Good afternoon. I guess afternoon is appropriate word for most of you. Ladies and gentlemen, I'd like to welcome you to our half year result presentation that we'll hold here together with my CFO Manuela Suter. We'd like to welcome you to that presentation. We have a lot of helpers in the background and in other halters taking care of all the video cuts and so on. We have Saskia sitting here as well, Saskia Rusch from Group Communication just as well as Gin Leader Care from Investor Relations. I will start off with giving some general comments and also by division how the first half year went. Afterwards Manuela Suter will present some more presentations on the financials, some organizational aspects right at the beginning. We did download the presentation or upload the half year report this morning at 6:00. It is available on our website.
We will record this video conference right up to the Q& A. Now it's being reported. It will be available tomorrow on the website as well so that you can track back once more any of our statements. You all are on mute that we can steer from here. Would like to ask you to remain that way as otherwise a bit disturbing. We have some background noises of course for the Q& A session. We'll unmute you as needed. If I want to summarize the first six months of this year, I guess these would be the right words. First half year it was a mixed picture. Obviously some markets of Bucher Industries did stabilize or even recover, at least on the demand side. There was political uncertainty and that did have an effect on the recovery. It slowed it down somewhat.
Order intake nevertheless was higher compared to the previous year's period. Sales although did reflect the lower order book that we had at the beginning of the year and remained below first half year of 2024 in comparison. Finally, the operating profit margin was reflecting on the lower volumes on one side, but benefited from the sales that we made from a property here in Switzerland. The group's profit overall remained at the level of last year. We have slightly adjusted our outlook for 2025 due to some uncertainties surrounding tariffs. Nevertheless, I think Bucher Industries is well set up for the future. Our equity ratio remained very stable at 67%. We have a high net cash position that we're using partially for the share buyback. Manuela will give you some more details for that.
Also on the organization, we have an internal successor for Bucher Municipal, we're happy about that as well. I will come to some more specific numbers now and bear in mind that the numbers we show here are always corrected for currency exchange rates and for acquisitions. They're like-for-like numbers. Order intake was higher than the previous year's period. Kuhn Group benefited from a greater willingness of the farmers to invest into new machinery, especially in Europe, and the order intake grew significantly there. Bucher Hydraulics also posted a growth. The demand for glass forming machines, however, fell substantially. Overall, the group order intake increased by 6.4%. The group sales continued to decline compared to the prior year period, decreased by 9%. We still have to gain momentum there. Only Bucher Municipal continued to grow slightly. The group increased profitability, which reached in this first six months 11.6%.
Weighing on profitability were lower capacity utilizations but also some salary inflation that we had passed down from last year that had more negative impact. We profited from lower material cost and from some cost saving measures that we have implemented last year and this year as well. The group's operating profit was boosted, as I had mentioned, by CHF 43 million coming from a sale of a non-operational property here in Niederweningen in Switzerland, and that had an impact on EBIT margin by 2.8 percentage points for the half year. It will be 1.4 at the end of the year. The number of employees was adjusted according to the lower use of capacity, particularly in Germany and in the United States, and decreased by 5.5%. Where we try to maintain the momentum was in R&D.
We reduced the absolute numbers just slightly and in percentage it went up, so we're at 4.3% now. I always believe between 4% and 5% is a good ratio. Actually, we launched a new machine. The one you can see here is basically a mechanical weeder. That's definitely a machine that is in line with sustainable agricultural practices where it's really purely mechanical, getting the weeds out of the ground between the rows. We also of course continue to invest, no more quite at the level of last year, but still had 3.4% of our sales invested in CapEx. I would want to transition to the results of the divisions. I'll start off with Kuhn Group as usual. We always look at the commodity prices as an important factor for the revenue expectations. On the left side you can see the prices for the grain and oilseed.
