I think that we can start. We are waiting for just a few seconds. Okay. Thank you all for coming on this investment call. As you can see, we scheduled this call later this afternoon because we were very busy the last few days. As you can see, it's not only that we go public with information about the Q2 and the first half of 2026, but also we have new information regarding our credit arrangement with four institutions that we'll cover later in our presentation. I'm happy to see that interest is still big for our results. I can share. We did the last time in English. I will try. I think that it's the best way to continue like that, to have the practice, because we have international colleagues.
I'm happy to see also that there is a colleague from North America that are able to join us because it's late enough that it's not too early for them. Let's go with the presentation. Okay. The results, as you could have already chance to see on the Zagreb Stock Exchange. We can confirm that our results are something that is just confirming our trend to be efficient and to deliver the good results in last 25 quarters. We have profitability that is the highest in group history. We'll comment on that afterwards. It's nice to see these great results. The contract is high. For the first time, we managed to reach this level of EUR 1 billion of contract in the first half of the year. Backlog is growing. It's on a level of EUR 2.9 billion.
You can see that it's this backlog and contract is supporting our sales and sales growth, that it's steady and nicely spread through international and domestic to customers. Okay, let's go to the second. I will just address few of these things that are relevant that happened in the last half of the year. We can start with a new factory. It was introduced in operation in January. It was for transformer tanks. This is joint venture with the Siemens Energy. We already discussed that this is important part of our vertical integration of production of power transformers, different sizes. When we are now talking about new hour capacity. In July, we also put into the service our second laboratory. That's something that is very important for us, that we are capable of production and EPC, but also for testing different equipment. In this kind of service, we are important part of value chain for the equipment worldwide.
Second, with Litostroj, this is very nice project that we had in cooperation with the Czech partners that were one of the most important hydropower plants in Czech Republic. This is the project to be liked because we can show our expertise that we built during the decades on different kind of hydro project across the world. The second, it's with the Sweden transmission system operator. This kind of project is just showing that partners in Sweden recognize KONČAR Group as the partner for the big project, not just brownfield, but we managed to construct here the first greenfield substation, 400 kV. This is very important for us as a nice project. Also the very important reference for the future contracts.
We already informed the public about our intention to participate in this Pantheon Project. The project is still in setup phase. With a letter of intent, we show our clear interest for the participation in this project. This is one of the biggest projects of infrastructure, IT, and in many dimensions for Croatia as the whole. We have this nice project coming back also to Republic of North Macedonia together in KONČAR and mother company, Dalekovod, for the construction, the wind farm, substation, and overhead lines. Maybe to also use here opportunity just that you know that after the reporting in July, we have two other projects that we signed. One is with the Croatian Railway passenger transport for EUR 53 million for new 6 battery electric multiple units. This is continuation of showing our expertise in battery trains.
Dalekovod signed the biggest contract for TSO in Germany, TenneT, for the 45 km of overhead transmission lines on a level of 380 kilovolts. Now we can switch to numbers. As you can see, all numbers increase on double-digit levels. I will just name a few numbers that are important, but also through the graphs, we can see the way how they progress through the years. Just a few numbers, EUR 745 million of sales income. In the first half of the year, increase of 14% compared to the same period. Last year, increase of 25% in EBITDA level to EUR 157 million. EBITDA increased 24% to EUR 173 million, and net profit increased for 33% to EUR 171 million. We are on the level of EBITDA margin of 22%, EBITDA 24%, and net profit margin on 24%.
What is important also to say here is that progress of the sales income is in parallel in export and domestic. We like this split that it's on a level of 70%/30%, that we can build our competencies and deliver value for Croatian customers, but also to prove ourselves on the international market. The order intake in the first half of 2026 was bigger than EUR 1 billion, as was mentioned before, and we reached this backlog of EUR 2.9 billion. As you can see from what I just mentioned, that this backlog is increasing further through the July. We can look at how the sales income and order intake progressed through the years in the first half of the years.
