Good morning, ladies and gentlemen. Welcome to the conference call of LION E-Mobility AG, regarding the half year 2026 results. This call will be recorded. Currently, all participants are in a listen-only mode. My name is Jens Hecht, and I am the moderator today. On the call, we have the LION management team, Dr. Joachim Damasky, Chief Executive Officer, and Tom Schmidt, the new Chief Financial Officer. First, Tom Schmidt will provide an overview on the H1 financial results. Joachim Damasky will give you an update on the overall business development and the outlook. After the presentation, as always, the LION team will be available to answer any of your questions. I would now like to hand over to Joachim for the introduction.
Good morning, ladies and gentlemen. I am very happy to present what we have achieved so far for the changes in our production and everything, and also our growing BESS business. Before I will tell you what we are currently working on, first, I would like to give a short introduction to our new Chief Financial Officer, Mr. Tom Schmidt. Mr. Hahn has decided for personal reasons to leave the company. We found, I would say, a very good successor with Mr. Tom Schmidt, and he now wants to give you an overview over the financial situation of LION E-Mobility AG, ending June this year. Tom.
Good morning, ladies and gentlemen. Good morning, everybody. Happy to participate in our today's presentation. I will, of course, speak about financial figures so far for the first half year of 2026. Most importantly, as you can see, the revenue declined in the first six months due to two major effects. As usual, in the, let's say, duration of the business year, customers proceeded to higher orders at the end of 2025. This time, even higher in order to ensure their inventory for the old battery technology, for which reason we had an impact in the first quarter 2026 with less quantity of orders. What also has affected later, let's say, the typical recovery, is that we had to stop our manufacturing. We had a shutdown with a good reason.
We now have switched over to a new battery technology, and our manufacturing line had to be modernized for the technology, which is the NMC+. For that reason, we did not produce or manufacture in May and June 2026. So we are not able yet to ship orders to our customers. Consequently, the EBITDA decreased as well. It remained still positive, but of course, the missing revenue had its impact. In terms of operating cash flow, we also have a decrease, of course, also caused by less business, but we also have faced higher prices. As you know, the current political environment is not business-friendly, and unfortunately, we also suffer from these conditions. Here, going a little deeper in our P&L. I just mentioned how revenue evolved. You can see in terms of capitalized own work, an increase.
The new battery technology I just mentioned, the NMC+, required a more, let's say, intense R&D, which of course, also is reflected in our numbers and has then accordingly increased our capitalized own work. Nevertheless, total earnings, given less revenue, are below 2025 first half year. The other operating income, what we have this year contains a penalty. One customer has to pay about EUR 500,000 and that's expressed here in this number. You can see a decrease of cost of materials, but this is just the absolute number in terms of the cost materials ratio. This has increased due to the previously explained current business environment. We also have a slight switch in terms of our product portfolios this year. Last year, we were able to run higher service revenues, which have or comprise a higher margin.
This year, we still have that service business, but the demand was a little slower in the first half. We could reduce our personal expenses, just following some streamlining in project management and also in the administrative and accounting part. Again, in terms of other operating expenses, the explained R&D expenses, also from an accounting point of view, result in slightly higher other operating expenses. The EBITDA, I just explained. In terms of financing, we have strong support from the shareholder side, for which reason we could transform our financing landscape and accordingly, obtain a lower interest expense. Going into more detail for our cash flow, we are able to maintain, let's say, a positive cash flow from operating activities.
Again, the current business circumstances are not easy, but we are working on a, let's say, more focused working capital management, and this helps us to remain the cash flow positive and should also result now, knowing better the current circumstances, in an increase. Investing, I just mentioned the new NMC+ battery technology. Joachim Damasky will further explain it from a business and technology point of view. But finance-wise or financial management-wise, this investment has caused a negative cash flow for investing activities. Typically, this should result in positive business results later. Financing, again, cash flow, given our, let's say, switched or changed financial management in terms of financing, results in a positive cash flow now for first half year 2026. Again, our important changeover from NMC, the old battery technology, to NMC+ has also its positive impact on our balance sheet.
