Thank you very much, welcome to the conference call where we will present our first half financial results. It's a very special day for Koenig & Bauer, a special day for myself as it is my first conference call in my new role as the CEO of Koenig & Bauer AG, also on my side, the first conference call for our new CFO, Dr. Alexander Blum. It's a very special day. Not only that, it's also a very unique day as we're broadcasting live from Frankfurt am Main. Because this is a special day, we also have a special guest, our Chairman of the Supervisory Board, Professor Dr. Raimund Klinkner, is also here and is joining today's call, will say a couple of introductory remarks and explain why today is so important.
Thank you very much for your kind introduction and remarks. Good morning into the room. Good morning in the virtual audience. I only would like to add some information. In this year, as you already mentioned, especially today, we are celebrating remarkable anniversary milestones. As a company, we are more than 200 years old, to be precise, 208 years old, we had our 100th annual general meeting on the 4th of June this year. Today, exactly today, we are celebrating 40 years on the capital market. Looking back to these last 40 years, we moved more or less from a narrow focus on newspaper and banknote printing to a global technology partner for a broad scope of industries and substrates. That means continuous transformation and further development is core of our DNA, this also applies to our organizational development.
With this year's already mentioned 100th annual general meeting, we completed the long-planned and well-orchestrated change of leadership, bringing Dr. Kimmich into the CEO position. He's not new in the company, new in this role. With his step up into the CEO position, we, [Inaudible], intentionally searched an external candidate, shaping the future operationally. Of course, it's not the task of the Supervisory Board to transport that to you. That were my introduction remarks to welcome you here in that special location and that special room, we are looking forward to exchanging with you our future. Thank you very much.
Thank you for Professor Klinkner. Now we'll move on to the more detailed presentation of our first half results, in the format that you've become accustomed to at Koenig & Bauer in the previous years. I, as CEO, will run through the highlights and give you an overview of what's happened in the last few months at Koenig & Bauer, Alexander Blum will present in detail the financial figures, how we were able to close out Q2 just recently. If you look at the business performance in Koenig & Bauer at a glance, we're very happy that we are able to present a strong second quarter. If you look back three months ago, the first quarter, we were very confident.
We tried to explain to you and to the capital markets that we are on track, you couldn't quite see it in our P&L, we had to explain that there were some temporary effects in Q1 that covered up the operating improvements that we knew were coming, or that we knew were there. In Q2, you can clearly see our operating improvement. We were able to strengthen our operating performance significantly over the prior year, I think you'll be able to see in the next 40 minutes that we're on track, the profitability improvements that we need are coming. We'll talk a little bit today about our new focuses, where are we focusing in the company? I will show that in a couple of pages.
What has happened in the first half of this year, I think one of the other significant announcements recently is that part of our strategy is focus. Koenig & Bauer has a very broad portfolio, we have to focus on doing what we have, bring it to the market, and make it more profitable. In doing this, we looked through our portfolio and decided to initiate a project for reviewing the future alignment of Koenig & Bauer Coding GmbH. It's one of our many subsidiaries. It's in a very unique business position in coding and marking. The synergies with the rest of the group are not particularly high, which is why we've put this into the market for discussion on our future strategy. We also had two big market developments in the last three months.
We had the China Print in May, which was one of the two largest trade shows in Asia, where we were able to successfully book a lot of business. We also see with the Print4All, another trade show in Italy, and the Italian government support programs and subsidy programs, that we were able to book significant orders in Southern Europe in the last few months, overall our top line and our order backlog continues to look good. We're making progress in digital printing. I'll also talk about this later. We also made great progress in our cooperation with Volkswagen, where we officially announced already at the general assembly in June that we have made good progress with our dry coating, battery dry coating development project. We successfully closed out the proof of concept, that project continues.
Finally, what we'll talk about today is a large program, which I think every company is looking at and every company is starting initiatives, Koenig & Bauer is really going all in on getting our company up to speed and state-of-the-art in the future of artificial intelligence and what it means for our internal processes and what it means for our products and our customers. If we look at the figures, order intake was slightly down over the previous year, please remember, last year was a drupa year. Sorry, I wasn't quite finished with that slide. Yeah. Apologies for the quick disruption.
Order intake was down over the previous year. Please remember last year was a strong Q2 due to drupa. Therefore, we're quite happy with our order intake in this year, where book-to-bill was again greater than 1.0, which is always a good sign for capital goods. Revenue was up, which we did not have as of the Q1 figures. Now year-to-date, revenue is up and EBIT, as mentioned, a significant operating improvement in our profitability, which Alexander Blum will talk about in a second. Also in net working capital, we continue to show year-on-year improvement as we have in the past. Overall, in both our segments, we show positive revenue development and, in Special & New Technologies, you'll see year-on-year a slight weakness in order intake, particularly on the digital preview solutions, which have a strong U.S. focus.
