Good morning, ladies and gentlemen, and welcome to the Jenoptik Stefan Traeger Conference call regarding the results of the first half year 2025. At this time, all participants have been placed on a listen-only mode. The floor will be open for questions following the presentation. Let me now turn the floor over to your host, Dr. Stefan Traeger.
Thank you very much, and a very good morning from our end here in Jena. With me today, as always, is Prisca Havranek-Kosicek, our CFO, and we're happy to present our first half numbers. I'd like to kick it off by saying that the first six months of this fiscal year have been characterized by really quite some challenges and a huge amount of uncertainty. I think we all have seen that in the news, and we all are aware of that. For us, in particular, the weakness in at least part of the semiconductor business has shaped the first half. That's something that we've experienced since Q4 as of last year, and it continued, in particular, in the first quarter this year. Second quarter, however, order intake and our semi business is actually 75% higher than in the first quarter. That's, in a way, a bit of a positive.
Overall, we see positive trends in demand in the second quarter, and as a matter of fact, also in order intake revenue and EBITDA. All of those KPIs are up quarter over quarter, but for the total of the year, for the whole year, these KPIs are down. And to see second quarter better than the first quarter is a pattern that's pretty regular in our business, and those of you who follow us a bit longer will verify. So in H1 most KPIs are down, with a notable difference of free cash flow. Free cash flow is up versus prior year. That's a positive. Order intake is down in the first quarter. Revenue is down in the first quarter. EBITDA is down in the first quarter. Again, quarter over quarter, second quarter versus first quarter, those KPIs, order intake, revenue, and EBITDA, are all getting somewhat better.
Cost management is something that's on our agenda big time. We've intensified that, had challenges down year over year. Obviously, we do take structural and process improvements, and we've planned more of that going forward. I think a testimony of our stringent cash management is the fact that our cash conversion rate is up from 21% last year to now at around 55%, and that's another positive point of view, a positive data point, if you want, and the testimony to our, as I said earlier, stringent cash management that we do in light of the uncertainties and challenges that we face in particular part of our market. In general, market environments are very uncertain. I think, again, that's something that we all see, and for us, it's actually pretty fragmented.
In three of our businesses, we see that orders are up, sometimes even quite not just moderately, but significantly up. Some moderate ups in the order intake, but semiconductor is still down, and obviously that for us has quite some impact. We do continue to focus on additional growth opportunities for a strong future of Jenoptik. We have good assets. We have good technology. We're strong when it comes to our technological experiences and our technological strengths, basically. We've talked a lot about AR/VR in the past, but there's more as optical communication for data centers driving and enabling AI applications, for example. There are defense applications that enable us to grow. So there are growth opportunities, but again, as I said earlier, overall, the markets are challenging. There are highlights and lowlights in the markets that we serve. A quick word on Prodomax.
We communicated that we don't believe any longer that we're the best owner for Prodomax and that there should be better owners for Prodomax out there. That still is the case. We still believe that Prodomax is not necessarily a core business of Jenoptik in the long run. Given the recent developments, in particular, between Canada and the U.S., it has to be said that a sale of Prodomax in this strategic period, so within this year, basically, is really not too feasible. We don't see that it can be done in the remainder of the year with any sense of timing. We do specify our forecast for 2025, and we'll talk about that a bit later in the presentation, within the existing range, but we do expect KPIs to come in the lower half of the range. Again, we'll talk about the forecast a bit later in the presentation.
Essentially, there are so many uncertainties that we all know that it's pretty difficult to forecast at the moment. Anything beyond that horizon, basically, again, we'll talk about that at the end of the presentation. With that said, I will hand the mic over to Prisca, and Prisca is going through the numbers in more detail, and later on, I'm going to round the call up with a look, or at least the attempt to look into the future for the next couple of months. Prisca, over to you.
Thank you, Stefan, and good morning to all of you on the call from my side as well. I would like to now cover our performance in the first half of 2025 in greater detail, as always, starting with order intake on page six. I think we've already stated several times in the previous call that the start of the year was influenced by generally high market uncertainties and some temporary impacts in the semi space. Hence, however, the intake H1 numbers are, of course, affected by this. As a result of that, first half year order intake on the group level came in at about € 473 million, down by 9.9% compared to prior year. The overall demand situation improved in the second quarter, which Stefan has already mentioned. However, this was still down by around 5% year on year.