We just have a higher capitalization in terms of the new technology. It just stands for a higher value for the company. When it comes to current assets, we reduced already our trade receivables. Again, we have a more focused working capital management that consists of banking and non-banking activities. In terms of non-banking, of course, we focus on working with our suppliers and customers to get a more positive, more stable situation for ourselves. Since, at the end, our company has to focus on the product and not being, let's say, a finance partner for our business partners. Equity-wise, of course, given the decreased result, and so equity-wise, we also have a decrease, a reduction in this position. In terms of non-current liabilities, so our longstanding financing, we have, as mentioned, the shareholder financial support, strong support, which also expresses in the balance sheet.
I will just hand over to Joachim Damasky.
Tom, thank you very much for presenting us the numbers. I would like to give you now an overview on that, what we have been doing in the last 6 months in this year, to show how we have been able to arrange the handover from the old SE09 battery packs to the NMC+ battery packs. I think last time I mentioned that we are planning to produce the last packs in March. We have been producing until April because we still have got some additional old SE09 cells, and we had customers who want to have as much as possible from the old battery. The last final spare parts that we do now have in stock have been produced end of April, and then we started the change of the production line.
In May and in June, we have been doing all the reworking, especially for the handling of the modules and the busbar welding, and also the changes that have been necessary for the end-of-line test. This is now already finalized. We have been able to ramp up all these changes because you may ask what is the difference between the old cells and the new ones, because the battery pack from the outside is the same. Yes, this is the case, but as you know, we have higher energy density now. The new battery has 53 kWh , what means that the voltage, but also the current of the new battery is higher. We also have been able to manage the change of the electronics.
I explained that we had to develop a new BMS, that we have also arranged the whole manufacturing rearrange of the S-boxes, the safety boxes where the relays are, where the measuring shunts are in. We have been able to arrange all the switch over. We have still some work to do with the last final software issues together with our supplier, Munich Electrification, who is doing the BMS software for us. But we are on our time plan, and we are also now on the electronics for the integration into the BMW i3. Last shipments of the old batteries, we still have some in stock because customers have been asking to get them until August. We will have the last shipment of the SE09 batteries in the next week to one of our major customers in Canada, Lion Electric.
I think we have now already achieved a good and stable production process, although not all the changes have been arranged to the final state. We are now still in a semi-manual production as we have planned it for the cell stacking and for the module welding. These changes will be finalized end of September so that we also switch over to this production on the automated manufacturing line. But we are already able, with a very intense quality control process, to produce the numbers for our customers of batteries that they order with us. We have started the serial production end of June, and as I said, the second step of the automated welding will be finalized in September this year. We have also now arranged, and you may know that the logistics situation is not so easy.
This was also one of the things, how to get the cells from China. You know that we buy them from Svolt to Europe. The shipment time, unfortunately, they have been going up from six weeks to eight weeks because most of the ships are now going around South Africa. Also, there is unfortunately not enough shipment space, so we have a lead time until you get a place on the boat for a container of another four weeks, so the shipment times by sea now are coming up to 12 weeks, maybe in some areas some 14 weeks. This is the situation now, but we have been able to manage to get the serial cells with a short delay of about two weeks, but more or less in time in Hildburghausen, and now we have established our serial production process. Next slide, please.
Yeah, NMC+ serial batteries have been shipped to the bus customers. You know the two major customers, one is Karsan in Turkey, the other one is Lion Electric. We are also working on the integration project. You may ask why is it different when you already have achieved a start of serial delivery to other customers in the bus area where the batteries have already been integrated in the cars and the cars are running on the road. The difference is that the electronic communication into the buses, where we normally use the batteries together with the gateway that the customers buy because in some areas they have up to five batteries in the buses, so they need that gateway. All this communication for this industrial and bus application, this has been realized.
