Good morning to OHB's Q2 results. I hope you have been able to dial in and download the documents. We're welcoming you here on behalf of the management board. Tim and I are traveling today, and you have Markus and the team in Bremen. I quickly walk you through the slides. Markus will briefly take over for the market. Tim will go through the numbers. European champion in the growing space economy is still the program that we are following. We have shown in the last weeks quite some good progress in our, what we call, Right to Win. We have been able to move quite significantly ahead on a number of important programs. We'll talk about that. The scaling of the operations is doing well. Tim will walk you through a very strong Q2.
From that perspective, we are in a very good way. Our business model, very well known. We're scaling the company in our three divisions. Nothing has changed in that one other than we have made some significant progress here. I quickly run through the most important things. On this slide, a quick summary. We had double-digit growth in our total operating performance, a strong improved adjusted EBITDA. We are confirming our guidance for this year. Order intake is strong. A few sentences have to be explained what we expect for the second half to happen. That's going to be a strong period. Markus will help us to understand that. We're moving along with scaling, hiring people. Our partnerships are growing and developing the business. I'll walk you through this a little bit.
Internationalization moves along in a number of countries, the U.K., Czech Republic. For example, RFA is moving along. I will come to that one with a specific slide. On our growth and operational milestones, we're going along very well. We had in late June our capital increase that is well understood. We are expecting to be included in the TecDAX and the SDAX later this year. It has been a marvelous ride in Q2. On a political level, the big picture for the space segment in Europe, in military is unchanged, very positively. We had Minister Boris Pistorius at OHB a couple of weeks ago. It was a very good moment for us to directly talk to him, to show him progress on programs that we are working on for him in Sparrow, for example.
He looked at the satellite. It was strong to touch base with the other people from the political environment that were there at this visit. I was very happy to hear from the decision-makers that space is very high on the agenda in the next years to come for implementing this strength in German security. Same was with ILA. In June, there was the big trade show. We had a strong representation there. We met many people there, the chancellor and everybody else. It's a very strong sign from Germany that Germany is serious about investing in space. Germany is serious investing in defense in a broader range, especially space, combining the boom from the military side with the civilian space of European Union and ESA.
That has been a very good showcase moment for us. Our Rheinmetall, OHB Rheinmetall Space Networks joint venture moves along. We are in a phase of negotiations of improvement. It is difficult negotiations at times because it is a very ambitious program. The teaming is growing, but it is on its way, and some of the people in this call are quite busy around this project. It is not easy, but it is obviously also a massive endeavor that we are all undertaking here. With our KIRK joint venture with Helsing has been established. The creation is moving along well. Together with Hensoldt and Kongsberg, we have started our consortium. We are preparing there for our joint topics. Obviously, it is a presentation that we feel should end up in a strong bid for the SPOCK 2 project.
I guess there will be many things to hear from this teaming with Helsing. VORTEX-S. I am quite interested about the VORTEX-S thing. We are waiting for the results of our proposal from the European Space Agency, ESA. This is about to be published soon. We have to see how it moves on. I think this is going to be on the agenda for the Space Summit that we will see, or that will take place in Paris on September 9th and 10th. We will see. Hopefully, there will be good scoring. Hopefully, there is also a political willingness on both sides in France and in Germany to continue implementation of this program. I will have meetings also with Dassault. I will meet Éric Trappier, we will see how we can push this program to the next level, but I am still excited about it.
Other than that, in Europe, I think the big event moving along and the visible stuff is our new facility in Bristol. You can see the building here. It is being implemented into the biggest space clean room in England. First significant contract with EnVision has been signed recently, we are happy to move along on that one. Also in Brno, in Czech Republic, OHB Czechspace has made a big step forward with being selected for the SOVA-S mission. First time that OHB Czechspace has a prime contractorship of that size and that complexity. Other missions going well is PLATO. You see the photo here. We concluded the environmental test campaign on PLATO, successful thermal vacuum test. Still the launch is scheduled for January 2027, so within a year from now, less than half a year from now, we will have the launch.
