Half Year 2026 Schaeffler AG Earnings Call

August 5, 2026

Speaker #1: Ladies and gentlemen, welcome to the Schaeffler AG Q2 2026 earnings call and live webcast. I'm Matilde, your Chorus Call operator. I would like to remind you that all participants will be in listen-only mode and the conference is being recorded.

Operator: Ladies and gentlemen, welcome to the Schaeffler AG Q2 2026 earnings call and live webcast. I am Matilda, the conference call operator. I would like to remind you that all participants will be in listen-only mode, and the conference is being recorded. The presentation will be followed by a Q&A session. You can register for questions at any time by pressing star and one on your telephone. For operator assistance, please press star and zero. The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Heiko Eber, Head of Investor Relations. Please go ahead.

Operator: Ladies and gentlemen, welcome to the Schaeffler AG Q2 2026 Earnings Call and Live Webcast. I am Matilda, the conference call operator. I would like to remind you that all participants will be in listen-only mode, and the conference is being recorded. The presentation will be followed by a Q&A session. You can register for questions at any time by pressing star and one on your telephone. For operator assistance, please press star and zero. The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Heiko Eber, Head of Investor Relations. Please go ahead.

Speaker #1: The presentation will be followed by a Q&A session. You can register for questions at any time by pressing star and 1 on your telephone.

Speaker #1: For operator assistance, please press star and zero. The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Heiko Eber, Head of Investor Relations.

Speaker #1: Please go ahead.

Speaker #2: Thank you very much. Ladies and gentlemen, I'm very happy to welcome you to our call today on Schaeffler's financial results for Q2 2026. The press release, the following presentation, and our interim statement have been published today at 7:30 a.m.

Heiko Eber: Thank you very much. Ladies and gentlemen, I am very happy to welcome you to our today's call on Schaeffler's Financial Results Q2 2026. Press release, the following presentation, and our interim statement has been published today at 7:30 AM CET on our investor relations homepage. For sure, we will provide the recording and the transcript of this webcast after the call. As usual, I am sure that you have all taken notice of our well-known disclaimer. As always, Klaus Rosenfeld, our CEO, and Christophe Hannequin, our CFO, have joined the conference call to guide you through the key information in our presentation. Afterwards, both gentlemen will be available for our Q&A session. Without further ado, let me hand over to our CEO, Klaus.

Speaker #2: CET, one hour, investor relations homepage. And for sure, we will provide the recording and the transcript of this webcast after the call. As usual, I'm sure that you have all taken notice of our well-known disclaimer.

Speaker #2: And also, as always, Klaus Rosenfeld, our CEO, and Christophe Hannequin, our CFO, have joined the conference call to guide you through the key information in our presentation.

Speaker #2: Afterwards, both gentlemen will be available for our Q&A session. And now, without further ado, let me hand over to our CEO, Klaus, please.

Speaker #3: Thank you very much, Heiko. Ladies and gentlemen, welcome to our Q2 conference call. Let me start with page number 3. The key messages for today: I would like to start with message number 1, which you already know from the ad hoc statement we had to give according to the German rules last week.

Klaus Rosenfeld: Thank you very much, Heiko. Ladies and gentlemen, welcome to our Q2 conference call. Let me start with page number three, the key messages for today. I would like to start with message number one that you already know from the ad hoc statement we had to give according to the German rules last week. We decided to update our midterm targets, driven by the market environment, in particular in the US, after a solid review of a first top-down plan. You all know that we do a strategy dialogue in the summer, as a result, we challenged clearly, intensively our outlook for the next years, and decided that on a more realistic and credible basis, the old ranges for E-Mobility were too aggressive, and that triggered this change. We have now internally given the directions for the detailed planning, that, under German law, constitutes an event where we decided to share that with the public. I hope you appreciate this. It created a little bit of turbulence. I understand this. We had to follow the rules also in the best interest of our reputation with authorities, and also wanted to trigger what was necessary internally to move forward with the planning cycle. Midterm targets adjusted. The key message here is we adjusted the top line, but decided, based on the preliminary planning work, that we would stay on group level with EBIT margin and also with our free cash flow target for 2028. That's, from my point of view, a sign of strength, it clearly shows that the hedging logic, the famous hedging logic that we explained to you several times, is paying off.

Speaker #3: We decided to update our midterm targets, driven by the market environment, in particular in the US, after a solid review of a first top-down plan.

Speaker #3: You all know that we do a strategy dialogue in the summer, and as a result, we challenged—clearly and intensively—our outlook for the next years.

Speaker #3: And decided that, on a more realistic and credible basis, the old ranges for e-mobility were too aggressive, and that triggered this change. We have now internally given the directions for the detailed planning, and that, under German law, constitutes an event where we decided to share that with the public.

Klaus Rosenfeld: We have now internally given the directions for the detailed planning, that, under German law, constitutes an event where we decided to share that with the public. I hope you appreciate this. It created a little bit of turbulence. I understand this. We had to follow the rules also in the best interest of our reputation with authorities, and also wanted to trigger what was necessary internally to move forward with the planning cycle. Midterm targets adjusted. The key message here is we adjusted the top line, but decided, based on the preliminary planning work, that we would stay on group level with EBIT margin and also with our free cash flow target for 2028. That's, from my point of view, a sign of strength, it clearly shows that the hedging logic, the famous hedging logic that we explained to you several times, is paying off.

Klaus Rosenfeld: We have now internally given the directions for the detailed planning, and that, under German law, constitutes an event where we decided to share that with the public. I hope you appreciate this. It created a little bit of turbulence. I understand this. We had to follow the rules also in the best interest of our reputation with authorities, and also wanted to trigger what was necessary internally to move forward with the planning cycle. Midterm targets adjusted. The key message here is we adjusted the top line, but decided, based on the preliminary planning work, that we would stay on group level with EBIT margin and also with our free cash flow target for 2028. That's, from my point of view, a sign of strength, and it clearly shows that the hedging logic, the famous hedging logic that we explained to you several times, is paying off.

Speaker #3: I hope you appreciate this. It created a little bit of turbulence—I understand this—but we had to follow the rules, also in the best interest of our reputation with authorities, and we also wanted to trigger what was necessary internally to move forward with the planning cycle.

Speaker #3: So, midterm targets adjusted. The key message here is we adjusted the top line, but decided, based on the preliminary planning work, that we would stay on group level with EBIT margin and also with our free cash flow target for 2028.

Speaker #3: That’s, from my point of view, a sign that clearly shows that the hedging logic—the famous hedging logic that we explained to you several times—is paying off.

Speaker #3: You can also say diversification is on our side. Second key message: Results for Q2 are good results in a very challenging environment. EBIT margin improved, while top line was more or less flat.

Klaus Rosenfeld: You can also say diversification is on our side. Second key message: results for Q2 are good results in a very challenging environment. EBIT margin improved while top line was more or less flat. You see in particular that two of our divisions have outperformed well. VLS and B&IS at the upper end of the full year guidance. PTC comfortably within, E-Mobility trending towards guidance range. On E-Mobility, all of you know that this is not a flat line across the four quarters, the first two quarters are the ones where margin is more negative and that then changes in the H2 of the year. I think the results show that despite no real growth in the top line, the company is improving its earnings quality. On that basis, we are also proud to say that our guidance for 2026 is confirmed.

Speaker #3: And you see, in particular, that two of our divisions have performed well: VLS and BIS are at the upper range of the full-year guidance, and PTC is comfortably within.

Speaker #3: And also, e-mobility is trending towards the guidance range on e-mobility. All of you know that this is not a flat line across the four quarters. But the first two quarters are the ones where the margin is more negative, and that then changes in the second half of the year.

Speaker #3: So I think the results show that, despite no real growth in the top line, the company is improving its earnings quality. On that basis, we are also proud to say that our guidance for 2026 is confirmed.

Speaker #3: We are on track to deliver on all the metrics that are there, despite this challenging, heterogeneous, and fast-changing environment. And for sure, Christophe will explain in more detail the minus €300 million in free cash flow, while we are confident to bring that safely into the range that we have guided for.

Klaus Rosenfeld: We are on track to deliver on all the metrics that are there, despite this challenging, heterogeneous, and fast changing environment. Christophe will explain in more detail the EUR -300 in free cash flow, why we are confident to bring that safely into the range that we have guided for. I would also add one more point that was mentioned this morning as well. Apart from the usual press release on numbers, we issued another press release on structural measures that were extended as relates to early retirement options. Most of you know that in Germany, we have a specific instrument to manage restructuring and transformation that is offered with the support of the necessary agencies and governments in Germany. There is, at the moment, discussion that that instrument could fall away.

Speaker #3: I would also add one more point that was mentioned this morning as well. Apart from the usual press release on numbers, we issued another press release on structural measures.

Speaker #3: That were extended as it relates to early retirement options. Most of you know that, in Germany, we have a specific instrument to manage restructuring and transformation that is offered with the support of the necessary agencies and the government in Germany.

Speaker #3: There's at the moment discussion that that instrument could fall away. And we have decided, after a considerable request and interest inside the company from employees—whether that instrument would still be available—to offer that instrument again.

Klaus Rosenfeld: We have decided, after considerable requests and interest inside the company from employees, whether that instrument would still be available to offer that instrument again. This is already agreed with workers' council and the necessary colleagues there. That gives us another opportunity to optimize our headcount FTE across the German base. That is not only specific for one or two plants. This goes across the whole board. We think that that will help us again, to continue with our performance optimization. We will come back to this later. At the same time, I can say that the promised structural measures as of November 2024 are all in execution, we are ahead of plan. This is also one of the drivers for the performance in B&IS. Last but not least, our new growth strategy also starts to pay off. We have promising new growth opportunities.

Speaker #3: This is already agreed with the workers' council and the necessary colleagues there. And that gives us another opportunity to optimize our headcount FTE across the German base, which is not only specific for one or two plants.

Speaker #3: This goes across the whole board, and we think that that will help us, again, to continue with our performance optimization. We'll come back to this later.

Speaker #3: At the same time, I can say that the promised structural measures as of November 2024 are all in execution, and we are ahead of plan.

Speaker #3: This is also one of the drivers for the performance in BIS. Last but not least, our new growth strategy is also starting to pay off.

Speaker #3: We have promising new growth opportunities. The new number that we are publishing for the first time is the order book for the humanoid business.

Klaus Rosenfeld: The new number that we are publishing for the first time is the order book for the humanoid business. I think we are the first ones to do that. This is, ladies and gentlemen, a conservative number. Conservative in particular because we have applied significant haircuts on the numbers that are given to us. Also with the experience that in such an environment, things will need a little bit of time to really be projectable. Haircuts here are above 50% to be on the safe side. It is a well-balanced portfolio. One name is mentioned here, XPENG. The two others we cannot mention. These are US names. Also the products behind this is well-balanced, I can say that all of them have SOP in 2026, or at the latest in Q1 2027.

Speaker #3: I think we are the first ones to do that. This is, ladies and gentlemen, a conservative number—conservative in particular because we have applied significant haircuts to the numbers that are given to us.

Speaker #3: Also, with the experience that in such an environment, things will need a little bit of time to be really projectable. So haircuts here are above 50% to be on the safe side.

Speaker #3: It's a well-balanced portfolio. One name is mentioned here: Chopin. The two are this. We cannot mention these; these are US names. Also, the products behind this are well-balanced.

Speaker #3: And I can say that all of them have SOP in 2026, or at the latest in Q1 2027. So, we felt that this gives you another good data point to measure success and how we are progressing.

Klaus Rosenfeld: We felt that this gives you another good data point to measure success and how we are progressing, and we have decided to publish changes in these order books on an ongoing basis going forward. That is my fifth key message. Let me now go quickly through the other slides so that you have time enough for questions. This is the old midterm targets that were communicated in 2025, September, as you know. Just as a point of reference. On the next page, you see what we have done. We lowered the top line from 27, 29 to 24, 26. That is quite significant. The major contribution here comes from E-Mobility and Bearings and Industrial. On the margin, we have stayed where we were, 6 to 8 on free cash flow as well.

Klaus Rosenfeld: We felt that this gives you another good data point to measure success and how we are progressing, and we have decided to publish changes in these order books on an ongoing basis going forward. That is my fifth key message. Let me now go quickly through the other slides so that you have time enough for questions. This is the old midterm targets that were communicated in 2025, September, as you know. Just as a point of reference. On the next page, you see what we have done. We lowered the top line from EUR 27, 29 to 24, 26. That is quite significant. The major contribution here comes from E-Mobility and Bearings and Industrial. On the margin, we have stayed where we were, 6 to 8 on free cash flow as well.

Speaker #3: And we have decided to publish changes in these order books on an ongoing basis going forward. That is my fifth key message. Let me now go quickly through the other slides so that you have enough time for questions.

Speaker #3: These are the old midterm targets that were communicated in September 2025, as you know—just as a point of reference. And on the next page, you see what we have done.

Speaker #3: We lowered the top line from 27, 29 to 24, 26. That's quite significant. And the major contribution here comes from E-Mobility and Bearings and Industrial.

Speaker #3: On the margin, we have stayed where we were, 6 to 8 on free cash flow as well. And you saw that, subsequent to the top-line change in E-Mobility, we lowered the EBIT margin range from above 0 to minus 4 to 0.

Klaus Rosenfeld: You saw that subsequent to the top-line change in E-Mobility, we lowered the EBIT margin range from above 0 to -4 to 0. That is clearly, for you, probably a disappointment, don't get this wrong, this does not mean that we give up on profitability in E-Mobility. I am firmly convinced that this is possible. What you see later on is that the work on the cost side is well underway. Top line clearly helps, but at the moment, the most important figure is gross profit, and that points clearly in the right direction. We left a 0 because you can imagine that if you are in my position, while I am rather, with my 60 years now, I am approaching the end of my career, and this promise was an important one.

