Good morning, ladies and gentlemen, and welcome to the Feintool International Holding AG half-year results 2025. At this time, all participants have been placed on a listen-only mode. The floor will be open for questions following the presentation. Let me now turn the floor over to your host, Lars Reich.
Yes, good morning, ladies and gentlemen, and thank you for joining our conference call today. Thomas Erne, our CFO, and I are pleased to present our results for the first half of 2025 and discuss them with you. Before we move on to the results, I would like to say that it is a great honor for me to take over as CEO of the Feintool Group as of June 1, 2025. I succeeded Torsten Greiner, and I would like to sincerely thank him for his smooth transition. I have been with Feintool in the United States since 1999, so close to 26 years, in different management positions, and since 2009, I have led the successful development of our U.S. business.
Under my leadership as Executive Vice President, Marketing and Sales, sales in the U.S. have grown substantially, and the business was set on a sustainable path to profitable growth. In July 2023, I was appointed Chief Sales Officer of the Feintool Group, and in April 2024, additionally, took over as head of the fineblanking and forming business unit in Europe. I have to say our core strategy has proven successful. We are strongly positioned in our core technologies, fineblanking, forming, and electro lamination for the production of electric motor cores, and continue to benefit from solid demand across all drive types and regions. At the same time, we are systematically expanding our activities in electric mobility and renewable energy solutions. With our global production network of 18 plants, we ensure close proximity to customers worldwide and follow a clear local-to-local strategy.
Very important in during those times right now. My short-term priority is to safeguard the profitability in a challenging European market environment while setting the course for sustainable global growth, building on our technological leadership, operational excellence, and strong customer relationships. To the agenda. Let's take a brief look at the agenda. First, I will provide a short review and outline the most important market developments and their impact on our business areas, followed by some background on our operational highlights in the first half of the year. Our CFO, Thomas Erne, will then present the financial figures for the first half. We conclude with our outlook, key messages, and a strategy update before we move on to the Q&A session. Let's start the review. Resilience is the word, word that describes our first half-year result.
Resilience founded in our dual strategy to cater to any propulsion systems, IC, hybrid, or BEV vehicles, helped Feintool navigate the uncertainties of the current automotive market. While we believe in an electrified future, the continued strong demand, especially for hybrid solutions, fueled a solid demand worldwide. The first half year was also a tale of different markets for Feintool. We saw solid momentum in Asia, in particular China and in North America. Europe is still plagued by an overall weak automotive market and low demand for our laminated electric motor components. Our industrial products have still not fully recovered from the slow demand after the COVID crisis and continue to be soft globally. The U.S. market, a strong performer for Feintool, and over the last 15 years, we have grown to be the number one supplier in functional, critical, fineblanked, and formed components.
We had some weakness in the US dollar against the Swiss francs and lower material prices that account for up to 70% of our component prices. However, increased significantly the number of shipped components. Our building expansion in Nashville to absorb growth with next-generation hybrid components is completed, and we are currently commissioning another large 1,600-ton servo transfer press to be in production this fall. Just as an example, over the last 12 months, we experienced an increase of 50% in daily shipments of some of our formed components, in this case, for an eight-speed hybrid transmission program. We see very strong demand in North America, especially on the hybrid and drivetrain side.
In Europe, thanks to our dual strategy, our traditional fineblanking and forming business was almost on budget, and we experienced growth, especially in our forming plants in Obertraubling and Ohrdruf, both located in Germany. The sales decrease of 17.5% was mainly found in our e-stamping division, with the early cancellation of an entire vehicle program that we supplied the electric main drive motor components. Furthermore, our industrial application showed, especially in Germany, continued subdued demand. We acted, and are currently in an active reorganization of our stamping division in Germany, and have to rightsize for our European operations. We are close to reach a settlement.
I've been personally involved with the Works Council and also the various unions, and we expect that all the restructuring projects in Germany are completed in 2027, and will enable us to get back in improvements in profitability. The relocation of our high volume fineblanking business from Lyss, Switzerland to our state-of-the-art plant in Most, in the Czech Republic, is nearly completed, and we have achieved on August 1st, OEM approval, and will start shipments on those programs towards the end of 2025. The decision five years ago to bring the e-stamping or our electric motor core technology to China proved to be right. We received a large order, approximately CHF 30 million lifetime, from a large Chinese commercial vehicle manufacturer.