The electronic communication for the BMW i3 is a little different. This is what we are currently doing. Homologation for the bus is also M2 and M3 class for the ECE regulation. We are also now doing the ECE R100 testing revision three for the battery to use it in a passenger car. That means in the BMW i3. We are working together with a company, Munich Electrification, who is able to do this integration, and they have now several hundreds of inquiries for older BMW i3 to get this upgrade, because now the old batteries have been 60 amp hours and 94 amp hours. The last version that BMW brought out from the year 2019 was the 120 amp hour system, and now we are working to offer to the customers 147 amp hours.
That leads for this car up to a range of 400 km, and we have a lot of customer interest for the retrofits together with Mandrill company. We have also started our first mobile storage project. Integration is successful, and we are waiting also for other orders with this battery. These are smaller units. Wherever you need to have a silent energy power, you can use these kind of containers and put them wherever you need them. We have also a lot of inquiries for this. We hope that after the integration has been done already, that according with our customers, we will be able to manage the ramp-up for this also in the next year. Maybe from the planning, we have the first dates also in this year on this kind of battery systems. Next slide, please. Immersion cooled battery is still going on.
We have here still a project with the German truck manufacturer. As you all know, the automotive industry is now very much looking where they spend the money. You know that most of the customers have now running reorganization and restructuring programs on. They all tell us, "We are still interested in this, but maybe not this year, maybe next year." We also have seen the new Mercedes-AMG GT XX has already the first immersion cooled battery in a serial application. This, I think, will also show that this technology is feasible. We are still working together with Castrol. We have been showing on a fair in Mainz, the technology, and we have customer interest for this.
As I said, maybe next year will be better for this technology because all the OEMs are running cost-saving programs for the time being, and they want to, let's say, concentrate on these models. I think some of you have also seen that the number of models has been reduced from the most customers. We hope that we will be able to bring this into a serial development in next year. Next slide, please. Please let me come now to our operational, let's say, increase, what is, I would say, really in good progress. You know that LION Smart has had roughly 50% of the turnover in the year 2023 with BESS business. Then technology has changed to LFP. Then also there was a big pressure in the market in the year 2024, especially on NMC technology for BESS business.
We decided, and I explained this last year, to work together with Leap Energy. This is the battery daughter of Leapmotor, where we have a cooperation agreement signed. You can see now our first project here on the side. We have made the project management for big containers. First container was a 5 MW at 20 MWh, that means a four-hour system in Finsterwalde that has been realized. We are now on the final grid connection. Everything, all the tests have been passed so far. It's also a kind of co-location because there is a big solar field. We expect to become operative working within the next weeks, so that we get then the permission from MITNETZ STROM, that is the energy net provider, that we can use the system on the electrical grid.
We have also a second project with two containers, also a 5 MW system. That means a two-hour system. We are working there together with IBC Solar. FAT, that means factory acceptance test, is scheduled for beginning of September. Our engineers will then go again to China to do this test. It is already running. Construction of the fundamentals has started. Grid connection is expected then to be live end of this year, so that all the units, that means the containers, but also the power conversion system, you know that we need also the technology, not only the DC side containers, but also the AC side. That means this unit is doing for both direction the conversion between DC and AC, that means the grid. There we have been working together with also a big Chinese company, but we are also looking now for European suppliers.
Some of you may have heard that the European Union wants to have, especially in the critical infrastructure, more European technology, especially on the software side and on the electronic components, and this is what we are currently doing as well. We are working on the third project and the fourth project, also 5 MW, 10 MWh , and we hope that we can sign this also within the next weeks. There is a bigger project where we expect the signing in 2026, and you see that this is now together with LEAP, but also with other container suppliers is already raising. Our preferred supplier, of course, is LEAP Energy, but unfortunately we have not the BloombergNEF Tier 1 listing what we expect within the next weeks to come. Then we have also more possibilities to do more projects together with LEAP. Next slide, please. Yeah.
This is something during that, and I will come to this later. We have been able also to build up a very good sales team on that. We have also been able to reallocate some of our engineers, electrical engineers, not only from our standard battery business where the development now is more or less at a final stage. We are still working on some of the topics until everything is running smoothly. But our engineers now are taking over also responsibility for the DC and the AC side of the containers. These are the engineers also who are now going to China for the factory acceptance test, but has been done also already this year twice. We have also been able to build up a very good sales team.