The dynamic, we can see clear dynamic of the increase of the sales, but what is more important that order intake is progressing quicker through the years. We are, for this period, on a level of 1.4 book-to-bill ratio that represents 40% more contracting that is actually executing. This is important because based on this gap between sales income and order intake, we are building our backlog, and actually, we are building our sustainable contracting for the future and the base also for further increase of the sales, which is also limited by our capacity, that we are on a high level of capacity utilization at the moment. We are happy to also to say that we are doing our project according to the plan, to increase our capacity, and you will see later how we will support this also through the financial arrangement.
In profitability indicators, you can see clear increase in EBITDA, EBIT and the net profit and also in normalized values. Regarding this progress, I mentioned before that this is important to say a few words regarding these profit levels. More than 21% of operating profit and more than 23% of the EBITDA margins is very high. It's record levels for us. We are very proud to see these levels. We are happy to deliver this level of profitability. Always, we want you that you are aware that these levels are very high, and we are always trying to be on a high level. Taking into the consideration the increase of the capacity of competitors and other market involvement, it's a question how long we can produce.
As you can see, we are surprising the markets quarter after quarter, but be aware that it's not easy to maintain on these levels of the profitability. Regarding the business segments, the biggest, the most important segment is the power transmission and distribution with 74%. You can see from our data that it's the split between transmission and distribution is more or less equal with the little bit dominance of the distribution that is understandable because the market is bigger for this part of the grid infrastructure. We are also happy to see power generation increasing with 77% on a yearly basis, primarily because of the not only of hydro segment that we are strong, that you can see them from the different big project that we won in the recent past. Also solar projects are starting to be more and more important.
Urban mobility is a little bit lower compared to the last year, but you know that we have this very dynamic last year with the delivering of the trains and trams. With the signing these new contracts on the trams, but also for the trains in the second half of the year, like I already mentioned, these six battery trains, we see enormous situation in this urban mobility infrastructure segment. Digital solution platform is something that is increasing. We are happy to see that with something that we started from zero four years ago, and that we are progressing and that we have a nice backlog for the future. You remember this project that was signed with the Ministry of Defense in the end of last year. Let's check data about markets. The split 70-30.
We finish the first half of the year with 28.8% sales in Croatia and 71.2% international. You can see on the right side that our market is primarily European Union and also non-EU European countries, Norway, Great Britain, Switzerland. Those are our most important markets. Also, we are happy to see that more neighboring countries are waking up with new projects. I already mentioned this in North Macedonia. We are active also in Bosnia, what is most important is those markets that you can see here. Germany, Sweden, the Netherlands, and Norway, and Austria. We are happy that we can show our expertise and the quality on these important markets. To see how the order intake is progressed through the years for the first half of the 2023, 2024, 2025, and 2026.
You can see that the mix is similar with stronger contracting last year on the Croatia market. That was expectable because it's from the EU financing. There was some project left for the spending of the money, you can see that we are also continued to progress, and contract more than EUR 1 billion in the first half of this year. Our export markets, for the order intake are Germany, Sweden, the Netherlands, and Austria. We can expect that in the future, these five markets will be Together with Croatia, the most important markets for us. Backlog, I already mentioned the level of EUR 2.9 billion.
The structure of this backlog is switching through the years to international, that it's something that you can expect, and we can expect that it will continue with expanding, especially with the increasing of our capacity, will be more and more oriented to international market. Our project in Croatia are also very important for us, and you can see that this part is also progressing. We have four times more level of contracts to be delivered compared to the seven years ago. Croatia is doing nicely, it is reasonable to see that it will continue this nice trend of investments or in grid infrastructure. Compared to the situation of backlog at the end of last year, we have more than EUR 270 million bigger level of backlog. What is more important is also that year-on-year basis, we have +EUR 624 million.
When you look on the structure of the expected revenue from the backlog for this year, we are planning to deliver EUR 823 million. That it's together with EUR 725 million already executed sales. It's more than EUR 1.5 billion. As you can remember from our announcement and our plan for this year was level of EUR 1.4 billion for the total sales in 2026. What we can see that it will be achievable. We are also happy to see that for the next period, for 2027, we have already contracted more than EUR 1.1 billion, and for another years, almost EUR 1 billion. Altogether, EUR 2.1 billion to be delivered in the future, and this is the base for our stable progress through the years.