Overall, I think the key message today is that we're on track. We confirm our guidance for this year. We confirm that we're absolutely generating the savings that we had intended on our Spotlight program. We see ourselves on a path to have a strong 2025 and a significant improvement over last year. If I move now into just the highlight on the figures. I think the main focus on this page is really just the order backlog on the top left, EUR 1.096 billion of order backlog, the highest figure in the most recent corporate history of Koenig & Bauer. We seem to be moving from one peak to the next peak, to the next peak. We've made that statement three times, I think, in the last 18 months, that we're at the historic highest order backlog.
That's again the case at EUR 1.096 billion, the third time we've broken the record in the last six quarters. Great news for us in very uncertain times, that we have a lot of tailwind from order backlog to support us in the coming quarters as the impact of the tariffs and the global economic uncertainty plays out. Everything else I mentioned, book-to-bill, good. Revenue up year-on-year and operating EBIT, also a significant improvement now in Q2 to prior year. The next few minutes, I'll talk more about the business highlights. I presented this slide at the general assembly, but just to give you a feeling of how the new board is approaching Koenig & Bauer and where we intend to have our focus. If you look back in the last decades, we've done a lot.
I'm thankful for all of my predecessors the last 40 years. Particularly here the last 25 years, that we've handled the disruption to our print industry quite well. A huge age of diversification, where we enter new markets with M&A, we develop our own new products. We spent the last five years in very difficult times, pandemics, energy crisis, wars, supply chains, energy shocks, et cetera, really finishing out this portfolio completion, the diversification, spinoffs, new products. We spent a lot of effort and a lot of money getting these products and getting into these diversified markets and getting ready to scale. Now our focus is very clear. It's about performing. It's about making Koenig & Bauer more profitable.
It's about getting these products that we finished, getting these new businesses that we've started, getting them into the market, scaling the business, and moving the company forward profitably. We're going to have five focus points. I talked about this again at the general assembly, it will be a focus on our Capital Markets Day today. On the right, it's about go-to-market. Koenig & Bauer has a very broad portfolio. It's not dogmatic that we say we're never going to do anything new, but the general message is focus on the portfolio we have and getting it more profitable and into the market and scale. Second is about competitiveness. I am a huge fan of Germany and German competitiveness, and I'm confident that we'll be able to compete on a global scale, but it requires work.
It requires thinking differently, it requires a lot of focus on competitiveness in terms of improving processes, improving costs, improving structures. Resilience as the third major topic. In volatile times, we have to become more flexible. We have to work on our structures to become more adaptable and to become faster in adapting to change. Resilience in terms of financial resilience, operating resilience, and supply chain resilience is something that I think all industrial companies need to improve on in the coming years to emerge from these kinds of crises even stronger. Finally, intelligence. Intelligence means artificial intelligence for ourselves, for our customers, but also means finding solutions to help our customers and to help our staff worldwide to face the challenges coming forward.
That all, even if customer first I mentioned last, it's deliberate because these four points are all under the mantra of our customers in focus. It's the strength of Koenig & Bauer for 208 years. Developing with our customers and making our customers more successful ensures our success as well. If we move on to the next page, I go through a few of the more detailed business highlights. Our Spotlight program that we announced in, I believe, Q2 last year, is absolutely fully on track. It's nearing completion in terms of implemented savings. You see it in the year-on-year improvement Q2 versus Q2. It's our Digital & Web project in Würzburg, bank notes, metal print, and reducing our holding costs. We had, again, a small amount of extraordinary charges in Q2 that we had announced, and you should have been expecting.
Overall, the program is nearing its full completion and full implementation, this is what's driving our profitability improvements year-on-year and will also drive further profitability improvements in 2026 compared to 2025. Also, of course, part of the holding cost reductions is streamlining management, streamlining the executive board, and reducing from five to two, which is now operatingly fully implemented. Until end of the year, we remain three, but the path to two is already clear for 2026. On the next page, I already mentioned in my highlights, we've decided to approach the market for a new alignment of our Koenig & Bauer Coding business, coding subsidiary. This is less than 5% of the Koenig & Bauer turnover, but it is a very nice business. It's profitable, it's successful, it's growing, it's got 300 employees that have been dedicated to this business for decades.
We are happy with it, but we recognize, one, Koenig & Bauer is a very complex company with a very broad portfolio. Number two, Koenig & Bauer Coding, if you look at all of our businesses across the entire spectrum, Koenig & Bauer Coding has the smallest overlap with the rest of the business. Instead of where we are either focusing on banknotes or on packaging manufacturers, so the company's making packaging, Coding is focusing more on the companies that are filling their packages. They are focusing on industrial applications like industrial cables, tires. It is a different market, different customers, different sales channels, and the overlap, both technology and from the market, is simply the smallest of any of our businesses.