I will come to this, and we have now a customer base of more than 20 companies where we are talking about concrete projects. We have a prospect list where we are already in discussions with 60 potential clients, especially on the co-location and the photovoltaic sector. I think that you know that there have been also some changes in the energy law. This means if you have co-location base business, you do not have to pay the so-called Netzentgelte. That means that what you need to pay if you use the German grid. This is also putting now more and more focus, especially we are having more times on the photovoltaic sector where we have negative energy prices, and this is something that the people do not want to pay for.
Now we have the possibility with this co-location to store wind and photovoltaic electrical power into these containers during negative energy prices, and to resell it or unstore it when it is needed. This was also the reason why I explained the two-hour, four-hour system. It depends very much how big these systems are. We are already now talking about eight-hour systems. That means that these systems can be used for power supply for about eight hours. Our supplier strategy, of course, as I said, on the DC side, that means the battery. First is Leap Energy, the second one is Sunwoda where we already are now doing a project with, and IBC Solar, a company. This is also located in Northern Bavaria. We are talking about several projects with them now. AC, as mentioned, Sinexcel, also Power Electronics and Sineng. We are looking also for European suppliers.
Power Electronics, for example, is a European company in case that the pressure is now going further in the direction of having critical infrastructure not driven by Chinese software. We are also working together with Great Power and Gotion. They are supplier of Volkswagen, for example, on DC alternatives. Also for the batteries, we are looking for a European-made solution. I think all of you know that after the insolvency of Northvolt, there is not very much left on the cell manufacturing out from Europe. Even Morrow has also faced bankruptcy. This was the last European cell manufacturer for larger scale. The cells will still come from China, but all the rest can be then be bought in the EU, but maybe also an alternative may be that once we also could manufacture this kind of containers also in Hildburghausen.
LEAPENERGY, as mentioned before, we are working on the Tier 1 listing on the Bloomberg list. We hope that we will be able next or month September or latest in October, we should get this Tier 1 listing. This is a precondition for the proper bank financing of these projects. This was the reason why we had to take Sunwoda. They already have this Tier 1 listing for one of our projects. Next slide, please. Now I would like to show a little bit our team. We really have a very good, strong BESS team now in place. We have three people in sales and business development. We have a head of strategy who is really experienced, who has more than 20 years experience in the BESS business and also photovoltaic business.
We have one business development for Italy, an Italian person working here in Garching and dealing with Italian customers. We have not decided to build up Italian subsidy for the time being, so we are doing this from here. We also hired a South Tyrolean technical solution manager. He will start on the 1st of September. We are still looking for additional sales management, and this may be then hosted in Italy. Italy is, for the time being, the second-largest market for BESS business within Europe. According to the talks that we had also with bigger customers, I think we have very good possibilities also in that market. Hildburghausen, as I said, with our already existing engineering capacities, we are supporting this.
We have also had the possibility to go with our engineering team to China to train our service people, but also our engineers on these systems to know exactly what is going on. This has been successful also that we will be able to coordinate the, of course whatever kind of technical support is necessary in the field. We are also working on long-term service agreements with our customers, where we also have to increase our service fleet. Of course whatever is necessary, we are building up a system now where we are able to control the behavior of the cells, of the packs, and of the container so that we have an early warning system if something is going into the wrong direction. We can also guarantee the customers 95% or even more uptime.
We also have been able to find people for supporting our mobility battery. A new sales manager just started 1st of August. He has also more than 20 years experience in sales in the automotive sector. He knows the customers already. We are looking also for strengthening this. We have, and this is something that we have been talking last year. We have unfortunately been forced to reduce our activities in the U.S. I think all of you know that the current American federal government is not really a fan of electric mobility, and they cut all the subsidies. They even removed a charging infrastructure in front of federal buildings. Therefore, the market in the U.S. is much under pressure.