Speaker #3: That's clearly, for you, probably a disappointment. Don't get this wrong—this doesn't mean that we give up on profitability and e-mobility. I'm firmly convinced that this is possible.

Speaker #3: What you see later on is that the work on the cost side is well underway. The top line clearly helps, but at the moment, the most important figure is gross profit.

Speaker #3: And that points clearly in the right direction. We left the zero because you can imagine that if you are in my position, while I'm rather—with my 60 years now—approaching the end of my career, and this promise was an important one, I was not really happy about this.

Klaus Rosenfeld: I was not really happy about this, I can assure you that we will do the utmost possible to bring this across the break-even line. We also needed to be realistic, and I hope that you appreciate that realism. You see on the top line also a little softer Bearings & Industrial Solutions are also a result of the environment, not so much of the Schaeffler performance as such. You see that we have increased the guidance or the midterm target, sorry, for Powertrain & Chassis by half a percentage point and also for Vehicle Lifetime Solutions. This is exactly what I said before. Here you see the power of our diversified model. Due to that change, 6 to 8 should be our midterm target, or is our midterm target. The rest is unchanged. With that, I would go into the results.

Speaker #3: But I can assure you that we will do our utmost to bring this across the break-even line. But we also need to be realistic, and I hope that you appreciate that realism.

Speaker #3: You see on the top line also a little softer bearings and industrial solutions, also a result of the environment, not so much of the Schaeffler performance as such.

Speaker #3: And then you see that we have increased the guidance, or the midterm target—sorry—for Powertrain and Chassis by half a percentage point, and also for Vehicle Lifetime Solutions.

Speaker #3: This is exactly what I said before. Here you see the power of our diversified model. And due to that change, 6 to 8 should be our midterm target or is our midterm target.

Speaker #3: The rest is unchanged. And with that, I would go into the results. Q2, as I said, a good result. Why do I say it's a good result?

Klaus Rosenfeld: Q2, as I said, a good result. Why do I say it is a good result? Flat growth, still gross profit margin improved by 1 percentage point. Midterm EBIT margin also improved by 1 percentage point to 4.5%. Free cash flow in the quarter is still negative. Christophe will comment on this, EPS, positive with EUR 0.10. This is clearly not the end of our efforts. We want to do more. We want to continuously improve. This sits, from my point of view, very well in our trajectory towards the year-end and what we promised also for guidance. You can all read the details here, and Christophe will explain them in the second part of the presentation. Let me go forward. On the next page, you see the sales growth.

Speaker #3: Flat growth. And still, gross profit margin improved by a percentage point. Midterm EBIT margin also improved by a percentage point, to 4.5%. Free cash flow in the quarter was still negative.

Speaker #3: Christophe will comment on this and EPS positive with 10 cents. This is clearly not the end of our efforts. We want to do more.

Speaker #3: We want to continuously improve, but this sits, from my point of view, very well in our trajectory towards the year-end and what we promised also for guidance.

Speaker #3: You can all read the details here, and Christophe will explain them in the second part of the presentation. Let me go forward. On the next page, you see the sales growth.

Speaker #3: I don't go into all detail. But the minus 4.3% clearly summarize a heterogeneous development across regions and divisions. You see in a region, Americas, 2.9% growth.

Klaus Rosenfeld: I don't go into all detail, the -4.3% clearly summarize a heterogeneous development across regions and divisions. You see in the region Americas, 2.9% growth. You see that China was rather weak. You see Asia-Pacific positive, and you see E-Mobility +9.4%. In such an environment, that's not a bad result. While the others, except for Bearings and Industrial, were slightly below the previous year quarter. All in all, that is acceptable to us, in particular in this environment. On the next page, you see the famous one on the powertrain alternatives. I'm happy to say here in the H1 2026, we outperformed in BEV with 9.4% more growth than the market growth, 20.7% to 11.3%. You also have in the back of the details for the quarters. HEV was nearly there, slightly less than the market.

Speaker #3: You see that China was rather weak. You see Asia Pacific positive. And you see e-mobility up 9.4% in such an environment. That's not a bad result.

Speaker #3: While the others, except for Bearings and Industrial, were slightly below the previous year’s quarter. So, all in all, that is acceptable to us, particularly in this environment.

Speaker #3: On the next page, you see the famous one on the power train alternatives. And I'm happy to say here, in the first half, 2026, we outperformed in BEF with 9.4% more growth than the market growth, 20.7 to 11.3.

Speaker #3: You also have in the backup the details for the quarters. HEF was nearly there, slightly less than the market. That's clearly also a function of what's happening in the regions and ICE.

Klaus Rosenfeld: That's clearly also a function of what's happening in the regions, ICE, more or less aligned. In total, in line with the market, a positive development in BEV. This is also exemplified by the order intake, where book-to-bill in the BEV product was 1.6 times, while the others were below 1 time. This is, again, pointing into the direction of why E-Mobility is important to us and why we are confident that we can also outperform in the future. Let me go to the next page and do all of them quickly. E-Mobility here, I mentioned the key numbers, I said the ramp-ups in Europe are successfully happening, also in Asia-Pacific. There are here and there, Christophe will answer these questions, the one or other one of positive effect.

Speaker #3: More or less online. So, in total, in line with the market, but a positive development in BEF. And this is also exemplified by the order intake, where book-to-bill in our BEF product was 1.6 times, while the others were below one time.

Speaker #3: This is, again, pointing into the direction of why e-mobility is important to us and why we are confident that we can also outperform in the future.

Speaker #3: Let me go to the next page. And do all of them quickly. E-mobility here, I mentioned the key numbers. And I thought the ramp-ups in Europe are successfully happening, also in Asia Pacific.

Speaker #3: There are here and there and Christophe will answer these questions. The one or other one-off positive effect. The order intake at the moment is a little lower than in previous years.

Klaus Rosenfeld: The order intake at the moment is a little lower than in previous years due to continued market uncertainty. I can say with an order book that is still safely above EUR 30 billion, I can say we have enough to do that we are not dependent on any new orders at the moment. What I really would like to point out here is the improvement in gross profit margin. Yes, 6.9% for a Q2 is not enough to make it a true success story, the direction is clear, this comes in particular from increased productivity. Let me go to the next one, PTC. It's -5% growth, to some extent also by phase outs. Without the phase outs, -2%. That means we are holding up quite well against these challenging market conditions.

Speaker #3: Due to continued market uncertainty, but I can say with an order book that is still safely above 30 billion I can say we have enough to do that we are not dependent on any new orders at the moment.

Speaker #3: And what I really would like to point out here is the improvement in gross profit margin. Yes, 6.9% for a second quarter is not enough to make it a true success story, but the direction is clear.

Speaker #3: And this comes in particular from increased productivity. Let me go to the next one, PTC: minus 5% growth. To some extent, also by phase-outs.

Speaker #3: Without the phase-outs, minus 2%. So that means we are holding up quite well against these challenging market conditions. Don't forget, the transition from combustion engine to e-mobility and electrified powertrains is still ongoing.

Klaus Rosenfeld: Don't forget, the transition from combustion engine to E-Mobility and electrified powertrains is still ongoing. The order intake has to be understood along the same lines. From my point of view, with 0.8 times, we are clearly going the right direction. Gross margin is impacted by the volume decline, also by the one or other one-off effect that come from settlement with customers. This is still to be seen against a gross profit margin of 22.4%. That's a strong margin, we are more or less able to keep that together. The highlight upstairs shows that Powertrain & Chassis is not only about cars, also about trucks, we're making good inroads in that sector at the moment when it comes to heavy-duty applications. Let me go to the next page. Excuse me. That's VLS. Very strong result.

Speaker #3: The order intake has to be understood along the same lines. There is, from my point of view, with 0.8 times, we are clearly going in the right direction.

Speaker #3: Gross margin is impacted by the volume decline, also by one or the other one-off effect that comes from settlement with customers. So this is still to be seen against a gross profit margin of 22.4%.

Speaker #3: That's a strong margin, and we are more or less able to keep that together. The highlight upstairs shows that Powertrain and Chassis is not only about cars, but also about trucks.

Speaker #3: And we're making good inroads in that sector at the moment when it comes to heavy-duty applications. Let me go to the next page. Excuse me.

Speaker #3: That's ELS—a very strong result. As you saw from the EBIT margin already, gross margin further improved, despite a top line that was not growing.

Klaus Rosenfeld: As you saw from the EBIT margin already, gross margin further improved against the top line that was not growing. Yes, if we measure ourselves against car part growth, slightly lower. All in all, this business is definitely on track. We are very happy about the underlying profitability and the earnings power that this business and division has. Next page is then B&IS. I also mentioned the key numbers there. Strong improvement in gross profit margin, 3.4%. Growth, rather flat against the blended markets. We were not outperforming. Good order intake. We have also here an interesting mix in the regions. Positive development in the Americas. Europe, a little bit softer. We see a continuously strong aerospace business. Wind is still one of our best businesses.

Speaker #3: Yes, if we measure ourselves against car park growth, it's slightly lower. But all in all, this business is definitely on track, and we are very happy about the underlying profitability and the earnings power that this business and division have.

Speaker #3: The next page is BIS. I also mentioned the key numbers there: strong improvement in gross profit margin, 3.4% growth, and rather flat against a blended market.

Speaker #3: We were not outperforming. Good order intake. We also have here an interesting mix in the regions. Positive development in the Americas. Europe, a little bit softer.

Speaker #3: We see a continuously strong Aerospace business. Wind is still one of our best businesses. We had a little bit of challenges in Greater China, but in general, we still keep up with that challenge and continue to do good business in China.

Klaus Rosenfeld: Had a little bit of challenges in Greater China, but in general, we still keep up with that challenge and continue to do good business in China. The competition is there, and gross profit margin, as I said, improved quite a bit. Here you see the effects of our footprint activities. In particular, Russia's business has done very well in terms of the consolidation of sites. Schweinfurt, Hamburg, Randow, all of that is happening. We mentioned here as well, headcount reduction of 1,650 people. Clearly points to the fact that our restructuring activities are starting to pay off. Next page is then on the three CEO priorities that we shared with you in the Capital Markets Day. EBIT break even, our self-help measures, and the portfolio optimization, and also new growth. Let me quickly go through them.

Speaker #3: But the competition is there. And gross profit margin, as I said, improved quite a bit. Here, you see the effects of our footprint activities in particular.

Speaker #3: Russia’s business has done very well in terms of the consolidation of sites—Schweinfurt, Homburg, Bandorf—all of that is happening. And we mentioned here as well the headcount reduction of 1,650 people.

Speaker #3: This clearly points to the fact that our restructuring activities are starting to pay off. The next page then covers the three CEO priorities that we shared with you at the Capital Markets Day.

Speaker #3: EBIT break-even, ourselves, help measures, and portfolio optimization—and also new growth. Let me quickly go through them. On EBIT break-even, as I’ve already said on the next page, the real issue is the top line.

Klaus Rosenfeld: On EBIT break even, I have already said on the next page, the real issue is the top line. You see it on the left. Where we are on track is our operational excellence part, with a more dedicated platform approach. The idea to optimize the design to cost activities, footprint optimization, and that is what you see in the gross profit margin, but also in various product cost initiatives. R&D efficiency is addressed. We have for this program, and let me stress this, for this program, the completion rate of R&D right-sizing is nearly 100%. We see also a very encouraging impact that is still small, but that could be increased from AI implementation in the R&D area that will improve also our time to market. Then overhead costs.

Speaker #3: You see it on the left. Where we are on track is our operational excellence part, with a more dedicated platform approach— the idea to optimize the design-to-cost activities, footprint optimization. That is what you see in the gross profit margin, but also in various product cost initiatives.

Speaker #3: R&D efficiency is addressed; we have, for this program—and let me stress this—for this program, the completion rate of R&D bite sizing is nearly 100%.

Speaker #3: And we see also a very encouraging impact that is still small, but that could be increased from AI implementation in the R&D area that will improve also our time to market.

Speaker #3: And then, for overhead costs, yes, we further need to improve in that area, but we can definitely see that we are leveraging merger synergies. The targets for the overhead ratio are coming in.

Klaus Rosenfeld: Yes, we further need to improve on that area, but we can definitely see that we are leveraging merger synergies. The targets for the overhead ratio are coming in. Also here, the measures are completed for this program. We have initiated on top of this, a significant initiative to optimize span of control and reduce layers. All of that is certainly not fully visible in the numbers yet, but it gives me confidence that starting with a strong order book and continuing on our performance measures, we should be able to achieve our midterm targets. Maybe slightly delayed, but with a continuous focus on sustainable positive profit contribution. Let me go to the next page, and that's the structural measures. First half of this page says we are very well on track with the program that we announced in November 2024.

Speaker #3: And also here, the measures are completed for this program, and we have initiated on top of this a significant initiative to optimize span of control and reduce layers.

Speaker #3: All of that is certainly not fully visible in the numbers yet, but it gives me confidence that, starting with a strong order book and continuing with our performance measurement and measures, we should be able to achieve our midterm targets.

Speaker #3: Maybe slightly delayed, but with a continuous focus on sustainable, positive profit contribution. Let me go to the next page. And that's the structural measures.

Speaker #3: In the first half of this page, it says we are very well on track with the program that we announced in November '24. At the moment, we can say that we have already overachieved the 4,700.

