Good afternoon, ladies and gentlemen, and I warmly welcome you to the earnings call of TAKKT AG. Following the publication of the first half year figures of 2025, I'm delighted to welcome CEO Andreas Weishaar and CFO Timo Krutoff, who will speak in a moment and guide us through the presentation and the results. Kindly note that you're not able to speak during the presentation, but afterwards we would be happy to take your questions via the audio line or chat in our Q&A session. With this, let's start. We are happy with the first six months and I hand over to you, Andreas. Unfortunately, we cannot hear you.
You should now be able to hear us.
Absolutely.
Okay, thank you. Great.
With the technical stuff out of the way, let me go again. Welcome everyone and thank you for joining us for our quarter two earnings call. This is the first call I'm hosting together with our new CFO Timo Krutoff, who has joined us three weeks ago. Timo, I'm very happy we have you on board. I very much enjoyed your onboarding and our close collaboration over the last few weeks. I look forward to jointly continuing our work on implementing our TAKKT Forward strategy and improving our performance sustainably in the coming months and years. Timo, over to you for a short intro.
Thank you, Andreas, and a warm welcome to all of you. Also from my side, I'm very happy about the opportunity to head TAKKT's finance, functioning as CFO for at least the next three years. I'm especially looking forward to get to know you and discuss your view on TAKKT, our outlook and our strategy today and in the coming months. First, I want to very briefly introduce myself. In the past, I held several management positions in finance in the thyssenkrupp Group. These included being CFO of Presta Camshafts, which is now Dynamic Components, and after that, the CFO and CEO role at BILSTEIN. In my last role, I was the CFO of the engine manufacturer DEUTZ. I have industry experience in the automotive and service area and adjacent segments. With that, a hopefully good understanding about how our customers operate and what's relevant.
In addition, I've successfully led finance organizations in turnaround situations and developed and executed transformation programs. I am convinced that I can add value and make a difference at TAKKT. I see a lot of potential in our group and Andreas and myself together with the team will work on realizing these potentials. For now, back to you, Andreas.
Thank you. Timo will present our detailed financials later on. First, I want to give you an overview on where we stand with our financial performance, our TAKKT Forward strategy, and how we're adjusting to the challenging environment. Before we talk about quarter 2 performance, let's look at the bigger picture. As you have seen, we adjusted our full year outlook on Tuesday last week. This is due to the continued market weakness and the persisting economic uncertainty with the tariff situation and other topics. We sell equipment to business customers. In the current environment, the willingness to invest in the business or even to replace products is quite limited. We remain committed to our strategy. We're making good progress on the performance measures and also with our commercial initiatives. Yet we do not operate independently from our environment. Let's have a closer look at quarter two.
We already expected another challenge. Our quarter 1 performance at the end of April, both due to the tariff impact and due to internal topics still playing a role. While the initial very high level of tariffs was adjusted to lower values in May, there was no lasting solution to the tariff dispute in quarter 2 , creating continued uncertainty. More on that in a moment when we take a closer look at our markets. For top line performance in Q2, it was slightly better than in Q1 with a -5.7% organic sales development. This was overall in line with our expectations in April. I&P and OF&D performed similarly to Q1, while Food Service saw a strong improvement and achieved slightly positive organic growth. This was versus a very weak quarter two at Food Service last year.
Thus, overall a continuation of the top line stabilization we have now seen for four quarters in a row. On gross profit margin, we were half a percentage point below prior year at 39.2%. We cautioned against the potential tariff impact on gross profit margin in our Q1 call. Looking at Q2, we see that we did a good job with the price adjustment we put through in our U.S. activities, but we still saw an impact from increased freight costs, especially after the U.S. and China agreed on a tariff pause and imports picked up again. Given the lower top line and the gross profit margin impact, we had a weak profitability with an adjusted EBITDA margin of 3.6% in Q2. We are intensifying our performance measures to improve profitability both short term and midterm. More on that in a few minutes.