On the business unit level, starting with semi, we've seen a substantial improvement quarter over quarter, but the overall development remained affected by certain supply chain fluctuations as highlighted on our previous call. Now, from what we can judge, we believe that the supply chain or inventory impact was less pronounced in Q2 versus Q1. On the inspection side, however, demand has been strong from our key customers. Order intake dynamics in our Biophotonics business were very strong in the second quarter, driven by several segments, including dental, ophthalmology, and life science. Demand in our Metrology and Production Solutions business, as well as in our Smart Mobility Solutions business, was overall robust in the first half, with SMS showing the typical volatility that we have in this business for government activity.
So overall, and Stefan has already said, we are pleased with the order intake momentum that we've seen in the second quarter, but I would like to note that this was partly driven by some pull-forward orders from customers, in our view. Therefore, we believe it's too early to call for a sustainable improvement of demand already. As a result, our book-to-bill ratio was slightly down year over year to 0.95, but I would like to mention that it was above one when we are just looking at the second quarter. Our order backlog reduced to around €630 million, and we anticipate turning approximately 60% of this backlog into revenue this year. Now, please follow me to page seven.
Revenue in the first half has declined by close to 8% year over year to around EUR 498 million, generally reflecting, as Stefan has already mentioned, a weaker order intake trend in Q4 last year and in Q1 this year, especially in the semi space. With regards to our semi business, revenue was down 15% year over year as a result of, as Stefan alluded already, soft demand in the lithography business, which, as you know, makes up for a very big chunk of this business. Revenues with customers in the inspection area developed very well in the first two quarters. Now, looking at biophotonics, year revenue was up by 11%, driven by a strong performance across all main applications, including dental and ophthalmology.
As we've mentioned in our half-year report, and Stefan has also alluded to, also our optical solutions for defense applications are growing at a very good momentum, and we expect this to continue also going forward. For metrology and production solutions, the overall business environment remained challenging, particularly in the automotive-related fields of the business. Therefore, revenue was down by around 11% in the first six months of the year. Given the overall robust order intake development we've seen to date, we are expecting a somewhat better revenue development in the coming quarter. Finally, revenue of our smart mobility solutions business was up by almost 18% in the first half year, as our efforts in the important strategic US market are gaining traction, in addition to some good momentum in the Middle East/Africa region. Moving to profitability on page six.
As you can see, the group's EBITDA reached around €79 million, down by 22% compared to last year. Our EBITDA margin thus contracted to 35.0%, including about 60 basis points impact that is related to the one-time move costs for our new fab in Huntsville in the first quarter. As expected, we had no impact from this move in Q2. Looking now by business unit, influenced by the just-mentioned one-time costs, lower utilization in our sites and product mix effects, EBITDA in our semi business dropped by almost a third year over year. If you look at second-quarter EBITDA margin in semi, it was close to 24%. This was for sure substantially lower year over year, but it is, in our view, also an indication of a certain resilience in this business, considering the substantially lower turnover level.
In our Biophotonics business, strong top-line growth drove better utilization of our capacity, and in combination with a positive mix effect, EBITDA margin substantially improved from 8.2% to 21.2%. As I mentioned already in the Q1 call, while this is certainly a very encouraging development, I think this above 20% margin level is not indicative for the next two quarters. When looking at our Metrology and Production Solutions business, as you know, Q1 was affected by a certain seasonality. In the second quarter, we saw some sort of normalization, as we were expecting, however, in a generally weak market environment. As a result of the slow start to the year, first half year EBITDA was only modestly positive. Considering our order intake and the backlog, we for sure expect better profitability in the second half of the year in this business.
Finally, for smart mobility, we saw a very good margin improvement of more than 300 basis points, so 9.4% in H1, based on a strong top-line development and the associated leverage of operational costs. Now, moving to page nine, here, I would like to give you a little more insight into the drivers behind the evolution of our margin. I think the key message is, as seen in the headline of this slide, that strict cost management is paramount to us at the moment, severely below 11% our revenue level. We started early on working on this subject, and therefore our headcount measured in FTEs is down by around 3% compared to mid-2024. So now, jumping into the details. In the first half, we saw cost margin approximately 250 basis points down year over year, which was primarily influenced by the lack of fixed cost absorption and product mix effect.