Part of which obviously will be a very exciting moment. Also good progress on the RAMSES mission, which is, as you know, a planetary defense mission, a little bit different, but succeeding the program line of our successful Hera mission that has been built in the last couple of years. We are quite happy with OHB Italia leading RAMSES. Another OHB Italia mission that has been successfully signed just recently, just a week ago, is the selection and the contract signature of the PRISMA-2, the second PRISMA mission we have built. First PRISMA hyperspectral satellite, a couple of years ago, it was launched, but it is operating since 2019, creating very high valuable hyperspectral images. The follow-up mission will be implemented under OHB Italia's leadership together with partners for the Italian Space Agency, ASI.
There's also Thales Alenia involved and Telespazio involved, we have a strong industrial team, and it shows that Italy trusts OHB Italia as a prime contractor for complex missions of that size. Rocket Factory Augsburg. It's a nice photo. The rocket on the pad. This is a sunny day in SaxaVord, I think just a few weeks ago. We are moving along. The first test flight is still planned for later this year. It has been shifted a little bit because we had to put the rocket down into the integration hall and examine the tanks again and working on that. It will be re-erected soon, but as you know, launching rockets sometimes takes a few detours. The team is working very hard. As you can see here, it's a sizable rocket.
Spaceport operation is doing well, and we're hopeful that these last remaining challenges will be fulfilled in the next foreseeable days and weeks. Another important thing that has been reached is that the European Launcher Challenge contract was completed, and it's now moving along. Together with three other companies, Rocket Factory Augsburg is one of the four European companies that has been selected for European Launcher Challenge agreements. Our MT Aerospace business in supplying into other rockets, into big rockets, showed a few launches again. The SLS, since 2013, MT is a qualified supplier for Boeing, has launched the Artemis II mission. Of course, also Ariane 6, which is very important for MT Aerospace, had two successful flights in April and June, in the big configuration, the Ariane 64 configuration for the Amazon Leo constellation.
We're expecting a strong flight manifest of Ariane, and obviously this is also very good for the ongoing ramp-up in the whole Ariane community and of course from our perspective for MT Aerospace also having a full load in the factory. Yes, of course, very important, our capital increase was successfully completed. We had in late June our about 1.6 million new shares listed. I think it's well known how this transaction worked. The Fuchs family did not participate in the selling. We remained the majority shareholder with 60+%. The KKR share is around 20% and the free float as well. We are expecting inclusion in the SDAX and TecDAX later this year. The gross proceeds of about EUR 480 million will help us to funnel the growth that you can see here.
There will be significant investments in production facilities around our footprint in Europe. We will invest in a number of programs, including lunar activities, exploration, other frontier applications. M&A is something that is currently looked at. Of course, RFA is on its way, as I just explained a few moments ago. Thank you. I think this leads now to Markus, who will give us a quick overview of his judgment of the market developments and what he expects in the remaining five months of this year in terms of order intake. Thanks for my side, and I'll talk later in the Q&A session.
Thank you very much, Marco. Brief overview on the market dynamics that we see. Key message here is that the market dynamics from our perspective are intact. To recall what are the main markets that we're operating in the immediate future on is the ESA with the EUR 22 billion budget that was voted last year, and over 30% increase in projects that ESA will put on the market between 2026 and 2028. We'll see the European Union with the Multi Financial Framework that is currently being discussed with the member states for the upcoming period in 2028 to 2034. We're still talking about the envelope of EUR 131 billion with an important increase in the space budget that is part of this envelope, given the focus also of the European Union to continue to invest into their space assets.
We'll see the EUR 35 billion budget envelope in Germany, which also is intact with now requests for proposals coming in, as Marco alluded to actually go from a plan into execution of programs. We'll see in all three categories active customer requests for the month to come. It was always our plan. We'll see that we will assign a couple of key cornerstone deals with ESA programs, specifically around the Sentinel. Those are ongoing discussions. We have a space situational awareness and operations mission, which is ClearSpace-1. We also have an important contract on OpSTAR that we expect to close for the ESA side this year. We're in active negotiations on Iris². There have been multiple statements in the press and also from the EU on progress. Very active negotiations.
I'm personally involved as now. As I said, on the German side, we're participating in the market signing requests and the proposal development. This is at various stages, but in line with the time expectations that we have. With that, I hand over to Tim with the trading update for H1 2026. Thank you.
