Good day to everybody. [Non-English content] . Welcome to our presentation of the quarterly results. If we switch to page two, please. I start with a summary at Koenig & Bauer at a glance as usual. I think the first and most important message for this year is that we are well off with the Spotlight program, and in an environment where we can, despite all the international political disruptions, confirm our guidance. I think that's the most important message which we give out today. We have seasonal effects, but the guidance is still the guidance, and we are still with it. We have priced that all in. We had a difficult first quarter, but that again is nothing unusual in the Koenig & Bauer world. In the same way as the fourth quarter is always for people with good nerves.
If you look at the amount of turnover and EBIT you want to create in only three months. It has also been for a very long time that the first quarter was slightly difficult, and there is no change this year. Despite of all of these things and despite some shifts, which Stephen Kimmich will explain later, we are well on track. We are well on track in order intake. Despite the global uncertainty, the order intake year-on-year was just about comparable to the last year. It is actually rising by 0.9%. We still have the highest order backlog at the start of the year in our recent history. You'll see more details on the next page. On group revenue, we are below the first quarter due to seasonality and some explanations which Stephen will give to you.
The net working capital ratio is now in the second quarter in a row below our threshold of 35%, which we had as an internal goal. On the segments, Paper & Packaging, which is the new segment, and we start with the new segmentation this year, has a positive revenue growth and also a slight improvement in earnings and a stable order intake, whereas Special & New Technologies is slightly below the previous year. The outlook remains unchanged. We still see a slight revenue growth, around EUR 1.3 billion, and an increase in operating EBIT in a corridor between EUR 35 million and EUR 50 million. We see our tailwind from the order backlog and also the savings from its focus program Spotlight, which is in all parameters well on track.
For the financial year 2026, we also confirm that we will plan a group revenue between EUR 1.4 billion and EUR 1.5 billion with an operating EBIT margin between 5% and 6%. That target achievement will, of course, be highly dependent on the global, economic, and geopolitical development, which we'll see throughout this year how that develops. If we turn one page, there you see the figures, which I just read to you at a glance. Our order backlog is EUR 1.032 billion, whereas it was just about the same a quarter before. That remains stable. More or less we had as new order entry what we did as revenue, and you also see the book-to-bill ratio of 0.97 in the box below, expressing that as a KPI. The order intake was slightly on that level.
The revenue is EUR 252.2 million and the operating EBIT is EUR -11.4 million as compared to last year EUR -10.2 million, so just slightly below that. The details will be presented by Stephen. Some of the highlights of this quarter. We're in the middle of a generational change, which we have announced consecutively over the last three quarters. Two changes are coming up. One change is sitting right next to me. That is Dr. Alexander Blum. He joined here for the first time. This will be my last presentation of the quarterly results to you. You'll see or hear me again on the AGM on 4th of June, but it'll be my last quarterly presentation. The next will be done by Stephen in his new role as CEO and Dr. Blum as the new CFO.
Dr. Blum has joined the company on first of May, and he now has the full experience of one working day behind him, and I want to hand over the word to him of what his reading of the company and his plans are. Please, Mr. Blum.
Thank you very much. I'm very happy to be on board. Already starting in the last days, before I get officially appointed to the board of directors as of July 1st. As CFO, I've worked already over 15 years in different industries and companies. Among others, I've also been in the machinery and equipment business. A lot of things I see with Koenig & Bauer look familiar to me. I've also been board member and CFO of a public listed company, which likely will help me also in the relation that we have further on. Together with Stephen and the whole team, I'm dedicated to focus on the further transformation of Koenig & Bauer, to work on our midterm guidance, and of course, to put further emphasis and focus on the Spotlight project, which is working out quite successfully at this point of time.
After my first days of Koenig & Bauer, yes, I can confidentially say I haven't fully figured out the company yet. Kindly give me a few more days before you start grilling me. I'm looking forward meeting you in person, either during our next AGM, for example, or via the coming Capital Markets Day. So far, thank you very much. I'm really looking forward to the ongoing journey.
Yep, thank you. I will hand over my role as CEO on the 4th of June to Stephen. There is still one month to go, and one month to work for me, at least in that role. The second highlight I present, please, we go to page five, is the spin-up of the Software Innovation Hub into the Koenig & Bauer Kyana GmbH. Why did we do that? It is an extremely important strategic move to focus our resources and also in the future, the revenue on digitization and also digital products. Mrs. Wagner has been previously the Vice President of Digitalization. She has, for those of you who have attended, presented what we do in KI or AI in English and digitalization at the drupa. We want to bring this thing more to market.
We are starting with turnover. We want to expand this business substantially. We think it is the right move to move it into a separate entity to bring it out of the company. First of all, the digitization unit follows other rules than heavy metal of what we do with the rest. Secondly, we want to move and grow this company very quickly. Thirdly, the product type, which they do, the digitization product, is very special. We think the best growth chance is if they have their own environment. We did the spinoff and outsource. We are obviously the 100% shareholder of that. The next one follows that line on page six. Mrs. Wagner and her team presented our artificial intelligence approach, at the big fair, which we had together with Google.