On the functional expense side, as I said before, we've remained very disciplined, as those expenses declined by around 2% year over year, despite some general labor cost inflation impacts. On the other operating results, we've seen only minor changes for this last year, mainly relating to slightly higher year-over-year fixed losses. Moving now on to the EBIT line, we see a marked decrease, both in absolute terms as well as margin-wise. Further down, we have recognized an income of EUR 2.6 million, resulting from a settlement agreement regarding the sale of Vincorion, our previous mechanical defense business activity. Bottom line, our EPS reached EUR 0.42 versus EUR 0.69 last year. Excluding Vincorion, our EPS was around EUR 0.38. Page ten, looking at cash flow and balance sheet data.
Despite the decline in earnings, as you can see, our operating cash flow pre-tax improved slightly year over year, with lower cash inflows into our working capital. Please note that when we look at our net working capital, there was overall a small increase compared to the end of last year, but this is driven by accounts payable movements relating to investments, so it doesn't affect operating cash flow. However, our overall net working capital intensity increased somewhat year over year. Moving on to CapEx. While IFRS CapEx in the first half year was down year on year, as we expected, cash CapEx increased by good three million due to spillover effects from last year's investments. Finally, our net debt position was slightly up versus year-end at a little over EUR 400 million, also reflecting, of course, our dividend payments.
Finally, our leverage was at two times at the end of the second quarter. And with this, let me turn back to Stefan to cover our outlook.
Thank you very much, Prisca. With that, I guess I have a harder part trying to predict the future at the moment. But I mean, we all know that forecasting the next few months is a big challenge for any business at the moment. That's the same for us. It's very blurred out there. There are so many uncertainties when it comes to FX rates, when it comes to tariff agreements, when it comes to uncertainties overall in our marketplace. There are ups and downs. There are positives and negatives. There could be an even better development than anticipated in semi business, driven by, in particular, our AI-related activities and stuff that our customers do to enable artificial intelligence applications.
On the other hand, there are potentially even bigger hits in our business from, for example, FX rates or other unforeseeable developments in the political arena, which makes it really hard to forecast the next few months. Forecasting anything beyond the next few months reliably is almost impossible given all these uncertainties that we see. For this year, at this point, we do expect the revenues of the business in the lower half of our previous forecast range, which had been a corridor of plus or minus percent around the last year's number. And as I said, we do expect to come in the lower half of that, somewhere between last year and a minus 5% decline in revenues. Same goes for EBITDA margin.
We anticipate our EBITDA margin, as a result of that missing volume, basically to come in in the lower half of the previous forecast range, which had been between 18%-21% EBITDA of sales. We also expect our capital expenditure now to be substantially lower than prior year. And I think both of us, Prisca as well as me, hold the idea that we do focus on cost management at the moment, and also, of course, on making sure that we have enough cash for the business in our chest, basically, for productivities. That leaving beyond 2025 forecast is really, really hard. Our outlook does reflect above average market uncertainties, and really, the overall risk of pickup has further increased due to all of these discussions in the political arena and other things that we are all aware of.
And really, the extent to which these risks mentioned above will affect our business performance in 2026, we cannot really assess with any sufficient certainty at this point in time. I point out again, we are a strong company. We have a strong balance sheet. We are in choppy orders in parts of our business. We have a good demand in our bio business, very good demand, actually, very good order intake pattern. We have a decent order intake pattern in our metrology business. We are happy with the performance of our smart mobility business. However, we also have huge challenges. And in the sort of balance of all of that, we, again, forecast our KPIs to come in in the lower part of the guidance corridor. Thank you for your attention, and I'm looking forward to answering the questions that you undoubtedly have as soon as we can.
Thank you very much.
Thank you very much. Dear ladies and gentlemen, if you have a question or a feeling, please press 9 and then the star key on your telephone keypad. Please note that asking questions is only possible within the conference call, so please dial in and press 9 and then the star key. To answer your question again, please press 3 and then star. But for now, please press 9 star. We have a couple of questions incoming already. So the first question would be from Craig Abbott of Kepler Cheuvreux . Please, Craig, over to you.
Yes, good morning. Welcome, everyone. Yeah, a couple of questions, please. First of all, Prisca, just getting back to your comment on the orders, you mentioned there were some pull forwards. I was hoping you could maybe give us some color here, i.e., how significant were these, what end markets were they referring to, and what trends have you seen so far in Q3? And then I have one follow-up question. Thank you.
