Ladies and gentlemen, welcome, and thank you for joining the ElringKlinger Group Q2 2023 Earnings Call. At our customer's request, this conference will be recorded. All participants will be in listen-only mode. After a short presentation by Mr. Thomas Jessulat, Spokesman and CFO, there will be a question and answer session. If you would like to ask a question, you may press star and one on your touch-tone telephone. Please press star and zero for operator assistance. I would now like to turn the conference over to Thomas Jessulat. Please go ahead, sir.
Ladies and gentlemen, I welcome you to our earnings call on the second quarter of 2023. We have already published preliminary quarterly figures on July 11th via an ad hoc announcement. With today's publication, we confirm them. Over this earnings call, I aim at providing a more detailed look into the results from the second quarter, and first, I will start with some headlines on the second quarter, then discuss the financial figures, and close with a few forward-looking remarks on the current financial year. At the end, you will have the opportunity to ask questions, and I am pleased to answer them. First of all, the second quarter saw improvement in important macroeconomic conditions when compared with the situation a year ago. Global GDP was slightly in the black, mainly driven by China and India.
However, macro challenges such as inflation and restrictive monetary policy curbed the economy in other regions, such as Europe. Inflation generally lost some of its dynamics in the first half of 2023, but it is still above the 2% target of the ECB. Last week, the ECB and the Fed each implemented yet another interest rate hike. At the same time, supply chains are more stable than one year ago. We are also seeing a stabilization on the raw material side, and when it comes to market price developments of several key raw materials that we are using in production, in addition, energy costs are down on the prior year, which is also visible in our margins. Both international vehicle sales markets and global vehicle production saw a marked upturn in Q2 compared to the previous year.
Light vehicle production benefited from improved supply-related factors, as well as the low prior year base. Production recovery in the key regions like Europe, North America, and Asia Pacific was reflected in the double-digit percentage growth rates. In China, production output picked up significantly after manufacturing activities there had been severely affected by lockdowns due to the pandemic in the previous year. As with our successful start into this year with the Q1 figures, we're able to improve sales and earnings performance visibly in the second quarter of 2023. Sales revenues increased to EUR 467 million, and that is an increase of 9% compared to the second quarter of 2022. Given that global light vehicle production rose by 11.2% in the first half, organic group sales were on market level in the first six months of 2023.
Adjusted EBIT came in at EUR 24.8 million. Adjusted EBIT margin for the group was 5.3% in the second quarter of 2023, which is a strong improvement compared to the 0.4% adjusted EBIT margin in the prior year, Q2. With the sales growth, the working capital level was also elevated on the previous year, while the net working capital related to sales remained flat at 28% on Q1 and the second quarter of 2022. Operating free cash flow was in positive territory at EUR 3.7 million, as in the prior year, Q2. With net financial debt at EUR 380 million, the ratio of net financial debt to EBITDA improved visibly compared to the end of June 2022.
Given the good first half of 2023, we confirmed the outlook for fiscal year 2023, as well as our midterm outlook. The second quarter was also a successful one for ElringKlinger in terms of nominations. We received significant orders that were also disclosed via official announcements. Starting with the classical business areas, we received new business in areas resulting from a strong market position. For example, an order for a valve cover for a global OEM, including a volume in the double-digit EUR million range. Second, transformation is continuing as originally classical business units use their know-how for e-mobility products, and they generate substantial new business. For example, we have just announced last week an order for metal battery housings to be used in commercial vehicles and city bus applications.
This order will be executed by the Metal Forming & Assembly Technology business unit, formerly Shielding Technology. Additionally, we have received a serious production order for battery housing components from a major global battery manufacturer. Third, there are new mobility products to be supplied by our e-mobility business-... driving transformation of the group. For example, we received a high volume order for cell contacting systems for the BMW Group's Neue Klasse. This order has a term of several years and will ramp up from 2025. Orders in 2023 also included a large volume, serious production order for the supply of bipolar plates by ElringKlinger Plastic Omnium, EKPO. These orders confirm the path of transformation chosen by ElringKlinger, and be sure there's more to come.