The development with Google in this, we have been announced as the first. I do not think we are exclusive, but I think we are still the biggest industrial strategic partner in the equipment manufacturing, in Germany with Google. This is an extremely important collaboration with us. At the HANNOVER MESSE, we had a booth to show this, and that was very well received. I believe if there is one thing you will hear over the next quarters, over and over again, is the impact of artificial intelligence on our business. I hope, and I am sure that eventually you will also see that some revenue and profit comes out of it. Again, maybe not over the next quarter, but over the next year. It is certainly one of the areas where we want to grow and play a very important role in our business.
If we turn one page over, on page seven, there you see another move which goes into the direction of bits and bytes, is our strategic partnership with Siemens for our modular automation. The modular automation that we will implement in our equipment is the interface to artificial intelligence, and it is also the next generation of controls in our machines. It is very unique, again, that we combine our forces here with Siemens. We are also one of their, let us say, transforming partners. What you see here on the picture is a photo, and on the right-hand side, you see Christian Steinmaßl, who is also a new member of our management team, and part of the transformation. One page further, we come to Spotlight. Since Spotlight is closely tied to the numbers which will be presented after you, I will hand over now to Stephen, please.
Thank you very much, Andreas, good afternoon, good morning, or good evening from my side as well. As mentioned, I'll walk you through the next slides, talking more about the financial results. Starting with Spotlight, I think one of the most important messages beyond what Andreas already mentioned, that we are confirming our guidance for the full year, is that our Spotlight project is absolutely on track. To take it advance, I think the question any of you would be asking when you look at our Q1 results is, well, where are the savings? Why don't I see the savings in the P&L? I'll of course be going into that in just a second. I think the very clear message for me is Spotlight savings are there. They're here. They're the reason we achieved our Q4 guidance, which was very challenging.
We were very happy to publish such a fantastic Q4. The Spotlight savings helped us last year, and they continue to help us in Q1.
There's other things that happened in Q1, particularly seasonal issues and exchange rate issues that I'll talk about in just a few minutes, why our Q1 result wasn't better than last year. If you dig into the details, which I'm happy to talk about, the fact is our run rate in Q1 and our progress is visible, it's there to see, and you'll see it in some detail in the P&L later. We're on track. The personnel cost adjustments of just around 300 FTEs are installed, the contracts are signed, headcount is leaving the company. Hourly contracts are being reduced. The savings are there in all four business areas. If I look in detail at our Q1, we're still absolutely convinced that we're on track.
The focus we have in the company on improving profitability in Banknote, on improving the loss-making situation in Digital & Web, on improving our market leadership and profitability in MetalPrint, and reducing our structural costs in the holding. The four focus areas of Spotlight are the right challenges to be addressed and we're on path. It's our key to meeting this year's guidance and our key to meeting next year's targets, and we are fully on track. Again, I will go into more detail in just a couple of minutes on why Q1, despite the Spotlight savings, did not end up significantly better than last year. I can remind all of you, I think nobody on today's call is new to the company. You all know us very well. Q1 at Koenig & Bauer is Q1 at Koenig & Bauer.
It's often and always weak and often suffers under some seasonal effects, which again happened this year, but doesn't change anything in our approach for the full year, or in our Spotlight program. If we look at page nine, some of the figures have been mentioned, but just a little bit more detail. Order intake, in Q1 is historically also weak. Last year, EUR 243 million, this year EUR 245 million, still 0.9% up, but of course, down compared to the three strong quarters we had last year. Revenue, with a product mix, moving more to the Paper & Packaging, ex-Sheetfed area and less to the Special & New Technologies. We have some mix effects within the revenue, actually down year-on-year by 0.4%, despite having much higher backlog moving into Q1. Again, a typical Koenig & Bauer weak Q1 on the revenue side.
Again, nothing that changes our opinion on the full year. Order backlog, with the book-to-bill just around 1.0, basically in line with December 31st. Much higher than this time last year of EUR 1.033 billion of order backlog. Of course, page 10, at a very high level, all of you would be expecting Spotlight to be driving higher profitability. Of course, that is the justified and correct expectation for the full year. In Q1, we weren't successful in improving the bottom-line profitability. Operating EBIT at EUR -11.4 million, compared to EUR -10.2 million last year, just about in line. We did have some negative volume and mix effects within this year-on-year comparison. I had mentioned already in February and again in March that we were expecting Spotlight expenses, non-operating Spotlight expenses, in a low single-digit million EUR in the first half of this year.
The EUR 2.8 million for the people on the call should not be a surprise. That's exactly what we had basically projected. There will again be a much smaller number than this one, but some small amount in the second quarter, and then Spotlight is finished for the full year. We stick to our previous statements and they're coming as we had mentioned in a low single-digit million euro amount. Overall, EUR -1.2 million like for like, at a very high level group, despite having significant improvements on the cost side through Spotlight. Why is that? I would like to point out the second bullet point on this page, and I would frankly almost read it because it's probably the most important message in the entire presentation.
Even though Spotlight achieved the planned savings, we had temporary effects of around EUR 5 million in the segment Special & New Technologies, which is where the most of the focus is in Spotlight, Banknote, MetalPrint, and Digital & Web. These temporary effects of EUR 5 million will be recovered in Q2, Q3, Q4 of this year. There were two primary drivers. There was a EUR 2 million exchange rate impact in Q1. You'll find that under other income, other expenses in the P&L, that because of our successful hedging of the U.S. dollar and euro in Q1, we can already firmly forecast that this negative impact of [Non-English content] EUR 2 million will be corrected throughout the next three quarters.