On free cash flow, we saw a cash out of EUR 4.3 million after a cash in of the same amount last year. This is mostly due to the lower level of earnings in quarter 2 and we also still have relatively high inventory levels as our U.S. businesses placed larger import orders after the U.S.-China Tariff Agreement. In addition to cost management measures, we're focusing on cash generation in the second half and expect a turnaround and positive free cash flow in the remainder of the year. To give you some background, let me talk about the environment. We've already touched on the macro picture, and these are topics you're all familiar with. Just to summarize, despite the tariff pause which was announced in May, there remains relevant downside risk from the trade and tariff situation. Due to this, our customers remain very hesitant to invest in their business.
While the very recent agreement between the U.S. and the EU might reduce the level of uncertainty, it is still a notable headwind for export-oriented customers, especially those of our I&P division. There is still no longer lasting agreement between the U.S. and China. Looking at the GDP growth, we see very limited growth in Europe with a 1.0% growth rate in the Eurozone and pretty much a flat development in our home market. In Germany, U.S. growth is only slightly better at an expected 1.5% for 2025 and showing a quarter-on-quarter slowdown this year. Looking at our industry trends, we also see headwinds. The PMI for the manufacturing sector has increased over the course of the first half of the year, but remains in contraction territory just below the 50-point threshold.
Typically, we see an improvement in the PMI reflected in our order intake with a delay of between three and six months. We'll have to wait if this will materialize. So far, sentiment has improved, but the willingness to spend and invest remains dampened. Looking at another data point, we see the negative sales trend in German manufacturing to continue and job cuts versus prior year accelerating from -0.5% to -1.8%. This is from an Ernst & Young report for quarter one based on statistical data. Quite a difficult environment for many of our customers. This impression is also supported by what we are hearing out of the market from peers and competitors, especially in Germany. There are several market participants who are currently seeing double-digit declines in the relevant product categories, and we're also seeing similar numbers on B2B marketplaces.
Compared to these numbers, our current performance at I&P is a bit better than what we see in the market. At the same time, we had a weaker year last year due to the internal topics, so the base might be a bit weaker for us. Switching over to the U.S., we're seeing a lower demand for office furniture indicated by a significantly lower online search volume for office furniture keywords. Investment decisions are postponed due to the challenging and volatile environment, especially in the U.S. B2B office furniture market. We, as well as fellow market participants, see continued impact from much lower order numbers and order volumes from federal government customers in our office furniture business in OF&D. This is related to the efforts from the government to significantly cut government spending.
Customers in the healthcare and education sectors are partly impacted as well, and we record lower order numbers in the first half of the year from them as well for the Food Service activities and relevant indicators. For the Food Service activities and relevant indicators, we see the Restaurant Performance Index fluctuating around the 100-point threshold with some readings below and some slightly above the 100-point mark. This suggests flat development for our customers and with that only limited demand for our products. This then leads to a slight contraction in the U.S. Food Service market in quarter two with key challenges from tariff disruptions and overall cautiousness from customers due to the economic and policy uncertainty. Having a closer look at the environment of our customers, we see restaurant traffic expected to decline about 3% year- over- year in 2025 and an increase of restaurant closures here.
Smaller and independent restaurants are affected disproportionately, while Western chains proved to be more resilient. All in all, both a challenging macro environment and also a difficult situation on our markets limit customer demand. Let me now give you a brief update on where we stand with our TAKKT Forward strategy and what we're currently working on. On focus, our objective is to build on our strengths and unlock the full potential of our most profitable businesses. Here, we have streamlined the TAKKT AG and IP organizational structure. This included a refocusing of our operations group function, where we implemented regional logistic teams, bringing them much closer to the regional divisions and customers. We have also made good progress on evaluating and further exploring strategic options for our display solutions business. This business has shown promising operational development in the last few months.
We're still evaluating several options, and we'll keep you updated as soon as we have concluded our view on growth. We are working very diligently to scale our business with larger customers who have more complex procurement needs. We increased the number of customer visits to operate closer to the strategic purchasers and end users. We're seeing promising results out of that, and we're on the right track looking at our U.S. activities and Food Service in particular. We see good results out of our focus on integrating spare parts into our product range and rolling out targeted marketing approaches for these products. We're seeing promising results here, with realized sales above expectation, so overall, we're on the right track, and we will continue with our growth initiatives. However, the impact of these initiatives is impacted by the current economic environment.