On slide number four, you can see that nominations like these move us forward on the path of transformation. In total, the nominations which we have received since 2021, for applications in the new drive technologies, amount to a total volume of around EUR 2.5 billion. Nearly two-thirds of the nomination volume relate to our e-mobility business, which includes the units drivetrain, battery technology, and fuel cell technology. In these units, we offer future mobility products like fuel cell stacks, bipolar plates, and other fuel cell components. We have the joint venture, EKPO Fuel Cell Technologies, battery systems, battery modules, and battery components, like the cell contacting systems, and last but not least, electric drive units and components. In addition to our e-mobility business unit, the originally classical business units have also won significant orders for e-mobility products, as outlined before.
All in all, you see that ElringKlinger is successfully pursuing the process of transformation. Coming now to the financial figures. Starting with orders and sales on slide number five. Considering the recent large-scale nominations in battery and fuel cell technology, it should be noted that order intake and backlog only comprise the order book, recording the short-term orders by customers placed as part of their scheduling arrangements, not the nomination volume over the respective remaining contract periods that is yet to be executed. Looking at the recent development of order intake and backlog, the order situation returns to normal levels. After the order intake showing pent-up demand related to the coronavirus pandemic in previous quarters, the order intake in the first half of 2023 was roughly on par with the pre-COVID levels.
Currency effects only had a slight impact on order intake in the second quarter of 2023. Against the backdrop of relatively high revenue and low order intake, order backlog also changed. Order backlog stood at EUR 1.35 billion, and this was below the high level of the previous year, but above the average of the past years, and also significantly above the pre-COVID figure at the end of 2019. Sales performance was significantly improved. We increased sales in Q2 by 8.8% to EUR 469 million. Given currency headwinds of EUR 8.8 million in the second quarter, there is organic growth of 10.9%.
Looking at the first half of 2023, revenues amounted to EUR 956 million, up by EUR 91 million or 10.5%. ElringKlinger Group recorded organic sales growth of 11.5% in the first six months, which is on par with the development of global light vehicle production over that period. On slide number seven, we see the sales performance of the different segments and business units. The original equipment segment is on track for growth, with nearly all business units increasing revenues in the second quarter of 2023. Lightweight Elastomer Technology, being the largest business unit, increased sales to EUR 149.3 million.
Metal Sealing Systems & Drivetrain Components, as well as Metal Forming & Assembly Technology, were able to report higher revenues than in prior years' second quarter, now amounting to EUR 126.4 million and EUR 73 million, respectively. The e-mobility business unit reported sales of EUR 10.9 million in Q2, which is up against the figure of the first quarter of 2023, but lower than the EUR 14.1 million in Q2, 2022. Coming now to slide number eight. In the second quarter of 2023, the group expanded revenues in all regions. Let me elaborate on the 3 main regions.
The rest of Europe, being the region generating the highest revenue within the group, recorded the strongest growth, with revenues that increased by EUR 16.4 million or 12.7% to EUR 145.8 million. Adjusted for currency effects, the increase was even pronounced at 14.6%. In Germany, revenues were up EUR 6.5 million or 7.4%. Sales in the Asia Pacific region amounted to EUR 83.9 million. That equals around 18% of group sales. Adjusted for foreign exchange effects, revenues in this region were up 12.3% in the second quarter. In the region comprising North America, revenue grew by 8.3% to EUR 120 million in the second quarter of 2023.
Foreign exchange effect on revenue in North America were only marginal. Let us now have a look at the earnings on slide number eight. After a second quarter last year, that was primarily influenced by energy and material cost inflation, the effects eased in the quarter just ended. Therefore, we could record a significantly improved EBITDA for the group, amounting to EUR 46.8 million, after EUR 26.7 million one year before. Adjusted EBIT in Q2, 2023, amounted to EUR 24.8 million, with an adjusted EBIT margin of 5.3%, markedly better than last year's Q2 with EUR 1.8 million and a margin of only 0.4%.