Yes, Craig. So, of course, thank you for the question. So what I was referring to was, when we look at the full year, we try as best as we can to estimate, obviously, also the business development by quarter. And what I would say is that orders in some of our business, mainly our OEM-related businesses, we've seen some pull-ins into Q2 of orders that we probably would have more expected in the second half of the year. I cannot really, at this point, quantify this impact. Those are very hard because, obviously, that's always relative to our expectations. What I can tell you is that it's mainly in our OEM-related businesses, so basically the semi business and the bio business.
Okay, but I mean, can you give us some color? I just expect a positive, i.e., comps in Q3 would be a relative assumption.
I think I was trying to strike this balance. While we've and Stefan, in his intro, I think, also said the same thing. We've seen encouraging development in Q2. We're certainly happy to see a sequential improvement in the most important businesses, including the semi business. I've already mentioned that we think the supply chain effects were probably less pronounced in Q2 than in Q1, at least in our view. We've seen a very strong business development in inspection. Having said that, it's, in our view, too early to call a sustainable improvement in demand pattern, as Stefan has alluded to. Volatility is very high, and I think we look at our end markets and the announcements that we see in those. Also sort of gets in line with the expectations of, of course, also other players in this space.
Okay, thank you. And my follow-up, and then I'll give you a second or two, is kind of building on that, but not being specific, of course, in quantifying. Nevertheless, your major semi customers on both inspection or the second design give you a lead-in into how you should be mapping your capacity or preparing your capacities or not. And I mean, has the tone of the message there when they're looking at the 26th, for instance, has that changed in any way, either to slightly more positive or slightly more negative? If you could give some color there. Thank you.
Okay, maybe I'll take that. And before I go into that, let me remind all of us also that we had this one semi factory order intake in the first quarter. Just as a reminder that in the first quarter, we had this double-digit takeout of a particular order. Just sort of, again, as a reminder. To your question, it depends. It really does depend. Even in semi, there are mixed messages from different customers. Therefore, I really cannot give you kind of one practical answer. Some customers are saying, "Whoa, we don't know. It may or may not come." Some customers are saying, "Please do prepare, and please do ramp up capacity, and we're going to go up pretty soon." And really, there are different messages from the different customers, and the one persistent picture is it's uncertain, and it's fragmented, and it's hard to tell.
Overall, that's why in this call, you will hear both Prisca and me always trying to strike a balance between the real positive things that we see in the business at the moment, demand sort of stabilization, if you want. On the other hand, the risks that we also see. That is why we are also in our business trying to balance, on the one hand, cost cuts that we can take, significant, stringent expense management. On the other hand, being prepared for potential pickup in the second half and beyond. We don't bank on potential. We need firm orders, and we've got more orders in the second quarter, significantly more orders in the second quarter than in the first. We've also got significantly less orders in the second quarter 2025 versus the second quarter 2024.
Striking that balance is really our topic of today.
Okay, thank you.
Thank you very much. The next question is from Lasse Stüben of Berenberg. Please go ahead.
Hi, good morning. I think just a question on guidance. Just when I'm looking, if I look at the lower end, so if I assume on revenues, you'll be down 5% year on year. Just looking at versus last year, that would imply you need a fairly similar level of revenues in the second half. Your backlog is close to just over EUR 100 million lower. So I was just wondering if you could help me kind of square that phasing or that effect, or if there's been any changes in kind of the times in some of those products over the past year, and then I would have, I guess, a very similar question on margin. You need quite a bit of pickup, which isn't unusual for you.
But yet again, just given the structure of the backlog, I was just wondering if you could give some more color, maybe also across the divisions, just given the structure has changed, so we just don't have as much visibility on the quarterly EBITDA sort of phasing. So any help would be appreciated.
Yeah, thanks, Arthur. And first of all, your math is correct, obviously. And I couldn't agree more with what you said. I mean, why do we believe we can deliver the same second half this year than last year with backlog being down? But there's still backlog. And if there is no pickup in the order intake, then we would deplete backlog a bit further. And our backlog going into 2025 would then be lower, which then is, on the other hand, a risk for 2026. However, if demand does pick up, as still anticipated, in particular in the semi world, then the situation is, well, in a way, the same. We would still simply have to - I shouldn't have said that - but we would still have to deliver the second half of the intake as 2024.
Again, if we have the same order intake like last year, then we basically would have EUR 100 million less backlog to be carried into 2026. The pickup in demand is expected in semi. That is the area where we do still expect and, yeah, do expect a pickup in the second half with all the risks attached that we mentioned earlier.