Klaus Rosenfeld: At the moment, we can say that we have already overachieved the 4,700, we have anticipated more interest than that number. The planned reduction in Europe is almost completed. Completed means contracts signed. The dark green bars mean people have left the company, and we expect to realize that full program with even an increased number by June 2027, ahead of plan. That shows that Schaeffler has, with all the experience from the last years, to manage these programs very effectively. The second half of the page talks about will be put into the press. I already mentioned this. You all know that, or you have heard about, that the German government is discussing at the moment, that this early retirement option that was seen as a very attractive instrument for managing transformation will fall away. That has triggered a range of questions in Germany.

Speaker #3: So, we have anticipated more interest than that number. The planned reduction in Europe is almost completed. 'Completed' means contracts signed, and then the dark green bars mean people have left the company.

Speaker #3: And we expect to realize that full program, with even an increased number, by June 2027—ahead of plan. That shows that Schaeffler has, with all the experience from the last years, managed these programs very effectively.

Speaker #3: And the second half of the page talks about what will be put into the press. I already mentioned this. You all know that, or you've heard about it — the German government is discussing at the moment that this early retirement option, which has been seen as a very attractive instrument for managing transformation, will fall away.

Speaker #3: That has triggered a range of questions in Germany. What happens to this program? Is that still something that you would offer to us? You all know that this is a program that is dedicated for people at a certain age.

Klaus Rosenfeld: What happens to this program? Is that still something that you would offer to us? You all know that this is a program that is dedicated for people at a certain age, and it is certainly something that only works if the company and the employee give their consent. We have decided, with already approval of the workers' council, that we would offer this again, same terms as in the existing structural measures announced November 2024. We think that through that, we can probably reduce our headcount number by 1,300 people in the next years. You clearly want to know how that impacts the P&L and the cash flow statement. The problem here is this very much depends on how people go into this program. There are various ways to structure this.

Speaker #3: And it's certainly something that only works if the company and the employee give their consent. We have decided, with the already approved workers' council, that we would offer this again.

Speaker #3: Same terms as in the existing structural measures announced in November '24. And we think that through that, we can probably reduce our headcount number by 1,300 people in the next years.

Speaker #3: You clearly want to know how that impacts the P&L and the cash flow statement. The problem here is this very much depends on how people go into this program.

Speaker #3: There are various ways to structure this. You can do it with an active and passive phase, where it's one year and one year, or four years and four years.

Klaus Rosenfeld: You can do it with an active and passive phase where one year and one year or four years and four years, we offer different options. As this is very early days, we have decided not to give you a full business case here. What we can say is that there is an immediate positive mid-term or mid-double-digit effect in 2027. There are one-off expenses and also some expenses that we can adjust in our earnings before special items. The program as such is an intelligent, flexible instrument to drive our transformation forward that we will now use and offer according to this timeline. By end of September, we should know how many people would like to participate, and we intend to finalize the implementation. That means signing all the contracts, agreeing on everything by end of November.

Speaker #3: So, we offer different options, and as this is very early days, we have decided not to give you a full business case here. But what we can say is that there is an immediate, positive, mid-term or mid-double-digit effect in 2027.

Speaker #3: There are one-off expenses and also some expenses that we can adjust in our earnings before special items. So the program as such is an intelligent, flexible instrument to drive our transformation forward that we will now use and offer according to this timeline by the end of September.

Speaker #3: We should know how many people would like to participate, and we intend to finalize the implementation—that means signing all the contracts and agreeing on everything—by the end of November.

Speaker #3: So, when we do the next budget, we should know what that means. It is, as I said, a very helpful instrument that we are now using because we were fast with approval.

Klaus Rosenfeld: When we do the next budget, we should know what that means. It is, as I said, a very helpful instrument that we are now using because we were fast with approval and start the communication to employees today, to manage the transition and also the transformation going forward. This is only a German program. It applies to plans and all the admin areas, so it is blue collar and white collar, and we have ample experience how to make that successful. Page number three on my key CEO priorities is the new growth. I have two pages here, one on humanoids. That is clearly gaining traction. Let me show that with the three different areas here. Customers. We are actively working with 45 humanoid OEMs globally, and we are increasing our strategic investments into that ecosystem on a selective basis. Neura Robotics was mentioned lately and also Humanoid AI.

Speaker #3: And start the communication to employees today, to manage the transition and also the transformation going forward. This is only a German program. It applies to plants and all the admin areas.

Speaker #3: So it's blue color and white color, and we have ample experience in how to make that successful. Then, page number three, on my key CEO priorities, is the new growth.

Speaker #3: I have two pages here, one on humanoids that's clearly gaining traction. Let me show that with the three different areas here. Customers—we are actively working with 45 humanoid OEMs globally.

Speaker #3: And we are increasing our strategic investments into that ecosystem on a selective basis. New York Robotics was mentioned lately and also humanoid AI. We are very happy with this approach that clearly gives us a competitive edge, also to others.

Klaus Rosenfeld: We are very happy with this approach that clearly gives us a competitive edge also to others. You all know this. The product development is also something where we can report positively. The number of sample orders has now increased the 50-mark for this year, 2026. With that number, we are significantly above full year 2025. The key focus at the moment is on production-ready scalability. Our foaming technology, as you know, is one of our key competitive advantages because it reduces production time from minutes to seconds. We can see at the moment no one really in play who can offer that ability. Delivery is certainly the most important thing.

Speaker #3: You all know this. Product development is also something where we can report positively. The number of sample orders has now increased to the 50 mark.

Speaker #3: For this year, 2026. And with that number, we are significantly above the full year 2025. The key focus at the moment is on production-ready scalability.

Speaker #3: Our forming technology, as you know, is one of our key competitive advantages because it reduces production time from minutes to seconds. And we can see at the moment no one really in play who can offer that ability.

Speaker #3: Delivery is certainly the most important thing. And here, I can say, as I said before, I'm happy to share with you, for the first time, an order book of €350 million by the end of June.

Klaus Rosenfeld: Here I can say, as I said before, happy to share with you for the first time an order book of EUR 350 million by end of June, comes from three major global humanoid OEMs, in three different regions, seven different products. The launches with the announced partnerships, Neura, Z Humanoid, and Hexagon are not included here. The most prominent one that we are allowed to mention, you know that some customers are not allowing us to mention their names. It is XPENG for the IRON humanoid that is famous, as you all know, where the SOP is planned for Q4 2024.

Speaker #3: Comes from three major global humanoid OEMs in three different regions, across seven different products. The launches with the announced partnerships—Nura Humanoid and also Hexagon—are not included here.

Speaker #3: The most prominent one that we are allowed to mention—you know that some customers are not allowing us to mention their names—is Xiaopeng for the RN humanoid, which is famous, as you all know, where the SOP is planned for Q4 this year.

Speaker #3: Let me mention again, there was maybe a little bit of surprise because when we were asked, "What's the order book?" we gave you a ballpark number.

Klaus Rosenfeld: Let me mention again, there was maybe a little bit of surprise because when we were asked what is the order book, we gave you a ballpark number that is not fully comparable here because we decided to put in significant haircuts that are done on a customer-by-customer basis because we want to be on the safe side. As I said, as an indication here, the haircuts on the customer level are at least 50%, in certain customers, even more. We want to be safe, and we will update that number on a quarterly basis. Next page is quickly on defense. On defense, we cannot give you an order book at the moment. What I can say, the team that we have is completed. In startups, it is always markets, technology, and team. Here we are super happy with what is coming together.

Speaker #3: That is not fully comparable here, because we decided to put in significant haircuts that are done on a customer-by-customer basis, because we want to be on the safe side.

Speaker #3: And as I said, as I indicated here, the headcount—the haircuts—on the customer level are at least 50% in certain customers, or even more.

Speaker #3: So, we want to be safe, and we will update that number on a quarterly basis. Now, next page is quickly on Defense. On Defense, we cannot give you an order book at the moment, but what I can say is the team that we have is completed.

Speaker #3: In startups, it is always market, technology, and team, and here we are super happy with what's coming together. Celia is a very experienced lady from the defense industry with 25 years. Montserrat is a 30-year guy from Schaeffler.

Klaus Rosenfeld: Celia is a very experienced lady from the defense industry with 25 years. Mansoor is a 30-year guy for Schaeffler, at the end of his career, one of our most experienced technology persons that joins here, who is already making a big difference in representing also the interfaces to Schaeffler. We have hired a top CFO, externally with startup experience, who starts 1 January. Very happy about this team, and looking forward to what they bring to the table. You saw some of the latest smaller things, Delair, you saw Spire. I can say there are numerous players and conversations that we are having at the moment, building also an order book here that we will publish when we are ready. Excuse me. Let me go to the next page and then hand over to Christophe. To sum it all up, you know this page.

Speaker #3: At the end of his career, one of our most experienced technology persons joined here, who's already making a big difference and also representing the interfaces to Schaeffler.

Speaker #3: And we have hired a top CFO externally, with startup experience, who starts January 1st. Very happy about this team, and looking forward to what they bring to the table.

Speaker #3: You saw some of the latest smaller things—Dell Air, you saw Spire—and I can say there are numerous players and conversations that we're having at the moment, building also an order book here.

Speaker #3: That we will publish when we are ready. Excuse me, let me go to the next page. And then I hand over to Christophe.

Speaker #3: To sum it all up, you know, on this page we have been disciplined in our capital allocation. Investment in Q2 was nearly $200 million, more or less on track with Q2.

Klaus Rosenfeld: We have been disciplined in our capital allocation. Investment in Q2 was nearly EUR 200 million, more or less on track with Q2. Reinvestment rates are below one, so we are reducing capital employed at the moment. That stands at EUR 12.1 billion. That is, from my point of view, also necessary to bring the SVA and also our return on capital back on track. You see where it was spent, and that is very logical, compared to what I said before. With that, my first part is finished, and I will hand over to Christophe for the numbers. Thank you very much.

Speaker #3: Reinvestment rate below one, so we are reducing capital employed at the moment. That stands at €12.1 billion. And that is, from my point of view, also necessary to bring the SVA and also our return on capital back on track to see where it was spent.

Speaker #3: And that is very logical compared to what I said before. With that, my first part is finished, and I would hand over to Christophe for the numbers.

Speaker #3: Thank you very much.

Speaker #1: Thank you very much, Klaus. Hello, everyone. I will go very quickly through a couple of slides to give you a flavor for Q2. As Klaus mentioned, after a very solid Q1, Q2 is also a solid one, even though we see a few headwinds here and there, and we do have some one-offs here and there—some favorable, some unfavorable.

Christophe Hannequin: Thank you very much, Klaus. Hello, everyone. I will go very quickly through the couple of slides to give you a flavor for Q2. As Klaus mentioned, after a very solid Q1, Q2 is also a solid one, even though we see there are a few headwinds here and there, and we do have some one-offs here and there, some favorable, some unfavorable, but overall, a very good quarter for us. We mentioned it before, the sales are more or less stable year-over-year, currency adjusted. If you look at the gross profit on the right side of the slide and the bridge on the top, you see a full point of extra gross profit compared to last year, same quarter. If I look first of all at the negative items on the bridge, volume would be the most prominent one. The bulk of it driven by PTC.

Speaker #1: But overall, a very good quarter for us. We mentioned it before—the sales are more or less stable year over year, currency adjusted. But if you look at the gross profit on the right side of the slide, and the bridge on the top, you see a full point of extra gross profit compared to last year.

Speaker #1: Same quarter. If I look, first of all, at the negative items on the bridge, volume would be the most prominent one. The bulk of it is driven by PTC, I have to add, as expected, and actually better than what we had envisioned in our budget for this year.

Christophe Hannequin: I have to add, as expected, actually better than what we had envisioned in our budget for this year. The other point is that we are not playing at exactly the same perimeter because of the sales of some of the businesses towards the end of 2025 that were still on the basis of. Sorry, that are still in 2025, but are no longer then in 2026. I will get into the division-specific volumes after. Mixed is slightly negative for us. That is more of a play between different programs and different levels of contribution. Should not be seen as a trend. Pricing, very favorable for us. A little bit helped by a one-off item linked with the settling of a long-running customer negotiation. Let us describe it this way.

Speaker #1: The other point is that we have parameters since, because of the sales of some of the businesses towards the end of 2025, that were still on the basis of 2025—sorry, that are still in 2025 but are no longer there in 2026.

Speaker #1: And I will get into the division-specific volumes after. Mixed was slightly negative for us. That's more of a play between different programs and different levels of contribution.

Speaker #1: This should not be seen as a trend. Pricing is very favorable for us, a little bit helped by a one-off item linked to the settling of a long-running customer negotiation.

Speaker #1: Let's describe it this way, but also coming from an improvement in the portfolio itself in e-mobility, as well as a very strong contribution from VLS.

Christophe Hannequin: Also coming from an improvement in the portfolio itself in E-Mobility, as well as very strong contribution from VLS, and then to a lesser extent, but still strong, from the B&IS side. Pricing policy that is playing in our favor. Production cost, almost EUR 40 million improvement year-over-year. If I want to simplify it, I would say that half of it comes from the material side. The performance of our purchasing teams is what is paying off here. The rest of it is coming, again, from the structural improvements that we are bringing to the business quarter after quarter after quarter. Improvement in the cost structure as well as operational efficiency. On a cost of sale, to touch on it briefly. It is two things. A little bit of an impact linked with US tariff.

Speaker #1: And then to a lesser extent, but still strong, from the BNIS side. So, pricing policy—that is playing in our favor. Production cost: almost €40 million improvement year over year.

Speaker #1: If I want to simplify it, I would say that half of it comes from the material side. So, the performance of our purchasing teams is what's paying off here.