On the right side you will see the dairy, the milk price actually and the crop prices overall showed a slight improvement, although at a low level. Main driver is still high expected yields, which keeps the pressure on the prices due to actually very favorable crop conditions this year. Basically in all regions we have a very strong growing situation. On the right hand side you can see the meat price that remained at a high or definitely higher than average level, or even very high level. We look at the European milk prices. We didn't show the meat prices here, but they also remained at a very high level. In combination with lower feed cost, the situation for dairy farmers as well as livestock farmers is actually very favorable at the moment. Kuhn Group did profit somewhat from that situation.
Farmers' willingness to invest did improve in the first half year of 2025. Interest rates and production cost did remain high. The weather conditions are very positive, very favorable and especially here in Europe. Also the crop yields in Brazil were higher than in previous years. The demand for machinery started increasing again, also because dealer inventories were now reduced in many regions. Kuhn Group's order intake rose significantly by 33%. It was the dairy and farming and livestock segments that helped particularly, but also the higher commodity prices were in the background of that. In the United States, however, the sentiment among farmers was impacted by the uncertainty concerning trade and economic policies and also subsidy programs. Kuhn Group sales fell by 10% compared to the prior period. The uncertainty in the U.S. was a major reason for the decline. Sales in Europe fell slightly.
Brazil returned to growth in local currency, but of course with the negative exchange rates that get compensated. Despite the lower volumes, the operating profit margin remained at the prior year's level and reached almost 10%. This was particularly supported by lower material cost. I move over to Bucher Municipal which had very pleasing results. They experienced a high demand in a stable market situation. Order intake increased slightly by 1% compared with the strong periods that we had a year ago. Compact sweepers kicked in again. That was very positive. Also electrified machines increased again. There was helpful sewer cleaning vehicles. We had more demand for that as well. A bit weaker demand we saw was truck-mounted sweepers with winter equipment, but also with refuse collection vehicles, that is, in Australia. Sales of Bucher Municipal increased by 3%.
Growth was attributed to different markets, for example Spain or Denmark, the Americas, but also Asia grew among others. It was especially related now to sewer cleaning and the winter maintenance equipment. The sales, that is, the division benefited from the high capacity utilization and continued with efficiency measures. The operating profit margin improved to 9.1%. I mentioned that we found a solution for the succession planning that was with Bucher Municipal and we have selected Martin Starkey as a new Division President as of beginning 2026. I'm very pleased. He is an internal successor. He's been running the truck-mounted sweeper business in the U.K. and then will move over to Switzerland at the end of the year to come into his new role. Aurelio Lemos will support him then in the transition phase. Aurelio has been with us for 23 years. Very successful.
We're very happy with that internal solution. I move on to Bucher Hydraulics. Demand in the hydraulic markets rose overall in the first half year of 2025. The order intake of Bucher Hydraulics exceeded the figure for the prior year period by 5%. The uncertainties surrounding global trade tariffs were noticeable among the division's customers, especially in the second quarter. Demand for hydraulic solutions overall for construction machinery, agricultural machinery, stationary hydraulics as well as mobile electric drive technology did increase. Where we were a bit more challenged was in the segment of material handling solutions. By the way, that's a segment that is driven mainly out of the United States. If we look at the regions, obviously the United States didn't support the growth, but it came mainly from Europe, China, and India. Bucher Hydraulics is moving into a new assembly site in Malaysia.
That is one of the reactions obviously to the tariffs, but also to be a bit closer to the customers that we have in Southeast Asia. The division sales fell by 10%. That's not even including an acquisition that we did in Finland, company Hitman. They would make about 2%- 3% of our sales and order intake if they were included. We saw the high uncertainty way in the second quarter of this year, especially in the United States and in China. Sales declined in all major regions and segments in Q2 of this year. The lower capacity utilization coupled with acquisitions and integration cost had a negative impact on the operating profit margin, which fell to a single digit number of 9.7% and was therefore below expectations. Cost saving measures were consistently continued. I move on to another challenged division, that is Bucher Emhart Glass.