Yes. Thank you. Go back to the other slide, please. Thank you very much, Marco, for explaining where our business is. It's obviously showing that we are very busy. Also from market side, there are very strongly filled pipeline. I will link our business opportunities with our financials as of first half year 2026. I think what we really can say is that we have demonstrated profitable growth again and strengthened our financial position. Starting with the KPI overview. In the first six months, we realized a double-digit growth of our total operating performance up to a level of EUR 628 million. The profitability outpaced the strong top line growth with a 30%+ increase of adjusted EBITDA. Our cash flow pre trade working capital also grew, even though we had here cash impacts from the transaction as well.
What is really important is that our net debt leverage has improved significantly following the capital increase, showing that our financial strength has improved significantly. Given the high backlog and the great outlook discussed by Markus, I think it is really important that we attract the right talent and expert to execute these businesses. This is basically also shown by a 50% increase year-over-year on our employees. Please note that those increases are to the very large extent only in our operational functions, which are really kind of working on the product, on our great services that we render to our customers. We are resulting in up to a level of almost 4,100 people. With support functions being flat, if we continue with the backlog, we see that in comparison, the backlog continued to increase on a record high level.
As Markus has shown, there are many opportunities at our doorsteps where we are working on very intensively. Please note that these are not reflected in this very high backlog, and that this is going to continue to grow. What is also important is that, as shown by Markus also, that our three core markets, European Space Agency, defense services in Germany, but also other countries where we are present, and certainly also the European Union funds, are at an inflection point. This will also, as discussed previously, also brings our business to an inflection point. We expect that the backlog is going to continue to rise. If we now look at the Total Operating Performance and profitability, we are a growing company and we grow profitable. In our Total Operating Performance, we achieved a level of EUR 628 million.
In comparison to the EUR 470 million, for instance, in first half year 2025, this shows that we are really on a strong trajectory of growth. The same is the case for our earnings, measured at adjusted EBITDA, as you know, with a EUR 60 million adjusted EBITDA, representing an increased margin of about 9.6%. To give you also a link to our guidance for 2026. In the last years, we had at this point of time, that is first half year of a year, we had an average 39% of our Total Operating Performance delivered. In the first half year 2026, we are already at more than 44%, which shows that we have been able to also accelerate our growth in the first half year in comparison to future years, where we always have also met our guidance.
In addition, if we go into more details on the Total Operating Performance, we are a European space company, as shown by Markus in the very beginning. We are one of the European space champions with a very strong domestic footprint. As we are the only German-headquartered and also German-owned space company, our German-based top revenues are represented by 30% of our business. In terms of Total Operating Performance by segment, Space Systems remains the biggest segment, representing a growth of Total Operating Performance as of first half year of EUR 472 million. The other two segments are really showing a strong momentum. I will talk later. If we see ahead, we see right now still a pipeline of EUR 20 billion of new projects, and some will get in our books already in this year, as shown by Markus.
What we basically also see is that we have a shift to a higher portion in an increased overall revenue stream of defense business, which will represent 40% approximately as of our pipeline. We continue now with the adjusted EBITDA, just a quick review, how do we reconcile this from EBITDA reported to adjusted. In comparison to first half year 2025, we have grown here the adjusted EBITDA by almost EUR 15 million. In first half year 2026, there were some costs still in associating with the transformation projects that we had run in the last years following the shareholding of KKR. In course of 2026 second quarter, it was a transaction-related cost, which were also expected and also, as such, no surprise from our side.
We then continue with the segments, we see that all three segments contributed to the performance in the first half year. This is, for me as CFO, a really important indication that our business is really based on strong three segments. The strongest is for sure our Space Systems with a double-digit margin as of half year one. Also the other two segments are really showing strong growth. This growth is represented, for instance, in a total operating performance growth year-over-year in excess of Space by more than 30%, or, for instance, in Digital, 70% increase in the backlog. Both showing that these segments are also showing strong momentum as well as the Space Systems. They also, especially over here, the international companies in Italy and in Sweden, for instance, show really strong momentum.
This is also for me a kind of signal that our international strategy is really evolving as we expect and to really add value here. We then look at the adjusted free cash flow, it's for sure also an important KPI, positive free trade working capital cash flow with an improved cash conversion, even despite some cash effects of one-offs. The one-offs that I have depicted in the EBITDA reconciliation. The trade working capital development represents the seasonality with the back-end loading of our business line and also the kind of evolution of our projects. For instance, in the first half year 2025, we had the MTG project, a weather satellite where one was launched in July 2025, were already finalized, this is kind of representing our normal course of business.