Maybe to follow on the EBITDA question, I think it is actually quite simple. Following the acceleration or the expected acceleration of the semi demand in the second half, that, of course, describes then the mix to the point of expansion of the margin that we need in the second half in order to, of course, ever reach our guidance range that we've specified today.
There's no doubt there are significant risks in the marketplace at the moment.
Understood. Maybe just one follow-up, if I may. So if you do get that pickup in semis in the second half, I mean, let's assume that comes in Q3, just for the sake of argument, would that partially be deliverable still this year, or are you then looking at 26? Because I guess most of, typically, how the business has worked in the past is second half is really about delivering on backlog, and then anything that comes in, at least in semis, is then for the next year. So I'm just wondering if, because your lead times have maybe shifted somewhat, has that changed in terms of you being able to deliver on that?
All right. No, I understand. The part of semi business, we do do POC, kind of revenue recognition, IFRS 15/16. I always mix those up. 15/16. And we can basically turn the order into sales on the second half. I shouldn't have said immediately or very, very quickly.
And maybe let me add, it goes on that one, what Stefan said, and maybe Lasse too, to explain. We also know that certain parts of our lithography business have shorter lead times, and that is mainly in our, actually, in our micro optics business. So that has a shorter lead time in general than it's in the optics businesses. And therefore, of course, it also has a bigger acceleration phase that you don't see in the numbers. So having said that, I refer to what Stefan said about the demand picture.
Understood. Very helpful. Thank you.
Thank you very much. The next question is from Olivier Calvet of UBS .
Yeah, good morning. I was looking at Prisca. Thanks for taking my questions. I've got a couple left. Maybe if we can go one by one. The first one is just on the guidance update. I mean, we know that it becomes easier in the fourth quarter, but in absolute terms, I'm just wondering if you could pick a higher fourth quarter versus third quarter.
Yes.
Oh, sorry. That's what it comes to. Okay. Yeah. And then the other question is sort of on the order intake seasonality. I mean, we have four quarters or now six quarters of optics on your new segment structure. And last year, you obviously had the Q3 or Q4. But I just wanted to ask if there was any sort of seasonality to pull out or any order pattern you expect specifically for this year.
I'm not quite sure if I really understand the question. If you're referring to the semi part again, then yes, I would point out that the order intake has been weak in Q4 last year already. So last year, I think we had a very strong start into the year for half in semi. And then Q3, in particular, Q4 was pretty weak, I believe, in semi. Is that right? I think that's pretty correct. Yeah. Yeah, yeah, yeah. So yeah, I'm just looking at the number that Prisca has. Maybe you can.
So I would say, I mean, keep in mind, I wouldn't call it seasonality. But what I would say is that, as you remember, and also what I alluded to in our call, if we now talk semi isolated, right, Q4 was not a strong quarter for the intake in semi. So obviously, that also means that the base effect will be quite significant. But I wouldn't call that seasonality because that is the effect of, I would say, the uncertainty in demand that we saw in Q3, particularly in lithography, and sort of the knock-on effect on that.
One customer that.
Yeah. The rest, if you then would. I would expect that broadly, businesses just like APS or SMS would broadly follow the seasonality that the Jenoptik has seen, meaning a second half that is normally a bit stronger than the first half, right? So I don't see any change in pattern. Yeah. That sort of gives you a little bit more color.
Okay. Okay. That's helpful. And just maybe on the semi space, if I sort of address that non-recurring customer product adjustment you had in the first quarter, I come to roughly around EUR 110 million average order intake per quarter over the last six quarters. Is that the right way to think about quarterly developments in the second half?
No, I don't think we can really give you a specific run rate for this business, and particularly because we've just said that it is highly volatile and there's huge uncertainty, right? So keep that in mind that we expect an acceleration.
So for the high end of your updated guidance, would that be a fair assumption or?
I would say we need an acceleration. We need a step up for both scenarios, the lower and the midpoint of the old guidance or the higher end of the new range.
Thanks.
Thank you very much. Moving on to the next question. The next question is from Martin Jungfleisch of BNP Paribas. Please go ahead.
Yeah. Hi, I'm James Martin. Just two questions for you, Prisca. It's on Prodomax, but it's a different situation than you've described, USMCA. Could you just talk about how big the business is today and what sort of growth rates you've seen there? And is it something for 2026 revenues or does it even come about? My first question. Thank you.