We still have customers in the U.S., but we have decided because at the end when we are coming to technical questions, we have to do it anyhow from here. I think it is better to have the day-by-day communication from here and a customer visiting is also then handled from our German colleagues here in the sales team together with Tobias Mayer. I think this is the upper picture showed us also here on the fair also together with the IBC Solar people. I think we are really on a good way there. We are also working on further other business opportunities in this area to increase our sales base also so that we will come hopefully also in the next year again to a distribution between mobility and BESS, which shows at least 50/50.
I would say this is an overview on that what we have achieved. We have been able to manage the transition to the NMC+ battery. We are now shipping the batteries to our customers. We are also now increasing our BESS sales activities. Only to summarize for you that we are on a good way. Thank you very much. Jens, now I would like to hand it back to you for the question-and-answer. Thank you.
Thank you, Joachim and Tom, for the comprehensive business update. We will now begin with the question and answer session. If you have a question, please use the question-and-answer function and I will read out your question, or please raise your virtual hand, and once your name has been announced, you can unmute yourself and ask the question. One moment for the first questions coming in. We have our first question from Stefan Burger. One second, please, Stefan. Mr. Burger, you can unmute yourself and ask your question.
Good morning. Can you hear me?
Good morning.
Yes.
Yes. Good morning. Two questions, please. First question, obviously it is quite telling that for the past six months, defense has been hyped and it is completely gone. Can you please explain on that one? Second question is, in the June 2nd, 2026 release, it has been mentioned LION Smart expects a significant share of the 2027 production capacity to be contracted at an early stage. Production capacity on the homepage is mentioned with more than 2 GWh. When I inquired that in June, if this is still the case and what it means when the company says that the production capacity of 2027, a significant portion will be contracted at an early stage. Does that mean the 2 GWh?
Consequently, the numbers have been removed from the site and there was no update on what the capacity now is with the new production facility or whatever the machines. The question is, what is the production capacity from 2027, and can you elaborate a little bit more on what has been mentioned already on this June 2nd? Again, the defense would be very interested in what happened to that since it has been hyped quite
Yeah
huge in the past six months. Thank you.
Yeah. Let's say it in this way, the defense is still a major portion of that what we want to do in the next year. We have applications running with defense companies. It's not that we changed anything on our business plans. We decided, because everybody can read this, to do it, let's say a little bit on a lower key, that everybody can load down this. Currently, we are also shipping cells, not on vessels, but also on the landline to Russia. This was the reason for us also to say, let's be a little cautious. Honestly, we are still working on this, and we have currently also good projects going on there. You have been seeing this mobile storage issue, Mr. Burger, that I've seen there. This is also an application.
This is possible also for defense usage, and it's coming also from this area. We do not want to show this in this very prominent way to reduce the risk a little bit more. It's still, and we are also looking for the ramp-up next year. We have very good applications. As you know, sometimes it takes a little bit. It's not only the Bundeswehrbeschaffungsamt in Koblenz. It's also other areas in other countries who take some time for their decisions. We are expecting to get these contracts in the next year. Coming back to the second question, is that we as LION Smart, we're doing the production line changes in different steps so that we, on the one side, because I think I mentioned it before also, that we now need more money for pre-financing.
We have to pre-buy or pre-pay the cells before they leave China. Therefore, according to that what Tom already said, to a very consequent cash management. We have been now bringing our manufacturing line, as I said, with a sometimes semi-manual process of the cell stacking on, let's say, a possibility that we can produce easily for the rest of this year, 2,000 packs. We are doing also the necessary changes that I explained already for all the other things that we can also run the manufacturing line also latest mid of next year in a full automated possibility, so that we can easily produce then within two shifts per year, 8,000 or also maybe 10,000 packs. So the production capacity would not limit us on this kind of pack. As I said, it would be not a big issue to increase this.
But as we said in the beginning, the 2 GWh was, let's say, related to both BESS batteries and mobile BESS batteries. As we now have been able to change the BESS to this LFP Chinese manufactured containers, but also battery packs, we do not expect to run this kind of cell technology and for the BESS business competitive circumstances or environment on our production line in Germany. The prices from China are very low. So we are now putting our manufacturing line to that maximum of battery packs what we expect for the mobile business. I hope this is okay for you as an explanation.