Speaker #1: The rest of it is coming again from the structural improvements that we are bringing to the business, quarter after quarter after quarter—so, improvement in the cost structure as well as operational efficiency.

Speaker #1: Other cost of sale—to touch on it briefly—it's two things. There's a little bit of an impact linked with US tariffs. The main contributor there is, I think, what I touched on last quarter.

Christophe Hannequin: The main contributor there is, I think, what I touched on last year, last quarter, which is the change that we have made to our inventory revaluation methods, which was creating issues in 2024 and 2025. We have it now under control, and this no longer impacts our numbers or not to a material level. As it was quite negative in Q2 last year and skewing the readability of our numbers, it shows up here as a positive contribution year over year. The last point is foreign exchange, which on the top line is quite strong, but then seems to phase out, does phase out, sorry, at the different level gross profit, and we see that it turns significantly positive on the EBIT side due to the natural hedge that we have within the group.

Speaker #1: Which is the change that we have made to our inventory revaluation methods, which was creating issues in 2024 and 2025? We have it now under control.

Speaker #1: And this no longer impacts our numbers, or not to a material level, as it was quite negative in Q2 last year and skewing the readability of our numbers.

Speaker #1: It shows up here as a positive contribution year over year. And then, the last point is foreign exchange, which on the top line is quite strong but then seems to phase out.

Speaker #1: It does phase out, sorry. At the different level of gross profit, we’ll see that it turns significantly positive on the EBIT side, due to the natural hedge that we have within the group.

Speaker #1: If I go to the next slide. We see that EBIT improves by a full point as well. So from 3.5 to 4.5 year over year.

Christophe Hannequin: If I go to the next slide, we see that EBIT improves by a full point as well. From 3.5 to 4.5 year over year. Most of that being carried through gross profit, as I explained on the previous slide. R&D expenses that you're showing is a little bit misleading in terms of readability. There was a significant reimbursement from one of our key customers in Germany in 2025 Q2, skewing the basis. Of course, it does not reoccur this year, and it creates this -29 that actually hides the improvement made on R&D expenses and R&D efficiency, up to 650 engineers actually being phased out compared to last year, and an overall improvement of R&D cost and R&D development expenditures. Again, the -29, not to be misunderstood. It's actually a positive impact that's hiding behind. -12 on SG&A.

Speaker #1: Most of that is being carried through gross profit, as I explained on the previous slide. R&D expenses that you're showing here are a little bit misleading.

Speaker #1: In terms of readability, there was a significant reimbursement from one of our key customers in Germany in Q2 2025, skewing the basis. Of course, it does not reoccur.

Speaker #1: This year, it creates this minus 29 that actually hides the improvement made on R&D expenses and R&D efficiency. Up to 650 engineers are actually being phased out compared to last year.

Speaker #1: And an overall improvement of our R&D cost and R&D development expenditures. So again the minus 29 not to be misunderstood. It's actually a positive impact.

Speaker #1: That's hiding behind. Minus $12 million on SG&A again—if I want to reduce it to one key, one core topic, that would be the ramp-up or the increase in speed of our S4 and our deployment programs.

Christophe Hannequin: Again, if I want to reduce it to one key, one core topic, that would be the speed, the ramp-up or the increase in speed of our S/4HANA deployment programs with more and more plants going live in 2026 and the associated expenses coming with it. EUR 25 million on others, mainly driven by an insurance topic and a reimbursement that we were able to book in Q2 on that category. FX, as I mentioned before, EUR +23 million, even though, as usually, hides a lot of plus and minuses. If we go to the next slide and we then take a quick look at the different division. Klaus already covered quite a bit, so I will be quick. Ramp-up on E-Mobility. Yes, a little bit of a one-off in there, but still almost 10 points or 10% increase year over year. 2 points on the EBIT side.

Speaker #1: With more and more plants going live in 2026 and the associated expenses coming with it. Twenty-five million on others, mainly driven by an insurance topic in the reimbursement that we were able to book in Q2 on that category.

Speaker #1: FX as I mentioned before plus 23 million even though as usual it hides lots of plots and minuses. If we go to the next slide and we then take a quick look at the different division class already covered quite a bit.

Speaker #1: So I will be quick. Ramp-up on e-mobility. Yes, a little bit of a one-off in there, but still almost 10 points, or a 10% increase year over year.

Speaker #1: Two points on the EBIT side. The negative evolution that you may wonder about in Mechatronics and Modules is mainly due, in Q2, to weakness in China on some specific program projects.

Christophe Hannequin: The negative evolution that you may wonder about on the mechatronics and modules is mainly due in Q2 to the weakness in China on some specific projects that we have over there. It is not something that's widespread in Q2. Again, EBIT structurally improves as we ramp up year over year, even though it's, again, a little bit amplified by a one-off this year. eDrive, as you can see on the right side, doing most of the heavy lifting during Q2 in terms of scaling up and ramping. If we go to the next slide and cover PTC, -5.1 decrease year over year. If I was to break it down for you between what's coming from the market, slowing down or the market phasing out, it would be almost 3 out of the 5.1 linked with market.

Speaker #1: That we have over there. It is not something that's widespread in Q2. And again, EBIT structurally improves as we ramp up year over year.

Speaker #1: Even though it’s again a little bit amplified by one-off this year. E-Drive, as you can see on the right side, is doing most of the heavy lifting during Q2 in terms of scaling up and ramping.

Speaker #1: If we go to the next slide and cover PTC—so, minus 5.1% decrease year over year. If I were to break it down for you between what's coming from the market slowing down or the market phasing out….

Speaker #1: It would be almost 3.3 out of the 5.1 linked with market. The phase-out businesses are divesting some business, which accounts for 2.2, or 1% out of the 5.1 that you see here.

Christophe Hannequin: The phase-out businesses or us divesting some business accounts for 2.1% out of the 5.1 that you see here. Obviously, the numbers that you then see on the EBIT side have to be acknowledged as strong, robust, and resilient given the volume drop to still improve the contribution to the bottom line in that context needs to be acknowledged. The bulk of the decrease hits Powertrain & Chassis. That's the -10.9 that you see here. That's quite logic when you think about the way the market is evolving. If we go to the next slide, Vehicle Lifetime Solutions. I mentioned it a little bit before, slightly disappointing Q1, where we took a little bit too long to settle some customer negotiations. That is now solved, and it was solved before the end of Q1.

Speaker #1: Obviously, the numbers that you then see on the EBIT side have to be acknowledged as strong, robust, and resilient. So, given the volume job to still improve the contribution to the bottom line in that context, it needs to be acknowledged.

Speaker #1: The bulk of the decrease hits Powertrain Solutions. That's the minus 10.9% that you see here, and that's quite logical when you think about the way the market is evolving.

Speaker #1: If we go to the next slide. Vehicle Lifetime Solution. So I mentioned it a little bit before. Slightly disappointing Q1, where we took a little bit too long to settle some customer negotiations.

Speaker #1: That is now solved. It was solved before the end of Q1. What we are faced with, or facing, in Q2 is a little bit of a difficulty with our own internal supply chain.

Christophe Hannequin: What we are facing in Q2 is a little bit of a difficulty with our own internal supply chain. The demand is there, the market is there. The customer demand for our products and offers is strong, but we struggle a little bit to deliver, which you find then in the sales there. Again, we are putting everything needed in order to compensate for that, and are pretty convinced that it will be fixed over the next few weeks or months, and that we will deliver on the full year commitment. That being said, EBIT itself is also very good news with 1 point of additional margin compared to last year or additional EBIT, mainly driven by somewhat of a favorable product mix, but also very strong pricing policy. The benefit of which you see here on the EBIT side.

Speaker #1: The demand is there. The market is there. The customer demand for our products and offers is strong, but we struggle a little bit to deliver.

Speaker #1: Which you find then in the sales there. We are putting everything needed in order to compensate for that, and are pretty convinced that it will be fixed over the next few weeks or months.

Speaker #1: And that we will deliver on the full-year commitment. That being said, EBIT itself is also very good news, with one point of additional margin compared to last year.

Speaker #1: Or additional EBIT, mainly driven by a somewhat favorable product mix, but also a very strong pricing policy. So the benefit of that you see here on the EBIT side.

Speaker #1: On the bearings and industrial side—which is the next slide—again, a 0.4% increase in turnover and sales, which is not a huge increase in sales.

Christophe Hannequin: On the Bearings & Industrial Solutions side, which is the next slide. Again, 0.4 increase in turnover in sales, which is not a huge increase in sales, but what they then deliver in terms of EBIT versus last year, comparable last year, 3.5 points. A little bit helped by the accounting policy adjustments or the fix that we brought to that topic since last year, but also significantly supported by their own internal work on the operational efficiency and cost structure as mentioned before. If we move on to the next slide to free cash flow generation. A little bit off compared to same quarter last year. Key drivers being highlighted on the right side. Net working capital, a little bit negative. To be honest, it's a little bit of a frustration of mine and we're actively working on this one.

Speaker #1: But what they then deliver in terms of EBIT versus last year's comparable—last year, 3.5 points—a little bit helped by the accounting policy adjustments, or the fix that we brought to that topic.

Speaker #1: Since last year, but also significantly supported by their own internal work on operational efficiency and cost structure, as mentioned before. If we move on to the next slide.

Speaker #1: To free cash flow generation. A little bit off compared to same quarter last year. Key drivers being highlighted on the right side. Networking capital a little bit negative to be honest.

Speaker #1: That's a little bit of a frustration of mine; I'm actively working on this one. But we did make the decision to take a cautious approach to inventory levels.

Christophe Hannequin: We did make the decision to take a cautious approach to inventory levels given the Middle East crisis and some other supply chain topics in order to protect our customers. CapEx, as mentioned by Klaus before, cautious approach, especially when it comes to the E-Mobility side, to make sure that we actually match and time the ramp-up of our CapEx with the ramp-up of the markets. The other big item there, besides the traditional ones, would be the others category with a significant impact there of our restructuring cash out, restructuring program cash out, as well as integration-related cash out. There's also a little bit in there related to timing effect on payroll and payroll taxes, which, again, should not be read as a trend. It's more of a timing topic between Q1 and Q2, also comparable with last year.

Speaker #1: Given the Middle East crisis and some other supply chain topics, in order to protect our customers—Capex, as mentioned by Klaus before—we are taking a cautious approach.

Speaker #1: Especially when it comes to the mobility side, to make sure that we actually match in time the ramp-up of our capex with the ramp-up of the markets.

Speaker #1: The other big item there, besides the traditional ones, would be the 'other' category with a significant impact there, of our restructuring program cash out as well as integration-related cash out.

Speaker #1: There's also a little bit in there related to the timing effect on payroll and payroll taxes, which again should not be read as a trend.

Speaker #1: It's more of a timing topic between Q1 and Q2, also comparable with last year. If we move on to the next one, you see our usual slide on leverage and the maturity profile.

Christophe Hannequin: If we move on to the next one, you see our usual slide on leverage and the maturity profile. As you know, we tapped the bond market in May, quite successfully, I must say, for a total of EUR 1 billion at very favorable terms given the context, the bonds that have performed quite well since then. You see an uptick in the leverage ratio at 2.4. That is seasonal, if I may say, and will correct itself between now and year-end, where we expect to land at something very comparable to the end of last year. It's more linked with the seasonality of our cash flow dividend payment and bond issuance. If we move on to the next slide. We can go back on the guidance, where I hand the mic back to Klaus.

Speaker #1: As you know, we tapped the bond market in May—quite successfully, I must say—for a total of €1 billion, at very favorable terms given the context.

Speaker #1: And the bonds have performed quite well since then. You see an uptick in the leverage ratio to 2.4. That is seasonal, if I may say.

Speaker #1: And will correct itself between now and year-end, where we expect to land at something very comparable to the end of last year. And it's more linked with the seasonality of our cash flow, dividend payment, and bond issuance.

Speaker #1: If we move on to the next slide, back to the guidance, I will hand the mic back to Klaus.

Speaker #2: Thank you, Christophe. And again, I mentioned this at the beginning—we will not spend much time here. But we are confident that, with the numbers that Christophe just mentioned...

Klaus Rosenfeld: Thank you, Christophe. Again, I mentioned this at the beginning, we will not spend much time here, but we are confident that with the numbers that Christophe just mentioned, we will achieve our 2026 targets. You can see it there, once again, when you take the H1 in E-Mobility, 2.6 times two, we're at the lower end of the range. That shows again why it's necessary to adjust also the midterm targets. The rest is comfortably in the midpoint of the range. On profitability, we have said what we need to say. Guidance confirmed. Next page then has the outlook with dates, I think that's self-understood. We will have an event tomorrow, a virtual roadshow with Citi, continuous events during the rest of the quarter. With this, I hand back to Heiko, thank you for your attention.

Speaker #2: We will achieve our 2026 targets—you can see it there. And once again, when you take the first half in e-mobility, 2.6 times 2.

Speaker #2: We're at the lower end of the range. That shows again why it is necessary to adjust also the midterm targets. The rest is confidently in the midpoint of the range.

Speaker #2: And on profitability, we have said what we need to say. So, guidance confirmed. The next page then has the outlook with dates, and I think that's self-understood.

Speaker #2: We will have an event tomorrow—a virtual road show with Citi—and then continuous events during the rest of the quarter. With this, I hand back to Heiko.

Speaker #2: And thank you for your attention.

Speaker #3: Thank you very much, Klaus. And thank you very much, Christophe. As Klaus already said, as a friendly reminder, tomorrow we will host our virtual road show with the friendly help of Citi.