Under our overall philosophy of more focus in the company and more resilience in the company, we have announced last week that Koenig & Bauer Coding is under investigation for its new alignment. What that means is open. Whether it means new strategic partnerships, joint ventures where we give up part of our shares or a full sale of 100% of the shares to a new buyer, to a new owner. That is open, but the basic message is we are realigning this business going forward, and I think it is clear that that is in line with the rest of our strategy and our main focus going forward. I mentioned already on the next page, the China Print and Print4All, in Italy. These were two major trade shows, and you will see I mentioned already, book-to-bill 1.2, highest order intake of all time, also driven by two markets.
It is not only about the U.S., you will see in the backup that our U.S. sales are significantly down year-on-year. But overall sales are up, and this means also focusing on new markets. It means not just being overly reliant on one region. Great successes in China during China Print, and I can only reiterate the Italian industrial support from the Italian government has really led to a boom in 2025, for demand for our machines from Italy. Combined with the trade fair in Milan, we were able. We announced that we had over EUR 50 million of order intake just in Italy, one country in one quarter. So I think this slide is really meant to show we are in a global market. We have 83%, 85% export, and being successful in markets across the world is another key to our success as a company.
On the next page, on page 11, a short reminder that we have a very broad portfolio in many different packaging markets, and we now have digital solutions for all these markets, whether it is folding carton, corrugated, MetalP rint, or here, also glass printing. We are the market leader in glass printing for traditional silkscreen direct-to-glass printing. Very quietly, without a lot of press and media, we now have nearly 20 machines installed for digital glass printing at Koenig & Bauer Kammann. You see one series here with Johnnie Walker. This is directly printed on the glass. Every one of these labels, it is not really a label because it is directly printed, is unique. It is a SKU of one. So a unique marketing campaign for, in this case, Johnnie Walker. This follows something we announced last year with Louis Vuitton on something similar.
We won a lot of awards because this is a very difficult process and a very difficult three-dimensional shape to print on. We've done it. We've done it well. We've done this also not because we have to do everything ourselves. I think you've seen many times in the past that Koenig & Bauer is very good at cooperations. We're very good at partnerships. We don't have to do everything ourselves. This is an example in one of our other small subsidiaries, also less than 5% of Koenig & Bauer, now becoming the leader in digital printing on glass, as an example of our flexibility and our ability to evolve the business.
On page 12, as already presented at the general assembly, we also announced in Q2 that we successfully achieved the next milestone of our cooperation with Volkswagen, for this dry coating and machine for the dry coating of battery cells. This is still a development project. It's now moved into the next phase, now it's about scaling together with Volkswagen PowerCo. We've now finalized the commercial framework agreement between the parties and move into the next phase. I can't tell you today when will that next phase be announced, but at the end, we've now been in roughly two years in this cooperation, we keep moving from milestone to the milestone and successfully pushing the project forward. I would also remind a lot of talk today about diversification in the markets and how do companies move into new markets.
This is a great example of how Koenig & Bauer takes its core knowhow, in this case, out of Banknote business, and applies it to new markets. This project is moving along quite nicely. Whether it's successful in the industrialization and the scaling remains to be seen, but we're clearly moving forward. Page 13, I'm almost done with the highlights. AI and power. We kicked off internally a massive training program for enabling a large portion of our employees in using our AI tools. We have a partner with Google since many, many years for Google Workspace, for Google BigQuery, Google data warehousing for a lot of our digital products. Google Gemini as their AI tool is integrated in our, every employee's workspace that they have access to it, but how to use it. Also, Gemini Advanced, NotebookLM, other Google tools.
We're training over 500 of our 5,200 employees are getting intensive training, have been for a couple of months, so that roughly 10% of our workforce will be intensively trained on how to use AI internally for processes. Even Dr. Blum and myself get trained on the use of AI. Monday this week, as a small little example, we spent an hour and a half with Google for the second time learning how does AI work in detail, how can you use it, what does it mean for companies like Koenig & Bauer. It's a massive project. Even within these 500, we've defined a smaller group of champions that get even more training and more intense on how to get AI knowledge into the company and get a multiplicator effect into the employees and figure out what does it mean for our internal processes.
On top of that, we have, in our Koenig & Bauer Kyana spinoff that existed since April 1, 2025, is the other question of how do we use AI for our products, for our machines, for our customers. Again, in partnership with Google and other partners, led by Sandra Wagner, who will also present this afternoon on Capital Markets Day. It is an ecosystem for our customers. How to use any information on our machines, whether it is training manuals, machine data, benchmarking among customers, energy management. It's how to use AI in our digital solutions, and this is something we are already scaling and already into the market with. This is not just future products. These products are now sold to customers, being used by customers, and is a large part of our strategic focus going forward.