The lower sales numbers are attributed to lower exports from our customers out of Japan, and the fierce competitive pricing and volume war in our Chinese automotive markets. Our presence in India. We experience a lot of interest in the Indian market, especially also from Japanese companies, that would like to localize seating and transmission programs in India. Therefore, we broke ground in September 2024, and expect to be in operation by mid-2026. This is a greenfield plant that we're building close to Pune, in the north of India, and Pune is the automotive center in India. Here is a picture from the groundbreaking ceremony, and an actual construction picture of the site as of July 17th. We currently started to pour the concrete for the foundation of the factory. With that, I will now hand over to our CFO, Thomas Erne, for the financial results.
Thanks a lot, Lars, for the first introduction of the first part of the review. So I will quickly guide you through our financials, starting with the top line, net sales. As you can see on that page, we basically dropped from CHF 390 million in the first half 2024 to CHF 334 million. That's a decrease of 14%. If we eliminate the Forex impact, then we have a decrease of 11.5%. As Lars already mentioned, the regions, going from the right to the left, the biggest decrease that we have is in Europe, with a decrease without foreign exchange impact of 15.4%, followed by Asia, a decrease of 9.5% compared to 13% with Forex impact.
In the U.S., we dropped by 3%, as Lars mentioned, driven by a steel price impact, though the volume is actually higher, as you have seen in the slide before. If we go to the EBITDA slide, then you see that even though that we have a drop in CHF 55 million on the top line, we were able, with our cost saving initiatives, to mitigate the result and actually end only with a drop of CHF 5 million on the EBITDA level. That was supported basically by a lower material cost quote, which is around 46.8%, compared to 51.5% in last year, due to a different product mix, and also supported by lower personnel costs, which have been reduced by CHF 6.6 million, compared to prior years' periods.
On EBIT level, we see the same picture, so we further decreased the depreciation compared to prior year by around CHF 2.2 million, and also, of course, the effects that you're seeing above EBITDA is taking place in the EBIT. The EBIT precisely, in consequence, has dropped to CHF 1.9 million. We are on our half-year report; you see an EBIT adjusted, so this is the CHF 4.8 million. The adjustment is mainly driven by an accrual that we had to build for the change in the management. So the real operational result is CHF 1.1 million. The financial result is at previous year level, resulting in a net loss at the end of minus CHF 5 million. Last year, we reported minus CHF 3.2 million. Feintool remains with a strong balance sheet.
So, if we look at our numbers, then we see that cash is on previous year level, we have been first half at around CHF 52 million. Our receivables have been last year around CHF 120 million in the first half-year, so basically due to we have dropped that to CHF 107 million, and inventory was last year also around 11 million higher. So, we're still managing that very well. If we go on the next page, then our equity ratio is still at a 55.5% level, very strong, and our net debt slightly increased to CHF 80.1 million. This CHF 80 million is driven by investments that we made, as Lars has mentioned before. We're investing in our growth markets in Pune in India.
We're investing in Asia, where we have been investing in the U.S., and this is basically then driving our net debt. Equity remains at, I said before, 55.5%. The drop that we see from CHF 450 million to CHF 426 million is mainly driven by a Forex impact of CHF 25 million. Finally, the cash flow, as we have seen before, we have invested CHF 28.1 million that we have funded by increasing net debt. The operating cash flow last year was also around CHF 12 million. Investment has been also around CHF 27 million, and the free cash flow last year was at -CHF 15 million. So the growth that we are planning and the outlook that Lars will give you is supported by those investments.