As I said, we're building the foundation for future growth, and we expect our initiatives to pay off sooner rather than later. The third topic, we're putting an even stronger focus on improving our performance and in accelerating our cost and cash management measures. These include both structural improvements as well as adapting our spend to lower demand. With these measures, we will realize mid-term savings of at least EUR 30 million. More on that on the following slide. Let's now look at the performance measures that we're working on as part of our TAKKT Forward strategy. Given the limited potential of top-line improvements in the current environment, we're stepping up our efforts to improve profitability and cash generation.
Our activities include both structural changes, which will positively impact our efficiency and profitability in the medium term, and adjustments of our spend to the lower demand we now expect for the second half of the year. Let me give you an overview of the most important initiatives that are already underway. We're improving our sourcing with a more strategic approach, for example, by bundling volumes at fewer vendors. We're reducing the complexity of our assortment with a rigorous 80/20 approach. We've already made progress with improvements in our freight and network setup and continue to push for more. This should help us to increase our efficiency and reliability in fulfillment, saving costs, but also improving customer experience. At the same time, we have several measures in place to increase our efficiency in marketing and other costs.
This includes improvements in online marketing, but also further evolving our go-to-market approach with our omnichannel activities. We're implementing improved processes and systems and will make use of automation and AI to increase efficiency in our core business. I&P. We have implemented a new operating system and are building up a shared service center. We're expecting substantial improvements in customer experience, but also cost savings out of this. More on that in a moment. In addition, we have set up our drive performance initiative and have identified measures to substantially cut non-essential spending and accelerate structural cost improvements across all relevant cost positions. Out of these measures, we expect full-year savings of at least EUR 30 million over the midterm. As mentioned earlier, the second focus topic is cash.
You have seen that we had a cash out of EUR 9.3 million in the first half after a very strong cash performance last year. Timo will give you more insights into the development of the last half year in a few moments. Prior to this, let me give you an overview on what we're working on the balance of this year. The biggest impact in H2 should come from a reversal of changes in net working capital. We will substantially release inventory that we built up due to the tariff situation. We continue to work on improving payment terms and expect lower days sales outstanding, which also add to our free cash flow in the second half. In addition, we're currently evaluating other options to generate free cash flow contributions.
Out of these, we think we can add another EUR 30 million and with that compensate for the higher cash out from increased one-time costs this year. As you can see, we're quite active with cost and cash management and expect both short-term and long-term improvements out of these measures. Let's now have a closer look at our core business I&P here. We've already talked about our new operating model in our capital markets update end of March. We've made progress and started in the implementation phase. Let me briefly summarize what we're doing here. Our future setup in I&P is threefold. First, we will outsource recurring and transactional activities to an external partner. This includes tasks in order management and also basic financial functions, among others. This will increase flexibility and lower our cost base. Second, we're currently building up a competence center in Hungary.
There we're both building up additional capabilities, for example in IT automation and AI implementation, and we're shifting sound, supporting and back end functions over to the shared service center from our local activities across Europe. With centralized shared service center operations, it is easier to implement state-of-the-art processes and systems and increase efficiency with standardized workflows. The third pillar is our core functions. These are tasks that really add value to our customers and that allow us to differentiate ourselves from competition. It also includes steering and oversight for the division. With the outsourcing shift into shared service centers, we're establishing an environment where we can put all our attention and focus on how to best serve our customers. To summarize, we are streamlining our organization to increase customer focus. We're using state-of-the-art digital processes and are removing manual and transactional tasks.
We're improving processes, systems and technologies with the help of established external partners and increasing flexibility. The full implementation of the new model is expected to take around one year midterm. This will allow us to realize material run rate savings contributing to our target of EUR 30 million. With that, over to Timo for a more detailed view on our financials.