Heiko Eber: Thank you very much, Klaus, thank you very much, Christophe. As Klaus already said, as a friendly reminder, tomorrow we will host our virtual roadshow with the friendly help of Citi. If there is additional interest, please reach out to the board. In order to not lose any time, I would propose that we directly jump into our Q&A session, therefore, I would give back to the operator.

Speaker #3: So, if there is additional interest, please reach out to the colleagues. And in order to not lose any time, I would propose that we directly jump into our Q&A session.

Speaker #3: And therefore, I would give back to the operator.

Speaker #4: We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their telephone. You will hear a tone to confirm that you have entered the queue.

Operator: We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their telephone. You will hear a tone to confirm that you have entered the queue. If you wish to remove yourself from the question queue, you may press star and two. Questioners on the phone are requested to disable the loudspeaker mode and eventually turn off the volume from the webcast while asking a question. Anyone who has a question may press star and one at this time. The first question comes from the line of Christoph Laskawi from Deutsche Bank. Please go ahead.

Speaker #4: If you wish to remove yourself from the question queue, you may press star and two. Questioners on the phone are requested to disable loudspeaker mode.

Speaker #4: And eventually, turn off the volume from the webcast while asking a question. Anyone who has a question may press star and one at this time.

Speaker #4: The first question comes from the line of Christophe Laskavi from Deutsche Bank. Please go ahead.

Speaker #5: Good morning. Thank you for taking my questions. I'd like to start with e-mobility, please. A more long-term question: outside of volume, what really needs to change in the business to make this a sustainable, long-term, profitable margin?

Christoph Laskawi: Good morning. Thank you for taking my questions. I'd like to start with E-Mobility, please. A more longer term question. Outside of volume, what really needs to change in the business to make this a sustainable, long-term, profitable margin division? I mean, at EUR 6 to 7 billion in 2028, it's clearly not small. Does the structure of the business need to change, more commonality or less investments? If you could comment on that. What could be key levers to bring this even above the zero? The second question will be, how do you make sure that the Humanoid business is not the next E-Mobility? In the sense that obviously there's more and more competition arising, there's regulatory changes, there's uncertainty on growth.

Speaker #5: Division. I mean, at $6 to $7 billion in 2008, it's clearly not small. So, does the structure of the business need to change—more commonality?

Speaker #5: Or less investments, if you could comment on that. What could be key levers to bring this even above zero? And then the second question would be...

Speaker #5: How do you make sure that the humanoid business is not the next e-mobility, in the sense that, obviously, there's more and more competition arising?

Speaker #5: There are regulatory changes, and there's uncertainty regarding growth. Obviously, you have fewer investment requirements, but I'll be keen to hear just how you prepare the humanoid business for potential volatility in calls or volumes.

Christoph Laskawi: Obviously, you have less investment requirements, I'll be keen to hear just how you prepare the Humanoid business for potential volatility in call-ups or volumes and how you make sure that this is not, again, just hovering around the break even for longer. Just a clarification question on the Humanoid backlog. Just to be sure, the 350 only includes three customers, and there's more on top of that, so that you are still in line with the mid-triple-digit number you gave before, or is there any change to that? Thank you.

Speaker #5: And how do you make sure that this is not, again, just hovering around break-even for longer? And then, just a clarification question on the humanoid backlog.

Speaker #5: Just to be sure right. The 350 only includes 3 customers. And there's more on top of that. So that you are still in line with the mid triple digit number you gave before.

Speaker #5: Or is there any change to that? Thank you.

Speaker #2: Okay, let me start with the last question, Christophe. Thank you very much. I confirm the three names. We have applied more or less the same logic that we use in order book calculation for automotive.

Klaus Rosenfeld: Okay. Let me start with the last question, Christophe. Thank you very much. I confirm the three names. We have applied more or less the same logic that we apply in order book calculation for automotive, also for Humanoid. It needs a signed order for series production to make it into the order book. The other potential orders that could come don't qualify at the moment because these numbers are not there, so potential orders are not in there. That's probably the main reason why the mid number that was mentioned is not reflected here. For the reason to be conservative, we have taken haircuts on the numbers, to make sure that in this early stage of the development of the market, we are not sitting on volumes that, or expectations that do not come through.

Speaker #2: Also for humanoids, so it needs a signed order for serious production to make it into the order book. The other potential orders could come.

Speaker #2: Are not—don’t qualify at the moment because these numbers are not there. So, potential orders are not in there, and that’s probably the main reason why the mid number that was mentioned is not reflected here.

Speaker #2: We have, for the reason to be conservative, taken haircuts on the numbers to make sure that, in this early stage of the development of the market, we are prudent.

Speaker #2: We are not sitting on volumes that were expectations that did not come through. That’s what I said. There is a 50%, if not more, headcount per customer.

Klaus Rosenfeld: That's what I said, there is a 50%, if not more, headcount per customer that is decided in our internal committees, where we say that's the probable amount to be on the safe side. That explains the 350. Why are we confident that Humanoid will be a business that will make money? For sure, no one can, at the moment, really say how this unfolds. As long as you count on your key strengths, and that's why I mentioned the forming technology we have. As long as you are not reinventing the wheel and utilize existing processes, existing technology, if possible, even existing capacity for something like this, then that is a different situation. Like in E-Mobility, one key driver for Humanoid success will also be standardization.

Speaker #2: That is decided in our internal committees, where we say that's a probable amount to be on the safe side. That explains the 350. Why are we confident that humanoid will be a business that will make money?

Speaker #2: For sure, no one can at the moment really say how this unfolds. But as long as you count on your key strengths—and this is why I mentioned the forming technology we have.

Speaker #2: As long as you are not reinventing the wheel and utilize existing processes, existing technology, and, if possible, even existing capacity for something like this, then that is a different situation.

Speaker #2: Like in e-mobility, one key driver for humanoid success will also be standardization. I think you know that we have started this actuator platform, where we're saying we're not going to offer it for 50 different customers.

Klaus Rosenfeld: I think you know that we have started this actuator platform where we are saying we're going to offer not for 50 different customers, 50 different actuator types, but rather do it from a platform approach that allows for standardized solutions. That is, from the experience with other situations like this, a key driver for success. Then for sure, it's pricing. If competition becomes so tough that it doesn't pay off, I think the experience from other businesses is that you better don't buy business, but rather refrain from the beginning. With that discipline and the things that I mentioned and also the position that we have in a market that will further develop, I am confident that this will make money. It's certainly nothing that you will see in the next two or three years in the P&L.

Speaker #2: Fifty different actuator types, but rather do it from a platform approach—that allows for standardized solutions. That is from the experience with other situations like this.

Speaker #2: A key driver for success, and then for sure, it's pricing. And if competition becomes so tough that it doesn't pay off, I think the experience from other businesses is that you'd better not buy business.

Speaker #2: But rather refrain from the beginning. So, with that discipline, and the things that I mentioned, and also the position that we have in a market that will further develop.

Speaker #2: I'm confident that this will make money. It's certainly nothing that you will see in the next two or three years in the P&L. It will rather need to ramp up.

Klaus Rosenfeld: It will rather need ramp up and critical mass. That's what we are building at the moment. On a long-term perspective, this should be a key game changer, also for Schaeffler in its business mix. E-Mobility. Why do we think that this has clearly the potential to make money on a consistent basis and, in particular, on a sustainable basis? A, there is a now really conservatively valued order book that is 30 billion plus, despite all the cuts that we have made. That still needs to be delivered. I know that this is top line and you said volume, forget volume. I also said, in my little slides, that the other key levers, in particular on the cost side, and this is not just admin, it's in particular R&D, all of that.

Speaker #2: And critical mass—that's what we're building at the moment. But from a long-term perspective, this should be a key game changer, also for Schaeffler in its business mix.

Speaker #2: E-mobility—why do we think that this clearly has the potential to make money on a consistent basis, and in particular, on a sustainable basis?

Speaker #2: There is now a really conservatively valued order book that is €30 billion plus. Despite all the cuts that we have made, that still needs to be delivered.

Speaker #2: I know that this is top line. And you said volume—forget volume. But I also said in my little slide that the other key levers, in particular on the cost side...

Speaker #2: And this is not just admin; it's in particular R&D— all of that. There are multiple levers that we are pulling at the moment, and I do believe in that.

Klaus Rosenfeld: There are multiple levers that we are pulling at the moment, I do believe with that, together with, and Christophe mentioned that, CapEx being conservatively used here. Also here, standardization plays a key role, customer interfacing plays a key role, speed plays a key role, Thomas is on top of all these aspects. If we get that right and do not just look at single contracts, but the overall portfolio that we have and continue to develop for customers well, I think this can definitely make enough profit margin that it can contribute positively to the success of Schaeffler.

Speaker #2: Together with—and as Christophe mentioned—Capex is being conservatively used here. Also, standardization plays a key role. Customer interfacing plays a key role. Speed plays a key role.

Speaker #2: And Thomas is on top of all these aspects. And if we get that right, and do not just look at single contracts, but at the overall portfolio that we have.

Speaker #2: And continue to develop for customers as well. I think this can definitely make enough profit margin that it can contribute positively to the success of Schaeffler.

Speaker #5: Very clear. Thank you.

Christoph Laskawi: Very clear. Thank you.

Speaker #2: You're welcome.

Klaus Rosenfeld: You're welcome.

Speaker #1: The next question, from counsel on the line, is from Horst Schneider of Bank of America. Please go ahead.

Operator: The next question comes from the line of Horst Schneider from Bank of America. Please go ahead.

Speaker #4: Thank you. Good morning. Thanks for taking my questions. Horst from Bank of America. I'll start with the least important question, maybe for Christophe, on taxes.

Horst Schneider: Thank you. Good morning. Thanks for taking my questions. Horst from Bank of America. I start with the least important question, maybe. For Christophe on taxes. I remember at beginning of the year, you were saying that tax rate could be around 100%. It's now 60%. That is the number that we also work with in H2. When is this tax number coming down?

Speaker #4: I remember at the beginning of the year, you were saying that the tax rate could be around 100%. It's now 60%. That is a number that we also work with in H2.

Speaker #4: And when is this tax number coming down?

Klaus Rosenfeld: Does anyone else ask that? Okay.

Speaker #2: Does everyone answer that. Okay.

Speaker #4: Yep.

Christophe Hannequin: Yep. A couple of points beyond this one. The first one would be the situation in the German tax pool. If you look at what drives our tax rate today, it's the imbalance between what we pay in the different regions. Today, in the setup that we have, we have a loss situation on the European side, on the German tax pool, and we pay in other jurisdiction, China, US, are the first that come to mind, but they're not the only ones. We are working at fixing that. Part of it comes from improving the quality of the business that's there, that goes back to our restructuring programs and the improvement of our profitability quarter after quarter. There is a second topic on the way around the R&D and the cost-sharing agreements in between our different regions.

Speaker #2: A couple of points beyond this one. The first one would be the situation in the German tax pool. If you look at what drives our tax rate today.

Speaker #2: It's the imbalance between what we pay in the different regions. Today, in the setup that we have, we pay—we have a loss situation on the European side.

Speaker #2: On the German tax pool, and we pay in other jurisdictions—China and the US are the first that come to mind, but they're not the only ones.

Speaker #2: So, we are working on fixing that. Part of it comes from improving the quality of the business that's there. That goes back to our restructuring.

Speaker #2: Programs and the improvement of our profitability, quarter after quarter. There is a second topic on the way, around the R&D and cost-sharing agreements between our different regions.

Speaker #2: All of these things take time, so I would not model an improvement too fast on that topic. It's something that will evolve over the lifetime of, let's say, our midterm targets.

Christophe Hannequin: All of these things take time, I would not model an improvement too fast on that topic. It's something that will evolve over the lifetime of, let's say, our midterm targets. For 2026, I would not see a significant improvement.

Speaker #2: So for 2020/6, I would not see a significant improvement.

Speaker #4: But then it comes gradually down, right? Towards 2028. So for 2028, I assume something like 40%. That sounds fair, or?

Horst Schneider: It comes gradually down, right? Towards 2028. For 2028, I assume something like 40%, sounds that fair, or?

Christophe Hannequin: That is not something that I think we are prepared to communicate on at this point, because it depends on the speed at which we move on certain programs.

Speaker #2: That is not something that I think we are prepared to communicate on at this point, because it depends on the speed at which we move on certain programs.

Speaker #4: Okay, fair enough. No problem. The second question that I have relates to the midterm guidance. When I sum up the various segments, I get to a revenue range of €24.5 billion to €27.25 billion.

Horst Schneider: Okay, fair enough. No problem. The second question that I have is related to the midterm guidance. When I sum up the various segments, I get to a revenue range of EUR 24.5 to 27.25 billion, but you guide for EUR 25 to 26 billion, and the summation of the segments is even not including the other line, which potentially is still low in 2028. I wonder why the sum of the segments is lower than the top guidance that you provide. Maybe you can provide some color on that.

Speaker #4: But your guide is for $25 to $26 billion, and that is even, or the summation of the segments is even, not including the 'Others' line.

Speaker #4: Which potentially is still low in '28. But I wonder, why is the sum of the segments lower than the top guidance that you provide?

Speaker #4: So maybe you can provide some color on that.

Speaker #2: Right. Horst, I can do this. I can take that up front. We have included what we have never done before—a little buffer—on the other side.

Klaus Rosenfeld: Horst, I can do this. I can take that up front. We have included what we have never done before, a little buffer on the other side, on the negative, that is there simply because of this environment. So far, we have never done this. That explains the difference.

Speaker #2: On the negative, that is there simply because of this environment. So far, we have never done this, but that explains the difference.

Speaker #4: Okay, okay. Interesting. I need to see how our corp is set from a forecasting perspective. But anyhow, the other question that I have is related to free cash flow.

