Q2 2026 OHB SE Earnings Call
Speaker #1: To OHB's Q2 results. I hope you have been able to dial in and download the documents; we're welcoming you here on behalf of the management board.
Speaker #1: Jim and I are traveling today, and you have Marcus and the team in Bremen. I quickly walk you through the slides and then Marcus will briefly take over for the market, and Tim will go through the numbers.
Speaker #1: Yeah, obviously European champion and a growing space economy is still the program that we are following. I think we have shown in the last weeks quite some good progress in our what we call "right to win." We have been able to move quite significantly ahead on a number of important programs.
Speaker #1: We'll talk about that. And also the scaling of the operations is doing well, and Tim will walk you through, I think, a very strong Q2.
Speaker #1: So from that perspective, I think we're in a very good way. Our business model, obviously, very well known. We're scaling the company in our 3 divisions, and I think has changed in that one other that we have quite some significant progress here.
Speaker #1: So I quickly run through the most important things. On this slide, basically a quick summary: we had double-digit growth in our total operating performance, a strong improved adjusted EBITDA.
Speaker #1: We are confirming, of course, our guidance for this year. Order intake is strong, but also I think a few sentences have to be explained what we expect for the second half to happen, because that's going to be a strong period, and Marcus will help us to understand that.
Speaker #1: We're moving along with scaling. We're hiring people. Our partnerships are growing, and developing the business. I'll walk you through this a little bit. Internationalization moves along, and a number of countries—UK, Czech Republic—for example, RFA is moving along, but I will come to that with a specific slide.
Speaker #1: And so on our growth and operational milestones, we're going along very well. And of course we had, in late June, our capital increase that is, I think, well understood.
Speaker #1: We're expecting to be included in the tech DAX and the SDAX later this year, and so it has been a marvelous ride in Q2.
Speaker #1: On the political level, I think the big picture for the space segment in Europe in military is unchanged, very positively. We had Minister Boris Pistorius at OHB a couple of weeks ago, was a very, very good moment for us to directly talk to him, to show him progress on programs that we are working on for him in Sparrow, for example.
Speaker #1: He looked at the satellite, and it was, I think, also strong to touch base with the other people from the political environment that were there at this visit, so I was very happy to basically hear from the decision makers that space is very high on the agenda in the next years to come, for implementing this strengthened German security.
Speaker #1: Same was basically with ELA. So in June there was the big trade show. We had a strong representation there. We met many, many, many people there.
Speaker #1: The Chancellor and then everybody else, and I think it's a very strong sign from Germany that Germany is serious about investing in space. Germany is serious obviously investing in defense in a broader range, but especially space.
Speaker #1: Combining the boom from the military side, but also with the civilian space, of European Union, and also ESA. So that has been a very good showcase moment for us.
Speaker #1: Our Rheinmetall OHB Rheinmetall Space Networks joint venture moves along. We are in a phase of negotiations of improvement. It's difficult negotiations at times, because it's a very ambitious program.
Speaker #1: The teaming is growing, but it's on its way, and some of the people in this call are quite busy around this project. So it's not easy, but it's obviously also a massive, massive endeavor that we're all undertaking here.
Speaker #1: With our KERK joint venture with Helsing, there has been established the creation is moving along well. And together with Hensoldt and Kongsberg, we've started our consortium.
Speaker #1: So we are preparing their for our joint topics, obviously it's a presentation that we feel should end up in a strong bid for the Spock 2 project.
Speaker #1: And I guess there will be many things to hear from this teaming with Helsing. Vortex, yeah, I'm quite interested about the Vortex thing. So we are waiting for the results of our proposal from the European Space Agency ESA.
Speaker #1: This is about to be published soon. And then we have to see how it moves on. I think this is going to be on the agenda for the space summit that we will see or that will take place in Paris on September 9th and 10th.
Speaker #1: We'll see, hopefully there will be good scoring, hopefully there's also a political willingness on both sides, in France and in Germany, to continue implementation of this program.
Speaker #1: I will have meetings also with Dassault. I will meet Eric Trapier, and we'll see how we can push this program to the next level.
Speaker #1: But I'm still excited about it. Other than that, in Europe, I think the big event moving along and the visible stuff is our new facility in Bristol.