The customers of Bucher Emhart Glass continue to be cautious with investments. In the first half of 2025, order intake fell by 26% and was therefore significantly below prior year level. In particular, orders for glass forming machines, but also for inspection machinery, came down. The division benefited from the large number of installed glass forming machines and its high share of spare parts that go into these machines. That offered somewhat stability to the new machine business. Sales fell accordingly by 21% compared to the prior year period. The operating profit margin also fell from very high levels down to 13.4%. Production planning was adjusted and we also have to adjust accordingly our capacities in the sites of Bucher Emhart Glass . Bucher Specials, as usual, is a mixed picture. I think it has never been different in the past couple of years.
The overall division order intake fell slightly by 1%, but we had some strong supporters there. If I go down the list, then we have Bucher Vaslin, which produces the presses for grapes. They didn't see a strong demand, matter of fact, that came down. The willingness of wine producers to invest at the moment is very restrained. By contrast, we have Bucher Unipektin that makes presses for apple juice, for orange juice, but also for beer, but also beer filtering equipment. They recovered or they remained at the high level. The one that recovered was Bucher Landtechnik, with a slight increase over last year's order intake. Finally, we have basically internal supplier Bucher Automation delivering controls to divisions like Kuhn Group, like Emhart Glass, and also Bucher Hydraulics. They obviously felt the weak momentum of their internal customers and had to post a decline.
Sales fell by 8% altogether for Bucher Specials. Only Bucher Unipektin was able to exceed the levels of last year. The lower sales level and additional costs associated with further efficiency measures and reorganizations weighed on the disappointing operating profit margin of barely 1%. Bucher Unipektin further expanded its beer processing capabilities with a small acquisition that we made in Germany of the company Banke GmbH in early June. I'm going to now hand over to Manuela to give you more details on the financials.
Thank you, Jac. Starting from EBIT, which has already been discussed by Jac, let's look at the below-the-line item of the waterfall chart. Net financial result of CHF 6 million was driven by interest income and the result of short-term investment as well as less finance cost due to the bond repayment end of 2024. Income taxes amounted to CHF 40 million, corresponding to a tax rate of 22%, quite in the range of our mid-term guidance of 21% up to 23%. The stable profit for the year and earnings per share reflected the lower performance or operating performance as well as the profit from sale of property.
The ongoing reduction in inventories is clearly a positive impact on the net working capital with a significant reduction or decline; however, in percentage of sales, still on a high level with above 24%, and it will remain a key focus area for the next month. Average NOA reflected continued capital expenditure to ensure our long-term organic growth, and with a renewal close to 19%, we are still well above our cost of capital of around 8%, but below the target over the cycle of 20%. We are working on both improving profitability and optimizing capital efficiency to get back to the above 20% target. A clear highlight of the first half year is a strong operating free cash flow close to CHF 100 million. This is thanks to a seasonally below-average increase in net working capital.
At that time of the year, it's normal to have a buildup of net working capital. From a seasonal perspective here on the waterfall chart with CHF 60 million, however, it's clearly below the average over the last couple of years. Remember that we expect for the full year around CHF 100 million net working capital release for 2025. The operating free cash flow would also have been positive without the gain from the sale of property, which makes roughly CHF 15 million a clear exception. The last time that we were positive at that time of the year was 2010, right after the financial crisis. Acquisition mainly reflected the acquisition for Bucher Hydraulics, a well-established supplier of hydraulic systems in the Scandinavian market.
The dividend and specialty shares with CHF 140 million reflects the dividend payout as well as the payout for the share buyback, which is around CHF 30 million. Remember that we plan to buy back up to 410,000 registered shares or 4% of the share capital over the next few years, thanks to a strong free cash flow. Over the last couple of months he reported a strong net cash position of more than CHF 300 million and an equity ratio close to 70%. By the end of the year we expect approximately CHF 450 million of net cash, also depending a bit on the speed of the share buyback program. Before handing back to Jac, who will walk us through the outlook for 2025, let me quickly summarize the priorities from a financial perspective for the next month.