That is it from me as the 20-minute introduction in terms of Koenig & Bauer at a glance and what are the business highlights that have happened in the last three or four months. For those of you that attend our Capital Markets Day this afternoon, we are of course, going to have a deep dive in many of these topics that we talk about more and have more members of management to present. But that being said, thank you for listening. I will hand over to Alexander Blum, who will walk you through the financial figures, and then we will open up for Q&A. Thank you.
Thank you, Stephen. Good morning, ladies and gentlemen. It is my great pleasure to present to you for my very first time, the first quarter results of Koenig & Bauer. And it is also not only a pleasure to present these numbers, but it is a true pleasure to be on board of this fantastic company. Later on during our Capital Markets Day, we are happy also to show you some further insights in the future strategy. But let us now start with finally some numbers, some financials. As Dr. Kimmich already has stated, the order intake is a little bit down on a year-on-year basis by -5.4%. But considering the macroeconomic level that we had, considering the state that we last year had the drupa fair, this is a good result and is offering us a very good basis. Revenues, we are increasing.
This is part of our growth strategy, growth initiatives, and also part of the guidance for this year. And the order backlog is on a fantastic level of nearly EUR 1.1 billion. With regard to operating profitability and EBIT. The EBIT increased tremendously on a year-on-year basis, +20.1% this year compared to last year. You can see what are the drivers behind this profitability increase. One driver is higher revenues and an increase of volume. But the other one, which is even greater, is the operating effects, which consists out of a product price mixture, but also on savings with regard to functional costs, savings with regard to our cost of goods sold, of our production costs. And this is also the reflection and the positive consequence of our Spotlight program from the recent past.
You also see that our non-operating effects decreased, which is a good result because last year with EUR 9 million of non-operational effects, this was a quite high number. This year we only see EUR 4.2 million. This is a significant decrease and also a good result. You see on the very right-hand corner the operating EBIT adjusted for drupa costs, which is offering you a view on the operational performance of the company. Also with regard to this KPI, we increased our profitability by over EUR 15 million year-on-year. On the next page, you'll find the Q2 numbers standalone. Q2 2015 was indeed very successful for Koenig & Bauer. On the one hand, you see the increase in revenues compared to last year quarter by +7%. You see the increase in order backlog by over 7%.
You see on the bottom line the three KPIs of EBIT, which also show big step of improvements. Why three indicators? Just to make it very clear, because maybe in the past, this could have been a little bit confusing. On the left-hand side, you'll find the reported EBIT according to IFRS. That includes basically everything. There you see that we achieved a positive EBIT in Q2 standalone this year by EUR 0.4 million. It's an increase by +EUR 24.1 million. In the middle column, you find the operating EBIT, also according to IFRS, which is deducting all the non-operational effects. There you also find a positive number for this year's quarter of EUR 1.8 million. On the very right-hand side, you find the comparison, especially with an adjusted basis of 2024, by the drupa costs.
Also with regard to this KPI, you still see an increase of profitability of over EUR 16 million. That is for Koenig & Bauer, within recent years in history, a very good step forward. At the end, we also will talk about the guidance. You know, we have confirmed our guidance for 2025. On the next slide, this is a new presentation, you find the LTM operating EBITDA. Last 12 months level is also showing nice indications. It is showing a trend level, which you can see here. It also shows that the operating performance after or before the depreciation and amortization is increasing even stronger as on the level of EBIT. It also shows a positive trend over the last quarters. What you see is that our profitability level is now above 2023.
You can also see that we have reached an EBITDA margin of 6.5% on the basis of last 12 months. That is something which is also bringing up confidence to us that the operational performance and the profitability level of our company is improving and the development is absolutely in the right direction. With regard to the full P&L, we have already presented the most important KPIs to you. Just let me state on two more lines of the P&L. One is the administrative costs, which show an increase year-on-year. This is due to overall price increases like leasing and rents, which we see in the market, unfortunately, and a shift in provisions.
This is not an expression that we are stepping down from our strategy of a lean structure and a lean company, but it has impacts which are on the market and which belongs to bookings and provisions, but not on a shift on productivity or on our focus strategy and on our strong belief that we want to be a leaner company and have a leaner structure. The second line, which might be of interest, is the financial result, which increased by a small amount compared to last year. This is due to a higher utilization of our accrual line. The higher accruals that we had to handle out is due to the higher order backlog. It is more money involved, but it's a positive sign. It also says that we have this strong order backlog, which we utilize for our further growth.
We also see some positive trends with regards to our interest rates paid for the bank loans and liabilities. Of course, the Euribor is decreasing on the one hand, but on the other hand, the premium interest, the premium margin that we are paying as Koenig & Bauer is decreasing as well due to a better position of our sales within our margin grids due to a lower leverage ratio, which we were able to achieve. On the next page, you'll find some key indicators with regards to cash and working capital. The free cash flow looks, of course, not positive on a year-on-year comparison, but it is due to a big increase in our working capital. Last year in the cash flow 2024, there was a decrease of working capital and therefore a cash in of over EUR 20 million.