EUR 2 million is FX and EUR 3 million was a seasonal project phasing issue, also in Special & New Technologies, particularly in our Banknote business, that we had a roughly EUR 3 million EBIT shift from Q1 into Q2, that will and has certainly arrived. Again, main message, EUR 5 million of EBIT in Q1 is pure phasing and will be recovered throughout the rest of the year. If we had published today around a EUR 6 million year-on-year improvement, or I am sorry, EUR - 6 million or EUR - 5 million instead of EUR - 10 million. I think all of you would understand we are fully on track to show the year-on-year improvement that we are showing in our guidance.
This quarter of EUR 35 million -EUR 50 million that we are targeting, if we were showing each quarter around a EUR 5 million improvement, we would be fully on track. We know internally we are.
We also know that on a bottom line, you are not seeing it in the P&L in Q1. Again, please do not judge Koenig & Bauer on a Q1. It is our most difficult quarter. Please understand the importance of us confirming our guidance for the full year and the fact that many of these effects in Q1 were simply phasing issues that will be recovered throughout the next three quarters. I repeat myself a couple of times, but I think it is important that everybody understands where we are coming from. On page 11, you see the full P&L. Again, it is Q1. As a CFO, again, showing a negative EBIT and net losses to start the year. It is no surprise. It is the way we start our years. We dig ourselves into this hole that we then in the next quarters have to climb back out of.
In detail, we know we are online. We had negative volume and mix. You see that in gross profit. Research and development, which is a very big focus of Spotlight, as all of you know. One of our other messages in Spotlight, it is not just cost out. It is focus on go to market and less new development, new products, broader portfolio. The reduction in R&D expenses you see here in the P&L from EUR - 16 million last year to EUR - 10.6 million this year, I think is a clear indication that Spotlight is working. The same you see also on the sales side, where we are reducing distribution costs, particularly on the fixed cost side in sales expenses. Administration costs are a little bit more necessary to explain. We see a year-on-year increase despite Spotlight.
Here we can confirm the Spotlight savings are in, you will see this throughout the rest of the year, that we will show year-on-year reduction of administrative costs. Please remember that last year we had not really kicked off full speed on the Spotlight program, some of the consulting expenses started in Q2, and we still had some Spotlight expenses in Q1 this year-on-year. I think you are all aware of the generational change in the board and in the management structure that leads to a slight increase Q1 over Q1. For the full year, I can only repeat, in all of our fixed cost blocks, R&D, distribution, and administrative costs, you will see year-on-year improvements, also administrative expenses in the coming quarters or for the full year.
It's a mixed picture, I understand, explaining only at a very high level group is sometimes not enough. We have to go into more detail, and I'm happy to answer any detailed questions about that in the Q&A sessions. Otherwise, interest results slightly down, which is good news. EUR -6.6 million down to EUR -6.4 million. Also here, you can expect that the interest expenses year-on-year will continue to drop because the European Central Bank has obviously reduced interest rates throughout the last 12 months, as well as improvements in our leverage ratio in the last two quarters, which drives a lower interest rates with our banks. Interest results slightly better than last year, you can expect this trend to improve over the coming quarters. Overall, of course, net loss, as a CFO, never good, but very typical for us in Q1.
Free cash flow on page 12. Yes, we had negative cash flow in Q1. Also here, no surprise. This changes nothing on our guidance we've given to you in the past that we're expecting positive cash flow for the full year. I think it's clear to anybody that covers industrial companies that after the very strong Q4 in sales and revenue, that we spent Q1 placing less, or we had less revenue in the income statement, therefore, obviously, we're spending our efforts increasing inventories, increasing finished goods, preparing for the sales to come in the coming quarters. The increase in net working capital on a euro basis quarter-to-quarter. December 31st compared to March 31st, we had an increase in net working capital. I would like to focus on the good news, 24.1%.
It's now the second quarter in a row that our net working capital level is below our long communicated midterm target of maximum 25%. We still have net working capital fully under control, but it is necessary purely from our seasonal operating model that in Q1 we spend more efforts in our factories as opposed to at our customers preparing the next deliveries, and that's the nature of our business. Overall, we still have a very strong focus on net working capital management. For the full year, again, to repeat myself, we still see Koenig & Bauer on track for a full year positive cash flow. Page 13, you see the details on the net working capital that I just mentioned verbally.
The increase quarter-on-quarter from EUR 294 million net working capital at the end of December, increasing to EUR 306 million in Q1, EUR 12 million increase in net working capital. I repeat, it's still an incredible improvement year-on-year, down from EUR 362 million a year ago to EUR 306 million this year, although we're projecting revenue at a similar level for the full year as we did last year. We continue to make great improvements in our net working capital management. You see on the top right, inventory is at EUR 422 million. Yes, they're slightly up. I can only repeat, it's because of our seasonal operating model that our Q1 is more in plan as opposed to at the customers. Year-on-year, a EUR 51 million reduction in inventory shows that we're absolutely heading in the right direction.