Managing cost at business units with low capacity utilization continues to drive the ongoing reduction in inventory, bringing net working capital to a healthier level, but also preparing for the SEC overlay that we are seeing in some of the markets. With that I would like to hand over to Jac.
Thank you. We would move on to the outlook for the whole year. Start off with Kuhn. There we assume that the reduction of the above average inventories in the dealer network is continuing in a positive direction, is progressing. Based on that assumption, we believe that Kuhn can expect stable sales always on a comparable basis and an operating profit margin in the region of last year's level 2024. We continue to Bucher Municipal. They expect the demand to fall slightly from a high level, but they believe that they will have stable sales at the end of the year again compared with last year. The operating profit margin should increase further compared to prior years, also based on the programs that they're driving now.
We come to a division where we had to make slight adjustments due to the uncertainty surrounding global trade tariffs mainly and then the uncertainties that come from the customers from Bucher Hydraulics. Bucher Hydraulics expects a delayed recovery of the demand and anticipates a slight decline in sales on a comparable basis and a slightly lower operating profit margin for the year. We adapted the outlook. That's the reason Bucher Emhart Glass is the second division that is challenged. They anticipate significantly lower sales on a comparable basis compared with the high level of the prior year. Accordingly, the operating profit margin is expected to be significantly lower as well. Finally, Bucher Specials, there we anticipate a slight fall in sales on a comparable basis. However, the operating profit margin is likely to rise due to the efficiency measures that we have taken.
Also here we adapted the outlook according to the new situation. What does it mean for the group overall? There we are with its strategic approach for local production close to its customer base. Basically, we are set up in a good position. Nevertheless, we did have to take into account that the uncertainties have increased in the past quarter specifically and the demand for capital goods is less euphoric maybe than we had anticipated at the first half. Bucher Industries therefore now expects slightly lower sales for 2025 again on a comparable basis. The group operating profit accordingly is going to be slightly impaired now, not calculating the CHF 43 million of profit that we are getting from the property sales here in Switzerland.
I believe we have covered the most important points for this first half year and we would move on now into our Q and A session. At that moment we will stop the recording. There were already two hands up for quite a while. Out of excitement or anticipation or just want to be first, Halter Bommert, what's your question?
Good afternoon. I just wanted to be sure that I can unmute myself. I tried early. The first question is regarding the U.S. agriculture business. I think your comments were more hesitant than I expected after they got the big down payment for the damages that happened in the recent years there. I see the surveys which spiked and are now normalizing at the higher level. Also, they introduced a farm bill. Do you really see that the U.S. agriculture business is stagnating? Did that change in recent months? Do you see volatility there? Do you want to share with us even regional divisional figures even though this is not typically the case? What happens in U.S. in agri?
Who knows? No, I think there's one element we have to start off with. The U.S. agricultural business last year was not as bad as we had it, for example, in Europe. We have somewhat the base effect that we start off with in the first half year of 2024. Yes, you mentioned promised payments. The most important bill is the one that they accepted in December of last year, 2024, which was a $40 billion support. So far they have only seen $10 billion of it. It hasn't come through. We always have to be careful what is promised and then how long does it take and when will it really reach the farmer at the end? The last element I think that is important is that the dealer stocks in the United States are still a bit higher.
We still have to burn off more dealer stocks there than we do in Europe. These are the key reasons why we're still a bit hesitant with the second half. I believe it will come, but maybe not quite as quick as we had hoped or anticipated.
You didn't see trade tariff-related volatility, pre-buying, and catching up.
Not for the moment. There could be another scenario that now they're anticipating price increases and they suddenly would go and buy frantically. We don't see that. What we see is that China is moving their demand from the United States back to Brazil. Positive for Brazil, but not necessarily for the United States on the agricultural level. At the moment we still see some reluctancy, especially on the crop production side. That has to do with the fact that they see that the commodity prices are still on the low side and their profitability is not as high. Okay.