Regarding the stock, this is very important for you, of course, and you can see that it's compared to the CROBEX that increased 24%, we increased 95% in the last one year, and we reach at the end of the Q2, EUR 2.6 billion of market capitalization. What is also very important is that trading level increase five times compared to the period before 2025. We can see from the level of 2025 and the realization of the first half of the 2026 that we can expect the same levels like last year. We are still the most important trade on a level for the trading levels on the Zagreb Stock Exchange with our mother company, KONČAR. When you look at the progress, how the dynamic change.
In 2025, increase of the supply from pension funds results the increase of the trade volumes, both in the block transaction and on continuation trading on the Zagreb Stock Exchange. You can see also that the supply from the pension fund actually changed the structure of our shareholders. We increase our free float from 17% to 27%. During this one year period, pension funds actually decreased their level from 51% to 41%, without actually compromising this increase of the price. Just to say a few words about this contract, this investment support package or the contract for the crediting. As you can expect with this strong CapEx that we have in plan for next three years of the level of EUR 550 million, together with our partners in Siemens Energy With the CapEx, they are planning also investment in increasing their capacity.
It's all together is on the level of EUR 800 million. This is something that was actually very good opportunity for us to explore possibility on capital markets to see is it possible for the finance and to introduce the leverage into our balance sheet. We decided to go through negotiation and contracting with the EBRD and IFC part of the World Bank Group, also with the two biggest commercial banks in Croatia, Zagrebačka banka and Privredna banka Zagreb. Together for the contract on a level of EUR 320 million, we also included our funds of EUR 50 million, and those credits will be support of different CapEx projects. Few of them are also visible through the other public announcement from Dalekovod, EUR 80 million.
Now it's also available information on the market that they are participating with EUR 80 million and also Instrument Transformers with EUR 70 million. Just few words about our creditors. We are very happy to introduce not only the most important Croatian banks with EUR 40 million each, but for the first time, EBRD and IFC are introduced in our balance sheet source of the financing. That's not only important as a stable future partner in the finance part, but also as you know, EBRD and IFC is very active in financing different projects, infrastructure projects. We have now easier approach for the future projects that can be ranging not only for Europe, but from Africa and some other markets that now it will be easier to monitor and to understand, because with the partnership with the EBRD and IFC, that's something that's much easier.
This is important for us that we have now, in this last long period, we went not only through the due diligence in financial sense, but also in ESG sense. You know that EBRD and IFC are those institutes, they are promoting extensively the part of environment and social awareness. Part of also this contract is that we'll continue our strong commitments to the ESG norms that we are also, you can see now our commitments through the reporting that for the second year it's now publicly available. I will say that's it. I am open now for questions. Maybe to see last time we have many different questions in the chat. You can Yes, Rok, please.
Hello. Good afternoon. Hope you can hear me well.
Yes.
Thank you very much for the presentation. I would have actually two questions.
First one is related to what you already discussed before, but I was just wondering if you could elaborate more. When I'm looking at half-year results this year and last year, of course, there's a noticeable drop in the profitability, and I was just wondering if there is something else that you achieved last year in addition to higher labor costs that we are seeing now, and what were the main differences for the, let's say, change in profitability?
Okay. Profitability is higher, you are right that the level of the labor expense is even bigger, even higher compared to the increase of the revenue. Here you can see also from our report that we increase number of our employees from 5,600 to level of 6,600. Increase of 18%. It's primarily our expense are coming from this increase of the labor capacity. This is very important for us that it's not only for the higher level of utilization of existing, but also to prepare our new employees to be capable of efficient delivery for the future. You know that Dalekovod is a good example of EPC project company that are introducing more and more people into their daily operation.
For this kind of very complex operational work on the field in fjords somewhere in Norway, it's not something that you can learn in a few months. It's something that you have to be able to go through the learning curve here in Croatia on some other smaller project, to be able to actually participate in these stronger and more complex projects. This is one example, and also the very similar example will be for the production in our facilities. You know that it's not that we are only producing in manufacturing to order. We are very active in engineering to order more complex, more rich projects, also needed not only from the engineers' part, but also with the skilled workers.