Thank you, Andreas. Let's have a closer look at our performance for Q2 and the first half year. Starting with the TAKKT Group and the view on the last quarter, sales came in at EUR 240.3 million, down 7.7% compared to prior year. On reported sales, we continue to see the portfolio impact from the divestment of MyDisplays at the end of last year, accounting for - 0.6%, and with the much weaker U.S. dollar we saw in Q2. We now also had a negative foreign exchange impact of - 1.4% on TAKKT level after positive effects in Q1. Adjusted for those impacts, organic growth was at - 5.7% as Andreas mentioned before, a slight improvement and continued stabilization compared to Q1 despite the challenging environment. Let's continue with EBITDA development. Reported EBITDA was significantly below the previous year at EUR 5.7 million after EUR 13.2 million last year.
This is mostly due to lower top line with an impact of around EUR 8 million. Gross profit margin was at 39.2% compared to 39.7% in prior year. We've talked about our countermeasures to the tariffs in detail in our Q1 call and we've been quite successful in passing on price increases to customers while the U.S. business, so we hardly see any direct tariff impact on gross profit margin from higher cost of goods sold in the U.S. What we are seeing is still an impact of freight costs at the U.S. divisions that we also saw in Q4 of last year and Q1, and we also faced temporarily higher freight costs after the tariff agreement between China and the EU. Everybody placing orders they had held back led to constrained capacities and somewhat higher prices.
Overall, we are in line with expectations and the guidance range with a gross profit margin, and we expect to see a gross margin improvement in the second half compared to the low level of H2 of last year. On costs, we continue to realize savings on personnel while marketing and other costs remained flat. On personnel, savings would have been even higher if not for a positive effect in the prior year for release of provisions for bonus payments. So the EUR 1.3 million savings would be closer to EUR 4 million if we really look at it like- for- like. One-time costs mainly from personnel changes were lower than last year at EUR 3 million compared to EUR 4 million last year. Out of the implementation in the new I&P operating model, we expect significantly higher one-time costs in the second half.
The profitability on adjusted EBITDA was at 3.6%, therefore 3 percentage points below prior year where we were at 6.6%. The lower profitability was due to the decline in gross profit margin and higher cost ratios. Of course, this is a profitability level far below where we want to operate the business. As Andreas explained in detail, we have implemented a broad range of cost management measures and expect positive effects out of these both short and midterm. Let me then continue to the year-to-year review in the first half of 2025. I will keep the comments a bit shorter here since developments are often the same for Q2 and the first half year. In total, sales were at EUR 491.7 million and with that 7.1% lower than prior year on reported sales. Positive FX effects from Q1 and the negative Q2 impact cancel each other out.
The portfolio impact from the divestment of MyDisplays was - 0.4% in H1. Adjusted for those impacts, organic growth was at - 6.7%. All divisions unfortunately still with a negative development. I&P and Food Services more stable with mid single-digit decline while OF&D was down low double- digits in percentage terms. Let's now look at costs and profit in the first half year. Reported EBITDA was EUR 16.9 million compared to EUR 29.9 million in the first half of 2024. On the EBITDA bridge, you can see this is mainly a result of the low top line with a EUR 15 million impact but also due to lower gross profit margin with a EUR 5 million impact. Of the EUR 20 million lower gross profit, we compensated around EUR 7 million with lower spend on marketing, personnel, and other costs. One-time costs were EUR 4 million compared to EUR 7 million last year.
Adjusted EBITDA margin is at 4.3% after 7.0% last year. For the full year, we are working to increase profitability and expect a slight improvement compared to H1. Let's now continue with the performance on the divisional level and first with our core business industrial and packaging. Andreas has talked about the continued weak market environment in Europe. The manufacturing PMI has shown a positive trend but we are still below the expansion threshold. Top line performance in Q2 has been virtually the same as in Q1 with organic growth coming in at minus 5.7% in the first half. Looking at our different regions, we see Switzerland and the Nordics holding up relatively well and more or less on prior year's level. Germany, with a stronger export orientation of the economy, and also France are more difficult currently with a double-digit decline in H1.