Horst Schneider: Okay. Interesting. Need to see how I cope with that from a forecasting perspective. Anyhow, the other question that I have is related to free cash flow. As you rightly point out, H1, your free cash flow ex M&A is EUR -300 million. You guide for the full year for EUR +100 to +300 million. I think your Q4 cash flow is always strong. There's some seasonality as well. Is it now fair to assume rather lower end of the range? What is driving then free cash flow in H2? Maybe you can put some color on that as well.

Speaker #4: So as you rightly point out, H1, your free cash flow ex EMA M&A is minus €300 million. You guide for the full year for plus €100 million to plus €300 million.

Speaker #4: Is it now—I think your Q4 cash flow is always strong. There's some seasonality as well. But is it now fair to assume rather the lower end of the range?

Speaker #4: And what is driving then free cash flow in H2? Maybe you can provide some color on that as well.

Speaker #2: Christophe, do you want to take that, or...

Klaus Rosenfeld: Christophe, you want to take that or?

Speaker #3: Sure. Again, Schaeffler traditionally has a very seasonal cash flow generation. Q1 and Q2 are typically negative, and most of the cash flow for the year comes in during Q3 and Q4.

Christophe Hannequin: Sure. Again, Schaeffler traditionally has a very seasonal cash flow generation. Q1 and Q2 are typically negative. Most of the cash flow for the year comes in in Q3 and Q4. You saw it last year. What distorts this a little bit are some of the cash flow linked with the restructuring, which are not completely linear during the year. We stand by the guidance that we communicated for the year, EUR 100 to EUR 300. As I mentioned before, the working capital piece plays a significant portion in that seasonality. You should, between the contribution from EBITDA and the improvement of the contribution from working capital, again, we stand by the guidance that we committed to for 2026.

Speaker #3: You saw it last year. What distorts this a little bit are some of the cash flows linked with the restructuring, which are not completely linear.

Speaker #3: During the year, we stand by the guidance that we communicated for the year: 100 to 300. And, as I mentioned before, the working capital piece plays a significant portion in that seasonality.

Speaker #3: So you should differentiate between contribution from EBIT and the improvement of the contribution from working capital. Again, we stand by the guidance that we committed to for 2026.

Speaker #4: Okay, that's great. Thank you. And my last one is a more strategic one. When I look at the debate that we are currently having, every day the perception is that companies announce that they are moving production away from Germany.

Horst Schneider: Okay, that's great. Thank you. My last one is more strategic one. When I look at the debate that we are currently having, every day, the perception is that companies announce that they move production away from Germany. Klaus, I think you at Schaeffler, you still have got something like 30% of workforce in Germany. Bosch also said yesterday they move more employees to Hungary. Mercedes was saying more or less the same. We know the story from Volkswagen. To what extent does that debate affect you? You announced this morning another restructuring, a small one, as you rightly pointed out. Is that basically the trend that we should assume going forward, that there's more restructuring, which also maybe consumes more cash?

Speaker #4: And Klaus, you also—I think at Schaeffler you still have about 30% of your workforce in Germany. Bosch also said yesterday they are moving more employees to Hungary.

Speaker #4: Mercedes was saying more or less the same. We know the story from Volkswagen. To what extent does that debate affect you? You announced this morning another restructuring.

Speaker #4: A small one, as you rightly pointed out. But is that basically the trend that we should assume going forward— that there's more restructuring, which also maybe consumes more cash?

Speaker #4: And in that context then, also, when I look at the overall net debt and the deleverage that you maybe can achieve as your dividend—

Horst Schneider: In that context then also, when I look at the overall net debt, and the deleverage that you maybe can achieve with your dividend, wouldn't it be the time then also to say that the dividend, basically the payout ratio, comes a little bit down in order to allow Schaeffler to delever a little bit more?

Speaker #4: Wouldn't it be the time then, also, to say that the dividend, basically the payout ratio, comes a little bit down in order to allow Schaeffler to deliver a little bit more?

Klaus Rosenfeld: It's a complex question.

Speaker #2: It's a complex question.

Horst Schneider: Complex question, I know. Sorry for that.

Speaker #4: Complex question. I know. Sorry for that.

Speaker #2: I know. But it's a very fair question, and let me try to answer this. I mean, I'm not so sure whether we are well advised to just apply general trends from others to our situation.

Klaus Rosenfeld: I know. It is a very fair question. Let me try to answer this. I am not so sure whether we are well-advised to just apply general trends from others on our situation. Why do I say this? We have now finalized restructuring, or let us call it performance improvement program number five. Over the last years, the continuous execution of these programs is key, and that is from my point of view, more or less company specific. Whether it makes sense to bring everything abroad and leave Germany completely, and I am exaggerating on purpose, is something that each management team has to consider. I think there are very strong arguments not to go to the extreme, but rather to see how can we balance, in particular our footprint, against the new reality. Let me give you one example.

Speaker #2: Why do I say this? We have now finalized restructuring, or let's call it performance improvement program number five, over the last years. The continuous execution of these programs is key.

Speaker #2: And that is, from my point of view, more or less company specific — whether it makes sense to bring everything abroad and leave Germany completely.

Speaker #2: And I'm exaggerating on purpose. This is something that each management team has to consider, and I think there are very strong arguments not to go to the extreme.

Speaker #2: But rather to see how we can balance, in particular, our footprint, against the new reality. Let me give you one example: you saw what happened with electricity.

Klaus Rosenfeld: You see what happened with electricity in the last days because of the heat. All of a sudden, Romania at risk, Hungary at risk. The famous nuclear plants are all needing water. Again, I am just using this as an example that there are always multiple arguments if you make footprint decisions. Therefore, I would respectfully say we are not going to simply apply because major customers or competitors are saying they move everything to Hungary. We would not just follow that trend because it is a trend. What is really necessary is that you consider what you have from a long-term point of view, and that goes back to what can you afford? For sure, you have to be right. We are used to present numbers on an earnings before special items figure, and say all the rest is then somewhere in the below the line stuff.

Speaker #2: In the last days, because of the heat, all of a sudden Romania is at risk, Hungary is at risk. The famous nuclear plants are all needing water.

Speaker #2: And again, I'm just using this as an example—that there are always multiple arguments if you make footprint decisions. Therefore, I would respectfully say...

Speaker #2: We're not going to simply apply because major customers or competitors are saying they move everything to Hungary. We would not just follow that trend.

Speaker #2: Because it's a trend, what is really necessary is that you consider what you have from a long-term point of view. And that goes back to—

Speaker #2: What can you afford? And for sure, you are absolutely right. We are used to presenting numbers on earnings before special items, and say all the rest is then somewhere in the below-the-line stuff.

Speaker #2: But the below-the-line stuff ends up somewhere, in the unadjusted earnings number and in the unadjusted net income number. So every restructuring that you do—

Klaus Rosenfeld: The below the line stuff ends up somewhere in the unadjusted earnings number and in the unadjusted net income number. Every restructuring that you do has to be a business case in itself, and that certainly includes the cash out for restructuring.

Speaker #2: It has to be a business case in itself, and that certainly includes the cash out for restructuring. We have now done something that was more, let's call it, upfront opportunistic.

Klaus Rosenfeld: We have now done something that was more, let's call it opportunistic, because we were just finished with the negotiations, but also with the collection of most of the people we need to fulfill the 4,700. That has now become a higher number. We have used the opportunity to say, "Let's offer again this instrument that has been proven to be one of the most successful instruments in the last years." In particular, with a view that this could fall away when the German government decides so. That is more opportunistic. It's not a new program. It's an extension of the existing program. The 4,700 could become 6,000. That, from my point of view, gives us the flexibility. This is only Germany. It is not something that has to do with we're moving plants somewhere else.

Speaker #2: Because we were just finished with the negotiations, but also with the collection of most of the people we need to fulfill the 4,700. That has now become a higher number.

Speaker #2: And we have used the opportunity to say, let's offer again this instrument that has been proven to be one of the most successful instruments in the last years.

Speaker #2: In particular, with a view that this could fall away when the German government decides so. That is more opportunistic. It's not a new program.

Speaker #2: It's an extension of the existing program. The 4,700 could become 6,000, and that, from my point of view, gives us the flexibility. This is only Germany.

Speaker #2: It is not something that has to do with—we are moving clients somewhere else. It doesn't need big restructuring costs. But it's a very intelligent instrument, also in the interest of the employee.

Klaus Rosenfeld: It does need big restructuring costs, but it's a very intelligent instrument to also, in the interest of the employee, in the interest of foreign craft M&A and managing the organization through these volatile environments. We're using that instrument. Do I exclude with that a next program for more structural things? No, definitely not. I think the only way to go is with continuous assessment. What can you do next? I think it's fair to say with what we're seeing here, there are always ideas to do things in a better way, and that will, to some extent, need some restructuring investment. Is there at the moment, thought given to the fact would we change our capital allocation externally in a sense that we're saying we want to pay a dividend and further delever? That is clearly something that we are looking at.

Speaker #2: In the interest of Fachkräftemangel and managing the organization through these volatile environments, we're using that instrument. Do I exclude with that a next program for more structural things?

Speaker #2: No, definitely not. I think the only way to go is with continuous assessment. What can you do next? And I think it's fair to say, with what we're seeing here...

Speaker #2: There are always ideas to do things in a better way, and that will, to some extent, need some restructuring investment. Is there at the moment thought given to that fact?

Speaker #2: Would we change our capital allocation externally, in the sense that we're saying we want to pay a dividend and further delever? That is clearly something that we are looking at.

Klaus Rosenfeld: The framework we have is flexible enough. We are confirming, as you saw on the midterm targets of 40% to 60%, as a general guidance. That's something that also clearly needs to be discussed towards the year-end. At the moment, I have no reason to believe why we should give up on the 40% to 60%. Why I'm saying this, because the net income number, even if you adjust it for restructuring provisions, is still a normal number. My team measure here is as long as we don't pay dividend too much out of substance, the interplay between deleveraging and dividend should be okay on the long run. Let's tackle that question when we get there. There's definitely no decision made here. As long as we end up in a good number within the range of EUR 100 and 300, then we should be fine.

Speaker #2: The framework we have is flexible enough. But we are confirming, as you saw, on the midterm targets of 40% to 60%, as a general guidance.

Speaker #2: But that's something that also clearly needs to be discussed towards the year-end. At the moment, I have no reason to believe why we should give up on the 40 to 60%.

Speaker #2: Why am I saying this? Because the net income number, even if you adjust for restructuring provisions, is still a normal number. And my team's sort of measure here is as long as we don't pay dividend too much out of substance.

Speaker #2: The interplay between deleveraging and dividend should be okay in the long run, but let's tackle that question when we get there. There's definitely no decision made here.

Speaker #2: And as long as we end up in a sort of good number within the range of 100 and 300, then we should be fine.

Klaus Rosenfeld: I'm optimistic that the free cash flow number for this year will be a solid one.

Speaker #2: I'm optimistic that the free cash flow number for this year will be a solid one.

Speaker #4: Okay. Great. Thank you Claus.

Horst Schneider: Okay, great. Thank you, Klaus.

Speaker #2: You're welcome.

Klaus Rosenfeld: You're welcome.

Speaker #1: We now have a question from the line of Jose Asumendi from J.P. Morgan. Please go ahead.

Operator: We now have a question from the line of Jose Asumendi from J.P. Morgan. Please go ahead.

Speaker #2: Hey, good morning. Hi, Claus. A couple of questions. Yes. The first question relates to the '28 targets. Some of the questions I've been receiving are again to revisit the reasons for upgrading the guidance.

José Asumendi: Hey, good morning. Hi, Klaus. A couple of questions.

Klaus Rosenfeld: Jose.

José Asumendi: Yes. The first question relates to the 2028 targets. Some of the questions I have been receiving is, again, to revisit maybe the reasons for upgrading the guidance, specifically within Powertrain & Chassis. When you sat down, I think, by the way, it is a very forthcoming approach to revisit the 2028 targets. Thank you for that in terms of that transparency. When you think about that level of confidence to increase the guidance on Powertrain & Chassis, what led to that thought process? Second, on the humanoid front, can you comment a little bit the European landscape and the partnerships you have? As much as you can share. I know it may not be easy to talk about all the players. Can you talk about the partnerships and collaborations you have with Hexagon, with Neura, with Humanoid? I think it is three very interesting clients.

Speaker #2: Specifically within Power to Land Chassis, when you sat down—and I think, by the way, the very forthcoming approach to revisit the '28 targets.

Speaker #2: So thank you for that, in terms of that transparency. But when you think about that level of confidence, to increase the guidance on power to land chassis.

Speaker #2: What led to that thought process? And second, on the human front, can you comment a little bit on the European landscape and the partnerships you have?

Speaker #2: As much as you can share. I know it may not be easy to talk about all the players, but can you talk about the partnerships and collaborations you have with Exagon?

Speaker #2: With Noria, with Humanoid, I think it's pretty interesting clients. Thank you.

José Asumendi: Thank you.

Speaker #3: Okay, let me first respond to the first question. Christophe, if you want to add, please feel free to do so. In these updated multi-year midterm targets...

Klaus Rosenfeld: Okay, let me first respond on the first question. Christophe, if you want to add, please feel free to do so. These updated multi-year midterm targets are not just something that we did over a weekend and saying, how can we do this best to make sure that the capital market understands it? This is the result of a detailed strategic planning. Jose, as you know, we start the year with the technology dialogue. In the summer, we finish our, what we call the top-down plan. That is the 5-year rolling plan, where all the divisions, all the business divisions, the business units, present their ideas and their cases. When we are finished with our discussion, we set the targets for the next years as sort of the top-down targets, and we put that in target letters that the people get.