Speaker #1: You can see the building here. It's being implemented into the biggest clean room space clean room in England. First significant contract with Envision has been signed recently, so we're happy to move along on that one.
Speaker #1: Also in Brno, in Czech Republic, which we checked with, has made a big step forward with being selected for the Sova-S mission. First time that OHB Czech Space has a prime contractorship of that size, and that complexity.
Speaker #1: Other missions going well is Plato. You see the photo here. So we concluded the environmental test campaign on Plato successful thermal vacuum test. And it's still the launch is scheduled for January 2027, so within a year from now, less than I mean half a year, less than half a year from now, we will have the launch.
Speaker #1: Plato which obviously will be a very exciting moment. Also good progress on the Ramses mission, which is, as you know, a planetary defense mission succeeding or a little bit different, but succeeding the program line of our successful HERA mission that has been built in the last couple of years.
Speaker #1: So we are quite happy with OHB Italy leading Ramses. And another OHB Italy mission that has been successfully signed just recently, just a week ago, is the selection and the contract signature of the Prisma 2, the second Prisma mission.
Speaker #1: We have built first Prisma hyperspectral satellite in a couple of years ago. It was launched by this operating since 2019. It's creating very high valuable hyperspectral images.
Speaker #1: Now the follow-up mission will be implemented under OHB Italy's leadership together with partners for the Italian Space Agency ASI. There's also plus Italy involved and Telespazio involved.
Speaker #1: So we have a strong industrial team and it shows that Italy trusts OHB Italy as a prime contractor for complex missions of that size.
Speaker #1: Yeah, rocket factory Augsburg. It's a nice photo. So the rocket on the pad, this is a sunny day in Saxofort, I think just a few weeks ago.
Speaker #1: So we are moving along. The first test flight is still planned for later. This year it has been shifted a little bit because we had to re put the rocket down into the integration hall and examine the tanks again and working on that.
Speaker #1: So it will be re-erected soon, but as you know, launching rockets sometimes takes a few detours. So the team is working very hard and as you can see here, it's a sizable rocket.
Speaker #1: Spaceport operation is doing well and we're hopeful that these last remaining challenges will be fulfilled in the next foreseeable days and weeks. Another important thing that has been reached is that the European Launch Challenge contract was completed and is now moving along.
Speaker #1: So together with three other companies, Rocket Factory Augsburg is, yeah, one of the four European companies that has been selected for European Launch Challenge agreements.
Speaker #1: Our MT Aerospace business in supplying into other rockets, into big rockets, showed a few launches again. So the SLS was since yeah, since 2013, MT is a qualified supplier for Boeing has launched in the Artemis 2 mission and of course also IANA 6, which is very important for MT Aerospace, had two successful flights in April and June.
Speaker #1: In the big configuration, the IAN 64 configuration, or the Amazon Leo constellation. So we'll expecting a strong flight manifest of IANA and obviously this is also very good for the ongoing ramp-up in the whole IANA community and of course from our perspective for MT Aerospace also having a full load in the factory.
Speaker #1: And then, yes, of course, very important, our capital increase was successfully completed. We had in late June our new about 1.6 million new shares listed.
Speaker #1: I think it's well known how this transaction worked. The Brooks family did not participate in the selling. We remained the majority shareholder with 60 plus percent.
Speaker #1: And the KKR share is around 20% and the free float as well. And we are expecting inclusion in the air stocks and tech stocks later this year.
Speaker #1: So the gross proceeds of about 480 million euro will help us to funnel the growth that you can see here. There will be significant investments in production facilities around our footprint in Europe.
Speaker #1: We will invest in a number of programs including Luna activities, exploration other frontier applications. And M&A is something that is currently looked at. And of course, RFA is on its way, as I just explained a few moments ago.
Speaker #1: Thank you. I think this leads now to Marcos, who will give us a quick overview of his judgment of the market developments and what he expects in the remaining five months of this year.
Speaker #1: In terms of order intake, thanks from my side and talk later in the Q&A session.
Speaker #2: Thank you very much, Marco. So brief overview on the market dynamics that we see. Key message here is that the market dynamics from our perspective are intact.
Speaker #2: To recall what are the main markets that we're operating in the immediate future on is the ESA with the 2 2022 billion budget that was voted that was voted last year.