Martin, thank you for the question. It's not actually a new development for us. I mean, we are in this data center business since quite a while, since years. In particular, our Huntsville, Alabama facility, where we use a technology called Grayscale lithography to help people with routers and optical interconnects and photonic interconnects. However, it's something that seems to be surging at the moment, something that shows good traction and development because of those data centers being built at the moment. It's nowhere near where we see, I don't know, the lithography business is definitely not. But also not inspection is bigger than that part for us. But it's a part, and it's, I think, a good example of other non-lithography areas in that data-driven space where we provide solutions to our customers and where we do see an uptick in demand, and something that I think is sustainable.
I mean, we all produce ever more data these days, and even without AI, that has been the case. But now it's becoming even more prominent. And so therefore, there is good development in that particular product line. It's a phase. I mean, it's sort of size perspective at this point. Even within the semi business, it's smaller than inspection, but it's growing.
Okay. Interesting. Thank you. I have a second question just on tariffs. I mean, could you just clarify how tariffs affect margins and what kind of products are exempt from tariffs? And also, are you adding these costs onto customers or is it some price increases? And maybe also on the latest news on tariff reductions for companies that invest in the U.S., if you're looking into, i.e., companies that have invested in the U.S. in certain products?
Yeah. Thank you. I'll take it off. And Prisca has more slides and more questions and some more sort of follow-up. But overall, I think our APS business is most impacted by it. The business, it really varies in business by business. We are looking into the exemptions that seem to transpire at the moment when it comes, for example, to semiconductor-related. Whether it's applicable or not, we don't have, I think, real absolute clarity at the moment. That's one of the uncertainties that we have. Where do we or do we not get exemption is still really sort of up in the air. When it comes to production in the US, I mean, we do have important production facilities, actually. We just mentioned Huntsville, Alabama for our grayscale lithography applications. We have Jupiter in Florida, our main hub in the US, where we do optics production.
We have a production facility, actually two production facilities around Detroit. Now there's one in Auburn Hills, one in Rochester Hills. So we do have production facilities, and of course, we produce there, and that's good. At this moment, we don't have any particular plans to move any production from Europe into the U.S. or from other parts. That's not to exclude it if it makes business sense. We've, of course, followed and monitored that. But at the moment, we use production facilities that we have and see what the next couple of days, weeks, who knows, will bring. Do you have any?
Yeah. Maybe to try to quantify this a little bit. I mean, the way we address it, obviously, since it's fluid, is by looking at business incidents and scenarios, right? And our base case at the moment, from what we know, and that is included in our guidance, is around 50 basis points for this year as impact. It doesn't include. Let's say that's the base case. And that's also not an annualized impact necessarily. So that's my current thinking on it. We obviously update, I mean, as the information comes in, and then we refine our scenarios.
Okay. Cool. Then maybe I may just ask one follow-up. And in Jenoptik, the order intake is quite strong. Can you disclose what percentage of orders seem to be defense-related activity?
We cannot disclose that.
Okay.
It's a good percentage, but we cannot give numbers on the distribution of order intake between different product pieces in Bio. At that, it has to be significant.
Okay. Thank you very much.
The next question is from Michael Kuhn of Deutsche Bank. Over to you.
Good morning. Thanks for taking my questions. One clarification. As you mentioned during your preparatory remarks, the share of orders to be delivered in 2026. Could you please repeat the number as you get it?
I think, thank you for the question. I think what you meant is how much revenue we turn into revenue, so how much of our backlog we turn into revenue for 2025. That was thrown off because I think you said 2026. But if you mean 2025, current year, we expect 60% of our backlog, 60, to turn into revenue for this year. I hope that that's clarified the question. But maybe I.
That is exactly what I was looking for. Thank you. Then, similar to the previous question, I guess if you don't disclose the order share for defense, I guess you won't say anything on the sales share as well?
That's correct.
I think what we have said in the past, that's in. But I can give you a 2024 number, right? And then you can maybe assume that this is growing. Well, actually, that's what we've said. So in 2024, we were around at 30% of our revenue. So of total revenue of the group, right? So from that basis, I would expect continuous growth, both obviously in revenue and then mentioned by the order intake. I can't really specify how much growth, but I would say we'll grow from this based on in 2025. And as it looks, I would say also probably beyond that.
Understood. And I think the sequence is already quite helpful. Then on semi again, I think many had the impression that your big customer was in a kind of destocking mode over the past few quarters. Would you agree with that? And is that destocking now coming to an end, and we're, let's say, moving into a little more stable trading environment again, knowing that there is a lot of uncertainties?