Not only regarding Bucher , but in general 15% tariffs on European exports, zero tariffs on U.S. exports to Europe. Do you see a wave of agricultural products coming into Europe, changing completely the structure here? Or do you expect in general that a lot of these exports to the U.S. will not happen any longer?
I cannot predict all. First of all, the machinery in the United States and Europe does look different. You probably could even compare it to cars. They just like it bigger and it's more sturdier in the U.S. I don't see that the machinery now suddenly is just going to take away market shares here in Europe substantially. The question is more how is it going to happen the other way around. For us it's not so much a problem because clearly the bigger part of the products that we sell in the United States is produced there. It's only a smaller part that we import from France to the United States. I don't see major shifts. The question for us will be from the imported products, can we now raise the prices on them and will we still be competitive.
There's something else going on in the United States we have to bear in mind, that now material prices are starting to increase again. Steel prices are coming up, that we see. We have to start anticipating inflation again, just like we had to do it in 2022. There's a price increase that is imminent. Of course, when there's a slow demand, price increases are a lot more difficult to implement. Maybe there will be a delay of a couple of months and then we can start raising prices as the demand starts kicking in again. Okay, yeah.
The second question is regarding the hydraulics business. Trying to understand what's going on there. The culprit is material handling, which I understand is mainly construction machinery in.
The U.S., no, not really. Actually, it's a lot used for logistical functions. For example, dock levelers within distribution centers or the levelers that we have on the back of a truck, the tailgates, these are driven hydraulically. We have, I don't know, 80%% or 90% market share of these in the United States. These are all products that we assemble in the United States with some electric motors coming from China. Obviously, all our customers knew now that there was a big shift in the 120% tariffs, which were prohibitive at that moment, that they stopped ordering in Q2 and they were living off their own stock, just to see what's going to happen with the tariffs. Now it has normalized somewhat with a 50%, but now we have to find a new level of demand.
At the same time, we are finding different ways of dealing with the situation. As I mentioned, we're opening up in Malaysia. We'll be most likely also going into Mexico just to kind of mix and match the components out of China in such a fashion so that it doesn't get hit by the high tariffs.
Would you say the, let's say, the temporary weaker performance in the second quarter of hydraulics was more related to homemade issues, I mean company-specific issues, also with the restructuring cost you mentioned, and not really the trend of market demand, the underlying trend?
I would just call it a short term market adjustment. The market demand, short term, kind of stopped because they were trying to find out what the new situation is going to be like and what the final pricing will be. The demand should come back. Will it kick back and then compensate for what we lost in Q2? I don't know that I can tell you.
Okay, and then a small last question. You sold a lot of real estate. Is there more non-operating real estate to be sold in the coming years?
I leave that to my Chief of Real Estate.
I would say it's the biggest part with this $50 million proceeds. It's quite a material transaction. Of course, here and there we always have some renovations, maintenance, or to sell part of it, but not to this magnitude. Clearly not. It's not an exception.
It happens that we buy something new, open up something new, and then we sell the old property that we had for operations. That's more a normal transaction.
There are still some portion of selling also in Switzerland related to the property that we just sold, but clearly not in this magnitude. Not material from a group point of view.
Not to adjust my model then. Okay, thank you very much.
Good. Thank you very much. I'll move on to Sebastian Feldo.
Hello. I 've got three questions. I would ask them one by one. First question on the guidance, can you understand or can you help us to understand what you mean by saying slightly lower sales? Does that mean something somewhere between 3%- 5% organic? Is that a fair assumption? Based on the guidance as well over there, when you said somewhat lower margins, what does that mean? Does it mean something like whatever 20- 90 basis points lower, or if you have any sort of other ballpark in mind that you can share, that would be my first question.
The two others will follow.
Yeah, that would be the plan, if possible.