For sure, we want to continue to grow our company in order to make sure that we have the capacity to really deliver the backlog and the new growth opportunities in time and in the quality that our customers are used from us. We then continue with the financial position, I would like to highlight that it has strongly increased. We had here now a net leverage ratio of -1.1, showing that it is really improved. From an equity ratio, we have now more than 40% equity, also showing robustness, which is allowing us to have the right kind of financial flexibility to execute our growth objectives, to deliver to our customers, industrialize our programs, and have the operational business requirements supported. As such, we also like to confirm our guidance. We had a strong first half year 2026.
We expect continued and further accelerated growth, which is allowing us to confirm our guidance of about EUR 1.4 billion of total operating performance and corresponding margin profile of 10.5%-11%. With that, I'd like to thank you very much for participating for the time being. For sure, we are now, after the so-called re-IPO, closer to the capital markets again. We will also be present there, not only with calls like that, but we have also derived with our consulting banks the really conclusive flow of conferences participation. We are really looking forward to meet you there and discuss our great opportunities and our great company with you. With that, I hand back to Marcel to open for Q&A. Thank you very much.
Yes. Thanks to everyone. As usual, we would like to start our Q&A. You can please raise your hand if you have any questions you would like to raise. I will add you as a panelist so you can ask your questions directly to the team. I see some raised hands already. First one's going to be Michael Filatov from Berenberg. I will just add you as a panelist, Michael. Now you should be able to talk.
Hi, can you hear me?
Yes. Hi, Michael. Morning.
Hi, everyone. Thank you for taking my questions. The first one on backlog. I know the orders will be lumpy, but I think backlog fell sequentially a little bit with Space Systems down a little over EUR 100 million. I believe the order intake was potentially the lowest since Q1 of last year. I guess I just wanted to get a sense of your expectations for order intake this year, and does it assume any of those defense opportunities you've recently or previously been discussing? Could you also touch on the order opportunity pipeline in terms of waiting between ESA work and defense work for the next 12 months? I have one follow-up as well.
You want me to take it? Yeah. I'll take it. Thank you very much for the question. As far as 2026 is concerned, the order intake is actually, as usual, a bit backloaded. We had an exception last year as LISA came in very early as negotiations slipped into 2025. From an order intake profile run-up, we're basically business as usual in terms of the timing. What we're expecting this year is essentially business out of the ESA programs that we have. I'll go with the ESA first. There's really one contract, which is the Sentinel constellation, as you know, the new generation, where we are in final negotiations right now with the customer. There's a bit of the summer period now kicking in at the institutions. The same thing as we have a mission called ClearSpace-1, on which we're also in the final phase of negotiations.
We will see later in the year the mission OpSTAR phase BCD. The first tranche of it, which is in the navigation for the new satellite, the laser-linked constellations that we have. We are in negotiation as we speak on a daily basis when it comes to the EU business, which is Iris², on which there is a very clear ambition by the commission to conclude over summer the negotiations for the entire constellation. We're part of this with the MEO segment, as you know, 18 satellites. We're really sitting with the customer finalizing that contract. Those are the essential businesses, the big opportunities that we see now coming.
On the defense side, to your second question, this year is not yet the year where large defense opportunities are part of our planning, just simply as the procurement process with Deutsche Bundeswehr, and will materialize starting 2027 and then will be a series of procurements that will be 2027, 2028, and 2029, depending on the program.
Okay. Thanks a lot. Markus, I think there was a follow-up question, Michael, right?
Yeah. Just to dive in here, because I know the SATCOM program is a big focus for everyone at your team and, of course, investors as well. I just wanted to hear any of your latest thoughts on that procurement process. Any details on expectation of timing for the award? I know there's been some sort of public rumors about Airbus potentially joining the bid. Any comments around what the bid consortium looks like at this point? Thank you.
The consortium and the industrial setup, I would say is unchanged. The procurement process as published by the customer, which foresees a I would say somewhere conclusion next year. Some of that is confidential, hence my cryptic answer here, is proceeding as planned by the customer. As Marco said, these kinds of programs are always hard negotiations, adjustment of needs, as you can say. Currently, we are in the plan initially foreseen by the customer, and we are executing to that plan.
Understood. Thank you.