At the end of the day, purely looking at March 31st, it was a reduction in our net financial position from EUR -128 million to EUR -158 million, but overall for the full year, on track to recover, particularly in the second half of the year. I think you see the details on page 14 to the points that I just mentioned. The free cash flow, negative, particularly due to changes in inventories, receivables, and other assets, at EUR -19.3 million as just discussed. This is simply us preparing for the strong quarters to come. Otherwise, I think just minor points, the cash flow from finance activities, the EUR -11.7 million. We reduced our credit lines that we had withdrawn from our banks. That helps us in reducing interest expenses, and is generally a good sign that we feel comfortable with our cash management for the coming year.
We were able to return roughly EUR 11 million to our banks last quarter. Page 15 on the balance sheet. I think there's no other points specifically to mention. We talked about inventories, and we talked about, of course, the negative net income driving the reduction in shareholders' equity ratio. As mentioned, this is simply Q1, and will recover in the quarters to come. Page 16, moving into a little more detail. This is the first quarter where we begin to publish in the new segment structure. It's important to us that the organization is driven by these two new segments that are very much market-oriented, market-focused. Paper & Packaging Sheetfed Systems, replacing the previous Sheetfed segment, in addition to the previous Sheetfed segment, including the corrugated business for the corrugated Sheetfed machines.
Special & New Technologies, including these heterogeneous business units outside of Sheetfed, and the first time we published the results in these two segments. You see that now on page 17. The format is in the same as what we've shown in the previous years with the three segments. I think good news that Paper & Packaging Sheetfed, which again is very similar to our previous Sheetfed segment, continues to be stable in its operating performance. Revenue was slightly up year-on-year. We did have a regional mix and product mix. I think you'll see that in the backup, that we're simply selling or bringing into revenue fewer U.S. machines and more China machines. We have a negative regional mix in terms of margin. It's very good news that, Sheetfed ended last year. Q1 was also weak.
We ended the year with a strong result and a strong Q3, Q4. Paper & Packaging Sheetfed continues to show this robustness in its business model, that we expect, with a EUR -0.1 million operating EBIT in Q1, we're at least off to, for the segment, a strong start in terms of, again, having a profitable year, and profitable coming quarters. We're again a stable business, and we have strong order backlog, and is moving along. Special & New Technologies is obviously a little bit more difficult to explain. At a high level, we see a drop in revenue. I can repeat what I said earlier, you'll see in the backup also that we kept our promise to the Capital Markets, that we continue to report Digital & Web as an old segment for the coming quarters for the sake of full transparency.
You will clearly see that Digital & Web is also down on revenue year-on-year. We also, as mentioned, had a shift in a banknote service project from Q1 into Q2. Otherwise, we would've been able to publish higher revenue in this segment. For the segment at roughly EUR 8 million lower revenue, operating EBIT at a very small EUR 900,000 improvement. As mentioned, we have the Spotlight savings in the segment. They are there, they are real. We were unable to compensate, number one, the missing revenue in Digital & Web, and we were unable to compensate this missing service project in banknote. If the banknote business would've been here and the FX had not happened, that EUR 5 million impact that I mentioned earlier, you would've seen entirely in this segment.
Again, if I was publishing or explaining a EUR -6.1 million Special & New Technologies today compared to a EUR -12 million last year, I think all of you would be happy and fully convinced that we're on track to meet our full-year target. That missing EUR 5 million due to the EUR 2 million FX effect and the EUR 3 million missing service project that will be recovered, really explains our entire gap to what are probably or likely or should have been your expectations for the single quarter in that segment. Again, we're confident we'll be showing this improvement in the quarters to come. We'll simply keep pushing for it and reiterating our commitment to show you the improvement in that segment in the months to come. On page 18, I think obviously a hot topic that we would expect questions about.
How do we see at Koenig & Bauer the impact of the trade wars and the punitive tariffs coming from the U.S. and expanding throughout the world, also affecting China and tariff policies throughout the world? I think there's a few very important major messages. Number one, these potential U.S. tariffs don't only affect Koenig & Bauer, they also affect our major competitors, predominantly based in Europe, but also Japanese competitors or potential Chinese competitors that are just as affected as we are. We don't see any issue in market share or in competition. The big question is what happens to a potential decline in demand in the U.S. market? Because again, economics 101, as we discussed in the past, higher pricing due to tariffs will drive demand down. I think it's no surprise that we'll confirm that we see that.
We do see weaker demand in Q2 coming out of the U.S. than we would've hoped for in a normal environment. That's nothing that worries us about calendar year 2025 too much. It does expose us to some risks in this calendar year. Predominantly, it's more of a question for how will it affect 2026. As we're sitting here today, I think nobody really knows. We're all hoping the trade wars will be short and resolved quickly. I think, again, here the real question is what happens to a potential decline in demand of the U.S. market, and how could that affect a 2026? How could a U.S. trade war affect demand in regions outside of the U.S., such as China or such as Europe? Are we able to compensate a decrease in U.S. demand in other regions? That's the big question.
Again, we feel comfortable with our 2025, and that's why we reiterate our guidance for this calendar year. North America's, of course, an important market for us. We're working hard. I think the other very important message is that our order backlog in the United States, including also our large banknote orders from the United States, we consider to be absolutely secure, and that the tariff risk or the effects from the tariffs have been successfully passed on to the customers. Our customers will take over the cost for the tariffs. That statement is valid for our entire order backlog. That's a very good news. It's not an issue for us in order backlog. It's not an issue for us from service and from spare parts. These are all things that we can manage.