Okay. I gather for net sales we probably could say that's a ballpark. That is not unrealistic. Of course we have to see where it leads to. I guess the 3%- 5% is maybe an assumption that could be fair on the lower margins. We definitely want to keep an 8% in front of. On the EBIT margin side, 8%+ would be of course the ambition that we have and then most likely also possible. Got it.
ond question is, on margins for Emhart Glass, is it fair to assume that you still aim for a double digit margin on a four year basis?
Aiming, yes. Yeah, is fair. It will be a tight call, but yeah, it's fair. Got it.
Okay, then the last one on my side. Can you provide me with the building blocks for the second half year? Implied sales growth, acceleration at Hydraulics. That is baked into your guidance, if I'm not mistaken.
I think one driver should be, but we have to. It is a bit of a question mark, is of course, when does John Deere kick back in? I mean, you maybe read the numbers, but they're still very pessimistic for the American market for the whole year. They believe that it should be better in next year. They will have to start restocking once they believe that they will grow their business again. At that moment maybe these orders can kick in and first supplies will happen there as well. That would be one element. The other element we probably discussed with Walter Baumert before is, once the whole tariff situation is stabilized again, maybe our customers have a better understanding how we can set up ourselves to deal with it again. I believe that Malaysia should come up and be operational Q4, maybe that helps as well.
There are multiple factors that weigh in there. Got it.
Many thanks. I will go back to the queue.
Thank you very much. Mr. Hasana, you had raised your hand, but everything has been answered.
Yes. I also wanted to ask about the margin guidance because when I plug in your divisional guidances for the margin, I get much closer to 8% given that probably sales in the second half year will not be significantly higher. I was also wondering what you exactly mean by somewhat lower and maybe specifically on Kuhn Group in terms of margin there. You expect kind of a flat level. Yeah. Isn't that a bit conservative given what we've seen so far?
Yeah, we'll have to see. I think with Kuhn Group, it depends a lot on how the early order programs work out. They are starting now in August. The other element is how much of the early orders can we still deliver this year or will they be moved into next year? That's going to be a driver for the profitability of Kuhn Group. We kind of make more predictions at the moment, but that's going to be the critical question. Is it going to be a lot more than eight or just eight? That's the question mark that we have.
All right, thanks.
You're welcome. Any other questions? Sebastian Feld o has one or is that an accident?
No, I definitely have plenty of questions. Happy to chip in. Another one or two others. No worries there. With regard to net working capital intensity, as you mentioned, that one is at sort of a level that you think, given of course assuming some seasonality and so on, that is also planned for going forward. If I'm already speaking, in this short question anyway, with regard to the CapEx, if I'm not mistaken, as I said, CHF 150 million for the year, it's a bit of a slow start. We still stick with CHF 150 million for t he full year?
With the capital expenditure, normally we have 1/3 in the first half year, but I would assume for the full year of around 1/3, CHF 30 million, somewhat in this area, so definitely below last year's high number of CHF 150 million. In the future, normally plan with around 4%. It could also be sometimes slightly higher than that. With regard to net working capital, in mid to long term, we clearly go in the direction, would like to go in direction to be below 20% as we were in the past. For this year, that will be challenging, however, as I mentioned before, we expect around CHF 100 million overall for the full year 2025 of net working capital release this year.
For the next years i s it too early to say?
As we started last year, mid of last year, slowly but steadily going in the right direction, I would assume even somewhat below 20% next year, but it's too early to already give a number.
Got it. Many thanks.
I don't see any hands anymore. It seems we are clear enough. It's only a half a year, we still have another six months to run. I think there will be opportunities coming up there as well. Now we'll have to see how we can capitalize on them or will it be shifting over into next year, but we're confident and overall especially the agricultural down cycle, which has been in a record length in the past almost two years now, that that has come to an end and that we will see recovery over the next months to come. I think that is a key driver for us. With these remarks, I'd like to close at this moment and thank you very much for attending. We'll be in touch one on one or at least in next end of February or March, that is. Bye bye everybody.
Thank you for being here.
Thank you.