Yes, thank you very much, Thomas, and I'm now pleased to provide you with an outlook of the Feintool Group. We remain cautious, but overall positive. While Europe, with our reorganization task and the soft volumes, will likely remain challenging, we see a good market and margin developments in our other regions, especially in North America. The right positioning with our e-stamping technology in China will support the market shift towards Asia. In the medium term, we believe that we are right positioned with our dual strategy and the various technologies in all three regions to profit from structurally growing markets. Our strategy has proven to be right and resilient. The way forward is to build on our global strength with our 18 production plants. Our local-to-local strategy isolates Feintool in most of the cases from geopolitical risk exposure.
We are present in all the major markets, and our new plant in India will further strengthen our global footprint in a growth area in the near future. Why our dual strategy? As an automotive supplier that needs to install production equipment, prototyping, testing, and validation of many of our components, we need to rely on some stability and years of production. Therefore, having our activities spread over all the possible propulsion system is the right strategy, and let us focus our efforts on the actual demands and adjust accordingly. To see the slowdown in speed of the electrification, as you also can see, we have very different opinions how much BEV vehicles will be penetrated in the market by 2030, going from the low 30s to the high 50s.
And this current slowdown will give us time and extension of IC and hybrid platforms, exactly what Feintool needs to help to adapt our production plants worldwide and to invest in growth areas. A presence in all major markets, a local-to-local strategy, and this is very, very important. We buy material, and we sell in all the markets, so our plants in China produce for China, our plants in North America produce for North America. We have very little export of products, only about 2%, so we are mostly isolated of the current geopolitical risk. And the high interest and growth potential of India in the near and mid-term will truly help us to strengthen and build on our global plant network. In China, the true test of success is selling through a local Chinese subsidiary to a Chinese OEM.
Five years ago, we decided to add our e-sheet capabilities, electric motors, to our Chinese operation and expanded our facility in Taicang. You see that on the left side, we have already maxed out the facility. We have now been successful to win our first main motor application. It's for a commercial vehicle. It's we can't show you the vehicle, but it's something, a small transporter. This order has been received in the first half of the year, and we expect a lifetime volume of around CHF 30 million. But it shows that we are positioned right and that we can grow in our new technologies. For me, it's clear a tale of different regions. Europe, North America, and Asia, they develop very differently.
But the strength of Feintool lays in a consequent globalization effort that we started already in the 1980s. We have now three strong regions that are very well managed. Our management team in Asia has been together over 20 years. The North American team, I'm coming from, has now a leader that has been since 2023 with Feintool. So we are very deeply rooted in those areas. They know best the local strategies, price levels, and opportunities, and it's my goal personally to further strengthen the regions with high independence, but ground them with a strong Feintool Group and support out of the group. In this uncertain times, it's important that that our customers can rely on a strong partner. Therefore, at Feintool, we truly make more than parts, we make commitments.
We commit to faster innovations, to quality and reliable parts, and we are a true partner to our customers. Before we start the Q&A session, I'd like to ask everyone to please limit your questions to two per person, and ask them one at a time, rather than both together. I will be happy to take questions on the company's general direction and strategy, while Thomas, our CFO, will address the detailed financial questions. We will first take questions from participants on the conference call, and afterwards, move on to the questions that have been submitted via the chat function. Now, operator, please open the line for the first question.
Yes, thank you. Ladies and gentlemen, if you would like to ask a question, please press nine and star on your telephone keypad. In case you wish to withdraw your question, press three and star on your telephone keypad. And the first question is from Charlie Felmbach, AWP. Please go ahead with your question.
Good morning, gentlemen. My first question is, is it reasonable to assume that the sales decline in the full year will be in the double digit area as well as similar to H1? Yeah, okay, you want the second later?
You can ask both if you want. I, I think we can answer.
It's not too long, huh? My second would be: there was in February confidence to be back in black figures on the result side for the full year. Can you confirm that? And if yes, what does it mean exactly? Is it just on operating or EBIT level, or also on net level, or with or without the extra costs? Thank you.
Okay. First, to your sales decline, we had our major problem in Europe was the early cancellation of a large program. But we expect for the second half year, a little bit stronger sales, but we still will see probably double digit sales reduction for the full year. But not continue to be stronger, but a little bit not continue to be weaker, a little bit stronger for the second half, because that program is gone now, and we have one or two new applications that start up. But overall, we will not be able to make up.