Increase of our capacity, that it will be introduced through the factories and equipment should be also supported with the increase of the people that will be daily in operation in these companies. If you look at the increase of the salary, if you deduct this increase of 18% by the numbers, you can recognize that it's actually the increase of the salaries on level of 8%. This is something that it's at the moment according to the increase of the prices of labor in Croatia on an average level.
All right. Thank you very much. If I may, I will ask one more question.
Yes, no problem. Please.
Yeah, it's just related. Now we are seven months into the year. Is it too early to guide on where you see the company ending full year 2026, or you already might have some visibility?
Usually we are not. I was trying to say this little bit, to give you hint to this, that we are managing now with the execution of the half of the year and the contracting for the second year that we are on a level that are bigger than sales, that we announced EUR 1.4 billion. We are not going out still with some numbers regarding what you're expecting for the end of the year.
Fair enough. Yeah. Thank you very much.
No problem.
Thanks again for the opportunity to ask questions.
No problem. It's Andrzej. Or Andrzej.
It's Andrzej. Yes.
I suppose. Andrzej.
Yes. Hi, Mario. Thank you.
Hi.
Thank you for the presentation. Generally, when you are guiding the profitability, you are pointing out that there are some potential future cost pressure. The analysts covering your stock, they are generally assuming declining profitability in the future. Yet every quarter it seems that the profitability is getting better and better. What's the realistic assumption going forward? Why would we expect the profitability to decline, actually?
Okay.
Should we expect that?
Yeah. First, like I said before, it's the market. It start to be more challenging because it's new capacity from competitors are introduced. The brown field cycle that we used also for increase our capacity, something that other companies are used in the last period. This is the one. Supply-demand gap is narrowing in some respect. It's second is that demand, the huge announcement and lead for demand also have reality check with how fast some project can be introduced into real world and going through the contracting, actually, not just contracting, but execution on a field, actually, with the implementation of the new equipment as agreed. This is something that we should be aware of that. It's also, you can see this very strange geopolitical situation, the war. We are managing supply chain. It's our reality in the last five years.
It will not be fair for us to say, "Okay. Yeah, everything will be fine." There is many types of risk on the market. I'm more happy to say be careful and check yourself about data. Also something that maybe to emphasize in next period, you know that we are now reaching the level of our limits of our capacity in those segments with the higher margins. In a segment that are lower margin, you can easily introduce capacity. Just multiplying the numbers and you will see that the revenue can increase, but the EBITDA in the same time can increase, but not with the same % increase.
Mm-hmm. Understood. To your first point about the capacity from competitors going online, can you quantify it a little bit? Was it the case in H1 or is the capacity expected in H2? Are there any bigger production plans that are expected to come online?
Sorry, you are asking for our capacity or about competitors?
No, for your competitors.
No.
You said there is some capacity coming online.
Yeah. This is not public information. You can monitor, but it's not something that we can discuss about that.
Okay. You said that you expect some capacity and the supply-demand gap to narrow, yes?
Yeah, like I said, 2024, especially 2025 and 2026 is the time that most of the factories use time for actually be more efficient and increase their capacity in this brownfield projects. Quick wins through pushing warehouse out from the factory and just increasing the assembly floor. It's just one example. It's hard to talk about numbers. It's reality, but we cannot talk about numbers.
Okay, understood. Thank you very much.
No problem.
Have a good day, bye-bye.
No problem. Jure, please.
Hi, Mario. Thank you. I was interested regarding, given the growing this international footprint and also the increasing interest of institutional investors, do you maybe consider a secondary listing in, for example, Frankfurt Stock Exchange or any other European market or any alternative measure to improve liquidity of the stock and so on?
Okay. This topic is something that I will say that it's not something new. It's something that Josip was already aware of this potential of introduce KONČAR in some more liquid market. At the moment, it's the reality with the double listing of the Croatian companies like INA, like Pliva, some others in international, on some other markets in London. It just make the volume becoming lower because its concentration and the spread, its focus of the investor goes lower. Yes, we are thinking about this potential, but we should be sure that it will make the benefit. Silvana, please.