This year, we have compared to end of last year, we have increased our working capital by over EUR 40 million. It has a cash out of EUR -40 million. This difference between EUR +20 million last year, EUR -40 million this year, is more or less the whole development of our cash flow this year compared to last year. You see on the lower left-hand side, the net working capital position. Even though we have a strong increase in the first half of 2025, we were able to decrease our overall net working capital position by nearly EUR 20 million. We also increased it on a relative terms down to a level of 26.3%. This is the right tendency, and my colleagues have started in the past an intensive discussion about cash and working capital and how we allocate our resources.
This is something which is also one of the most striking points for me and most important topics in future for Koenig & Bauer, to have a very close look in our cash provisions, on our liquidity, and also with regard to working capital, to be and become more and more efficient over time. The equity is still over EUR 300 million, with an equity ratio of nearly 23%. There we are still on a good level. The decrease is, of course, to the net loss that we have achieved in the first half of the year, but we are still on a considerably good amount. With regards to the group cash flow statement, let me emphasize two more points to you. First of all, the gross cash flow improved significantly by the better result that we were able to achieve this year compared to last year.
The cash from operating activities, that is changing due to an increase in working capital and also due to the comparison of last year's cash flow, which had a decrease of working capital. You also can see the investing activities this year are below the level of last year, and this is due to a very good investment story in the last years. Now Koenig & Bauer is in a position to profit and to benefit from the CapEx spend in the last years. We can deliberately lower our level of necessary investments, even though to be prepared for the future on the one hand, and on the other hand, of course, it is our constant task and job to be very careful with our capital expenditures and to save our liquidity on an appropriate level.
With regard to balance sheet on the next page, there you find all the details. Maybe let me point out four more specific topics to you. The decrease in our tangible and intangible assets is due to a lower CapEx level this year. The current assets are slightly below the level of last year by EUR -2.8 million. There is a mixture of effects which we see. We see an increase in inventories. We see an increase in our financial receivables, which belongs to our receivables towards our joint venture with the company Durst for digital printing. We see an increase of the other assets, which is a result of the POC accounting, especially with the banknote solution business. Higher prepayments for our suppliers due to the strong order backlog and due to an increase of other taxes on the one hand.
On the other hand, we see, of course, a bigger decrease in our cash position, which is bringing the overall current assets position a little bit down. The development of our equity is due to the net loss of the period. The small decrease of our pension provisions and similar obligations is due to an increase in the discount rate by 0.3 basis points. Last but not least, our bank liabilities. There you see a shift between the current bank liabilities or current financial liabilities and the non-current liabilities, bank liabilities, by roughly EUR 40 million. This is not due to a change in our financing structures, or this is not due to a change in the due dates. This is only an expression of our own sentiment, of our own planning, how we will decrease the bank liabilities until year-end.
Last but not least, let us have a closer look to our two segments on the next page. On the next page. There we are. Here we go. Thank you very much. Paper & Packaging and Special & New Technologies. The order intake of Paper & Packaging is nearly at the level of last year. This is very positive news because last year there has been the big drupa fair. This year there was no drupa, nevertheless, Paper & Packaging order intake on the same level. With regard to order backlog, it's a little bit lower, with regard to order intake, it's on the same level, The order backlog is also lower because revenues have been increased in the segment Paper & Packaging compared to last year. With regard to Special and New Technologies, it looks a little bit different.
The order intake is a little bit lower compared to last year. This is due to the situation that we had last year. A lot of order intakes from the American state for the Bureau of Engraving and Printing from the Federal Reserve banks. Of course, this year, the order intake is a little bit lower. That's why the order intake decreased on a year-on-year level comparison. But the order backlog has strongly increased compared to last year, and this is also due to the fact that we are still working on these big orders from the past. With regard to revenue, we see a small increase on a year-on-year basis. With regard to profitability, the positive effect is that the profitability within both segments could have been improved on a year-on-year basis.
On the next page, allow us a little summary of the current situation with regard to uniforms, customs, and tariffs. I think that is a topic which is striking to all of us and to a lot of companies. What we see right now is that there is the cap on tariffs of our machines of 15%, and hopefully there won't be a shift anymore after the deal was made. On the one hand, we see the +15%, and at the same time, we also see a change in the FX rates, euro to US dollar, which has, you all know this, the dollar is weaker right now. With regards to FX change rates, it is also a second effect which makes our machines more expensive for U.S. customers. Now we have the two ends of the same equation.