Growth in the group sales, again, translated into visible earnings growth, and in terms of adjusted EBIT, the positive effect of operating leverage was EUR 13 million compared to Q2 2022. Concerning raw materials, the positive effect of EUR 11 million, now a big step towards the cost level from 2021, and first and foremost, due to the effective negotiation results of our sales teams. For energy and logistics, the purchasing situation was better than in 2022, as I have previously mentioned. Further, ramp-up costs in the strategic future area of fuel cell technology, as well as in a new plant in North America, totaling EUR 2 million, affecting the adjusted EBIT in Q2.
Net finance cost in the second quarter was -EUR 5.3 million. Given the hike seen in market interest rates, interest expenses were higher than a year ago, resulting in higher net interest expense. In addition, contrary to Q2 2022 exchange rate developments led to a lower net foreign exchange rate result. Taking net finance costs into account, earnings before taxes in Q2 amounted to EUR 11.4 million. After deducting tax expenses and taking into account non-controlling interests, the share of the net income attributable to our shareholders amounted to EUR 2.4 million. Therefore, earnings per share amounted to EUR 0.04 in Q2. On slide number 11, we take a close look at CapEx, net working capital, and operating free cash flow.
At EUR 17.4 million, capital expenditure and property, plant, and equipment was up from prior-year Q2. Among others, CapEx flows were directed at manufacturing facilities for new SOP ramp-ups planned within the global production network. CapEx included projects aimed at aligning the product portfolio with the e-mobility market as part of the transformation. The investment ratio stood at 3.7% in the first quarter of 2023, after 3.2% in the first quarter of the previous year. Given the strong sales growth in the period under review, accounts receivables expanded year-on-year in view of cost inflation, as well as the tense situation seen for some raw materials. Inventory was adjusted accordingly. Irrespective of this, inventory levels also expanded in view of the group's sound order situation.
Net working capital totaled EUR 529 million at the end of Q2, expressed as a percentage of revenue for that 12-month period, its share was 28%, slightly up from 27.9% a year earlier and flat on the Q1 2023 figure. Regarding operating free cash flow, less capital was required for inventories and trade receivables than in the preceding quarter, and therefore, operating free cash flow was in positive territory at EUR 3.7 million, comparable to the prior year Q2. Slide number 12 now shows the net debt. The group was able to reduce net financial debt by 2.4%, or EUR 10 million year-on-year to now EUR 380 million, despite the higher funding requirements for the group's operating business in terms of net working capital.
The net debt to EBITDA ratio was 1.9 as of June 30th, 2023, markedly reduced from 2.5 one year earlier. Let me now turn to slide number 13, showing the performance of our segments in terms of sales and adjusted EBIT margin. As mentioned before, the OE segment continues its growth path. Both sales and earnings were improved compared to the prior year Q2. This mainly reflects the fact that the group was better able to absorb negative cyclical and sectoral factors, such as elevated energy and material costs in the second quarter. The adjusted EBIT on the OE segment was positive at EUR 3.4 million. Sales were up 6% compared to Q2 of the previous year. The aftermarket segment successfully continued its growth strategy in a very strong business cycle and delivered again, an outstanding EBIT result.
Already from a high revenue base, the segment managed to expand earnings compared to the same quarter of the previous year, now amounting to EUR 75.6 million. The aftermarket business generated an adjusted EBIT of EUR 19 million and an adjusted EBIT margin of 25.1% in the second quarter. The Engineered Plastics segment was able to extend revenues by a 2.5% to EUR 32.7 million in Q2. As regards to earnings, a combination of higher staff, material, and energy costs exerted pressure on the segment performance compared to the same period last year. Adjusted EBIT amounted to EUR 2.5 million from April to June, 2023. Having said this, let me provide some remarks on the market and the current financial year.
As I have already outlined in the beginning, the car market, and thus light vehicle production, is influenced by several geopolitical and macroeconomic factors. The global economy is expected to see weaker growth of 3% in the current year, according to the latest estimates of the IMF. Despite an improvement in the first half of the year, strict borrowing terms, inflation, and supply-side conditions that are not yet considered entirely stable, together with geopolitical uncertainties, continue to pose considerable risks for the automotive sector. According to recent projections by S&P Global Mobility, the global light vehicle production is expected to grow by 5.3% to 86.7 million vehicles this year, still below the pre-COVID figure of 89 million vehicles produced in 2019.