Great. Thank you very much.
No problem. Silvana. Hi, Silvana.
Hi. Thank you for your presentation. I really enjoyed it. Most of all, and first of all, I enjoyed to see the great results, KONČAR Group represented today. I would have three questions. One is the capacity expansion and the growth potential. Given the record order backlog, the planned investments in the new production capacities are key enabler for the future growth, right? You said so that.
Yeah.
By how much do you expect these investments to increase in the group's production capacity over the next two or three years? How should investors think about their contribution to the future revenue growth?
This is the first question.
Yes.
Okay. I would say that this is something that we are announcing, but we are not going out with the numbers because it's not easy to compare. For example, if you build some new factory, we are trying to be lean, green and digital. The same size can be more efficient. It's very hard for us to compare this kind of investments. Sometimes you will be in smaller space, but more efficient. Second is that through the implementation of these CapEx, we are trying also to reach some other levels of voltages. Higher voltages are more complex. More complex is something that you can charge bigger margins. We are trying also to use this. It's not that we don't want to go with some numbers, but it's hard to say something that it'll be valuable for you to make a clear projection.
We are trying to be more clear in this area, but respecting your willingness to understand, we have to take into consideration this other aspect, that it's not easy to compare one to another.
In other words, you are working on higher voltages, better margins, we should expect the higher revenue from those projects in future?
The first and second is correct, the third one, it's your interpretation.
On the positive side.
Just to be clear, it's economically wise to explore this potential of CapEx into the product lines with a better potential for the future.
Thank you.
This is the way how we behave. We are not betting just on one product line, but in different product lines, and trying to be more efficient with those. Because in the future, with introduction of the greenfield wave of the new factories, the one who will be more efficient will be the one who can then be, first, capable of delivering more complex solution for the customers, but also to be more operational efficient, and to protect, in the end, their margins with operational efficiency.
Okay. Thank you. The second question is on the.
That was this. Sorry.
The second question is on competitive positioning. KONČAR and the other companies within the KONČAR Group are increasingly competing with leading European electrical equipment manufacturers on international projects. The last one we just saw the other day with Dalekovod.
Okay.
What would you identify as the company's key competitive advantage when winning new contracts? Are they primarily based on technological capabilities, delivery lead times, product quality, operational flexibility, or there is something other things that we are not considering?
I would say that you addressed most of important factors. It's not one dimension. First, to be capable of deliver some complex project, you need history of these projects, and this is very important. This is the reason why we like to look at Croatian market as the market where we can build our competencies, and after that, to introduce them and to prove them internationally. That's in one aspect. We are present, for example, Dalekovod is present on the Scandinavia for many years. We are, as a KONČAR Group with the Hydro program, present for 70 years worldwide. With transformers, I don't know for how long. First, you cannot build this kind of company overnight or through the one decade. It's something that you need some time and expertise. This is first.
Second is, our expertise, not just through the programs, but the people who are on those projects, people who are with us for 10, 20 years, with high education in very complex majors on universities. People dealing with very complex process of production, for example, transformers, that it cannot be automated and stuff like that. This is second. Third, I will say, being with customer, especially utility, you cannot just come on the tender and say, "Okay, I'm here." You have to go through some process of being shortlisted to be able to participate. You need sign for that. We just, this entry level, we passed in many markets.
We passed this entry level for long time ago. Through our excellent execution, we are proving to be on this shortlist and to be an eligible partner for those utility companies across Europe, especially Germany and Scandinavia and Austria.
Thank you. Finally.
Silvana, may I add a little bit? Ivan Paić speaking from the board as well.
Sure. Thank you.
Yeah, if I can add something. Today, KONČAR Group is uniquely positioned with very interesting value proposition because the main game in the electrical green transition is what and how you can make on the grid connection. To be able to differentiate from the competition, it's really critical that we can cover the full scope of the grid connection, including overhead transmission line, but also different components like transformers, switchgear, high voltage, low voltage, medium voltage. With this, the speed is becoming extremely important, and whoever can control your supply chain that is fully vertically integrated has a strong advantage. Why is this important?