The big elephant in the room and the big question that nobody can answer is what happens on the demand side going forward, and how will it affect 2026? I think, again, the main message is for 2025, we consider the risk to be very well managed. Nothing can be eliminated completely. There are still some orders coming out of the U.S. that we need for our revenue in Q4 this year. Overall, we would consider the risk in this year to be managed and manageable. The risk for 2026 is the big question. That leads me to page 19 as the last page. Despite our Q1 only being in line with prior year, we still are on track and absolutely confident that we will achieve the full year improvement in our operating EBIT in the range of EUR 35 million-EUR 50 million.
We confirm our guidance. We know the Spotlight savings are there. We know they're real, even if they don't show up directly in the P&L in Q1. They are in the P&L, and if we didn't have them, the quarter would've looked even worse because of the phasing effects I just mentioned coming out of banknote business. We know that for the next three quarters, we're on track. Therefore, we're confirming our guidance and are confident that we're on track for both the revenue target of [Non-English content] EUR 1.3 billion and the operating EBIT in our guided range. Of course, this is all under the assumption that the world doesn't go even more crazy in the next nine months. We will see what happens throughout the world. We know that our operating measures and operating management are on track to make this possible.
Under the current assumptions, we still see as ourselves on track for our guidance in 2026 of somewhere around EUR 1.4 billion-EUR 1.5 billion, and with the additional Spotlight measures, an EBIT margin between 5% and 6%. Of course, this guidance is under a little bit more of a risk profile or a lot more risk profile, compared to 2025, because we simply don't know how much the trade war will escalate or not escalate. Will it resolve itself? Will it become worse? Will it become better? Obviously, I think every company in the capital goods sector and the industrial sectors is fighting the same assumption. What happens in demand for 2026? As of right now, we still feel comfortable we're on track for both the sales increase and further EBIT improvements as we've been promising for the past quarters. That's it from my side.
I think it's a lot of information and perhaps also a lot of questions. I hope the main messages came across that we're confident we're on the right track, and we keep pushing. I would hand over to the operator for Q&A.
We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their telephone. You will hear a tone to confirm that you have entered the queue. If you wish to remove yourself from the question queue, you may press star and two. Questioners on the phone are requested to disable the loudspeaker mode and eventually turn off the volume from the webcast while asking a question. Anyone who has a question may press star and one at this time. The first question comes from Stefan Augustin from Warburg Research. Please go ahead.
Yes. Hello, gentlemen, and welcome, Dr. Blum. The first question is actually on the EUR 2 million FX effect.
Could you just simply outline, how this is exactly constructed and the thinking, what happens if the U.S. dollar right now in the second quarter would actually go down into the direction of one again? Would there be a negative effect, or is that simply baked in and is also the full, let's say, banknote orders until their end, completely hedged? That would be the first question.
I'm very happy you asked the question, because frankly, we have a very good answer. I hope that the markets also understand how important the answer to this question is. We have in Q1, in February, when the dollar was around $1.03, $1.04, we have successfully executed a hedge for our entire U.S. dollar revenue for the coming two and a half years.
Of course, you pay a premium. The actual dollar was $1.035 or something like that, our hedge is higher than that, a couple basis points higher than that. We've executed a hedge at exactly the right moment. I'm really proud of our treasury team for their work. We have the dollar hedged at a very attractive dollar rate for the coming, say, through the end of 2026 is certain, depending on how much the revenue is, the amount is. It's a question of how long it lasts, that's the good news. The consequence of that hedge, however, is that the December 31st books were closed at a course also of a dollar course of around that $1.04, right?
Our hedges, I think I don't want to publish the exact number, our hedge is somewhere between $1.04 and $1.10, right? We have premium on that $1.03. We have a balance sheet reassessment March 31st at the hedge course. We had to reevaluate all of our receivable, our dollar receivables on March 31st at the hedge course, which was higher than the December 31st course. That cost us this EUR 1.8 million in revaluation, in our EBIT in Q1. That's unrealized. It's just a bookkeeping issue. That drives this EUR 2 million roundabout negative effect in Q1.
In the coming three quarters, we know exactly how much dollar revenue we're going to do and what our benefit from the hedge will be, that's going to roughly even out in the next nine months that we're going to have a positive effect from our hedging in the next nine months to outweigh this one-off. That's realized effect, by the way, to offset the balance sheet revaluation on March 31st. It's actually a very good news, to be honest, that led to this negative EUR 2 million impact in Q1, because we have really secured our dollar business for the foreseeable future at a very attractive rate for Koenig & Bauer.
I am glad you asked the question, and it is a little bit technical from a finance side to explain, but again, it is great news that the dollar, frankly, if it weakens to [ $1.15 or $1.20], that is probably even a benefit for us because it gives us a chance to renegotiate other contracts, despite having hedged for a long period of time. It is good news and glad you asked the question.
Yes. Thank you. Just again, on the end of June, if we have another depreciation, we have another revaluation of the remaining receivables at that time, and can we still have then, the temporary effect?
No.
Technicalities.
It was only one-off because it was the revaluation December 31st unhedged compared to March 31st hedged. We executed the hedge in February 2025. This year, we executed really when the dollar was at its strongest. Sometimes you have to be lucky in life. We got a little bit lucky that we picked exactly the right point to hedge, exactly when the dollar was the strongest in February. It only affects Q1 and going forward. March 31st is valuated at the hedge course, and going forward for the coming quarters, everything will continue to be valued at that hedge course.