The positive thing is that we have no more uncertainty or that we have much more clarity with regard to customs. That is positive. On the other hand, we see an increase in the prices, or we see it is more expensive due to the increased tariffs on the one hand and the change FX rates, on the other hand. Which effect will be more stronger? That is the exciting question for the future, and that is something which we will observe very closely within the next month. That brings us also to our outlook for this year and our mid-term guidance. We are absolutely convinced that we can confirm our guidance and that we will receive and achieve our guidance of 2025.
We will see a slight increase of revenues up to EUR 1.3 billion, and we definitely see an increase in the operating EBIT to a range of EUR 35 million-EUR 50 million. Once we have achieved that step will be also a further big improvement with regard to the last year, and also a very big step in the right direction for Koenig & Bauer. We also confirm our strategic outlook. We are aiming up to revenues of up to EUR 1.5 billion with an operating EBIT margin of 5%-6%. That is our ambition level, and we see that this is possible. We also will see a further increase within profitability in the next year compared to this year, compared to 2025.
A more precise guidance on the next year, due to the uncertainties, due to the developments also with regard to tariffs, with regard to the trade and the business with the U.S., we cannot give you today, but we will give it to you at the near point in future, latest beginning of the next year.
Thank you very much. Thank you. Alex, I think that closes out the presentation of our business highlights and the financial figures. Now we hand over back to the operator for I'm sorry, stay here in the room. I apologize. We're first going to stay here in the room. If there's any questions here in Frankfurt regarding our H1 figures. Again, just please raise your hand and a microphone will be brought to you. We start here with Mr. Rothenaicher from Baader Bank. Yeah. Because the operator will not announce your names, I know all of you, I think, but still, I'd be happy if you can please introduce yourselves and then ask the question. Yeah.
Peter Rothenaicher from Baader Bank. First question on order intake. Order intake in the second quarter was quite good given the high basis last year.
Sorry, Rothenaicher
Regarding security printing and Digital & Web, can you give us some information, how did Digital & Web perform in relation to security printing in the second quarter?
Sure. We can jump in the backup slides. Slide two of the backup.
Yep.
There you find the Digital & Web Business Unit as a breakdown of our segment S&T. Yes, this one. Thank you very much. There you see that we are facing a decrease in order intake with the Digital & Web business. This is due to the business that we are doing within this business unit with Hewlett Packard U.S. This is the direct impact and the most direct impact we are facing due to the situation with tariffs. We can unfortunately directly link it to the U.S.
Also RotaJET [Inaudible]
You do the RotaJET. Let me also show you one other big improvement. This is on the level of EBIT. Even though we have a decline in revenue year-over-year in this segment due to lower order intake and due to lower business with the U.S., we also see an improvement within our profitability. That is a good sign as well. Of course, it is still on a level which is absolutely not appropriate, Koenig & Bauer and the business unit and the business is developing in the right direction.
I would only add that it's softening in the business in general, in the large digital printers. It's both the HP business and the RotaJET. The install base for those big massive digital printers is to a large degree in the U.S. The U.S. has been adopting those products faster, that certainly softened a lot in the last six months. That hits us both on the order intake side and on the revenue side, because we have pocket counting. We promised you when we segmented that we would continue to publish the Digital & Web results for a certain amount of time for transparency reasons, that's why they will always remain in the backup. You can see we still have quite a lot of work to do, we've already done a lot of work.
My next question is on free cash flow. In the first half of the year, you were strongly negative. What is your expectation for the full year? Do you expect positive free cash flow for 2025?
Yes. We do this. We expect it similar last year. We promised last year, by end of the year, we expect positive cash flow. Still a lot of work to do, obviously. That commitment we gave in Q1, that we expect a full year positive cash flow, it still stands. We have a lot of working capital to support our strong second half of the year.
It's a seasonality effect that we are facing right now. To one reason, it is also due to the higher order backlog and also the strong H2 that we are looking ahead to. At the year-end, also with the improved profitability, cash flow should be on the same level at least as last year, our cash position.
My last question is on security printing, particularly with your big customer in the U.S. Do you have here some statement to what extent have the tariffs and the FX situation had some impact here on demand?
Both we would say none. The tariffs is fully covered by the customer. That's already contractually agreed, and we have also received the first reimbursement of tariffs after importing. It's also working. It's not just a paper. Second, we told you already in Q1 that we had executed a very large hedge for US dollars. That was one of the reasons we had a temporary effect in Q1, that drove down profitability a little bit. We feel comfortable on the FX rate for at least, I would say 2026 and into 2027. PleQase.
Johannes Ries from Apus Capital. Maybe following on U.S. You showed it's an important end market for you. Can you explain us a little bit more how important the market is? It had been weak already in the first half compared to last year, and it was 23% and it was 20% in the first half. How important is the market and what do you see maybe compared to your competitors, how your position is? I think there is no major printing machine producer in U.S. I'm not aware of it. They are coming from Europe and Japan. Maybe partly of China now in the low end. How you see your positioning going forward? Except for how easy it is maybe to give the tariffs to the customer and so on. A little bit more insight. How profitable this activity was in the past.