Speaker #3: These are not just things that we did over a weekend, and we are asking ourselves how we can do this best to make sure that the capital market understands.

Speaker #3: This is the result of a detailed strategic planning. Jose, as you know, we start the year with the technology dialogue. We then, in the summer, finish what we call the top-down plan.

Speaker #3: That's a five-year rolling plan, where all the divisions, all the business divisions, the business units, present their ideas and their cases. And from that, we then, when we are finished with our discussion...

Speaker #3: We set the targets for the next years, as sort of the top-down targets, and we put that in target letters that the people get.

Speaker #3: These targets were sent out yesterday. And what we saw again were changes in top lines, but we also saw that performance in PTC.

Klaus Rosenfeld: These target letters were sent out yesterday, and what we saw, again, was changes in top lines, but we also saw that performance in PTC with also the changes that are happening there. You saw that the -5% is to some extent also getting rid of certain or phasing out certain businesses that the underlying performance here is considerably keeping up quite well. When we saw the number, we said there is a good reason to say in the midterm, this is going to be even better than what we expected before. That led to the half percentage point. The same is true with VLS. VLS is performing now several quarters above or at the 15% mark, and that is why we said that is also something that we can upgrade. This is not just wishful thinking.

Speaker #3: With the changes that are happening there, you saw that the minus 5% is, to some extent, also getting rid of or phasing out certain businesses.

Speaker #3: The underlying performance here is considerably keeping up quite well. And when we saw the number, we said there is a good reason to say, in the midterm,

Speaker #3: This is going to be even better than what we expected before. That led to the half-percentage point. The same is true with VLS.

Speaker #3: VLS is performing now for several quarters, above or at the 15% mark. And that's why we said that's also something that we can upgrade. So this is not just wishful thinking.

Speaker #3: This is based on a discussion that we had within the board over several rounds. What's the near term? And midterm here is more near term.

Klaus Rosenfeld: This is based on a discussion that we had within the board over several rounds. What is the near term and midterm here is more near term because 2027, 2028 is around the corner, but also part of a 5-year longer-term plan that we have. Hopefully, that gives you enough insight and maybe I can say for PTC for sure, the composition of that business, the strength of the business that we have in the classical powertrain world, in the hybrid powertrain world, but also with the sensors and the new things that Matthias is doing, is clearly driving this. With VLS, the main business driver is the strength of that business proven over years, very good with logistics, very flexible when it comes to the product offering, also new things coming in. That is the main business reason for this.

Speaker #3: Because 2027/2028 is around the corner, but it's also part of a five-year longer-term plan that we have. Hopefully, that gives you enough insight.

Speaker #3: And maybe I can say for PTC, for sure, the composition of that business—the strengths of the business that we have in the classical powertrain world.

Speaker #3: In the hybrid powertrain world, but also with the sensors and the new things that Matthias is doing, is clearly driving this, and with VLS.

Speaker #3: The main business driver is the strength of that business, proven over years. Very good with logistics. Very flexible when it comes to the products.

Speaker #3: The product offering, also new things coming in—so that's the main business reason for this. In the European landscape of humanoids, yes, we have decided to support Nura.

Klaus Rosenfeld: In the European landscape of humanoids, yes, we have decided to support Neura. Neura is, from my point of view, one of the stars, with German origin, very active, in particular on the KI side. Very interesting what they do with their humanoid gyms, how they want to cooperate with us. That is from the whole way how they approach this humanoid robot, as a KI-driven or software-defined solution, that is I think their main strength. We are very happy to partner with them. There are also others in that group, but we have a trusted relationship with them that allows us to really understand where they are going. Hexagon is very interesting from a different perspective because they have more experience in production. They are, as you know, a company that is very strong with automation.

Speaker #3: Nura is, from my point of view, one of the stars with German origin. Very active in particular on the AI side. Very interesting what they do with their humanoid gyms.

Speaker #3: How they want to cooperate with us. So that's from the whole way how they approach this humanoid robot, as a KI-driven or software-defined solution.

Speaker #3: That's, I think, their main strength. We're very happy to partner with them, and there are also others in that group. But we have a trusted relationship with them.

Speaker #3: That allows us to really understand where they're going. Hexagon is very interesting from a different perspective, because they are more production-oriented; they have more experience in production.

Speaker #3: They are, as you know, a company that is very strong with automation. They clearly sort of match with us, because we have our own large production sites.

Klaus Rosenfeld: They clearly sort of match with us because we have our own large production sites. We know how important automation on the shop floor is, how that all fits together. There, the fit comes in particular from that experience, from that shared experience. They do different types of things. As you know, their robots are more seen as sort of integral parts of an overall automation solution. Some of them do not have legs, some of them have wheels, some of them roll. That is, I think, the strength we see there, and that is very interesting for us for these overall solutions. Then Humanoid AI is the British one. What is really impressive there, that is more the startup approach. They started with more or less nothing. We know them. Some of you remember, we had them on the CES show in 2026.

Speaker #3: We know how important automation on the shop floor is, and how all that fits together. So, the fit comes in particular from that experience.

Speaker #3: From that shared experience, they do different types of things. They are, as you know, their robots are more seen as sort of integral parts of an overall automation solution.

Speaker #3: Some of them don't have legs. Some of them have wheels. Some of them roll. So that is, I think, the strength we see there.

Speaker #3: And that's very interesting for us for these overall solutions. And then, Humanoid AI is the British one. What is really impressive there—that's more the startup approach.

Speaker #3: They started with more or less nothing. We know them—some of you remember, we had them on the CEST show in 2026. What is, from my point of view, most impressive there.

Klaus Rosenfeld: What is, from my point of view, most impressive there, how focused they are and how fast they are in moving forward. Also there, the idea of investing in them, supporting them, also giving them a little bit of this, let us not call it name-lending, but you know what I mean. The fact that Schaeffler stands behind it gives all of the young ones something of an edge. That is maybe the three descriptions of how I see these relationships. I am not in all the details, but I can tell you, these three ones are, from our point of view, on the one hand, complementary, on the other hand, also, on a successful path to conquer the European, if not global, space of the humanoid robots. That is important. Let me finish there. You saw legislation from the US where they say China is unwanted.

Speaker #3: How focused they are, and how fast they are in moving forward. So also, the idea of investing in them, supporting them, also giving them a little bit of this—let's not call it name lending.

Speaker #3: But you know what I mean. The fact that Schaeffler stands behind it gives all of the young ones something of an edge. So that's maybe the three descriptions of how I see these relationships.

Speaker #3: I'm not into all the details, but I can tell you these three ones are, from our point of view, on the one hand, complementary.

Speaker #3: On the other hand, also on a successful path to conquer the European, if not global, space of humanoid robots. And that is important.

Speaker #3: Let me finish there. You saw legislation from the US where they say China is unwanted, so they will regulate much more what’s been applied in the US.

Klaus Rosenfeld: They will regulate much more what's being applied in the US, and there, our strategy being present in the US, in China, and also in Europe, it's crucial and starts to pay off.

Speaker #3: And there, our strategy of being present in the US, in China, and also in Europe is crucial and is starting to pay off.

Speaker #1: That's very interesting. That's a good follow-up. So, you saw the partnership between SKF and Leader Drive. Would this be something you would also be open to, in terms of creating a partnership with another supplier?

José Asumendi: That's very interesting. As a quick follow-up, I'm sure you saw the partnership between SKF and Leaderdrive. Would this be something you will also be open for in terms of creating a partnership with another supplier? Or you think that due to your technology expertise and portfolio, you would not require such a venture?

Speaker #1: Or do you think that, due to your technology expertise and portfolio, you would not require such a venture?

Speaker #3: Well, I'll give you a bit of a diplomatic answer. We are open to every partnership, as long as it pays off and as long as it's win-win.

Klaus Rosenfeld: Well, I'll give you a little bit of a diplomatic answer. We are open to every partnership as long as it pays off and as long it's win-win. There's a certain limit at some point in time to the number of partnerships you can really pursue and also support. I've spoken enough about single names, so let me please stop here.

Speaker #3: There's a certain limit, at some point in time, to the number of partnerships you can really pursue—and also support. But I've spoken enough about single names.

Speaker #3: So, let me please stop here.

Speaker #1: Thank you very much.

José Asumendi: Thank you very much.

Speaker #3: You're welcome.

Klaus Rosenfeld: You're welcome.

Speaker #2: The next question comes from the line of Ross McDonald from Citi. Please go ahead.

Operator: The next question comes from the line of Ross MacDonald from Citi. Please go ahead.

Speaker #1: Yes, thank you. It's Ross at Citi. You've certainly given us a lot to discuss this quarter, so thanks for that. I have three questions. One is long-term focused.

Ross MacDonald: Yes. Thank you. It's Ross at Citi. You've certainly given us lots to discuss this quarter, so thanks for that. I have three questions. One is long-term focus, one is midterm, and the final one just on the Q3s. On the long term, specifically on humanoids, could you maybe just give a little bit more color for people that are frankly owning Schaeffler specifically on this theme? Could you talk about the share of the bill of materials within the orders you have? Are you still tracking towards that 50% share of bill of materials within humanoids? Specifically, there's a lot of interest around the CMD, potential mini CMD related to humanoid. Should we still expect that this year? On XPENG specifically, was there anything that Schaeffler brings to the table that the Chinese players don't?

Speaker #1: One is midterm, and then the final one just on the Q3s. So on the long term, specifically on humanoids, could you maybe just give a little bit more color for people that are, frankly, owning Schaeffler specifically on this theme?

Speaker #1: Could you talk about the share of the bill of materials within the orders you have? Are you still tracking towards that 50%? Share of bill of materials within humanoids.

Speaker #1: And then, specifically, there is a lot of interest around the CMD—potential mini CMD—related to humanoids. Should we still expect that this year?

Speaker #1: And then on Xpeng specifically, was there anything that Schaeffler brings to the table that the Chinese players don't? I'd be very interested to understand how you're able to win business with those local Chinese players.

Ross MacDonald: Be very interested to understand how you're able to win business with those local Chinese players. That's the long-term focus. The midterm one, I appreciate that you have this powertrain hedge. Obviously, the fact is that the EBIT is coming down on a change in powertrain trends, so there is a little bit of pressure there. I think that's related to the content, specifically per vehicle in eMob. Could you just give us some comfort that the PTC here should have the right to win maybe higher piece prices on some of that US content that has gone away in eMob but could come back in PTC? Kind of linked to Jose's question, shouldn't we see a top-line boost in PTC given that hedge that you have in place?

Speaker #1: So that's the long-term focus. The mid-term one—I appreciate that you have this powertrain hedge. But obviously, the fact is that the EBIT is coming down due to a change in powertrain trends.

Speaker #1: So there is a little bit of pressure there. I think that's related to the content, specifically per vehicle, in E-Mob. But could you just give us some comfort that PTC here should have the right to win maybe higher piece prices on some of that US content?

Speaker #1: That has gone away in EMOB, but could come back in PTC. Kind of linked to Jose's question. Shouldn't we see a top-line boost in PTC given that hedge that you have in place?

Speaker #1: And then the final one, just on Q3. Obviously, we're in the upper half of the margin range in the first half. How should we think about Q3?

Ross MacDonald: The final one, just on Q3, obviously, we're in the upper half of the margin range in H1. How should we think about Q3? Is it progressing in line with plan? Are there any evidence of call volatility or any headwinds emerging in Q3? Thank you.

Speaker #1: Is it progressing in line with the plan? Are there any signs of volatility or any headwinds emerging in Q3? Thank you.

Speaker #3: Christoph, could you take number two and number three? I would start with the long term, if that's okay. Long term, again, the general parameters of our go-to-market strategy for humanoids are intact.

Klaus Rosenfeld: Christophe, could you take number two and number three? I would start with the long term. If that's okay, long term. Again, the general parameters of our go-to-market strategy for humanoids are intact. Just to repeat them, we've always said we believe, and know that that is rather a conservative number, 1 million robots or humanoid robots in 2035. We have always said we want at least a 10% market share and our bill of material calculation that the addressable market per humanoid, and yes, humanoids are changing their shape. There are different types of humanoids. It's not just only the fancy one that runs the half marathon or that can dance or play tennis. That bill of material number of 50% is approachable for us or addressable for us is still intact, Ross. It's simply explained by the fact that you compare it to a car.

Speaker #3: And just to repeat them, we've always said we believe and know that that is rather a conservative number: a million robots, or humanoid robots, in 2035.

Speaker #3: We have always said we want at least a 10% market share. And our bill of material calculation is that the addressable market per humanoid—and yes, humanoids are changing.

Speaker #3: There are different types of humanoids. It's not just only the fancy one that runs the half marathon or that can dance or play tennis.

Speaker #3: That bill of material number of 50% is approachable for us, or addressable for us, is still intact, Moss. And it's simply explained by the fact that you compare it to a car.

Klaus Rosenfeld: The battery has a lower content per humanoid. What has high content are all the joints, the ball screws, the fingers, all of that number has not changed dramatically in a sense that we would change our calculation here. 50% is addressable for sure. There is some competition on the parts, but as I said before, as long as you can provide the right quality, as long as you can provide quality at a decent price in a market that is not a completely global market, with local delivery and a strong name and hopefully standardized production, then that should be the case for us. XPENG, again, they weren't kind enough to allow us to talk about them. They are also a key partner for us in other products, I cannot go into more detail.

Speaker #3: The battery has a lower content per humanoid. But what has high content are all the joints—the ball screws, the fingers, all of that.