Thanks, Michael. I can't see any further raised hands right now. Okay, Michael's back. So
Yeah. If I can, just if nobody else is in the queue.
Sure.
On Access to Space margins, I saw that they maybe were a little bit softer than expected or at least my expectations here for margin on total operating performance for Access to Space. Is that simply a factor of launcher component mix or some ramp-up costs at MT Aerospace? Could you just maybe speak to the margin profile on that business? At the same time, it seems like the backlog there grew quite nicely. Any comments around the progress at Access to Space?
No. Happy to do so, Michael. You already touched the right point. As also discussed before here, our Access to Space segment is really showing strong growth in three pillars. One is the Ariane business, which is ramping up. In addition, we are kind of supplying U.S. launch vehicle providers. The market momentum from that customer segment is really very strong. Thirdly, it is also that defense-related business predominantly in Germany is also contributing to the backlog and the order intake momentum, which I showed also on the segment slide. This is then kind of connected with ramp-up activities. As also shown, we are kind of investing there and make sure that we have the capacity to really deliver.
We had also new hires, so that if there was a slight but expected, we have budgeted it accordingly, a little bit softer margin profile, which we right now expect to kind of further increase and improve in the second half year.
Thank you. The last one for me, just on RFA. We all know launch is extremely difficult, but my understanding is the vehicle was on the pad and testing was going well, but it had to be removed from the pad, as you've alluded to. Maybe any further details on sort of what exactly happened during the testing with RFA at SaxaVord?
Maybe I take that one. There was a problem with the tank, and this was uncertain, so team decided to take a look into this. This is what's going on now. They took the rocket back into the hangar, and opened up the tank and actually currently are doing this and looking into it. They wanted to make sure that they fully understand what the data showed. This lost some time. There's a big team up there trying to figure that one out and putting it together and hopefully putting it back to the pad as quick as possible.
Okay. Thank you, everyone.
Thanks, everyone. Next up, we have Simon Keller from NuWays. Simon, you should also be able to raise your questions now.
Hi, everyone. Thanks for the presentation. Given that you have noticeably increased your firepower thanks to the capital increase, I was wondering how your M&A pipeline is developing, and also what the most promising targets do look like right now. Thank you.
Obviously, we are not going to go into much details on this. We have not really committed anything. Teams are busy on this one. Obviously, our capital raise is well known out there. The discussions we have with potential additions are going on. We're looking at European footprint issues. Obviously, we're also looking along the own value chain. There might be some smaller stuff coming, but significant acquisitions are not imminent at this moment in time.
Okay. Maybe conceptually, just as a quick follow-up, will it be rather technical expertise? Will it be production capacity? Any comment here on what you're looking for?
M&A, production capacity will not be M&A. That's CapEx. That's investment. We are looking at investing and increasing as we currently do in Italy, in U.K., and other places. That's not going to be M&A. M&A, for us, would be additions that either add a broadness to our current footprint, or they must be somehow technologies that are really unique. Again, we're not looking at M&A for production facilities.
All right. Thanks a lot.
Thank you. Next up, we have Olivier Brochet from Rothschild. Olivier?
Thank you very much, good morning all of you. I would have two questions. First of all, on the adjusted free cash flow and the change in net contract assets on liabilities, which is a very large outflow. Can you maybe help us frame how this is going to develop in H2? Is it going to be reversed? I understand there is some seasonality in there. The second question is on the Ariane 6 and the long-term plans and potential capacity increase in the launch rate, trying to reconcile that with the work that is done in reusable launchers with the Themis outside test that just concluded.
Can you help us frame whether we are going to see an increase in the Ariane 6 rate, or whether this is just going to remain as it is for the moment, with potentially some changes in the generation of launchers in the long term? Thank you.
I can start with the launcher. Tim can talk about the cash. Currently, we have a situation where there is very high demand for launch services anticipated for the coming years. Currently, we do have a situation where the international supply is uncertain. There obviously had been the mishap in Blue Origin's New Glenn, which is about to recover, and new rockets coming on the market. There is some uncertainty about the long-term availability of Falcon 9 in the market. The statement from SpaceX that this might shift, or they might shift radically their resources to the Starship. The market currently needs launch services, and whoever now looks at launching in a few years will find a difficult outlook. This all results in existing launchers, and Ariane 6 obviously has been very successful in the last years after market introduction to ramp up cadence.