Speaker #2: And the 30% over 30% increase in projects that the ESA will put on the market between 26 and 28. We'll see the European Union with the multi-financial framework that is currently being discussed with the member states for the upcoming period in 2028 to 34.
Speaker #2: We'll still talking about the envelope of 131 with an important increase in the space budget that is part of this envelope. Given the focus also of the European Union to continue to invest into their space assets and we'll see the 35 billion budget envelope in Germany, which also is intact with a now request for a proposals coming in as markets Marco alluded to to actually go from a plan into execution of programs so we'll see in all three categories active customer, customer requests for the month to come and it was always our plan.
Speaker #2: We'll see that we will assign a couple of key corner deals with ESA programs specifically around the Sentinel that those are ongoing discussions. We have a space situational awareness and operations mission, which is a clear space and we also have a an important contract on OPSTAR that we expect to close for the ESA side this year.
Speaker #2: We're an active negotiations on IRIS square that have been multiple statements in the press and also from the EU on progress. Very active negotiations on personally involved as now.
Speaker #2: And as I said on the German side, we're participating in the market signing development. This is at various stages but in line with the time expectations that we have.
Speaker #2: With that, I hand over to Tim with the trading update for H1 2026. Thank you.
Speaker #3: Yes, thank you. Go back to the other side please. So thank you very much. Marcos and Marco for explaining where our business is. It's obviously showing that we are very busy and also from a market side that there are very strongly filled pipeline.
Speaker #3: I will link our business opportunities with our financials as of first half year 2026. And I think what we really can say is that we have demonstrated profitable growth again.
Speaker #3: And strengthen our financial position. Starting with the KPI overview, in the first six months we realized a double digit growth of our total operating performance up to a level of 628 million.
Speaker #3: Euros we have the profitability outpaid this strong top line growth with a 30% plus increase of adjusted EBITDA our cash flow trade working capital also grew even though we had here cash impacts from the transaction as well.
Speaker #3: And what is really important is that our net debt leverage has improved significantly following the capital increase showing that our financial strength has improved significantly.
Speaker #3: Given the high backlog and the great outlook discussed with by Marcos, I think it's really important to that we attract the right talents and expert to execute these businesses and this is basically also shown by 50% increase year on year on our employees.
Speaker #3: And please note that those increases are to the very large extent only in our operational functions which are really kind of working on the products on our great services that we render to our customers.
Speaker #3: So that is we are resulting in up to a level of almost 4,100 people and with support functions being flat. If we continue with the backlog, we see that in comparison the backlog continued to increase on a year record high level as Marcos has shown there are many, many opportunities at our doorsteps where we are working on very intensively and please note that these are not reflected in this very high backlog and that if this is going to continue to grow and what's also important is that as shown by Marcos also that our three core markets, European Space Agency, defense services in Germany, but also other countries where we are present and certainly also the European Union funds have or are at an inflection point and this will also as discussed previously also in brings our business to an inflection point.
Speaker #3: And so that is we expect that the backlog is going to continue to rise. And if we now look at the total operating performance and profitability, we are growing company and we grow profitable.
Speaker #3: In our total operating performance, we achieved a level of 628 million and in comparison to the 470 million for instance in first half year 2024, this shows that we are really kind of on a strong trajectory of growth.
Speaker #3: And also the same is the case for our earnings with measured at adjusted EBITDA as you know with a 60 million euro adjusted EBITDA representing an increased margin of about 9.6%.
Speaker #3: And if to give you also kind of link to our guidance for 2026, in the last years we had at this point of time that is first half year of a year we had an average 39% of our total operating performance delivered.
Speaker #3: And in the first half year 2026 we are already at more than 44% which shows that we have kind of been able to also accelerate our growth in the first half year in comparison to future years where we always have also met our guidance.
Speaker #3: In addition then on if we go into more details on the total operating performance, we are European Space Company as shown by Marco in the very beginning we are one of the European Space champions.
Speaker #3: With a very strong domestic footprint. As we are the only German headquartered and also Germany owned or German owned space company our German based top news represented by 30% of our business.
Speaker #3: In terms of total operating performance by segment space segment remains the biggest segment representing a growth of total operating performance as of first half year of 472 million but also the other two segments are really showing a strong momentum I will talk later and if we see ahead we see right now still a pipeline of 20 billion of new projects and some will get in our books in already in this year as shown by Marcos and what we basically also see is that we have kind of shift to higher portion in an increased overall revenue stream of defense business which will represent 40% approximately as of our pipeline.