On top what Mario just explained with the utility that has a certain process of prequalification, and technical preparation to be able to execute those projects, mainly, most of the projects are now moving as a behind the meter projects, in which you need to design and build the full solution. With the engineering capability, ability to provide everything from the high voltage overhead transmission line up to the low voltage. Sometimes, for example, if we are talking about data centers, up to the powering the rack and cooling solutions, basically, you are becoming a one-stop shopping for the customer, which they like a lot. Having this kind of advantage is definitely helping us to secure projects in this, let's say, trend that we are seeing today.
Thank you. That was a great addition. Really important for us to understand where is the competitive positioning for KONČAR in EU market. If I may proceed with the third question, which is, in finance, it's work in progress and revenue visibility. Work in progress inventories keep on increasing from period to period. To what extent does this increase reflects preparation for the execution of already contracted projects, and to what extent is this result of longer production cycles? Mario,
Yeah. Okay. it's not
Should investors Oh, I'm sorry.
Yeah. I will say that it's
Should investors expect the majority of this work in progress to be converted into the revenue during the second half of 2026, or it's something that's a longer proportion that is going to be extended into the 2027?
We have more than 20 different product lines. Different product lines can be different dynamics. For example, you can have situation that this will produce transformers, and because of weather or the customer needs or whatever it can be, before or after the date that we are looking on the reports. It's not important for us. For us, it's to deliver the good quality product. This work in progress in this situation is not important. Second, like this example can be generators, for example, in GIM, something that will be produced through the 3 years. Again, it's not a problem. I would say that this level of work in progress, it's something that came together in the inventory. It's something that can go up and down through the time.
It's not that important because, as you can see from our source of financing, the most of our working capital is financed through the prepayment for the customers. I would say that, okay, you can monitor this, but it's not relevant on when we will recognize something in a third quarter, fourth quarter. It's, for us, is important that we finish, that we can deliver on a year-on-year basis.
Okay. Thank you very much.
No problem.
Wish you all the best for the remaining of the year.
Thanks. Dan, please.
Hello, am I audible?
Hello.
Wonderful. This is Dan from Vergent Asset Management. Congratulations on the spectacular set of results. I had two quick questions. The first of them is on the employee base. I think, Mario, you mentioned earlier in the call that you increased your employee count from 5,600 to 6,600. Whilst you cannot estimate how much you might be increasing production capacity in the future, given that factories can be more efficient and you're still working on optimizing production capacity in those factories. Can you provide any color on roughly by how much you'll have to increase your employee base in the future to support that production capacity that you are adding?
I will not go with this number because, again, we'll compare something that is not comparable. First, because just to see what kind of acquisition and we did in last period. For example, now is engineers for the IT experts for business intelligence projects.
It's not increasing capacity in a way that you're building the factory with equipment. You're actually putting extra level of adding value to the customers. It's not easy just going like, "I will multiply this number with something, and I will project the level of the number of the people and then figure out what will be the labor cost." I will go through different angle. I will say that labor cost is something that we have to be on the level with other competitors. It's not that we can save money. We are in Europe. Croatia are becoming more and more similar to other countries. The increase of the salary levels in Croatia was on a level of 10% in last five years, compared to the Europe, like 5%, so 25% comparison to the European average.
It's the question, we will pay our workers because for us, this is the important part of our equipment and EPC solutions. It's not the question of what we are willing to pay them for their achievement. Second is the level, how many people we need. We need, like I mentioned previously, we need to expand our additional add value. We have to fulfill our engineering capacity for the construction of the new and existing type of equipment. We need people who will operate on equipment. As regarding the last part, I will say that more efficient factories need less people. In this respect, we'll need more skilled people capable of doing more complex things, but less number of people.
All together, I think that it's for you, it's better to check how this progress and participation of the level of the cost of labor compared to other market company, like peer companies.
Thank you, Mario. My second question.