Yes, the whole Ariane community is thinking about it, is looking at it. It has not been decided up to my knowledge. We, as a supplier, are involved in this, so we are discussing with the ArianeGroup about this. Decisions about how a significant ramp-up in cadence of Ariane 6 would be implemented have not been taken and are imminently, obviously, also in the Ariane system political. We might see in the second half of this year quite some discussions on this because, looking at, for example, all the German space programs that are intended to be implemented, yes, of course, Germany and Europe needs more space launch capabilities. Yes, of course, Ariane is the number one to go to because we will not have micro-launchers being in the market quick enough to take a significant share of this.
You alluded to Themis and reusability in Europe. Themis is a demonstrator for recovery of the first stage. It is pretty far away from market entry. Before we see a European reusable launcher really in operation, quite a number of years will pass before that is the case. Yes, Ariane has to ramp up, I hope. I am saying this not as a supplier in MT Aerospace, but I am saying this as a user, as a customer for satellites. We need more Ariane, and I hope the political system around Ariane, between the European Space Agency, but also the member states of ESA, will produce a way forward that the capacity will be increased and that the industry, ArianeGroup, and all the supplier will have an opportunity to ramp up significantly from the numbers where we are now.
I guess this year we might see seven launches, but I think demand is much, much bigger than that.
Marco, can I ask a follow-up on that? What is the cap physically that can be implemented? Where can it go from the 10-ish that it can do today?
Of course, there are different views on that. I think that from a supplier perspective, we can go wherever the system wants us to go. I think there is a limitation in Kourou. We have one launchpad. We have limitations in the processing facilities in Kourou. The so-called BIL and also the BANF, the facilities in Kourou to prepare satellites are, under my understanding, also a target of potential increases. A substantial increase, I think at one point will need also a significant investment in Kourou, which I think is intended, is talked about. Obviously, being an expendable launcher, we will not see numbers that we have seen with Falcon 9 in recent years, no. I think there will be numbers like 12, 15, whatever in this range. This is, I'm sure, something that the system could do gradually.
Again, if we have on top of that also massive investment in Kourou. By the way, another facility that is critical in Kourou is the solid propulsion factory or the solid propulsion facilities in French Guiana. If this increases, we might see higher numbers coming out. Again, the demand is there, and the supply from international launch providers, at least today, August 2026, looks uncertain. I think Europe has to invest.
Very clear. Thank you.
In terms of trade working capital, you depicted already the right kind of areas, Olivier. We have seasonality. We usually see a strong second half year, especially very strong Q4, which we also expect for this year. This is basically a typical footprint for institutional business in defense and space. At least in the companies I was with in the sector, is very typical. This is one aspect. Seasonality, which is then kind of expected to kind of improve in the second half year, especially Q4. There is also, to some extent, project portfolio or mix effect here. We have, for instance, in the LISA project, you know that was a major project, almost a billion in size, which we are ramping up now, and this is then also reflected.
Second half year, we expect an improving trade working capital due to the seasonality which we typically see.
Thank you very much, Tim. We will end up the year with a positive free cash flow after working capital.
That's our target, but we will work on that. We don't project that.
Okay. Thank you very much.
You're welcome.
Okay. Thanks, Olivier. We have one further raised hand from a call-in user. We kindly ask you to introduce yourself very quick. You'll be able to talk right now. Try to unmute you. One sec. Okay. Perhaps the call-in is not working right now. I can see that you raised your hand again, unfortunately, apparently you aren't able to unmute yourself. I can't see any further raised hands, so maybe we just give people another minute to raise any further questions while the person is trying to unmute. Okay. Perhaps. Okay, I can't see any more questions right now, maybe this brings us back.
Can you hear me now?
Okay, now we can hear you. Hello. Good morning.
Oh, sorry. At last it worked. Thank you so much for the opportunity. This is Sriram from Deutsche Bank, by the way. I have two, three clarificatory questions, if I may. Pretty simple ones. The EUR 21 million transaction cost, which we reported in H1 2026, can you just confirm this is to do primarily with the re-IPO related cost, or is there any other cost which is included within this one? How should we think about this transformation cost, which is being reported continuously? When do we expect this to completely wind down, or should we expect this to continue for the foreseeable future? That is the first one. Second one is with regards to the outlook, which you have communicated, which sounds encouraging, where you said that you could exceed some of the strategic midterm targets. Just wondering what could be that driver.