Mm-hmm.
Regarding the one-offs, as you mentioned, basically, the one-offs are driven by the progress of the negotiation with the German Works Council, due to the closure that we plan or the restructuring of the German plants. That will also drive the one-off effect in the second half. But at this point, we believe that we're able to close the negotiations actually pretty soon. But it's too early to announce, and in consequence, we cannot make a statement on the one-off effects at this point.
So loss or win, for the full year, you won't do any prognosis, yeah?
No .
Okay. Thanks a lot.
Yes, no.
At the moment, there are no further questions here in the audio conference. If you would like to ask a question, please press nine and star. For the moment, I hand back for the written down question in the chat.
Okay. So, we have a couple of questions in the chat, so I start with the one that is first submitted. So, Walter Bamert from the Zürcher Kantonalbank, he basically wrote more questions because you announced it too late, that you want only two questions. But, we basically, the first question we already answered, so that was: Could you please quantify the expected one-off costs for second half 2025 and 2026? So the answer we already have given, so I think that's clear. How big was the U.S. ramp cost in first half 2025, and what do you expect in second half 2025 and 2026 from each of the various projects?
Mm-hmm. Mm-hmm. So we had actually reinvested the last two years. We invested close to CHF 35 million in North America. And that is done now, and the equipment is in place. We're just starting up now. We, of course, had some costs with bringing in the equipment that we cannot depreciate, so this was a one-time cost. But we now expect that this is done, and we have two big hybrid programs that start up, but it will be later in the year. It will be November, December, so we will not see a big impact on the sales side this year but we have the business booked, and we had very strong sales in North America the last two years. So we expect to see that next year on the sales side.
Next question: What impact do you expect from steel prices in second half 2025? Are there retroactive compensations looming?
No, the good thing is, and you saw the steel market, especially in North America, is very volatile. But we have, on the buying side and on the selling side, we are able to buy with an index. So while we see the numbers changing a lot, that we have no risk, basically. And right now, the material prices are sinking again in the U.S. It's also part why we ship higher volumes, but show lower sales numbers. But we don't have any risk, and that's very important. We are just adjusting the sales and the purchasing pricing accordingly.
And then the last question, so that's CapEx budget for second half 2025 and 2026. So on 2026, we haven't done our budget process yet, so I'm not gonna answer that. So, but second half, CapEx will be on probably same level as in the first half. And for 2026, we will see. But definitely, the target is to drive CapEx back to a normal level.
Mm-hmm.
because we have a investment we have done, and I think we will basically try to reduce that in future. So next question, from, Alessandro Foletti from Octavian. In automotive, can you say approximately what percentage of sales you are now doing in e-stamping versus traditional fineblanked components? And based on this, do you think you are lagging in line or ahead of the market? The first part, I'm gonna answer, so second part, Lars will answer.
Mm-hmm.
So we are approximately around 25% of sales in the e-stamping business. And the second part, you wanna answer?
Yes, yes. I mean, when we purchased, so this was, e-stamping came to Feintool through an acquisition in 2023. At that time, it was a very big hype, and I think the market has adjusted a little bit, but we are seeing now a lot of, a quoting activity again. So we, we for sure, we may not see it on the sales number, but we see it on the interest and on the quoting activities. And I don't think we are lagging behind, because we have a unique chance within Feintool. We have with with the acquisition in Germany, but have already successfully brought that technology to China, and we will expand this globally. So we are working right now on bringing that technology to North America as well.
One further question from Alessandro Foletti: What happened with your client that canceled this program? Why did he do that? Just trying to understand if it's really company specific or if there's more.
Yeah. It is a big German OEM. I can't mention the name, but the whole vehicle got canceled, so they closed basically the plant. And we supplied the main motor, and this was the reason. It was the not successful vehicle for the OEM, and this was done in April, and we are currently in negotiation about remaining volumes and long term. So this could probably be connected with new business as well. So we are... Sometimes it's also a chance for us to win new business with the same OEM, because we have some requirements that they also stick with us and help us in this situation. So we will probably, hopefully end up with winning in this situation.