Looking at profit, gross profit margin remains below prior year by 1.2 percentage points and impacted by the commercial decisions to be a little more aggressive on pricing. In addition, we also saw higher freight costs out of price increases at I&P. Still, we are at comparably high gross profit margins at I&P at more than 42% adjusted for one-time expenses. Costs were similar to prior year at I&P, so the cost savings we pushed through were counteracted by higher expenses for some commercial initiatives and transformation-related costs, as for example for tech and consulting. One-time costs were lower this year at I&P with EUR 1.4 million. After EUR 3.3 million on adjusted EBITDA, we generated a margin of 8.9% compared to 12.2% last year, so a significantly lower profitability compared to prior year due to the profit margin lower cost ratios. Let's now move over to the U.S.
activities starting with our division Office Furniture and Displays . On reported sales, we saw the impact of the MyDisplays divestment here with a - 1.9%. For organic growth, we were at - 12.6% for the half year and saw a slight improvement from Q1 to Q2. Displays2Go performed slightly better with a high single-digit organic decline while NBF was down in the low double digits. In our office furniture business, we are facing several headwinds at the moment. First is an overall weakness to business office furniture sales due to the degree of uncertainty and the tariff impacts. CEO confidence indicators show relatively low values in recent months and this translates to a lower order volume. In addition, we see the impact of reduced efforts in orders from federal customers, which are down more than 40% year- over- year.
In addition, as Andreas Weishaar mentioned, this is also impacting our sales in the healthcare and educational sector. On profit, as expected, gross profit margin was below prior year but still on a good level at 43.1%. The lower gross margin level was to a large part a conscious decision to adjust the very high margin to a more competitive level. In addition, we still see an impact from higher freight costs here at NBF. On costs, we are doing a good job compensating a large part of the lower absolute gross profit, so we managed to keep cost ratio stable when we adjust for one-time costs. These did not have much of an impact in H1 with less than EUR 1 million and was that also slightly below prior year despite the good cost compensation.
We are of course not on the profitability level we want to achieve with our OF&D business. Let's now look at Food Service starting with the sales development here. We saw a return to positive organic growth in Q2, and with this also a significant improvement compared to Q1. We continue to head in the right direction here after a very difficult year at Food Service last year. It's also true that we are running against a very weak base in Q2, so we have to wait and see how the coming months will develop. Looking at the profitability side, on the gross profit margin we improved to 28% versus 26.6% last year. Here we had a slight negative impact from tariffs in the second quarter. On costs, we see marketing, personnel, and other costs on prior year's level.
In H1, marketing was impacted by an increased focus on selling products on marketplaces. Here we see good growth opportunities. Personnel costs are impacted by the rebuild of our sales teams that we talked about in our last calls. We are still missing top line given our current cost structure. We are currently operating with a negative adjusted EBITDA margin. In H1, we stood at - 0.7%, very similar to the - 0.6% last year. We are working on improving profitability at Food Service and expect to return to positive margins soon and also for the full year, but obviously still a way to go to substantially improve our profitability in this business. Let's now continue with cash generation for the group. Cash flow before change in working capital was substantially lower than last year at EUR 11.4 million. This is a consequence of lower EBITDA in H1.
Looking at changes in working capital, we significantly released working capital last year. This year, we temporarily invested in working capital. A large part of that was high inventory in the U.S. divisions, first in preparation of the tariffs in Q1, and now after the agreement to lower tariffs between especially now here U.S. and China, we again placed larger orders to suppliers overseas. We also saw an impact of lower fee payments. We typically receive these in connection with larger orders and project business, and with customers being very hesitant to commit to these projects. We are also seeing million compared to cash in of EUR 14.1 million mostly. Consequently, operating cash flow was much lower than last year at EUR 2 million. CapEx was slightly lower than last year. Payments of lease liabilities didn't change much. In total.
This led to a free cash flow of -EUR 9.3 million in the first half of this year. Andreas talked about the cash measures we have implemented and are executing in H2. We will secure a cash turnaround and return to positive free cash flow in Q3 and Q4. The focus point of our efforts will be a substantial release in inventories, but we also work on a visible improvement in DSO and expect this to positively contribute to the free cash flow. A quick look on our balance sheet. The biggest change here compared to year end 2023 came from the dividend payment of EUR 38 million in May. Together with the negative free cash flow, this led to an increase in net financial liabilities to EUR 151 million. A third of this is consisting of lease liabilities.