Okay. Great. Thank you very much for that one, and congratulations on the good hedging. As a follow-up, you mentioned, and I just want to clarify if I understood that correctly. You have agreed also with your banknote clients in the U.S. on a risk pass-through of the tariffs. Is that right?
I think I would answer that indirectly because we don't talk about specific customers or individual projects. I think the statement was our entire order backlog is covered with pass-through of tariffs.
Okay, great. Thank you. In the cash flow Q1, is there any significant amount of Spotlight cash out in there?
Yes, there is. I will follow up with that with Lena Landenberger because we haven't published that figure yet, and I don't want to shoot a number in the room. We had mentioned that on December 31st, we had roughly EUR 17 million of cash out to come, and certainly a portion of that was in Q1 this year. We haven't published the amount yet. I take that as homework. You can clearly. The EUR 17 million divided by four would be the minimum, what you would expect in this first quarter. Again, I don't want to throw a number in the room. We'll come back, but it's somewhere in that low single-digit million euros range, is what it would be in cash out in Q1. Landenberger , we'll follow up with that, and we'll consider if we publish it quarter by quarter going forward.
I can only repeat the EUR 17 million is the full year effect, and some of that did fall in Q1.
Okay.
I meant to correct myself. The EUR 17 million was the open amount. A small portion of that hits 2026, a very small portion. How much is in Q1. We have to consider how we publish.
Good. You mentioned something on the regional mix. Respectively, you said there is a negative regional mix due to less U.S. and more China business. I wonder if you would keep that statement, if I ask you, does that imply that a Sheetfed machine sold to China has a lower margin than the Sheetfed machine sold to the U.S.?
I think the answer to that is, it's difficult to say directly. I think there's two mixed effects happening. One is, it's not just that you have less U.S. machines, it's that the U.S. is our largest customer for large format machines. I think everybody knows large format is one of the big business drivers for our Sheetfed segment. Less U.S., more China, doesn't necessarily imply lower margin on the individual machine. It implies a negative product mix within the region, because we're selling a lot of the basic standard, sorry, bread and butter Rapida 105s with low automation. That the product mix in Asia is more towards the commodity machines and less towards the highly specialized, high output machines that we would sell in the U.S. It's not necessarily a regional issue in terms of like for like, the same product in different regions.
I think we're not commenting on one region is better pricing than the other or such. That's not the case. It's more that the mix within the regions is better in the U.S. than it is in Asia or in a developing market.
Okay. Fully understood here. The last one is actually a little bit looking at the segments. If I look at the slide 17, I recognize in the first quarter 2024 that these are exactly the same numbers, as in the reporting last year. I wonder, can I read into that actually the complete Digital & Web is fully in the Special & New Technologies, and there is more or less nothing moved into the Paper & Packaging Sheetfed Systems?
It's a different answer that it's only about the corrugated business. The corrugated business involves Celmacch. We said Paper & Packaging is Sheetfed old plus corrugated. Corrugated is Celmacch, which is not consolidated, since we're the 49% shareholder. Corrugated involves that Chroma X Pro machine out of Würzburg. Basically, assumption is in Q1 2024, there was very little activity in that area in the Digital & Web segment. There will be differences going forward. You will see it. Perhaps we're still working a little bit on that year-on-year comparison. I think the main message is Paper & Packaging is basically old Sheetfed. There will be some minimal differences you'll start to see, but corrugated, which is for us strategically very important to move into Paper & Packaging, is largely non-consolidated because it's run through the Celmacch business. That we'll work on.
We also have to practice a little bit with the two new segments and making sure we're explaining it correctly. I think you understand. We hope to start consolidating Celmacch in the coming two years, but until then, we'll have to figure out how we explain our progress in the corrugated business, despite it being non-consolidated.
All right. Cool. Thank you very much for all these answers.
The next question comes from Jorge González from Hauck Aufhäuser Investment Banking. Please go ahead.
Hello. Good afternoon. Well, first I would like to thank Dr. Pleßke for all these years, helping us to understand better the company. One welcome to Dr. Blum, and I wish both of them all the very best. On the results, I would like to start with the order intake. I'm quite interested to understand better the dynamics, by region, and how, for instance, tariffs are hitting North America at the start of the year. Especially, what I want to understand is the trends, if we can compare the second quarter, the next months to come with last year, or you are expecting a completely different dynamic, maybe North America to worsen in Q2. How you see the development of the year? How we need to model the demand for the next quarters, if you think Q3 is going to be more important?
What can you tell us in terms of the seasonality for this year, please?
Sure. It's a very difficult question than we expected. Because the crystal ball is clearly a little bit cloudier on order intake in the regions going forward than in, say, normal times. I don't want to avoid the question, but it really is a tough question. I think we openly already said that we see demand weakening in the U.S. It's clear. It's not that we're losing projects, and certainly not that we're losing market share or customers are canceling orders. We don't have any canceled orders. What we do see is simply delayed decision-making, that customers are simply saying, let's wait and see what happens with the tariffs and delay the order. That's going to have an effect in order intake. There's no other way to work around it. Right now we see it predominantly limited to the U.S.