Speaker #3: If we continue now with the adjusted EBITDA, just a quick review how do we kind of reconcile this from EBITDA reported to adjusted. In comparison to first half year 2025, we have grown here the adjusted EBITDA by almost 15 million.
Speaker #3: And in 21st half year 2026, there are some here costs still in associating with the transformation projects projects that we had run in the last years following the shareholding of KKR and in course of 2026 second quarter it was a transaction related cost which were also expected and also as such no surprise from our side.
Speaker #3: If we then continue with the segments we see that all three segments contributed to the performance in the first half year. And this is for me as CFO really kind of important indication that our business is really based on strong three segments the strongest is for sure our space system with the double digit margin as of half year one.
Speaker #3: But also the other two segments are really showing strong growth and this growth is represented for instance in a total operating performance growth year on year in excessive space by more than 30% or for instance in digital 70% increase in the backlog both showing that these segments are also showing strong momentum as well as the space system and there also especially over here the international companies in Italy and in Sweden for instance show really strong momentum.
Speaker #3: This is kind of also for me a kind of signal that our international strategy is really kind of evolving as we expect and to really add value here.
Speaker #3: If we then look at the adjusted free cash flow as for sure also an important KPI positive pre trade working capital cash flow with an improved cash conversion.
Speaker #3: Even despite some cash effect of one of the one offset I have depicted in the EBITDA reconciliation. The trade working capital development represents a seasonality with a back end loading of our business line and also the kind of evolution of our projects for instance in the first half year 2025 we had the MTG project weather satellites where one was launched then in July 2025 were already finalized and this is kind of representing our normal course of business and for sure we want to kind of continue to grow our company in order to make sure that we have the capacity to really deliver the backlog and the new growth opportunities in time and in the qualities that our customers are used from us.
Speaker #3: If we then continue with the financial position I really like to highlight that it has strongly increased we had here now a net leverage ratio of minus 1.1 showing that it is really kind of improved and from an equity ratio we have now more than 40% equity also showing robustness which is allowing us to have the right kind of financial flexibility to execute our growth objectives to deliver to our customers industrialize our programs and have the operational business requirements supported.
Speaker #3: And as such we also like to confirm our guidance. We had a strong first half year 2026. We expect a kind of continue and further accelerated growth which is allowing us to confirm our guidance of about 1.4 billion of total operating performance and corresponding margin profile of 10.5 to 11%.
Speaker #3: And with that I like to thank you very much for here participating for this time being for sure we as now we are kind of being after the so-called re IPO and closer to the capital markets again we will also be present there not only with course like that but we have also derived with our consulting banks the really conclusive flow of conferences participation and we are really looking forward to meet you there and discuss our great opportunities and our great company with you.
Speaker #3: With that I hand back to Marcel to open for Q&A. Thank you very much.
Speaker #1: Yes. Thanks to everyone. As usual we would like to start our Q&A. You can please raise your hand if you have any questions you would like to raise.
Speaker #1: I will then add you as a panelist so you can ask your questions directly to the team. I see some raised hands already. First one is going to be Michael Filatov from Berenberg.
Speaker #1: I would just add you as a panelist Michael. Now you should be able to talk.
Speaker #2: Hi. Can you hear me?
Speaker #1: Yes. Hi Michael.
Speaker #2: Hi. Hi everyone. Thank you for taking my questions. Just the first one on backlog. I know you know the orders will be lumpy but I think backlog fell sequentially a little bit with space systems down a little over 100 million euros.
Speaker #2: And I believe you know the order intake was potentially the lowest since Q1 of last year. So I guess I just wanted to get a sense of your expectations for order intake this year.
Speaker #2: And does it assume any of those defense opportunities you've recently or previously been discussing? And then could you also touch on the order opportunity pipeline in terms of waiting between ESA work and defense work for the next 12 months?
Speaker #2: And then I have one follow-up as well.
Speaker #3: Yeah. So I'll take it. Thank you very much for the question. So if as far as 2026 is concerned the order intake is actually as usual a bit backloaded.
Speaker #3: We had an exception last year as Lisa came in very early as you know negotiations slipped into 2025. So from an order intake profile run up we're basically you know business as usual in terms of the timing.
