Ladies and gentlemen, welcome to Phoenix Mecano's half year 2025 results webcast. All participants are in listen-only mode, and the webcast is being recorded. Please note that any recordings by participants for publication or broadcast is not permitted. After the presentation, we will hold a Q&A session. We will first address written questions, followed by verbal questions. You may submit written questions at any time via the dialogue box on the left-hand side of the live stream tab. Instructions for asking verbal questions will be provided at the start of the Q&A session. I will now hand over to Rochus Kobler, the CEO of Phoenix Mecano.
Good morning, everyone, and welcome to our webcast. I am Rochus Kobler, CEO of the Phoenix Mecano Group. Thank you all for taking the time to join us this morning. During today's webcast, we will be discussing the Phoenix Mecano Group's business performance for the first half of 2025. On the phone line with me is our Chief Financial Officer, René Schäffeler, who will provide a detailed overview of our financial results for this period. After our presentations, we will be pleased to address any questions you may have posted online or via telephone. Use the online portal for that. Ladies and gentlemen, before we dive into specifics, I would like to start by providing you with a brief overview. Our previous meeting took place in April, during which we presented our first quarter results. As noted then, the year 2025 began positively for us.
Nevertheless, global markets have since then continued to experience considerable uncertainties and high volatility. In the second quarter, these developments clearly and directly affected the end markets for Phoenix Mecano industrial solutions, as well as smart furniture and trade assistance. We are closely following these developments, and our group responds to these challenges with flexibility and by working very closely with our customers. By focusing on profitable niche markets such as explosion-proof enclosures and structurally growing application areas such as current measuring systems, we can compensate for some of the overall limited market dynamics. On top of that, we continue to make strategic investments. Investments in digitalization and in specific performance enhancement initiatives. As a result of this, for the first half year, 2025, the Phoenix Mecano Group recorded a slight decline in sales and a drop in profits compared to the previous year.
Its industrial divisions, Industrial Components, and Enclosure Systems maintained stable overall sales, while the DewertOkin Technology Group faced a temporary standstill in global supply chains in the second quarter, resulting in lower sales and operating profits for the DOT Group. At our last conference in April, we also discussed the implications of the U.S. tariffs on Chinese imports and on our business. Naturally, we are closely monitoring the impact of the U.S. tariff actions on the economy and our markets. We are regularly reassessing the situation, and today we can confirm that the direct impact of U.S. tariffs on Phoenix Mecano remains minimal. However, the indirect consequences are relevant to bring to your attention again. Since April, the scope of this issue has evolved significantly, with U.S. tariffs now being implemented globally, resulting in higher tariff levels for many countries besides China.
We will address this matter in full detail later during this call. We have prepared a special slide for that. For now, I will hand over to our Chief Financial Officer, who will present the latest figures. René, please.
Good morning from my side as well. With EUR 380.3 million, Phoenix Mecano consolidated gross sales in the first half of 2025 were 1.5% down on the previous year figures. Organic locally currency sales fell by 1.2%. Industrial Components division could slightly increase its sales, while sales in DewertOkin Technology Group and in the Enclosure Systems slightly declined. Incoming orders fell by 3.3% to EUR 375.6 million. In organic local currency terms, they reduced by 2.6%. The book-to-bill ratio for the group was at 0.99 compared to 1.09 in previous year. The ratio was above 1 .0 in the two industrial divisions, while DOT Group's figure was lower because of a sharp drop in orders in Q2 due to tariff conflict.
The operating cash flow declined by 12.8% from EUR 37.7 million- EUR 32.8 million, and the operating result by 18.8% from EUR 26.2 million - EUR 21.3 million. The results were burdened by one-off expenses of approximately EUR 3 million for a performance enhancement program in Industrial Components division. A further reason for decline is the volatile business situation with significant fluctuations in capacity utilization, which could not fully be met with capacity adjustments and short-term time working. The result of the period was down by 20.8% at EUR 14.4 million. Previous year, EUR 18.2 million. Let me continue with the division performance, starting with Enclosure Systems. Sales in the Enclosure Systems division fell by 1.4% from EUR 111.5 million- EUR 110 million. In organic local currency terms, they were down by 1.1%.
The operating result declined slightly from EUR 15.8 million- EUR 15.2 million, and the operating margin from 14.2%- 13.8%. In the light of the challenging economic environment, business performance of Enclosure Systems was robust, both in top and bottom line.
Customers in mechanical engineering, automotive, and building automation sectors delayed orders. Sales of explosion-proof enclosures benefited from plant engineering project worldwide, especially in India and Middle East, and increased. While sales of electronic enclosures fell in the first half year, incoming orders in this business area show a slight positive trend. Let's continue with Industrial Components. Gross sales in that division increased from EUR 94.5 million- EUR 96 million. In organic local currency terms, they were slightly down by 0.4%. The operating result declined from EUR 4.3 million- EUR 2.4 million, while the operating margin shrank from 4.6% - 2.5%. The division result was impacted by initiatives to improve the performance in the range of EUR 3 million. Demand for components and modular solutions for industrial automation remained on a low level in European key markets.