While the projections were lifted compared to the April projections, the most significant increase in production is likely to have occurred in the first half that just ended. The second half of the year is expected to trend sideways on a global scales after a strong first six months of 2023. Against the backdrop of the general uncertainty and volatility still evident in the economy, ElringKlinger confirms the guidance for 2023 on the basis of its first half results and current market assessment. Accordingly, we continue to expect its organic revenue growth in 2023 as a whole to be significantly above the rate of change in global light vehicle production. As for an adjusted EBIT in 2023 as a whole, the group expects a margin of around 5%.
The outlook for the remaining key indicators is also confirmed as well for the medium-term targets. Having said all this, I'm happy to take your questions. Thank you very much.
At this time, we will begin the question and answer session. Anyone who wishes to ask a question may press star one on their touch-tone telephone. If you wish to remove yourself from question queue, you may press star two. If you are using speaker equipment today, please lift the handset before making your selections. Anyone who has a question may press star one at this time. Our first question comes from Akshat Kacker from JPM. Please go ahead.
Thank you. Good afternoon, Akshat from JP Morgan. Three from my side, please. The first one on outperformance and growth over market. I want to ask specifically on the Auto OE division. I think in the first half of the year, Auto OE revenues have underperformed auto production slightly. Just want to check what your expectations are here for the second half, as S&P now expects production to be roughly flattish year-on-year in the second half. If you could comment on our performance on that division, please, that'd be great. The second one on the Auto OE margins. First half result was better than breakeven. Could you just talk about what you expect for the second half, as labor inflation now picks up in Q3, but you also get probably higher compensation from the OEMs going into Q4?
Just how you expect second half to develop versus the first half result. The last one on aftermarket. Can you just talk about inventories and distribution right now? Do you see the strong sales numbers over the last few quarters holding up, or are we entering into a period of destocking now in aftermarket? Thank you.
Yeah, thank you for your, for your question. I'll start with question number one. The outperformance in the second half, the expectation here, and the expectation is that the market is gonna be flat, based on S&P and also based on observations. Market is gonna be flat. We'll have some projects running up from a OE side, and we'll also have a continued, and this, you know, reflects a little bit on your question number three, we'll have also continued good performance in our expectation in the aftermarket, yeah? Therefore, from an overall perspective, we think that we can outperform in the second half the market, that is gonna be flat, as you said. The Auto OE margin, your question is here: How is the expectation on the second half?
Here, the some of the elements you said, you know, I, I share the same, yeah? On the, on the risk side, we have higher costs in some areas. You know, for example, in Germany, you know, the increase in personnel costs based on the, on the increases here that were negotiated. You know, energy levels are to some extent a little bit on a higher level, even though that some of the commodities, you know, here in the energy area came back significantly. From a commodity side, we see, you know, generally a relief in the markets, you know, I assume, based on the reduced outlook of some industries. You know, on the chemical side and on some plastic materials, we see some increases still. Yeah.
On the, on the chain side, there is the customer compensations, yeah, and there is the expectation that overall we have a situation that is, you know, not as significant as last year. Now, we talked about very much significant compensations that were required in the inflation cycle of 2022, and that essentially started in 2021. The figure, you know, the risk figure for 2023 is lower, but at the end of the day, you know, those increases still need to be compensated. You know, there is also some risk in regard to that. Overall, we think that we'll be able to compensate the risk with those compensations, yeah.
Therefore, we think that we can confirm, you know, the, the outlook that we had given at the beginning of the year. Okay, your third question was related to the aftermarket, and the aftermarket, it seems like, is a strong cycle that will last, yeah? There is two elements to that. On the one side, it's a, it's a strong cycle that obviously people like to repair rather than to buy their vehicles or new vehicles. On the other side, we have a good performance here, in particular in the North American market, where, you know, we started along with also China, to go into those markets and, and realize, chances that we see, and in particular in North America, we make good progress in regard to that.