Speaker #3: What we're expecting this year is essentially business out of the ESA programs that we have we have one we you know in the I'll go with the ESA first.
Speaker #3: So there's really you know one contract which is the Sentinel Constellation as you know the new generation where we are in final negotiations right now with the customer there's a bit of the summer period now kicking in at the institutions same thing as you know we have a mission called Clear Space One on which we're also in the final phase of negotiations.
Speaker #3: We will see later in the year the mission upstar phase BCD so the first tranche of it which is you know in the navigation for the new satellite laser linked constellations that we have and we are in negotiation as we speak on a daily basis when it comes to the EU business which is you know IRIS square on which there is a very clear ambition by the commission to conclude over summer the negotiations for the entire constellation we're part of this you know with the MEO segment as you know 18 satellites and we're really you know sitting with the customer finalizing that contract.
Speaker #3: So those are the essential businesses that big opportunities that we see now common on the defense side to your second question this year is not yet the year where large defense opportunities are part of our planning just simply as the procurement process with Deutsche Bundeswehr and will you know materialize starting 27 and then we'll be a series of procurements that will be 27 28 and 29 dependent on the program.
Speaker #1: Okay. Thanks a lot. Marcus I think there was a follow-up question Michael right?
Speaker #2: Yeah. Yeah. Just to dive in here because I know the SATCOM program is a big focus for everyone in your team and of course investors as well.
Speaker #2: I just wanted to hear any of your latest thoughts on sort of that procurement process. Any details on expectation of timing for the award and I know there's been some sort of public rumors about you know Airbus potentially joining the bid any comments around sort of what the bid consortium looks like at this point.
Speaker #2: Thank you.
Speaker #3: So the consortium and the industrial setup I would say is unchanged. The procurement process as published by the customer which you know foresees a I would say you know somewhere conclusion next year some of that is confidential.
Speaker #3: So hence my cryptic answer here. Is proceeding as planned by the customer. So as Marco said these kind of programs are always you know heart negotiations adjustment of needs as you can say but you know currently we're in the plan initially foreseen by the customer and we are executing to that plan.
Speaker #2: Understood. Thank you.
Speaker #1: Thanks Michael. I can't see any further raised hands right now. Maybe we just okay. Michael's back. So yeah.
Speaker #2: If I can I just if nobody else is in the queue on access to space margins right. I saw that they you know maybe were a little bit softer than expected or at least my expectations here for you know margin on total operating performance for access to space.
Speaker #2: Is that simply a factor of launcher component mix or some ramp up costs at MT Aerospace? Could you just maybe speak to the margin profile on that business and at the same time it seems like the backlog there grew quite nicely.
Speaker #2: So any comments around the progress at access to space.
Speaker #3: No. No. Happy to do so Michael. That is you already touched the right point. As also discussed before here our access to space segment is really showing a strong growth in three pillars.
Speaker #3: So one is Ariane business which is ramping up. Then in addition we are kind of supplying US launch vehicle providers and the market momentum from that customer segment is really very strong and then thirdly it is also that here defense related business predominantly in Germany is also contributing to the backlog and the intake momentum which I showed also on the segment slide and this is then kind of connected with ramp up activities as also shown we are kind of investing there and make sure that we have the capacity to really deliver and we had also new hires.
Speaker #3: So that is there was a slide but expected we have budgeted it accordingly a little bit softer margin profile which is then to be which we right now expect to kind of further increase and improve in the second half year.
Speaker #2: Thank you. The last one for me just on RFA we all know launch is extremely difficult but my understanding is the vehicle was on the pad and testing was going well but it had to be removed from the pad as you've alluded to.
Speaker #2: Maybe any further details on sort of what exactly happens during the testing with RFA etc?
Speaker #1: Maybe I take that one. So there was a problem with the tank and this was uncertain so team decided to take a look into this.
Speaker #1: This is what's going on now. So they took the rocket back into the hangar and open up the tank and are currently or actually currently are doing this looking into it.
Speaker #1: So they wanted to make sure that they fully understand what the data showed and so this lost some time but there's a big team up there trying to figure that one out and putting it together and hopefully putting it back to the pad as quick as possible.
Speaker #2: Okay. Thank you everyone.