Was it above the average or below the average?
Sure. No, it's a great question. The U.S. is very important for us. I think for all export companies, it's a massive market. It's the largest export market in the world. If you look also in the backup in terms of revenue, last year in 2024, it was significantly higher than now in 2025. It's disappointing that the free trade is under pressure and that the tariffs have hit as well as the exchange rate issue that with 30% more expensive machines going into the U.S. in dollars, we expect obviously a decrease in demand. You can obviously see in our results and in our order intake is that we're very capable in transitioning to other markets and selling our machines into new markets, particularly in Asia and China.
I think, my personal opinion, this overall disruption we see through protectionism throughout the world leads to a diversification of production throughout the world. That is driving investment in one of the other countries. We see a lot of Chinese companies investing heavily outside of China, building up capacities in Southeast Asia or in Latin America. It is driving reactionary investments in other parts of the world. I think that's certainly one driver of our successes in Southeast Asia and China. We have to see. U.S. is important. It's not only just the sales, it's also traditionally a country that invests in high tech, it invests in the most advanced machines. It invests in digital printing and tends to be on the forefront of productivity. It's not just mix. We're able to compensate that quite well.
I think we mentioned already in Q1, margins are under pressure and payment terms even. Payment terms of Chinese and Asian companies are typically with letters of credit, not as attractive as traditional Western payment terms. The machines are a little bit less automated, a little bit more basic, so it means the margins are perhaps not as strong or the price point per machine is not quite as strong. It's a shift that we can manage and we are managing. It's part of our job and it's part of our daily business. The real answer is, again, the U.S. is important and we have to find the answers there. From the competitive position, we're quite comfortable. As you mentioned, none of our major competitors are in the U.S. They're all in Europe, in Switzerland or in Japan.
As you also mentioned, Chinese competitors are more in low end and not directly competing with us. It's not about market share, it's more about the market itself and how will the U.S. market develop. We're quite, again, with EUR 1.08 billion of order backlog or nearly EUR 1.1 billion of order backlog, we're comfortable moving into the next quarters. Free trade would be better.
A very short follow-on. In your CRM system, how has the pipeline into U.S. developed? Had been the pull effect, it don't look like, but have you seen any impact on the pipeline because of.
It's a very good question as well. It's not that we're losing projects. The projects are still alive. The decision time frame is taking longer. The time between opening up a tender or a project with a customer and getting the decision is certainly taking longer than it used to. We had a lot of contracts that were ready to be signed, but the customer said, let's wait, maybe the tariffs go away. Because as mentioned, we passed through the tariffs to our customers, we had quite a few customers saying, we think the 10% is going to go down, or, I think the 30% is going to go down. Let's wait. I think that basically answers the question. We will see. The pipeline itself, I guess maybe one last comment.
It's not shrinking, it's taking longer, and we are still booking orders in the U.S. Sorry, it's the last major comment I should repeat. It's not that the market's gone. I wouldn't even say it's down to COVID levels or just disappeared. It's still there. The U.S. is a rich country. It's not just about tariffs. They have a clear onshoring strategy in the U.S. too, that we can find good or find bad, but we are placing orders. Our customers are placing orders, we are selling machines, and the pipeline is there. It's certainly not as robust as, I think back 2023, 2024, the U.S. was just booming, and that's not the case in 2025.
Let me add one point maybe. Our American colleagues are very optimistic.
Maybe they tend to be more optimistic than the Germans but, at the end, it's a EUR 1 million question, how the tariffs now, the new situation will turn out, and how it will affect the business.
Second question to your coding business, which under review. If I'm not totally wrong, your new major shareholder, [Mr. Leibinger], is also in this business. Are you in contact with him about this topic?
As a shareholder. We have to ask him if he has any intent in that direction. The two topics have nothing to do with each other. Coding was on our list of potential new alignment long before we had a change to our shareholder structure. Now the decision is also completely independent of any shareholder structures. Of course, there may be discussions in that direction in the future, but you have to ask our investors and not me.
Is he an active investor?
Sorry?
Is he an active investor to maybe push you to do things, or is he only on the side?
I think very supportive as a strategic investor. I think active, the way I would define it is at general assemblies and in meetings. I think that's not the case. We're very happy to have a strategic investor on board in these difficult times. We see it as a commitment to German industry, and it's a good sign for us.
Finally, to your full-year outlook. It looked first ambitious to have the sequential growth of 35%, Last year it was even a little bit stronger. You had the same. You plan now for EUR 750 million, and now you expect the same. Is it prudent given your high order backlog or looking at the environment you have to expect the same figure as last year? Is it even maybe optimistic given that the environment is so difficult and you have the tariffs now and so on?