On the other side, the demand for products in measuring technology business area, especially in power management of Smart distribution grids and High-voltage direct current transmission, remained very strong. The bolt-on acquisition of a transformer and choke business in 2024 led to sales increase and the realization of cost synergies. First orders for split-core current transformers for data centers have been won. In the electrotechnical components business area, inventory levels of customers and therefore supply chains normalized further. Sales slightly picked up despite the difficult economic environment. Let's continue with DewertOkin Technology Group. The gross sales of DewertOkin Technology Group fell by 3.3% to EUR 169.7 million. In organic local currency terms, the decrease was 1.4%. The operating result reduced from EUR 9.9 million- EUR 5.6 million and the operating margin from 5.7% - 3.3%.
The volatile business development and the digitalization initiatives in medical technology had a negative impact on the division results. It also has to be mentioned that in the first half year of 2024, increased subsidies have overcompensated the substantial expenditure in connection with the complex site consolidation in Jiaxing in that period. The new regime on tariffs in the U.S. significantly influenced the order behavior of customers of DOT Group. Some tariffs, Ireland for furniture industry, increased significantly, which increased the existing uncertainty in the market. A sluggish demand of end customers in the important U.S. market was the consequence. Producers of furniture in turn reduced their inventories. This led to a temporary standstill in global supply chains and order behavior of OEMs. As a result, order intake and sales of DOT Group decreased by double digits in the second quarter across the different business segments.
In the meantime, a certain revival can be noticed. Customers of DOT Group work on relocation production volume from China to other Southeast Asia countries. The division has reacted early on this trend and is increasing its capacities in Vietnam. So much from my side on the figures for the first half of 2025. Thank you for your attention.
Thank you, René. Ladies and gentlemen, please do not hesitate to post your questions online if you already have some. I would like to spend some time on the tariff situation and elaborate on that topic. I would like to return to the topic I initially mentioned, the topic that we are closely monitoring. We are monitoring the impact of the U.S. tariff actions on the economy and on our markets. I said that we could confirm the direct impact of U.S. tariffs is minimal and remains minimal for the Phoenix Mecano Group. We are talking figures now. Direct exports into the United States account for roughly EUR 36 million - EUR 37 million in the budget 2025. That is way below 5%, around 5% of our turnover. Let us first start with a snapshot on our industrial activities.
For 2025, our industrial divisions expected and budgeted direct exports of products worth EUR 11.5 million from the E.U., from Switzerland, from India into the United States. In addition, there are indirect flows of goods when our customers deliver their products to the U.S. However, with around 10,000 customers, we cannot quantify the consequences of such changes. More importantly, let us look now at the smart furniture business. The direct impact on it by U.S. tariffs. The original budget 2025 of the DOT Group showed a product value of EUR 25.1 million to be supplied from China directly to customers in the United States. This is less than 10% of DOT's turnover, but important to understand. According to recent updates, the team in China has confirmed that this volume will now gradually be rerouted through other countries in the Southeast Asia, namely Vietnam.
This process has been initiated in close cooperation with our customers and will be completed soon. Here it is very important for me to emphasize we are doing these reroutings according to customer requirements, customer needs. It also is important to note that we are not paying for these tariffs. Our customers do that, and we are not offering better prices due to tariffs, but we are offering valuable alternative sourcing options to our customers. That said, the indirect consequences are also relevant to bring to your attention. The overall economic development resulting from the U.S. customer situation is important to us. We know, for example, that major customers in our industrial end markets, as well as in the smart furniture business areas, currently lack the necessary planning security for long-term investments.
They are currently not able to make solid investment decisions for new production capacity, for industrial automation projects, nor for infrastructure or equipment for final assembly. On top of that, talking about DOT key accounts are not even able to make such investment decisions with regards to their stock levels in their supply chains. Should they build up safety stock to prevent higher customs, invest right now because they fear an increase, or should they decrease their inventories further, hoping for reductions in tariffs? At the end of the day, some of these supply chains will get empty and the orders will restart. What I would like to underline is a very high volatility behind this business at the moment.
I think at the last roadshow I mentioned the book-to-bill rollercoaster, and if you look at our book-to-bill ratio, especially in the DOT business month by month, you see deviations from 70% up to 120% in this rollercoaster. Moreover, it is another important effect, we do expect that price increases and inflation hitting the end customers will dampen consumer spending in the U.S.A., especially for discretionary items such as comfort and lifestyle furniture. I am reading some of the questions coming in right now, but let me finish our presentation properly with an outlook, and then I will go back and answer your questions. Many of these uncertainties that I mentioned will remain in the coming months. In key core markets, the prospects of a near-term recovery are quite limited. International Purchasing Managers' Index and the ifo Business Climate Index remain without clear direction.
However, we assume that the slowdown in the markets is temporary, and we do not expect any further economic deterioration in the second half of the year. We are also actively addressing the currently limited market momentum, and we are actively compensating for some of the negative impacts resulting from it. We have been successful in capturing new business in some of our selected strategic growth areas. We launched product innovations specified for high-tech applications. For example, current transducers for data center applications, as already mentioned, or enclosure solutions in and around hydrogen infrastructure. Enclosures for sensors and panels in LNG terminals. Or finally, last but not least, innovative smart drive systems for bedding applications. The latest invention is a so-called zero-gravity , zero-wall mechanism.
Our strict focus on profitable activities with growth potential in combination with our transformation from a pure component player towards a solution provider continues to pay off. Assuming stable overall development for the rest of the year, we do expect the operating result for the year to stay up to 20% lower than in 2024.