Compared to 12 months ago, you can see we are on a very similar level with our net financial liabilities. Equity ratio is now at 55% and with that still towards the upper end of our target range of 60%. We continue to operate with a very solid balance sheet in this challenging environment we are in. That is a key strength for us and allows us a high degree of flexibility and independence. Let me conclude my comments on our financial performance or my personal view in the group. In the past three weeks I got to know a very dedicated team here at TAKKT that is driving the transformation and working diligently to improve the commercial side of the business as well as our financial performance. We have a very attractive business model, a loyal customer base and our market position provides a lot of opportunities.
In addition, there are a lot of aspects we can improve on. This is what motivates me to take over the responsibility for TAKKT in the CFO role and that's what I'm working on together with the team to deliver. We are very focused on improving profitability and cash generation in the coming quarters and midterm. I'm looking forward to keep you updated on our progress here. With that, back to you, Andreas.
Thanks, Timo. I've talked about our environment and our performance measures in detail at the beginning of this call, so I'll be a little briefer here. As far as the overall economy is concerned, we see persistent uncertainty around the tariff situation that is affecting investment decisions and order behaviors of our business customers in our markets. We see good demand in some areas, for example from customers in defense, but this is not sufficient to compensate for the weakness in other segments. Looking back at our expectations in April, there's both good news and bad news. The good news is that the direct tariff impact was less pronounced. We reacted quickly and managed to limit the impact on our gross profit margin. The bad news is that we saw and will most likely continue to see a substantial indirect impact.
Yes, we now do have an agreement between the U.S. and the EU. While this makes it easier to plan ahead for customers at I&P, it is still a substantial headwind, especially for German manufacturers. What we have seen in Q2 and to some extent expect to continue to see is the indirect impact of tariffs. Impediment indicators are improving. We remain cautious and we'll have to see if and how fast this translates into our order intake. July so far looked better than the previous months, but as I already said, it's too early to declare this a continuing trend yet. In the U.S., we see a slowdown of GDP growth which is expected to continue into the second half. The biggest topic here is the uncertainty and impact of cost increases being passed on to consumers on overall demand.
In addition, we also see very restrictive government spending which is affecting our NBF business. Specifically, Q3 is traditionally the most important quarter for this customer segment. We will see how this develops in the coming months. Let's then talk about what we can influence and what we're working on. High priority is on the continued implementation of our TAKKT Forward strategy and here specifically on our performance measures. This includes the implementation of our new I&P operating model and the build up of a shared service center approach. We have already made good progress here and expect to shift additional tasks from other European locations to the center in the coming months. This will lead to additional one-time expenses, but also already to realized savings in H2. Given the lower top line, we're accelerating our cost management measures in H2.
I've talked about what we're working on earlier in the call. This includes both structural improvements that we're implementing, for example in sourcing or with our processes and systems in IT, and it includes adjusting our spending to lower demand for all relevant cost positions. In addition to cost management, we prioritize cash measures. Timo already talked about our initiatives to structurally improve our cash conversion cycle. While there's a lot of focus on costs and cash, we also continue to execute our commercial initiatives. We see promising results. While the impact of these measures currently is not enough to compensate for the weak environment, we are making progress here and are building the foundation for future growth.
By putting our customers at the center of everything we do, we specifically focus on bright spots where we see the most potential, for example in defense, infrastructure, and life science, and we will continue to focus on customers in these markets. Let's now come to our expectations for the second half of the year. We have updated our outlook last week. Due to the continued weakness in our markets and the high degree of volatility for top line development, we now expect an organic growth rate between -9% and -2%. This implies that we no longer expect a significant improvement in the second half compared to the first.