Speaker #1: Thanks everyone. Next up we have Simon Keller from New Ways Simon you should also be able to raise a question now.
Speaker #4: Yeah. Hi everyone. Thanks for the presentation. Now given that you have noticeably increased your firepower thanks to the capital increase I was wondering how your M&A pipeline is developing and also what the most promising targets do look like right now.
Speaker #4: Thank you.
Speaker #1: Obviously we are not going to go into much details on this. We have not really committed anything teams are busy on this one. Obviously I mean our capital raise is well known out there.
Speaker #1: The discussions we have with potential additions are going on. We're looking at European footprint issues. Obviously we're also looking along the own value chain.
Speaker #1: There might be some smaller stuff coming but significant acquisitions are not imminent at this moment in time.
Speaker #4: Okay. Maybe conceptually just as a quick follow up. Will it be rather technical expertise? Will it be production capacity? Any comment here on what you're looking for?
Speaker #1: I mean M&A I mean production capacity will not be M&A. That's CapEx. That's investment. I mean we are looking at investing and increasing as we do.
Speaker #1: As we currently do in Italy and UK and other places but that's not going to be M&A. M&A for us would be additions that either add a broadness to our current footprint or they must be somehow technologies that are really unique.
Speaker #1: So again we're not looking at M&A for production facilities.
Speaker #4: All right. Thanks a lot.
Speaker #1: Thank you. Next up we have Olivier Boche from Rothschild. Olivier.
Speaker #5: Yes. Thank you very much and good morning all of you. I would have two questions. First of all on the free cash flow adjusted free cash flow and the change in net contract assets and liabilities which is a very large outflow.
Speaker #5: Can you maybe help us frame how this is going to develop in H2? Is it going to be reversed? I understand there is some seasonality in the second question is on Ariane 6 and long term plans and potential capacity increase in the launch rate.
Speaker #5: I'm trying to reconcile that with the work that is done in reusable launchers with the Themis test that just concluded. Can we help us frame whether we are going to see an increase in the Ariane 6 rate or whether this is just going to remain as it is for the moment with potentially some changes in the generation of launchers in the long term?
Speaker #5: Thank you.
Speaker #1: Yeah. I can start with the launch and then Tim can talk about the cash. I mean currently we have a situation where there's very high demand for launch services anticipated for the coming years.
Speaker #1: Currently we do have a situation where the international supply is uncertain. There are obviously had been the mishap in Blue Origin's New Glenn which is about to recover.
Speaker #1: New rockets coming on the market. There is some uncertainty about the availability long term availability of Falcon 9 in the market. The statement from SpaceX that this might shift or they might shift radically their resources to the Starship.
Speaker #1: So the market currently needs launch services and whoever now looks at launching in a few years will find a difficult outlook. And this all results in existing launchers and Ariane 6 obviously has been very successful in the last years after market introduction to ramp up cadence.
Speaker #1: So yes the whole Ariane community is thinking about it. Is looking at it. It has not been decided up to my knowledge. We as a supplier are involved in this.
Speaker #1: So we are discussing with Ariane Group about this but decisions about how significant ramp up and cadence of Ariane 6 would be implemented have not been taken and are imminently obviously also in the Ariane system political.
Speaker #1: So we might see in the second half of this year quite some discussions on this. Because looking at for example all the German space programs that are intended to be implemented yes of course Germany and Europe needs more space launch capabilities and yes of course Ariane is the number one to go to because we will not have micro launchers being in the market quick enough to take a significant share of this.
Speaker #1: And you alluded to Themis and reusability in Europe. I mean Themis is a demonstrator. It's a demonstrator for recovery of the first stage. So it's pretty far away from market entry and before we see a European reusable launcher really in operation we will quite a number of years will pass before that is the case.
Speaker #1: So yes Ariane has to ramp up. I hope I mean I'm saying this not as a supplier in MT but I'm saying this as a user as a customer for satellites.
Speaker #1: We need more Ariane and I hope that political system around Ariane between the space agency European Space Agency but also the member states of ESA will produce a way forward that the capacity will be increased and that the industry Ariane Group and all the supplier will have an opportunity to ramp up significantly from the numbers where we are now.
Speaker #1: I guess this year we might see seven launches. But I think demand is much much bigger than that.