No problem. Yes
Is on the export opportunities. You mentioned the European markets. Can you also comment on how much demand you're seeing in the U.S. for your products, as well as whether there is any progress on the MOU you signed with the Sanmina Corporation to establish a JV, and manufacture certain products in the U.S.? Thank you.
We look at United States as a huge market with a huge potential. You can see they are progressing in different things, with different type of customers, with big projects. This is the reason why we are trying to be present there. Also, you mentioned Sanmina. We are in partnership with them. We are exploring other opportunities with them. We are also looking at the market, how to be more efficient on this market. I would say that's a huge potential, and we should figure out how to use our long-term build expertise to be present on this market, because it is valuable for be present there.
For now, there's no update on the JV with Samina, when production might start.
It's-
How materialized it's going to be?
We are supporting them in this contract that you know that it's Samina. I would say that Samina will be the first who will go probably with some numbers, then we can support them with other information. I said, it's something that we have to now to set up to develop, it's not something that we can share on this kind of basis.
No worries. Thank you so much. Once again.
No problem.
Congratulations on the results.
Thank you. If it's that all, it's just that we have few question for example, M&A pipeline look. I will go just quick. You know that we were very active. We have very successful story with Dalekovod few years ago. You can see now that a result of this acquisition is already visible to everybody through this great results they are achieving at the moment in contracting. Also, we have those medium-size acquisition that I can mention, that we are increasing our capacities in a part of not just people expertise, but also references. M&A is not something that you are delivering quarterly. This is something that you have to build through the years and sometimes its market is hot, so it's too expensive. Sometimes you have chance to find some company that are very suitable for acquisition and very open for it.
We are active, but we will see. When we will be ready with some new information, we'll go publicly with that. What is the plan to strong balance sheet? What is the plan for the strong balance sheet? In a way that, we just use its-- We have the strong cash position, as you can see from the balance sheet, but it's good to use our position to go with the financial leverage and to have bigger potential for expansion through the M&A, through some other project, and also potential for the dividend for the future. Just this expecting high dividend of percent of earning, this is something that obviously we have potential to do in the future. This is something that it's up to general assembly and our shareholders to decide.
It's not up to us to define the dividend. We can just go with our proposal as managers. I don't know. It's in Germany, Austria, and Holland. We are approaching different markets with different solutions. Transformers, switchgears, instrument transformers, distribution transformers is like equipment, but also EPC project, transmission lines, microgrids, the hydropower plant, solar power plant. It's not market-focused, our approach. It's more to be different clients need different things sometimes. Like Ivan mentioned before, sometimes it's also combination of different solutions. It's even better for the customer. It's not product line based market approach. Okay. I think that I covered most of our artificial intelligence data set adding to transformer demand. Of course it is. It's data centers are demand for the whole electrical value chain, so not just transformers.
To complement Mario a bit on this one, because I can see that this question is going in many ways. Yes, the AI data centers is definitely adding to the transformer demand, and especially, as I mentioned, on the grid connection part, in which you need to have bigger and bigger transformers. For us, it means that this is why we put the focus in our CapEx to put more capacity on the medium power transformers in the future, as well as high voltage equipment. You can see. At the same time, this demand is coming on the distribution transformers as well and the new generation of SF6-free switchgear that is basically coming to the power modules of the data centers of the future.
Now, this trend is much more obvious in U.S. than in Europe. We can see the wave coming from U.S. to Europe, since the major decision makers are coming from U.S. Now they see that the timeline in Europe can be faster and, actually, this is bringing quite a lot of new added value and new opportunities for us, not only on the component delivery, but as well on the EPC and general contractor kind of projects. This is where we are now preparing our setup and putting extra resources to be able to tackle those kind of projects in the right way.
Okay. Thank you, Ivan. That was very useful insight. Now we already used our time. If it's okay, I will thank you again, all, for your interest. We'll be more present in third quarter and fourth quarter on the conferences, and I'm looking forward that my team and I will be able to share more insights about our group that is obviously relevant, as Ivan just mentioned, how important it is to understand different kind of the markets and the progress in the markets. Okay. Thank you very much and see you at the end of third quarter or maybe before on some conference. Thank you. Bye bye.
Bye.
Thank you. Bye.
Bye