China is also a little bit weaker, due to the uncertainty. We have a big China Print trade show, which is a every two-year drupa in China. That's in May. And create some demand in Asia, Koenig & Bauer is, actually the entire industry is presenting. It's similar to a drupa for the China region. We're hoping that's going to give us some impulses. Banknote remains, I think we've always said despite the high order backlog, we still see a great pipeline. That's pretty much independent of any macroeconomic trends because it's governments making the decisions. We still expect strong banknote. Digital & Web is, with its RotaJET and HP, very much also dependent on the U.S. Again, I don't want to avoid the question, but you're specifically asking about seasonality on order intake. It's tough. I think Q2, you can't expect any miracles.
We had an incredibly strong Q2 last year, particularly in S&T, if you look at it, EUR 225 million. That was driven by single off orders in banknote. That can't be your measuring stick for S&T. Paper & Packaging this time last year, we had drupa, we had a strong EUR 180 million. That, we might be able to reach again. We simply don't know. What we do know is we have a very strong order backlog, we can hold out several quarters, and still maintain operations in a normal way. We're hoping that the trade wars are resolved quickly. We're also confident that we're doing everything possible on finding alternative regions or alternative markets and getting machines placed in the market. Again, please, I don't know how other companies are answering that question.
I would be skeptical of any company that tells me they know what's going to happen on order intake coming out of U.S. in the next two quarters. We're not that brave, or we're more serious about it and say, we simply don't know. Demand is weaker, what that means in numbers, you have to wait and see. In the meantime, we do everything possible to manage it.
I understand that, with the backlog that you have at this point now, the record backlog, you don't have any expectation of reduced production during the year, not even in Q4, no?
I would hedge that with Q4 is always a little bit of risk towards the end of the year, the next two quarters, I would answer that question definitely with a yes. We're fully utilized and running at full speed. I don't see any risks in Q2, Q3. There's always a couple of orders that we need for revenue in Q4, particularly in the POC, the percentage of completion business units that have a much smaller gap, the order intake and revenue. There's some small risk in Q4, but overall, again, we feel comfortable with 2025, and what it means for Q1 and beyond, it's simply too early to tell.
Okay. Do you see any momentum improving in Europe that maybe compensating for.
We do. Absolutely we do. We do, particularly in Germany. There is increased demand. We are placing orders, Europe in general, it's coming from a weak couple of years, we do see some strengthening.
Okay. Finally, can you update us on how the project for the printing components for batteries is ongoing? Is there anything new that you can tell us?
We have published shortly before Christmas in an ad hoc, that we are aiming for a proof of concept together with Volkswagen in the middle of this year. If I look at our timetable, I would confirm that statement. We are aiming for a proof of concept in the middle of this year. If we achieve that, this will be an extremely important milestone. It's one of the things where we are not affected by tariffs or if so, positively. It's mostly an upcoming business for Europe and for de-risking by Volkswagen. Let's press our thumbs and bring to the R&D department that this thing turns into turnover in 2026. We are on the way. There's still the development risk. It's a new thing. It is still there. So far, you don't see me frightened.
Good. Thank you very much, both. I go back to the line.
Thank you.
The next question comes from Peter Rothenaicher from Baader Bank AG. Please go ahead.
Hello, gentlemen. I would be interested in a little bit more background on the different markets you are in the Special & New Technologies segment. Order intake in the first quarter in the segment remained on a relatively low level. Were there some special developments affecting one of the other areas, perhaps banknote weak order intake? How do you see this? Is there some special development in?
I think it's just a typical Q1. I mean Q1 last year you see was also quite weak at EUR 76 million. Especially when technology is dominated by the largest business is banknote, the second largest is Digital & Web, and the third largest is MetalPrint. Those are the three dominating businesses in that segment. Banknote again, has a fantastic order backlog. It's simply a business where you don't have huge orders every quarter. The three strong quarters we had last year is atypical for the business. We're very happy that it happened. We never get nervous by one or two or even three weak quarters in banknote. Now we had one weak quarter. My God, that's really nothing unusual. Frankly, again, I repeat, we see a strong pipeline in banknote.
For Q2 moving forward, you can expect us to continue to publish order entry in the banknote business. Digital & Web, I think you see that in detail in the backup. The order intake in the top line continues to be weak, we know that. We had order intake slightly down over previous year, EUR 17.4 million as opposed to, I think, EUR 24 million last year. Yeah, EUR 24.5 million. This is something we know. It's why we're doing Spotlight. The whole point of Spotlight in Digital & Web is to reduce the break-even point of the business and prepare ourselves for the revenue at the level it's at. The order backlog of EUR 109 million is roughly in line with last year. Last year, we ended at EUR 160 million in revenue.
We're targeting around EUR 180 million for break even, as we've mentioned in the past. We do need some more orders, but we're working hard on it, and of course, the issues in the U.S. don't help. Digital & Web is more a cost issue where we're cutting costs, cutting staff, cutting personnel, and the order intake is at least around the level we expected. Of course, we would be happy with one or two more orders, but it is what it is. Our focus there is on the cost side.
Regarding the market potential for the RotaJET, anything new here? How do you judge this for the next one, two years?
We have more projects than ever before in terms of working with a customer on potential projects, they're not turning into order intake the last couple of quarters. We have one really nice project in Q4 that we announced. I think that's in our Q4 or our year-end publication that we've placed an order that was driven by a brand. A brand drove through their project the investment at our customer, the converter. We are booking specific projects, but it's still too difficult to say. It is specialty machinery building, and the projects simply have long project times between talking to a customer and coming to an order. Nothing new to update. All of this market uncertainty, it just simply doesn't help. Actually, I mentioned already we have examples of projects that are being delayed. The decision is being delayed.