I think it's realistic
last year you have guiding for a flat revenue compared to last year.
The second half of last year was very strong indeed. We expect it to be very strong this year again. The overall guidance from our point of view is absolutely realistic, again, a very strong second half year is, of course, ambitious. That's normal for us, and Koenig & Bauer proved it very well last year that they are able to achieve and to realize the goal. This year, again, the same ambition level.
I would only agree. After my sixth year at Koenig & Bauer, we're very confident that we'll be able to execute to our second half of the year as in our guidance is implied. We know how to do it. We've done it many times. We also would prefer a much more front-loaded year and not have to chase it towards Christmas, we know we can do it. Last year was extraordinary. We had a lot of things that went from the first half of the year into the second half of the year, that kind of double loaded the second half of the year. I wouldn't just take the second half of the year plus the first half of this year and just add them together. It's going to look a little bit different this year.
As we're sitting here, I hope we make a relatively relaxed impression. We're confident in this guidance and our ability to execute.
Thanks a lot.
[audio distortion]
Hello, Jorge González from Hauck Aufhäuser. I would like to go back to the free cash flow and the Spotlight. It was not very clear to me, looking into the increase of the administrative cost, if you already had a good support from the Spotlight this quarter? That will be my first question. I see that in Digital & Web and the Banknote segment, you have a strong improvement. I don't know if it's related to the catch-up in the second quarter, with the accounting of banknotes sales or if you already had a big support. That will be my first question.
We had definitely a big support from the recent program, Spotlight. You maybe can see it in the best way if you look at the EBIT bridge, on page 16. There you have operating effects, positive effects in the first half of this year compared to the first half of last year of over EUR 10 million, of nearly EUR 11 million. That, of course, is also part of Spotlight. The volume effect is lower because of the current situation, but the operating effect is even higher. That is the main driver behind the increase in profitability that we are facing today. This is also, of course, partly due to Spotlight.
Can you give us some hint of what is the run rate per quarter of savings that you are going to have from now on?
This is difficult to say because Spotlight originally was also for our financing partners, measured in a very special way. First of all, it did not show the net savings, but only the cross savings. Secondly, it was always compared to the basis end of 2023. This measurement and this calculation is absolutely correct, and it is also audited by an external expert. It is difficult to say how this translates into the current numbers that you see in the financial report, also with regards of the comparison of last year. What we prefer is to show you the direct impacts that we see on a year-on-year basis, and which you also can find directly in our financial reports.
Maybe in another way, do you have more additional savings coming in the second part of the year? Or you have achieved most of the plan in terms of.
No, we have achieved the majority of the plan, the vast majority of the plan, but we still expect some more savings in the second half of this year, the second half of 2025, due to Spotlight.
Okay, good. Following that question, I see that you have reduced substantially your provisions. This means that the outflows related to the Spotlight have been also completed. You have already paid for the.
[audio distortion]
Reviews of the FTEs and all that?
Yes, correct.
Okay. Maybe a follow-up on the North America topic, the tariffs and the order intake. Is there a way you can give us a hint or idea of where is the cycle for Sheetfed in North America? Also, I'm interested in Germany to a little bit have a clearer picture where we are. If you take, obviously, the good news in Italy, the good news in China, and I think the sales are not going to show us the clear view on where we are in North America because you have the back notes.
Sure.
We are already at a low cycle in North America and in Germany, this can improve from now on or.
In the U.S., it's just a big question. Nobody knows when or if or how it's going to develop. That's really, I think, nobody has a crystal ball and anybody who claims to know it, I think I would approach with a lot of skepticism. Germany is still weak, slightly improving. It's getting a little bit better, certainly no [audio distortion] effect there. In general, I wouldn't say Sheetfed is the largest part of our company, the reliance on the U.S. is similar to the group in general. We see the biggest impact in Digital & Web, which you saw earlier with the big digital machines, where the order backlog was down. Sheetfed is having perhaps, again, the stable development in the U.S. considering the circumstances, it's also Sheetfed that was driving the Italian and China uptick.
That's mostly coming from that paper and packaging sector. There's no business that's not doing business with the U.S. We're exposed across all of our businesses to the U.S. market. I would only repeat. I think Sheetfed is robust. Digital & Web is suffering a little bit more, again, on top of all the other topics. I think the time is up. You have one, maybe 30 seconds, Jorge, if you.
I can ask some questions later if you want. Yeah.
We don't have any questions in the call. I was just received the message, and it is exactly 12 o'clock, so we are very punctual. That was the plan. Thank you very much for joining our first half conference call for the June 30th results. It was a pleasure as for me, the first time as CEO to present the figures. Thank you for your attendance. I look forward to seeing many of you, I hope at one o'clock at our capital market today and discussing further. Thank you very much, and good afternoon. The operator, you can close the call. Thank you.
Thank you