The first part of the question is easy to answer. Yes, I would agree with that. The second part of the question is harder to answer. I mean, at some point, it has to change. It keeps on to an end. And we do see second quarter order intake in semi being better than first quarter, significantly better, and also better than the fourth quarter 2024. But that's something that, once again, semi order intake in the second quarter, although being below second quarter 2024, is higher than the fourth quarter 2024. So actually, that's pretty significant. I do think it looks like it with all the risks and strings attached that we did throughout the whole call.
Okay. That's okay, and then last one, you mentioned a couple of times that you, let's say, expect that we need some pickup in demand in order momentum. And as we can tell, we are almost halfway through Q3. Is that what you have already seen, let's say, early in H2, or is that something still to materialize and there is no positive early signs yet?
Let's maybe say the first few days of the second half look pretty good, but it's really too early. I really don't want to give any sort of guidance on Q3 at this point with all the uncertainties. But the first few days that we had thus far, we can call it the first half of the third quarter if you want, but those have been pretty good, yeah.
Very clear. Thank you very much.
Thanks a lot. The next question is from Michael Schaumann of Warburg Research. Please go ahead and over to you.
Good morning. The question is on the gross margin. We have grown by 200 basis points since the previous first half last year. I mean, we have seen product mix effects. You have various underloading and some operations. So how much of that do you expect to catch up in the second half of the year? I mean, you mentioned the improvement of product mix. Obviously, the business comes back stronger. So after 30.1, I mean, you have to deduct at least some extra costs. So how much will the gross margin be down compared to last year? 100 basis points, would that be a reasonable assumption? Maybe you can elaborate a little bit.
Yeah. Thank you for the question, Michael. What I can tell you is I can give you some color on the ups and downs in the margin. I won't be able to guide you on the exact margin for the full year. But what I can tell you is, obviously, the mixed impact acceleration of the top line and the mixed impact from particularly the semi business are tailwinds on the growth margin in the second half of the year. So that will help us. What we will see stronger than we saw in H1 is the US dollar impact that we have partially hedged. We will see the translation impact. And then what we will also see is, of course, the full impact of our base scenario, at least that's what we think of the tariffs. So that would basically go against that.
And then always keep in mind that our inflation, our labor costs is not necessarily starting in the beginning of the year, but there are usually Q2 increases of collective agreements. So that is also a headwind on the growth margin. So those are the, I would say, factors that will influence the growth margin in the second half of the year.
Okay. So you do expect that improvement product mix should somewhat soften, or more than offset, the headwinds you will see in the second half of the year compared to H1?
I would say a stronger business dynamic, obviously, will also have a full extension in the growth margin.
Yeah. Okay. Then on Bio specifically, I mean, you mentioned that one should not expect a top 20% margin in the second half of the year. I think that's clear. But you're seeing margins coming down to almost 80%. And if you do, so is that kind of a reasonable level at similar players? You play 15%-20% margins going forward, would that be a number that would fit your expectations?
Yeah. Michael, thank you for the question. And you're right. As we have expected, we had a potential, let's say, deceleration of the margin in Q2 versus Q1. But I also mentioned Q1. This is a very exceptional quarter. And we do anticipate overall for the SPU an increase in margin in this year. But not at the levels we've seen in the first half. Now, in between this range, obviously, we should land. And I'm confident that there will be an improvement in the margin for the full year.
Okay. On the product mix, do you see any, get any indications from your customers or is that it remains unpursued? Customers do not really proceed with the projects. Anything that changes in the pipeline, or is it more or less the same situation as a few months ago?
Michael, there are some changes, actually, in the pipeline, which have not yet materialized in order intake. The pipeline has become very weak in the first quarter, as we discussed at the last round call and in the meetings in between. But at the moment, there is some talk that we've reached the bottom. The noise between the US and Canada has sort of gone down a bit at the moment. And in particular, then it turns out that probably most of the products from Prodomax are actually what's called USMCA exempt. And if that holds, then that could be that would make things much easier. So there's an old agreement from the first Trump presidency between Canada, Mexico, and the US.
And if that seems to be the case, that this might stay in place, and it might be that Prodomax actually falls under that agreement, which helps a ton, actually. But there's a lot of ifs and buts in my answer. So at the moment, it looks a bit better than three months ago, but it hasn't materialized in further order commitments at this point.
Okay. Would you expect that to materialize before year-end, or is that something that rather than expect it next year, maybe next year?