Is it more from the top line, or do you think there is an upside to the margin, which could lead to the margin upside? A final question, more from the operational point of view. Just trying to understand, among all the projects which you are currently undertaking or manufacturing the satellites, which of the satellites or programs would you think are the most challenging from an execution point of view? Thank you.
Yeah. Okay. I think I will start with the first one and two, and maybe on the projects, Marco and Markus comment upon. With regard to transaction cost, yes, confirmed this is for the capital increase. That is a one-off item will not kind of continue in the next years or so. This will be something for 2026, but this is then the classical one-off. With regard to transformation, you already see that this is a kind of reduced pace, and we expect that in the next year it will be kind of basically coming to an end. With regard to the transformation, this here was our projects to improve efficiency in overhead functions and also in terms of cost ratios, and this is now those kinds of follow-up impacts that we see, but these will be wearing out.
This is clearly expectation that this is going to reduce significantly. With regard to the outlook, on the one hand, driver is the growth of the top line, but also the structural shift from the customer funds point of view. As mentioned in the pipeline discussion, we see that the proportion of the defense-based activities will basically double up to a level of 40%, and there we expect higher margin profiles. Here maybe Markus and Marco, you can also comment on that, and then talk about the most challenging projects that you see from an operational perspective.
Yes. Thank you very much. Well obviously looking into your question, what is the most challenging one? If you walk the aisles of OHB, you hear different projects being most challenging one. Each team believes it's their project. I think one to mention clearly is, for example, RAMSES, because that has a fixed date when it has to launch. The calendar of RAMSES is fixed because the asteroid will come and will go, and will have decades later. We have to really be on time as we had the same challenge with Hera some time ago. Completing the optical programs is a big challenge. We have optical measurements with very high criteria, and completing that in a fully performant way is very challenging. On the science missions, it's challenging because we don't necessarily fully understand the physics programs like, for example, LISA.
It's a broad range. I would say, it sounds simplistic, but programs get very difficult at the end when you really have to pass acceptance. The first phases of programs, they tend to go along, the closer they come to launch, the more nervous teams are, the more, let's say, under pressure the whole project comes. I think it's a variety of issues, I guess, that I don't know if Markus has to add something on that, but I would mention those couple as the most difficult ones that are keeping us busy. Maybe I forgot something. Markus, you have anything to add to that list?
I think I confirm what you said. There's not one typical challenge that we face, given the nature of the business that we have. As you say, we've got three large customer groups, the ESA, EU, and the Bundeswehr or the militaries. They represent challenges by themselves. On top, you have the nature of projects that we're doing, Earth observation, you've exploration that we're in, we're in science, and we're in telecommunications. There's not one thing, but it comes back to what is the focus that we have, that specifically we work hand in hand from a sales perspective with the operational teams to make sure that what we promise to the customer can be also delivered later on. I think that's an important component that we're focusing on.
Thanks a lot. I can't see any further questions, Sriram, or does it answer everything from your side?
Thank you so much for the opportunity. Appreciate it.
Thanks. Yes. I can't see any further raised hands right now. I think people had quite some time to do that. Therefore, also looking at the time, I think we are almost exactly where we want to be with this call. Maybe I just hand over back to Marco for some closing remarks.
Well, thanks, Marcel, obviously thank you very much for all your interest and for your time. For us, it's a new period. It's a new chapter now starting with this quarterly call after our capital increase. We're very excited about the opportunities that provided to us. We're working very hard, especially on new programs, as Markus said. We do expect, especially on Iris², some significant good news, and more than that, even confirmation and conclusion in the near future. As always, we're not completely in control of calendar. From my side, I can only invite you to stay in touch, and as Tim said, we are very interested in direct exchange. We have a heavy calendar of direct meetings.
We do have a number of conferences coming up, each and everyone's obviously always invited to visit us in Bremen or in Augsburg to see. There's good news coming in the next weeks, and it's a hardworking summer for all of us. Thank you very much, I wish you all hopefully a relaxing week in the mid-August timeframe. Again, feel free to contact all of us directly. Obviously, Marcel will coordinate, we're all available. From my side, big thank you and talk to you all soon again. Thank you very much.
Thank you.
Thanks.
Thank you very much. Bye.
Thank you. Bye.