Oh.
There was one big RotaJET project that we hoped to book in Q1 in the U.S., that decision was delayed. The project's still alive. It's still out there. We're hoping to book it simply is what it is. We have to keep pushing.
Regarding Spotlight, you indicated that you're looking perhaps to finish some of the activities in Special & Webfed. How much on revenue impact might this have in 2025 and 2026?
Which activities? I think I didn't understand the question exactly. We don't have any activities that should decrease revenue. The only real revenue risk is.
Well, I understood that with the Spotlight program, you're looking on every product which might sense to continue or to discontinue. I would have expected that this might have perhaps some impact that you are losing some revenues to avoid bigger losses.
Mr. Rothenaicher, I think your question was about Spotlight impact on revenue. If you could just repeat your question.
My impression was that every project, every R&D project, et cetera, will be checked if it makes sense to continue it. My question was if there is some impact on the revenues in 2025 and 2026.
No.
From the discontinuation of projects?
No. That's a clear answer, absolutely not. We discontinued, for example, the CS MetalCan that was not playing with any revenue in this year. Those were the only canceled projects that were promising revenue in future years, but they have been doing that for several years. There's no impact from any discontinuation of product lines or discontinuation of R&D projects. There's no impact on sales or revenue targets in 2025 or in 2026. That's definitely a clear no.
Okay. Thank you very much.
The next question comes from Johannes Ries from Apus Capital GmbH. Please go ahead.
Yes, good afternoon. Some follow-on questions from me. First, maybe how has Celmacch developed during this year and what do you expect for the full year? That's maybe the first question. Let's do step-by-step, the questions.
Sure. If you look at the market data, the corrugated business is the weakest of all of our markets, whether you're looking at offset or Flexo or commercial. From all of the addressed markets, the corrugated business is suffering the most. Despite that, Celmacch has been able to maintain profitability throughout all of the years since we acquired them. The market growth hasn't been what we had expected. I think these mega-mergers that you're aware of, the Smurfit WestRock and the DS Smith International Paper, just the general weakness has at least hurt us a little bit on our growth perspective. We're incredibly happy with the business. Again, Celmacch has maintained profitability throughout the last three years.
Okay. Secondly, on Kyana, I really like what you do, Sam. Can you give us a little more data about this new company? How many people you took over? Any idea maybe how important this business could go forward? I really like this because I think Ms. Wagner has really done a great job, and I was really impressed last P&P by the presentation. Maybe if you can add one or two, that we have a feeling how big this attempt is with this own company on your digital activities?
Sure. I'm glad to hear your opinion on Sandra Wagner, because obviously we share. She's doing a fantastic job, and she's really an absolute diamond in the industry for her energy and for her representing Koenig & Bauer. I think there's two parts to your answer. I'm not going to give you today a revenue target on Kyana the next three or five years. We're still working on it, but we do see potential for it to be an absolute relevant contributor to the company. The good news is, it's not an R&D project. We're in business. We have customers. We have installed machines that are buying Kyana products. This is a business that recurs. As we get more and more machines online, it becomes more and more relevant, and Sandra Wagner is doing a fantastic job.
The decision to spin this off into a separate GmbH is for exactly that reason. We saw this as move from an R&D development project into a real revenue bringer where we can start generating sales, the business is simply different. It has a different agility, a different speed than our core business, and therefore, we need to get it into a separate GmbH with its own rules. Sandra Wagner and her team can be moved more dynamically. Today, it's only around 20 people. It's not a huge business. It's not just about the 20 people you have internally. It's all about the partners. We work with Google, we work with Tessitura, we work with Coca-Cola. You've seen some of the announcements the past years. Sandra Wagner does a fantastic job of leveraging partnerships, and that's the way this entire industry works.
It's not about how many people Koenig & Bauer has. It's about how we get, called the digital ecosystem, I think, is the new way to talk about it. How to get the digital ecosystem managed and moving. It's 20 people fully dedicated to this business, which is an investment. It's a team. They're powerful, and they're moving, and we're really confident. Again, I don't want to avoid your question, but I also don't want to answer it. What revenue target do we see in the business? We understand we're going to have to put that number out there sometime, but we're not there yet.
Ladies and gentlemen, that was the last question. I would now like to turn the conference back over to Dr. Andreas Pleßke for any closing remarks.
Thank you for covering us and being with us. I personally hope to see you on the 4th of June if you make it. If you don't make it, as usual, we broadcast the first half of the AGM through our Investors channel. Otherwise, as I said, it's the last time I participate here in that round. I can say that at the end because it sounds better at the end of a career than at the beginning. I enjoyed speaking to people who cover us, and I enjoyed speaking to investors, and I enjoyed speaking to analysts to explain to you the business. I like this environment a lot because you know what we are doing. There are so many shareholders who are, let's say, a little bit more distant.
I think you're the perfect translator as the analysts to understand our business and help us to also be performing in the future of the capital markets. My thanks goes to all of you for being here, for covering us, and I wish all the best in this round of the quarter results to my colleagues, and hope to see you one more time at the AGM. Have a good day.