I've already mentioned that order intake in July was better than in the previous months, but we're now entering a time where order intake is relatively low over the summer break, so the development in September will be much more relevant and we see both downside risks and upside opportunities out of the environment. The guidance range remains relatively broad for the moment given the lower top line. We have also updated our profitability expectation and now guide for an adjusted EBITDA margin between 4% and 6%. We expect positive impacts out of the measures we have implemented and identified. This will partially compensate the lower gross profit in H2 and should lead to a slight margin increase in H2 compared to H1. For free cash flow, we're working on substantial improvements in H2.
We will reverse the negative cash out of EUR 9 million and expect to generate free cash flow in the low to mid double-digit million euro range. This will come out of structural improvements with the reduction of five to 10 days in our cash conversion cycle, and we are evaluating additional opportunities for cash contributions to compensate for the higher cash out from one-time expenses. Two additional comments on what we expect for the second half: we saw the negative FX impact on reported figures in quarter two. This will most likely have an even bigger impact in quarter three and quarter four. Reported sales and reported EBITDA will be impacted by the lower U.S. dollar, and reported EBITDA will in addition be influenced by higher one-time costs than last year.
For the full year, we expect one-time costs similar or somewhat higher than the EUR 17 million we incurred last year. Before we come to the Q&A, let me briefly take an even broader perspective on where we stand and talk about my view on TAKKT as an investment. I was convinced of TAKKT's potential when I took over the CEO role one year ago, and I'm even more convinced that we are on the right track 12 months later. Our current financial performance is not where we want to be. We have a detailed and convincing strategy that we're executing to improve our financials. I'm seeing progress in many key metrics, but in the current environment it takes time for our measures to fully gain traction. At the current level, I'm also certain that we're an attractive investment.
With our continued implementation of the TAKKT Forward strategy, our results will improve. Success remains in our hands. To summarize the investment proposition, we have a clear portfolio focus addressing attractive markets with high margin potential. We've made progress in strengthening I&P as core with the buildup of the shared service center approach and will take additional steps in the future. We operate in a market-leading position with repeat and long-lasting customer relationships, offering opportunities to grow with our customers and beyond. We have shown our resilience in EBITDA and cash generation in the past and will return to performance already in the second half of the year.
We follow a clear strategy and roadmap underpinned by targeted investments in our capabilities and new execution focus, an extensive and continuously growing sustainable offering providing further growth opportunities, and we combine our track record of attractive and reliable dividends with a shareholder-oriented capital allocation. We're happy to take your questions over to the operator for the Q& A.
Thank you so much, Andreas and Timo, for your presentation and the dive into your first half year.
Dear participants, we're now open for your questions, and to keep this conversation engaging, we kindly ask you to ask questions in person via the audio line. To do so, just raise up your virtual hand, and if you have dialed in by phone, you can use the key combination star key nine to enter the queue, followed by pressing star key six to unmute yourself. If you're not able to speak freely today, you can also submit your questions in the chat box, and we will read them out for you. Let's have a quick look in the line and in the chat, and by now we have the first virtual hand from Christian Bruns. Please go ahead with your questions, Christian.
Yes, hello. Let me start. First of all, good to have you on board, Timo, and I would like to look forward to meeting you in person. I hope that there will be a possibility in the next weeks or weeks to come. My first question is on your transformation or on your shared service center. I think that you will have massive layoffs then in maybe Stuttgart, and I also wonder about the build up of the staff in Hungary. I just wonder what you can say about your talks with the works council, the employees. I know also that it is difficult in such times to keep employees happy and motivated. I know that TAKKT also looks at net promoter scores for customers as well as for employees. Are you confident to manage this without demotivating the existing staff? That's my first question.
Thank you very much, Christian. To answer your first remark, of course there will be the opportunity to also closely engage with Timo over the coming weeks and months. As far as your question is concerned related to our shared service center buildup, this is an approach that we're pursuing focused on three priorities. First and foremost, we set out to better serve our customers. In order to do this, we need internally to upgrade our systems and processes, moving currently manual tasks into automated, artificial intelligence-enhanced processes. Freeing up capacity from employees to not do transactional manual tasks, but moreover really provide value as they are really focused towards our customers. This will imply a change in the profiles of many jobs, and this will also mean that activities—there will be new activities created, new jobs created, there will be activities that are changing.