Speaker #5: Can I Marco can I ask a follow up on that? What is the gap physically that can be implemented? Where can it go from the 10ish that it can do today?
Speaker #1: Well there are different of course there are different views on that. I think that from a supplier perspective we can go wherever the system wants us to go.
Speaker #1: I think there is a limitation in Kourou. We have one launch pad. We have limitations in the processing facilities in Kourou. The so-called bill and also the BANF the facilities in Kourou to prepare satellites are under my understanding also a target of potential increases.
Speaker #1: So a substantial increase I think at one point will need also a significant investment in Kourou. Which I think is intended is talked about.
Speaker #1: Obviously being an expandable launcher we will not see numbers that we have seen with Falcon 9 in recent years. No. But I think there will be numbers like 12, 15, whatever in this range.
Speaker #1: This is I'm sure something that the system could do. Gradually and again if we have on top of that also massive investment in Kourou.
Speaker #1: And by the way another facility that is critical in Kourou is the Solid Propulsion Factory or the Solid Propulsion Facilities in French Guyana. If this increases we might see higher numbers coming out.
Speaker #1: Again the demand is there and the supply from international launch providers at least today August 2026 looks uncertain. So I think Europe has to invest.
Speaker #5: Very clear. Thank you.
Speaker #3: And in terms of here trade working capital you depicted already the right kind of areas Olivier. So that is we have seasonality. We usually see a strong second half year especially very strong Q4 which we also expect for this year.
Speaker #3: This is basically a typical footprint for institutional business in defense and space. So that is at least in the companies I was with in the sector is very typical.
Speaker #3: So this is one aspect. So that is seasonality which is then kind of expected to kind of improve in the second half year especially Q4.
Speaker #3: And then there is also to some extent project portfolio or mix effect here. We have for instance in LISA project you know that was a major project almost a billion in size which we are ramping up now.
Speaker #3: And this is then also reflected. So that is second half year we expect an improving trade working capital due to the seasonality which we typically see.
Speaker #5: And thank you very much Tim. And we will end up the year with a positive free cash flow after working capital.
Speaker #3: That's our target. But we will work on that. So we don't project that.
Speaker #5: Yep. Okay. Thank you very much.
Speaker #3: You're welcome.
Speaker #1: Okay. Thanks Olivier. We have one further raised hand from a call-in user. So we kindly ask you to introduce yourself. Very quick. You'll be able to talk right now.
Speaker #1: Try to unmute you one sec. Okay. Perhaps the call-in is not working. Right now. I can see that you raised your hand again but unfortunately apparently you aren't able to unmute yourself.
Speaker #1: I can't see any further raised hands. So maybe we just give people another minute to raise any further questions. While the person is trying to unmute.
Speaker #1: Okay. Perhaps okay. But I can't see any more questions. Right now. So maybe this brings us back.
Speaker #5: Can you hear me now?
Speaker #1: Okay. Now we can hear you. Hello. Good morning.
Speaker #5: Hello. Sorry. At last it worked. Thank you so much for the opportunity. I have this is Sreeram from Deutsche Bank by the way. I have two, three clarificatory questions if I may.
Speaker #5: Pretty simple ones. So the 21 million transaction cost which we reported in H126. Can you just confirm this is to do primarily with the re-IPO related cost or is there any other cost which is included within this one?
Speaker #5: And how should we think about this transformation cost which is being reported continuously? Should we when do we expect this to completely wind down or should we expect this to continue for the foreseeable future?
Speaker #5: That's the first one. Second one is with regards to the outlook which you have communicated which sounds encouraging where you said that you could exceed some of the strategic midterm targets.
Speaker #5: Just wondering what could be that driver? Is it more from the top line or do you think there is an upside to the margin which could lead to the margin upside?
Speaker #5: And a final question more from the operational point of view. Just trying to understand among all the projects which you are currently undertaking or manufacturing the satellites.
Speaker #5: Which of the satellites or programs would you think are the most challenging from an execution point of view? Thank you.
Speaker #3: Yeah. Okay. I think I will start with the first one in two and maybe on the projects Marco and Marco's comment up on. So with regard to his transaction cost yes confirmed this is for the capital increase.
Speaker #3: So that is one of item will not kind of continue in the next years or so. This will be something for 26 but this is then the book classical one of.