Speaker #3: And that number has not changed dramatically in a sense that we would change our calculation here. So, 50% is addressable for sure. There is competition on the parts.

Speaker #3: But as I said before, as long as you can provide the right quality, as long as you can provide quality at a decent price.

Speaker #3: In a market that is not a completely global market, with local delivery and a strong name, and hopefully standardized production, then that should be the case for us.

Speaker #3: Xiaopeng again. They were kind enough to allow us to talk about them. They are also a key partner for us in other products, but I cannot go into more detail.

Speaker #3: The product we are offering here is a key of our is a key product of our offering. And that gives me confidence that they have made their calculation why it makes sense to go for us and not a Chinese player.

Klaus Rosenfeld: The product we are offering here is a key product of our offering. That gives me confidence that they have made their calculation why it makes sense to go for us and not a Chinese player. I can tell you in all of what we have here, scalability and the ability to ramp up all of this and to deliver in time the right scale, the right number of products when it comes, will be a decisive factor. There are many people that will be able to produce things cheaper or attack sort of companies like us with low prices. Here, functionality, reliability Scale plays an important role. That's why we think we are well-positioned, and as I said before, we're not going to buy business just for the fun of it. We want to make this something that is high volume and solid profitability.

Speaker #3: And I can tell you, in all of what we have here, scalability and the ability to ramp up all of this and to deliver in time at the right scale, with the right number of products when it comes, will be a decisive factor.

Speaker #3: And there may be people that will be able to produce things cheaper. But don't attack companies like us with low prices. Here, functionality, reliability, and scale play an important role.

Speaker #3: That's why we think we are well positioned. And as I said before, we're not going to buy businesses just for the fun of it.

Speaker #3: We want to make this something that is high volume and solid profitability. With that, Christoph, I would hand over to you for the powertrain hedge and Q3.

Klaus Rosenfeld: With that, Christophe, I will hand over to you for the powertrain hedge and Q3.

Speaker #4: I mean, you can make a really solid argument that, at least in the US, what goes away on the Mobility side comes back at least partially, if not completely, on the PTC side.

Christophe Hannequin: You can make a really solid argument that, at least in the US, what goes away on the mobility side comes back at least partially, if not completely, on the PTC side. The vehicles need propulsion regardless of the technical solution. That's what you're seeing a little bit this year for our numbers. When you look at the Q1, Q2, what is pulling in terms of sales, and also if you were to dig into the order book, you would see that that hedge logic actually works, and that the US or the North American market is proving to be a very good, almost business school study case for it, if I may see it like this. The margins that are being pulled also are strong, and this despite the top-line decrease coming from some of the old markets.

Speaker #4: The vehicles need propulsion regardless of the technical solution. So that's what you're seeing a little bit this year for our numbers when you look at Q1, Q2.

Speaker #4: The 'what' is pulling in terms of sales, and also, if you were to dig into the order book, you would see that that hedge logic actually works, in that the US—to the North American market—is proving to be a very good, almost business school study case for it.

Speaker #4: If I may see it like this: The margins that are being pulled are also strong, and this is despite the top-line decrease coming from the Saudi oil market.

Speaker #4: So, for me, it makes complete sense to do the adjustment that we did to our midterm targets. We call them midterm targets, but as Klaus pointed out, midterm and short term are almost the same when you're only a year or two out.

Christophe Hannequin: For me, it makes complete sense to do the adjustment that we did to our midterm targets. We call them midterm targets, but as Klaus pointed out, midterm and short term, when you're only a year or two out, it starts to be debatable what's our target. For 2028, it's the right thing to do, and we have every reason to believe that what's being put out there is the right one. On Q3, what to expect? Nothing significant or nothing special that we know of. We do have this uncertainty on what is going on in China, when we see kind of the mixed feeling from the Chinese market on PTC and E-Mobility, is this temporary? Is this something a little bit more structural?

Speaker #4: It starts to be debatable what our targets are. So for 2028, it's the right thing to do. And we have very, very good reason to believe that what's being put out there is the right one.

Speaker #4: On Q3, what to expect? Nothing significant or nothing special that we know of. We do have this uncertainty on what is going on in China.

Speaker #4: When we see kind of the mixed feeling from the Chinese market on PTC and any more business, this temporary is something a little bit more structural.

Speaker #4: But from where I stand today and looking at our data for the short term—this time for Q3 and part of Q4—there is nothing significant to report at this point.

Christophe Hannequin: From where I stand today and looking at our data for the short term this time for Q3 and part of Q4, nothing significant to report at this point. Again, we stand by the full-year targets for the company and for the group. That's only two more quarters to go, nothing specific there.

Speaker #4: And again, we stand by the folio targets for the company and for the group. That’s only two more quarters to go, so nothing specific there.

Speaker #1: Thank you very much.

Ross MacDonald: Thank you very much.

Speaker #4: Welcome.

Christophe Hannequin: Welcome.

Speaker #2: We now have a question from the line of Vanessa Jeffries from Jefferies. Please go ahead.

Operator: We now have a question from the line of Vanessa Jeffriess from Jefferies. Please go ahead.

Speaker #5: Hello, just another one on the humanoid order book. You said your partnership with humanoid AI is not included, which I think was a seven-digit amount.

Vanessa Jeffriess: Hello. Just another one on the humanoid order book. You said your partnership with Humanoid is not included, which I think was a seven-digit amount, so a big order. Just wondering why that isn't included, because it seems that the release would imply it meets the criteria you mentioned. Then just wondering if you could explain what order book means in terms of length of projects. Because I'm just wondering, given the momentum that you're seeing, when you refreshed your 2028 targets, why you didn't add another line for other? Because I know it's still small, but when we look at your 2028 guidance changes, that order book is already enough to offset the cut in B&IS sales guidance. You've just said a few times how conservative it is, so I feel like it should be there.

Speaker #5: So, a big order. I was just wondering why that isn't included, because it seems that the release would imply it meets the criteria you mentioned.

Speaker #5: And then, just wondering if you could explain what 'order book' means in terms of the length of projects, because I'm just wondering, given the momentum that you're seeing.

Speaker #5: When you refreshed your 2028 targets, why didn't you add another line for 'Other'? Because I know it's still small. But when we look at your '28 guidance changes...

Speaker #5: That order book is already enough to offset the cut in BNIS sales guidance. And you've just said a few times how conservative it is.

Speaker #5: So, I feel like it should be there.

Klaus Rosenfeld: Well, it's a good point. When we decided on the midterm target update, we decided to stay in the format that you had for 2028. Certainly, you could argue and say, Why didn't you put a fifth column here? That would have made it all more complex. We decided because 2028 is so close, we stay with that format. When then time comes and we give a next year outlook for a different period, happy to discuss. It has to do with the fact that the whole others, and humanoids, and defense, and the other startup businesses, don't forget that the fifth division is not only humanoids, and defense is still early. I think that was the right decision.

Speaker #4: Well, it's a good point. When we decided on the midterm target update, we decided to stay in the format that you had for 2028.

Speaker #4: Certainly, you could argue and say, why didn’t you put a fifth column here? That would have made it all more complex, but we decided not to, because 2028 is so close.

Speaker #4: We stay with that format. And when the time comes and we give a next-year outlook for a different period, happy to discuss. But it has to do with the fact that the whole 'Others' and 'Humanoids and Defense' and the other startup businesses—don't forget that the fifth division is not only 'Humanoids and Defense.'

Speaker #4: It's still early, so I think that was the right decision. Now, when we decided what to put in the order book, we agreed that we are very firm in terms of standards.

Klaus Rosenfeld: Now, when we decided what to put in the order book, we have agreed that we are very firm in terms of standards, and don't put just numbers in to make the number as big as possible. The Humanoid AI contract is a contract that, at least at the moment, doesn't meet all these standards, at least not for 30 June. It is something where we see a good order intake coming, but it's not included for 30 June. As I said before, we want to be strict and very conservative what goes in and what goes not in.

Speaker #4: And don't just put numbers in to make the number as big as possible. The humanoid AI contract is a contract that, at least at the moment,

Speaker #4: It doesn't meet all of these standards, at least not as of June 30th. It's an area where we see good order intake coming, but it's not included as of June 30th.

Speaker #4: As I said before, we want to be strict and very conservative about what goes in and what does not go in.

Speaker #5: Okay. And then just on the cut to 2028 e-mobility guidance—just wondering how much is attributable to the US and how much to China.

Vanessa Jeffriess: Okay. Then just on the cut to 2028 E-Mobility guidance, just wondering how much is attributable to the US and how much to China. Because you've talked about the US as the main point, but I guess in H1, we can see that your E-Mobility decline was larger in China than it was in the US. It looks like you're getting some good offset there from that one-third of the business that's not EV.

Speaker #5: Because you've talked about the US as the main point. But I guess in the first half, we can see that your e-mobility decline was larger in China than it was in the US.

Speaker #5: So, it looks like you're getting some good offset there from that one-third of the business that's not EV.

Speaker #4: Well, when you talk about the order book, the main sort of reduction is when we reassess the order book as part of the planning exercise that we explained.

Klaus Rosenfeld: Well, when you talk about order book, the main sort of reduction that when we reassess the order book as part of the planning exercise that we explained, the main parts came from the US. As you all know, all the large customers there either pulled their orders or reshape them in a way that their volume assumptions became much lower. Don't forget that we are not just taking their volume assumptions into that order book, but it's a continuous assessment where we say they are asking for this, and our experience is that they normally don't ever deliver on that. Then we make our adjustments.

Speaker #4: The main part came from the US. As you all know, all the large customers there have either pulled their orders or reshaped them in a way that their volume assumptions became much lower.

Speaker #4: And don't forget that we are not just taking their volume assumptions into that order book, but it's a continuous assessment where we say they are asking for this.

Speaker #4: And our experience is that they normally don't ever deliver on that, and then we make our adjustments. So, it's a continuous process. But I can only say I don't have a split by percentage point.

Klaus Rosenfeld: It's a continuous process, but I can only say that I don't have a split by percentage point, but on the order book, the main reassessment is driven by the weakness of E-Mobility, BEV, and to some extent, also some of the hybrid programs in the US. China is something that we monitor more carefully on the running top line, and then we need to see how the market develops there. There, the real issue is price and competitiveness. The fact that we are gaining orders in China from Chinese customers is a good one. At the end of the day, I cannot just say X% versus Y%.

Speaker #4: But on the order book, the main assumption is clearly—or the main reassessment is driven by the weakness of e-mobility BAF and, to some extent, also some of the hybrid programs in the US.

Speaker #4: China is something that we monitor more carefully on the running top line. And there we need to see how the market develops there.

Speaker #4: But there, the real issue is price and competitiveness. The fact that we are gaining orders in China from Chinese customers is a good one.

Speaker #4: But at the end of the day, I cannot just say X percent versus Y percent.

Speaker #5: Thank you. And just a quick third one on the '26 guidance, and why you chose not to change BNIS margin. I guess because we know the market is tough in the second half.

Vanessa Jeffriess: Thank you. Just a quick third one on the 2026 guidance and why you chose not to change B&IS margin. I guess because we know the market is tough in H2, but it seems it has to go pretty wrong for margin to be 7%. I guess the same question on VLS, really.

Speaker #5: But it seems it has to go pretty wrong for margin to be 7%. And I guess the same question on VLS, really.

Speaker #4: Yeah, you're right. That would have been something to consider. We have talked about this, but again, we have said we need to see a little bit more now, what happens after the summer.

Klaus Rosenfeld: Yeah. You're right. That would have been something to consider. We have talked about this, but again, we have said, we need to see a little bit more now what happens after the summer. The trends need to be stable, that's why we decided, let's stay where we are at the moment.

Speaker #4: The trends need to be stable. And that's why we decided, let's stay where we are at the moment.

Speaker #5: Thank you.

Vanessa Jeffriess: Thank you.

Speaker #4: Thank you for your observations. Very helpful.

Klaus Rosenfeld: Thank you for your observations. Very helpful.

Speaker #2: Ladies and gentlemen, that was the last question. I would now like to turn the conference back over to Heiko Eber for any closing remarks.

Operator: Ladies and gentlemen, that was the last question. I would now like to turn the conference back over to Heiko Eber for any closing remarks.

Speaker #3: Thank you very much. I know there have been one or two questions left, so we want to be respectful of everybody's time.

Heiko Eber: Thank you very much. I know there has been the one or the other question left. We want to be respectful of time of everybody. Again, if we were not able to answer your question right now, please come back and we will do our best to get the rest of the questions answered. For now, I would like to say thank you for your time and your interest in our company. I would like to say a big thank you to our speakers, and of course, I would like to say thank you to our team for the preparation. Again, if there are more questions, feel free, reach out to us, with this, I wish you a good rest of the day. Thank you very much. Talk to you soon.

Speaker #3: So again, if we were not able to answer your question right now, please come back and we will do our best to get the rest of the question answered.

Speaker #3: So for now, I would like to say thank you for your time and your interest in our company. I would like to say a big thank you to our speakers, and of course, I would like to say thank you to our team for the preparation.

Speaker #3: Again, if there are more questions, feel free to reach out to us. And with this, I wish you a good rest of the day.

Speaker #3: Thank you very much. Talk to you soon.

Speaker #2: Ladies and gentlemen, the conference is now over. Thank you for choosing KARSKA, and thank you for participating in the conference. You may now disconnect your lines.

Operator: Ladies and gentlemen, the conference is now over. Thank you for choosing Chorus Call, and thank you for participating in the conference. You may now disconnect your lines. Goodbye.

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Half Year 2026 Schaeffler AG Earnings Call

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