Okay, so then next question, as it's basically for the dealer, Tagblatt, and Ms. Siegrist is asking-
Mm.
If we can answer that in German. I will also read the question in German.
Yeah.
Okay.
In Deutsch? Okay, good, good. Kein Problem. Okay. So, English und Deutsch, so that both, both parties can, can hear it. I'm, I'm gonna say quick in English, and then I, I go to German. So it's very, very important that we understand why we have-
Yes, just, just, we do it in English, then. The, the question, because we have,
Oh, you do the question in English.
We know that there's ...
In English. Okay.
There's one English speaker in the call.
Okay.
So the question is, how far we are the transfer from Switzerland to Czech Republic, and if people have been already terminated or still to be terminated? And the second part was about tax tariffs for the U.S.
So I start in English quick. It's very important to understand that we have a commitment to our location in Lyss. We will keep the technology center and the tool room, and we actually invest several million CHF, that I probably can say more about in the year end, in new equipment and to modernize and bring us back to be really a competitive solution. We had to move the high volume business from Lyss to Most, because our contracts are in EUR with that OEM in Germany, and we just had a exposure from the EUR, the cost in CHF, the sales in EUR, and this was the main reason. The move is almost completed. It was very successful.
However, in Lyss, it will remain. We have several customers that will remain in Lyss, and we are reducing 62 positions, and we have 20 left that will leave if the business leaves. But I also have to say, we're working right now on a big program. It could well be that those 20 leave will stay, but there is no further reductions as we already have announced. So we will not cut deeper, so we will stabilize the business. We will remain in Lyss. It's a clear commitment also to the technology. We have engineering, and we have prototyping, and we have the tooling technology in Lyss, and this is the foundation for Feintool to build a future business. So then the second question was about import duties to the U.S.
Which I said, only about 2% will be imported. In fact, this will go away because the material has been localized, so we will have no duty exposure in North America. We had one component that came from Korea, but we have settled with our customers. Our customer has fully taken over the exposure, and we have zero financial risk.
Okay, then the final question from the chat, from Amira Manai, from ODDO BHF. First question, you have reduced the break-even threshold. Could you specify the targeted fixed cost reduction and when you expect the full impact? So it is correct that we have further decreased the break-even threshold, and now we're still in the alignment process, as we said before, with the negotiations. And then we expect that the full impact, the full impact will be in 2027. Partial impact will be this year, and also an impact will be next year. So second question, could you elaborate on how quickly you expect the India plant to ramp up and contribute to revenues and margins?
Mm-hmm, mm-hmm. So building completion is scheduled for May 2026, and we will then start to put in equipment. So this will, in 2026, very little add to sales and revenues. This is normal. We have started many operations. I was personally involved in China in 2009 and 2010, and it will take us a couple of years to really... And we know that to have a positive EBIT margin because of the investments. But we all have now very, very large interest, and especially from Japanese customers, and it could be that we can add quick and grow quickly in this plant. The plant, the area we have, we could actually double the size.
We are starting with half of the size, especially also to have the cost under control. And we also move in some used equipment to be sensitive on the capital spending, as this is a problem in the group, and we will have to reduce our spending in the future years. If there's no more questions, I would like to turn over to the operator.
Yes.
I would like to thank you. Thank you very much for attending this call. This was my first call. Thank you very much for attending. I'm looking forward to present you in six-seven months, our full year numbers. As you have seen, I think we are on the right track. You have seen that with lower sales, we have continued to increase our bottom line, even if still a negative result. But I see that we have a lot of actions going, and we will further reduce our cost structure, right size, especially in Europe, and we will continue to grow in the areas, and we were set up globally in the right areas to grow. So with the technologies, with our hand, we have...
We have a full portfolio, we can adapt to forming, fineblanking, and e-core stamping, and are really flexible in the propulsion system choices that even our customers right now not fully understand. So this flexibility, I think, is a strength of Feintool, too. So once again, thank you very much for attending. I wish you all a beautiful day, and especially in Switzerland, stay cool. Thank you very much.