It's really, really hard to tell. In terms of order intake, I would hope at least. In terms of net sales, I mean, that depends. And obviously, in these large projects, there's quite a time delay between order intake and sales. On Prodomax, for the rest of the year, in terms of sales, I wouldn't see things getting significantly better. In terms of order intake, it might, and that helps for 2026.
Yeah. Okay. Thank you.
Thank you very much. Next question is from Chris Edwards of Prudential. Thank you.
Yes. Hi again. Thanks for allowing me on again. I just wanted to follow up on the earlier discussion regarding the tariff impact. Excuse me. A couple of quick questions there to follow up. I just want to make sure I understood it correctly. You're expecting around 50 basis points for the remainder of this year, and therefore, I assume, of course, that that's included in your revised guidance, but I think you said not necessarily on a full-year basis, so my first add-on to that would be, well, I mean, should we lever on a full-year basis, or how should we understand it? That would be my first question. I got two more, I think, related to that. Please.
Yeah. Thank you, Chris. Thank you, Chris, for the question. I'm sure. Now, I can only give you our assumptions, right, and our basis. But this year, as I said, yes, you were completely correct for 50 basis points on this year. Now, as you know, some of the tariff effects started in Q2. Some of them are only impacting in Q3 onwards. So it's very hard to get an accurate number there. So I would say, ballpark, I think you have a good working assumption if you double that impact. But that's a very crude way of assessing it. As I said, what we are doing is, as you know, it's super complex. So we are basically updating and refining our models as we go. And that's the best assumption I can give you today.
Okay. I understand. Could you maybe just elaborate a little bit on which businesses exactly are most impacted? And then finally, just follow up again. Today, you're at a discussion on spend production-wise and the plans for this stage. But I mean, what kind of countermeasures or potential future disposal for looking out to 2026? Thank you.
I mean, the biggest impact, I think, they have on APS, really. How are we?
Oh, yes, you did say that.
Yeah. And any sort of countermeasures. We don't have any particular plans at this point. Given that, with all the uncertainty, I mean, we would need to calculate. At the end of the day, it's a calculation between the cost to move something and all the implications that it has versus the cost of whatever the tariffs end up being. So therefore, at this point, we don't have any concrete tangible plans that we can spell out to move any production into the U.S. We have production within the States.
No, I was thinking more of pricing measures or.
Well, that depends, really, because it depends on the contract. Some contracts, frankly, our customers have to bear it anyway. We don't bear it. It's for the Americans to deal with it. In parts of the business where we are the importer, then we have to deal with it. And then we will have to think what we do about it. But it's not as if all our products we are importing. Often, it's actually our customers. And yeah, in the first cut, at least, it's their problem. It might, in the long run, make our business a bit more sort of, yeah, more expensive for our customers. But often, our customers come to us because we have solutions that nobody else has. And that's, yeah, that's what.
That was going to be my final question related to all that, was how you see this potentially impacting or not impacting your competitive positioning. Yeah. Thank you.
Yeah. Here again, it depends on the part. I mean, in the product lines where we have strong competitors in the United States, and we do not want to produce in the United States, that could have an impact. But in many of our businesses, we sell either to, I mean, to European partners anyways, or again, we have often technology positions where, at least at this point, we're sole suppliers, or we have at least a very strong position in terms of our capacities and capabilities where, yeah, our customers are. It seems struggling with answering because it's, what do I know? But overall, I would think that I don't see that much of an impact, I think, at this point. But again, there's all the disclaimers attached to it.
Okay. Thank you.
Thank you very much. Dear ladies and gentlemen, if there are no more questions from you for the last call, please press 9 and star now if you have a question or a follow-up question. I repeat, the combination is 9 and the star key. There's no questions to be incoming. So with that, I'm closing the Q&A session. I'm now ending the recording of the notes.
Okay. Thank you very much for all your questions, and thank you very much for being with us today. As I said earlier, first half being quite a challenge. Second quarter being somewhat better in terms of dynamics doesn't make for a good first half in any way, shape, or form. First half has been a challenge, and we'll have to see what the second half is going to bring. There are increasing risks, well, risks have increased. It's probably the better way of putting it. Uncertainties have been increased. But there are also chances, and in the balance of that, we, in the long run, have a strong business. That's probably the more important thing, the more important part. We do believe in our business. We have a good balance sheet. We have the people. We have the technologies.
And we're pretty sure that the second half will be better than the first. And anything beyond that, we'll have to see. Thank you very much for being with us today.