, but they have a 10-year cycle plan. They do the platform development first, and then they have an idea what kind of car will they place on these platforms, and this is called cycle plan. They are currently defining what model should come in the next two, three, four, even in the early 2030 years.
Why do you think that we at VW will still use Bertrandt while they are investing in other players like Rivian in our software JV in China?
We are a strategic partner from Volkswagen Group, and it's a completely different business model. Rivian is a software company, and they invested in the whole software solution. We are a partner for implementation for the new software, for validation, for software testing, for development from HUDs and so on. It is a completely different group there, and this is additional potential for Bertrandt.
The Rivian and XPeng partnership in China, it's linked to the platform development, something they have done in-house or together with its subsidiary CARIAD, which wasn't always successful in the past, to put it that way, and this is the reason why they went into the partnership. These partnerships are linked to the platform and EE architecture development while we are engaged as soon as these platforms are ready so that we can make any kind of derivative development or integration work into new cars.
Thank you. What is the percentage of your sales done on projects around SDV technologies?
Software-defined vehicles. It's difficult to say because it's over all divisions. It's difficult to say.
Okay. So far, we have received no further questions. I will hold the room another moment. Sometimes it is clear and fast. Thank you for joining and your interest in Bertrandt again. We are coming to the end of today's earnings call with one last question. Can you guide us on EBIT trajectory? Will you be break-even in Q2?
It's too early to say. As I mentioned, Q2 is also under pressure, and we expect a recovery with the beginning of Q3. It's too early to say.
Thank you so much.
It is pretty clear that our fourth quarter, as it used to be in the past, will be the strongest one, especially as we will have finalized the restructuring program. We have probably a better utilization, and of course, we have the most working days. We cannot really provide you with a trajectory, but it is for sure that Q4 is decisive and will be significantly better than the former quarters.
Are you able to do the same business in China as in Germany?
Yes, of course, because there's also demand for CAD construction, also for software, also for software development and testing. This is also possible.
Okay. Thank you so much for your presentation and the time you took to answer the questions. Should further questions arise, please feel free to contact Mr. Voss. I wish you all a lovely remaining Thursday, and with this, I hand over again to you, Mr. Voss.
Yeah. Thank you very much for all the questions and for the trust in Bertrandt, and if there are some follow-up questions, just give me a call or drop me a mail, and I'm looking forward to see you at our capital markets day on May 15th. We will send out invitations quite soon. Thank you very much.
Thank you. Bye.