The second element of this is really that we have a good situation here in terms of parts availability to support that growth for the additional demand from new customers. On the other hand, when we take a look at inventory, inventory in the OE segment remains, you know, flat and the increases in inventory here, that is associated to the most extent with our increase in business activity and aftermarket. Aftermarket, we, you know, we can only realize growth when we have parts available, when we can satisfy immediately, you know, what the customers request and need from us, and therefore, we have increased the inventory levels in order to support that growth. Yeah. I hope that all answers your questions, yeah.
Thank you so much. Just one quick follow-up. On the Auto OE result this year, are you expecting the second half to look very different from the first half?
I would not expect it significantly different, but I have to say this, this is my expectation, but there is a risk also in regard to that, in terms of, okay, how some of the cost elements are developing in the second half. This is one item. On the second part, of course, you know, to what extent we are able to compensate by customer compensations.
Understood. Very detailed. Thank you so much.
The next question comes from Marc-René Tonn , from Warburg Research. Please go ahead.
Yes, good afternoon. Thank you for taking my question. It will mainly be around e-mobility and EKPO. I think we've seen, and we can take this number, I think, from the minorities line, that since the fourth quarter of last year, you have to pay more than EUR 2 million, let's say, in basically losses attributable to other shareholders, which are kind of corrected here, which, as I understand it correctly, are mainly attributable to the ramp-up costs which you have at EKPO.
You could give us some, some indication on what you are expecting here, perhaps in the quarters ahead and also in the years ahead, on how we should look at this, at this number, and, and when we perhaps can, can, can think about the break-even in this segment. Secondly, because also, as I referring to your earnings bridge, which you provide, thankfully in your presentation, where do we see those EKPO losses here, and particularly in the year-on-year comparison? Is it in the volume effect, or is it operating leverage, where you include those effects? Thirdly, also related to e-mobility.
I think in the second half, you have these, the ramp up of the battery circular contract with the global battery manufacturer. Perhaps you give us some indication on how we should think about, let's say, revenue generation for the e-mobility segment in this quarter. I think Q2 was, let's say, already a bit better than Q1. Third question would be with regard to the financial result. I think when I calculated correctly, interest costs you currently have are around 5% now, when looking at your gross debt on an annual basis. Is this level what you also expect for the second half year, or should we assume any further increases in financing costs for the second half?
Certainly, looking at the tax rate, I think presumably also has to do a bit with these, with these, losses at, at EKPO, but also, like, the regional differences in, in your profit generation. How should we look at this number for the, for the full year, from, from your perspective? Thank you.
Thank you for your, for your questions. When we, when we take a look at the, in particular, but not only e-mobility, let's say e-mobility and lightweight, then we, we have on an annual basis, we have double-digit loss on a full year, like I said, in mainly battery and fuel cell in the group. You see this, of course, you know, in the, in the losses that are associated here with other shareholders in the reporting is one part of it, you know? It's not all of it. Second, we have start-up plans. We have a start-up situation here in Texas, related to lightweight products, and also we have a start-up plant, a new plant here.
This is our center, for, for, for e-mobility here in Neuffen, that we have recently just opened, where we will produce here a lot of e-mobility contracts. Based on, based on this, it's right from an observation that we have here, still in 2023, significant start-up losses. Expectation is that starting with a one cell contacting system, that will start in the second half of this year, most likely towards Q4. There's gonna be some activity in Q3, that will start revenue cycle in the battery business here, really going into the higher revenue figures, yeah?
This is a starting point, I said that my expectation would be somewhere around 25, we'll have a significantly, significantly different situation here, in terms of the operating leverage, in the business units, and also in the group based on the revenue cycle and revenues in those business areas, and also in those new plants. Now, I come to your last question here in regard to taxes. The taxes that we see here, it's a relative high tax rate, so the loss situation is distributed in the group. That on the one side, we have taxable gains, and on the other side, we have losses in some of the areas, in, you know, those examples that I mentioned.
This, you know, balance, so to say, over group entities, this leads to unusual high tax rates, generally speaking, yeah? In regard to the financial result, the interest rate, that is, that is right, huh? We see here when I, when I take a look at the net interest, I think it's around EUR 7.3 million for the quarter. There is interest in the interest expense. Let me say this: there is, from our hedging positions, there is EUR 2 million interest in there coming out of hedging, and there is EUR 1.5 million coming out of pensions. This, this high interest expense would need to be corrected, so to say, by around EUR 3.5 million when you compare it to other quarters, huh?