Thank you, Joachim, and thank you, Stefan Burger, for the question. If you have any further questions, please again, raise your hand or to use the question-and-answer function. We have another question from Sarah Hellemann. One second, please. So Sarah, you can unmute yourself now, and please ask your question.
Yes, thank you very much and a nice morning to you as well. Just a question on residual inventory from the older battery pack version.
Is there significant inventory left, and what are the plans with that, if the case?
Thank you for that question. I would love to have more inventory left, because we have customers where we sell modules, for example. They still had not the change to change their BMS to the new cells. We have in stock only that what we need to have, and this is also calculated on the BMW exchange rates, our spare parts. We have no residual stock left for our customers. We would be able even to sell more of the older batteries if cells would exist, but unfortunately, they are not existing anymore.
Thank you very much. What would be current potential bottlenecks to ramping it up even further beyond these 10,000 packs- 11,000 packs?
We would have possibilities also to do some changes to come to the same manufacturing volume. Welding, for example, is something where we now working with one robot. We have another welding robot there. As soon as the system is running, this bottleneck also can be changed. Also, the automated stacking and maybe I should explain a little more. In the last batteries, the cells have been glued together cell by cell. Now we have a so-called swell pad in between because due to the higher energy density, electrochemical changes lead to a little bit of blowing up of the cell. To achieve at least the same lifetime, even better, we have a different process. These swell pads have been glued together. This is the semi-manual production. Anyhow, we do plan now to put this to the fully automated production then next year.
This would be, let's say, a further possibility to increase this production. But if we really would have more demand from the market, then we would have to build up a second line. What anyhow would help us then, because I think you know all that the production line has now a certain age. We have been taking over this production line from BMW. Of course, we are able to manage all this even with the electronic components, but a new production line would also maybe look a little different. But for the time being, we would be able, with that what we have, to come back to the original number of batteries that could be sold.
Do you expect higher CapEx needs in next year and the year after?
This is a very good question, and we are discussing this also internally and also with our board now. The issue is working capital. In the beginning, the cell prices or the cell cost is roughly 50% of our turnover. The more we increase our turnover, the more working capital is needed. Because as I explained, if we ship them and we have then 12 weeks- 14 weeks the batteries on a ship and we have to prepay, of course, then we have to have a higher working capital. Of course, this is a logical thing, and this unfortunately is not only our problem, it's also the problem of all battery manufacturers because the cells are not allowed to leave China without prepayment. Yes, of course, the more turnover, the more working capital we need, and this is directly related.
Thank you very much.
Thank you, Sarah, and we will now continue. We have a question coming from the question-and-answer section from Torsten Bolting regarding the working capital swing between Q1 and H1. In Q1, operating cash flow benefited from favorable supplier terms, whereas Q2 saw a reversal due to required supplier prepayments. Did the payment behavior in Q1 cause suppliers or credit insurers to reduce your payment terms in Q2? How will this requirement for upfront cash impact your liquidity during the heavy H2 production ramp-up?
Actually, as you stated, we do have those firmer conditions on the supplier side. But again, as explained, if we don't see ourselves as a financing partner, but as a manufacturing entity, one approach to, let's say, buffer it, is to persuade our customers to also undertake prepayments. We have been successfully achieving it in the last weeks. So customers have to prepay. That's one matter. Also, in a way, we have these most recent political environments, but also businesses now learn to maneuver with these conditions and also banks. We are pretty confident now also speaking with new finance partners, with a new house bank, to get to other, let's say, more flexible financing conditions. So let's say guarantees, convertible guarantees, letters of credit, just to improve our working capital situation.
Thank you, Tom. Currently, we have no further questions. If there are no further questions, we would like to close the call now. Thank you for your attendance. If you do have any further questions, please reach out to the investor relations team offline at any time. Thanks a lot. This concludes the call today. Bye-bye.
Thank you very much. Bye-bye.
Thank you. Bye.