Yes, you're right, there's also activities that will no longer be performed within the current location. They may be either fully automated or they may move to shared service center, captive or non-captive. What is important is that first and foremost, as I mentioned, we do this to increase our customer focus, which will even further elevate our already very solid and very good cNPS score. The second element I want to highlight is if you listen to our employees, they will tell you exactly that, namely that our processes are sometimes too cumbersome, activities are still too manual.
Right?
We have embarked on a very constructive dialogue that is ongoing with the works council to find an appropriate way forward and solution that will be respective of all parties.
Okay, good to hear that. Maybe can I add a follow up question because I did not, I'm not sure if I got it right. Do you expect a positive EBITDA margin for the Food Service division for the full year? I was not sure if I heard that correct,
Chris.
My answer is yes.
Okay. I step back and let others ask. Thanks.
Thank you for your questions, Christian. By now there are no further questions. At this point, just a reminder, if there's still open topics you would like to discuss, just let us know. Andreas and Timo explained everything so well. In the meantime, we come back to Christian, so just move on with your follow up questions.
Sorry. Okay. If there's no one else, then I of course take the opportunity. You said that order intake in July was better than in the previous month, if I listen correctly or if I heard that correctly. You also took that in perspective that August is not the most important month, but September is more important nevertheless. What do you mean with better than an improvement in order intake? I mean, I think your order intake is most of the times, I think it's only one or two weeks duration until the order is executed. Does that mean you had a better start in or do you expect a better start in August or is that too much?
We're book and turn business, right, as opposed to book and bill with long lead times. What we're seeing for the first couple of weeks in July, and as you can imagine we're tracking this very closely, is that compared to prior months year- over- year, we're performing overall better, right, but still slightly negative.
Okay, so that fits into the picture of the course of the year, I think.
Yeah, right. What I would say is right, you know, two dots are aligned, three dots are a trend. What we're seeing is a good development.
Right.
We are tracking it really closely division by division. August usually is a period where sales go down due to the summer vacation period.
Right.
We're seeing some of that coming as we outlined. It will be September, also considering government season in the U.S. That would really watch me careful.
Thank you. Maybe a follow up on your U.S. business and looking at your inventory, I think you stepped up inventories also with regard to the tariffs there. Is that right? If you look at the working capital movement, is that you ordered more from Asia to sell it in the U.S. in the first half of the year, is that right? Or is there also inventory build up in Europe?
Timo?
I can do that.
Yes.
It's indeed mainly in the U.S. I mean there is a little bit in Europe. It's seasonal anyways, we've seen as well. The main reason really is yes, we were very cautious on what was going on in the tariff situation, especially between the U.S. and China. As soon as that was, can't really say solved, but you know, postponed or we were sure what we could do. After a while we did build up inventory. Again, you need to know that our incoterms mean that as soon as it latest hits the ship, it's our inventory. There was a very quick effect from us doing the orders until it hit our books. That's why it was already then in the June numbers and therefore in the first half year.
Okay, good to hear. I have currently, I have no.
No further question.
Maybe now we started the discussion and there are others hopefully.
Thank you so much, Christian. By now there are no further questions, so if there's a last one you would like to ask, just please go ahead.
No, I really have no further question. I would like to get into discussion with Timo and of course also with Andreas in person as I said before. That would be nice if you could arrange that in the weeks to come or in the months to come. At least I wish you all the best.
Thank you.
Thank you. We will do, and looking forward to it.
Okay, thank you.
I hope you have a lot of questions by then.
I'm sure. Bye.
Thank you so much, Christian. Everything seems to be answered by now. This means we come to the end of today's earnings call. Should further questions arise at a later time, please feel free to contact investor relations. A big thank you to you, Andreas and Timo, for your detailed presentation and the time you took today. From my side, it was a pleasure to be your host today. Have all a lovely remaining week. With this, Andreas, I hand back to you for some final remarks which concludes our call.
Thank you for your time and interest in TAKKT and thank you, Christian, for your questions. Our next earnings call will be on October 28. We will keep you updated on any progress and look forward to talking to you individually. In the meantime, have a great day.