Those effects are based on interest effects, based on the, the interest cycle that we have gone through, and they lead for Q2 here to a more significant interest expenses. Now, in regard to the question here in terms of the earnings bridge, could you please repeat that? Because I did not get that question.
It's also been when, when we look at, at, at, at the P&L number for, for minorities in Q2 2022, I would say basically, I think it was almost zero. We have this EUR 2.8 million, which we have this year, which indicate that there must have been, let's say, pretty deep deterioration of earnings and EKPO, probably preparing for the, or the contracts you have won. Where would we see this deterioration in the earnings bridge which you provide here, on page number nine, slide number nine? Is this included in sales growth, these, these deterioration earnings?
Yeah, it's essentially, you know, in ramp-up costs, is, is one portion of that. There is another portion in, in others, yeah? There is one topic also, and this is an offsetting, you know, of start-up situation here at EKPO. If you, if you, you know, pick this example, also with improved situations in, in other areas here, there is also a little bit of offsetting in regard to that. You will not see this full amount as you know, and let's say, entity-related topic, huh? Because we have also some other developments here that offset this what you observed there. Yeah.
Got it. I don't know whether you've considered this or just, just as a remark, that I think in the past there, there were some years in which you mentioned some, some results for e-mobility specifically. Perhaps it would be an idea to, to be more, let's say, give, let's say, direct and, and, numbers for that. Basically the, the, figures that you stated them are kind of understating on how successful you actually were, particularly in the OE segment, I think. This is an idea for the future to, to provide-
Yep. Point is, you know, the battery here, starting from this year will be, will be front running in terms of sales growth. Yeah. Again, it's, it's an early time to look at that, but the basic mechanism is that, you know, the, the revenue cycle and operating leverage towards 2025 in the new business areas will get us, you know, in a, in a different situation from an entity perspective, but also from a, from a group perspective, yeah. Okay. I, I hope I answered all your questions, yeah?
Thank you very much. Thank you, yeah.
The next question comes from Frank Biller from LBBW. Please go ahead.
Yes, hello. Thanks for taking my question. It's actually two. The one is on this Engineered Plastics. Here, the margin nearly was halved here. Maybe you can elaborate on that. What happened here, and what could we expect here for the whole year? Should it stay in the single digit range or returning to the double digit range? The other question on net debt and free cash flow target. When assuming free cash flow in the range of last year, is it fair to assume a net debt in the range of about EUR 350 million?
Yeah, let me, let me start with your, with your first question. You know, right now, we are at EUR 380 million with, I think, free cash flow minus EUR 16. You know, EUR 350 would be a, a EUR 30 million move. You know, I'd say this would be on a, on a high side. It's not impossible, it would be on a, on a high side. I think, you know, it would be, yeah, somewhere around three, let me think, EUR 350, EUR 360, I think is, is reasonable. We see a little bit of the same cycle that we have seen last year on the free cash flow, I expect here an improvement in the second year.
There's one point, of course, that is different comparable to last year, and this is the development here in aftermarket. Expectation is from now on, inventory levels are gonna be flattish and towards the end of the year, getting lower, and bringing us to this sort of net debt. On the first question here, Engineered Plastics, that has different exposures here from a sales perspective as well as from a cost perspective. There's, like I mentioned here, on the commodity side, the Engineered Plastics business is affected by cost increases here in regard to the used materials and material mixtures. Here also, it is the same mechanism relative to the OE segment.
There is gonna be compensation that I would expect towards the second half, but there is still some uncertainty. At least I would see, you know, a comparable level. If we are successful in regard to compensations, then it would be a little bit higher. Thank you.
Thank you.
The next question comes from Christian Glowa, from Hauck Aufhäuser Investment Banking. Please go ahead.
Yeah, hi there. I just have two questions left, basically. My first one, again, is on your aftermarket business. Can you please provide, what's that growth being made up in terms of price and volume? My second question is with regard to the most recent orders from e-mobility, which you have announced, how much of that is already reflected in your order intake? Another way to put it, what the Auto OE order intake business development is in Q2 and the first half year?