Speaker #3: With regard to transformation you already see that this is the kind of reduced pace and we expect that in the next year it will be kind of basically a kind of coming to an end.
Speaker #3: With regard to the transformation this was here was our projects to improve efficiency in overhead functions and also in terms of cost ratios. And this is are now those kind of follow-up impacts that we see but these will be wearing out.
Speaker #3: So this is clearly expectations that this is going to reduce significantly. And with regard to the outlook on the one hand driver is the growth of the top line but also the structural shift from the customer funds point of view.
Speaker #3: As mentioned in the pipeline discussion we see that the proportion of the defense-based activities will basically double up to a level of 40%. And there we expect higher margin profiles and here maybe Marco's and Marco you can also comment on that and then talk about the most challenging projects.
Speaker #3: Do you see from an operational perspective?
Speaker #1: Yes. Thank you very much. Yeah. Well obviously looking into your question what is the most challenging one. If you go to if you walk the aisles of OHP you hear different projects being most challenging ones.
Speaker #1: So each team believes it's their project. I think one to mention clearly is for example Ramses because that has a fixed date when it has to launch.
Speaker #1: So the calendar of Ramses is fixed because the asteroid will come and will go and will have decades later. So we have to really really really be on time as we at the same challenge with Hera some time ago.
Speaker #1: Completing the optical programs is a big challenge. We have optical measurements with very very high criterias and completing that in a fully performant way is very challenging.
Speaker #1: On the science missions it's challenging because we don't not necessarily fully understand the physics programs like for example ESA. So it's a broad range.
Speaker #1: I would say I mean this is it sounds simplistic but programs get very very difficult at the end when you really have to pass acceptance.
Speaker #1: And so the first phases of programs they tend to go along. So the closer they come to launch the more nervous teams are the more let's say let's say under pressure the whole project comes.
Speaker #1: So I think it's a variety of issues I guess that I don't know if Marco has to add something on that but I would mention those couple as the most difficult ones that are keeping us busy.
Speaker #1: And yeah maybe I forgot something Marcos you have anything to add to that list?
Speaker #5: You know I think I confirm what you said. There's not one typical you know challenge that we face given the nature of the business that we have.
Speaker #5: As you say we've got you know three large customer groups the ESA EU and Bundeswehr or the military they represent challenges by them own by themselves.
Speaker #5: And then on top you have the nature of projects that we're doing earth observation you know you've exploration that we're in we're in science and we're in telecommunications.
Speaker #5: So there's not one thing but it comes back to you know what is the focus that we have that you know specifically we work hand in hand from a sales perspective with the operational teams to make sure that you know what we promise to the customer can be also delivered later on.
Speaker #5: I think that's an important component that we're focusing on.
Speaker #1: Thanks a lot. I can't see any further questions speed on or doesn't answer everything from your side.
Speaker #5: Yeah. Thank you so much for the opportunity. Appreciate it.
Speaker #1: Thanks. Yes. I can't see any further raised hands right now. I think people had quite some time to do that. So therefore also looking at the time I think we are almost exactly where we want to be.
Speaker #1: With this call. So maybe I just hand over back to Marco for some closing remarks.
Speaker #2: Yeah. Well thanks Marcel. And obviously thank you very much for all your interest and for your time. And for us it's a new period.
Speaker #2: It's a new chapter now starting with this quarterly call after our capital increase. We're very excited about the opportunities that that provided to us.
Speaker #2: We're working very very hard especially on new programs as Marco said and we do expect especially on Iris Square some significant good news and more than that even confirmation and conclusion.
Speaker #2: And in the near future. But as always we're not completely in control of calendar. From my side I can only invite you to stay in touch and as Tim said we are very very interested in direct exchange.
Speaker #2: We have a heavy calendar of direct meetings. We do have a number of conferences coming up and everybody each and everyone is obviously always invited to visit us in Bremen or in Augsburg to see so there's good news coming in the next weeks and it's a hard working summer for all of us.
Speaker #2: Thank you very much and I wish you all hopefully a relaxing week in the mid-August time frame but again feel free to contact all of us directly obviously Marcel will coordinate but we're all available.
Speaker #2: So from my side big thank you and talk to you all soon again. Thank you very much.
Speaker #5: Thank you. Thanks.
Speaker #3: Thank you very much. Bye.