Yeah. Thank you for your questions. On the- on your second question, the new orders, they are not reflected in the order intake. The order intake, as we, as Elring Klinger measures it, is based on the actual releases from customers, and there is, you know, different release horizons. The new projects that we have announced here, they are not part of those, let's say, you know, operating communications from the customers to us. On the, on the aftermarket, I haven't gotten really an exact figure on that. I would say, you know, very roughly speaking, it- it's, it's half and half, because the, the volume increase is happening in Europe and is happening in North America. Yeah, there's factual significant development there. I can, I can look that up.
Roughly speaking, now, I'd say it's maybe 50/50.
And the Auto Business OE standalone order intake, is that similar to group development or is there a big deviation?
The development in OE segment, in terms of the order intake and also the, the order stock situation, that has two components. The one component is, you know, general market development, yeah, which is in line, this is why I said, you know, this is also based, you know, a flat market based on our expectations. This is reflected in there. We have also a little bit of, product mix, because there are some customers that have very long horizons, in terms of their scheduling and some a little bit shorter. Here we have some, let's say, short-term developments that affect that on the negative side, yeah? Essentially, that's out of our hands. Those two factors, you know, go essentially into the, the OE order stock situation.
That's very clear. One follow-up, if I may, please. You, you are guiding for a CapEx ratio of 5%-7% for the full year. You stand at about 4% in the first half year. That 5%-7%, is that sustainable looking forward with regard to the ramp-ups in new mobility? Or is it even possible to lower that CapEx ratio looking forward, then below this ratio of 5%?
Yeah, we are, we are on a, on a very low CapEx rate right now. It is certainly the lower end of this guidance. We are gonna be moving up with those projects, and, and the degree, the intensity of CapEx really depends on what the project is. Now, there is deep value, deep value added. There is more like assembly type. My expectation is that step by step, we'll go into, from a working capital perspective, into a better situation, and, generating here, you know, a better free cash flow. On the other side, we'll have also, you know, a higher level of CapEx going forward.
Not necessarily in the short term, but when we look into, yeah, 2024, 2025, my expectation is that CapEx is gonna be going up. EBITDA right now runs at roughly EUR 200 million, no? You know, the, from an earnings perspective, group is prepared for that as long as we have the working capital in check. We will see some higher levels there.
That's very clear. Thank you.
Thank you.
As a reminder, if you wish to register for a question, you may press star and one. Our last question comes from Michael Punzet from DZ Bank. Please go ahead, sir.
Yes, Michael Punzet. Good afternoon. I have one question with regard to your adjustments. Can you split up the adjustments you have booked in Q2? Can you give us any kind of guidance whether we should expect some additional restructuring provisions or something like that in the second half of this year?
Yeah, thank you for your question. We have in total, I think, around EUR 8 million, EUR 8.1 million booked. CEO departure of that is EUR 4.4 million. Then we have EUR 3.7 million related to restructuring and impairments. For the second half of the year, I would expect a little bit more in terms of restructuring and impairment, because we have some activity here in regard to Langenzenn on the one side and, you know, consolidation efforts in the group. Yeah. Would we be seeing a higher number relative to Q2 in the upcoming quarters? I don't think so. Yes, there is gonna be more restructuring as we do consolidations, but this Q2 figure is high.
There's no additional PPA expected in, in the coming quarters, or is that only so minor that you have not included it in the guidance?
No impairment, you know, when we look at
Purchase prices, purchase price allocation. I mean, purchase price allocations.
No, no. Typically, you know, purchase price allocation is associated with M&A activity, and right now
Okay.
We don't have, you know, any of that. We haven't acquired anything, so there is no.
Okay. Thank you.
Thank you.
As there are no further questions at this time, I hand back back over to Thomas Jessulat for closing comments.
Yeah. Thank you very much for attending this call. Thank you for your questions. I'm looking forward to talking to you on our next call, and that's gonna be November 7th this year, where we will be discussing Q3 figures. Thank you very much. Best wishes to you, and talk to you soon. Bye-bye.