Q2 2026 Jost Werke SE Earnings Call
Speaker #1: Morning, everybody from North Edinburgh and a warm welcome to our earnings conference for the first half-year and the second quarter of 2026. I'm very happy to report that we have a record first half-year in 2026.
Speaker #1: Our sales grew 12% to $857 million, and our adjusted EBIT grew 21% to $88 million. Which calculates to a margin of 10.3%. I'm very happy with the strong quality of our growth, organic sales went up around 9%, driven by all three regions and all our business lines.
Speaker #1: The HIVA integration is fully on track; we're creating the cross-selling synergies and they're ramping up, and with our profitability we are back into our strategic corridor between 10 and 12%.
Speaker #1: In terms of adjusted EBIT margin. And we're winning new customers worldwide; our market share is growing across business lines, consistently, and we are executing our ambition 2030 strategy.
Speaker #1: So let's look at the financial numbers a bit more in detail. It shows our strength and our resilience for the Q2, so sales were up 13% to $440 million.
Speaker #1: In the second quarter 2026, paired with an adjusted EBIT growth of 19%, up to $44 million, and an adjusted EBIT margin growing half a percentage point to 10.0%.
Speaker #1: Free cash flow was up in Q2, 17 million, despite the working capital increase that we needed to drive the high business growth that we've had.
Speaker #1: We had high capital efficiency with a return on capital employed up 3.5% points to 16.3%. Our leverage improved to 1.81 times and is now back in the strategic range between 1 and 2 times.
Speaker #1: Adjusted net income grew 19% to $25 million in the second quarter 2026, and that calculates to an adjusted earnings per share up 7% to $148 due to the high to the larger number of shares that we are circulating compared to last year.
Speaker #1: So H1 2026 posts the strongest first half in just company history, and was supported by a strong organic growth, and with that we confirm our outlook for the fiscal year of 2026.
Speaker #1: Looking at the market environment that we had in the first half of the year, in Europe, Middle East, and Africa, the truck and trailer market grew slightly, 5 to 10%.
Speaker #1: Tractor market very slight growth between 0 and 5%. Hydraulics also very slight growth. Our organic growth in that market environment, a strong 5.6%, and I'll explain a little further on the next slides what the main drivers are, but it's mainly been our ag and transport business.
Speaker #1: In America, we had no support from the market, not in North America and certainly also not in Brazil, so market decline between 15 to 10% on trucks and 10 to 5% lower on trailers.
Speaker #1: Also in agricultural tractors, down 5 to 10%. Hydraulics more or less stable, slightly positive. Our performance in America's region, plus 9.9% on an organic basis, without the M&A effects, and that is mainly driven by new ag customers and also some market shares on trailers.
Speaker #1: In North America, and cross-selling synergies that we were able to generate. Asia Pacific region, market in that region for truck and trailer fairly strong, 10 to 15% market increase.
Speaker #1: On agricultural tractors, 5 to 10%. On hydraulics, 10 to 15%. Our performance up almost 15%, 14.6% to be exact. We're benefiting from the growth of our Chinese customers, in their export business, and also with the growth that we see mainly in India.
Speaker #1: And as promised, on the next slide I will go a bit more into detail on the organic growth that we are seeing in our business lines.
Speaker #1: So if we split down the organic sales development by regions and business lines, if you look at the total sales in half-year 2025, of $764, and the $57 that we are reporting in the first half-year of this year, $69 million, is organic sales 39 is HIVA that is in effect the one-month additional that we had in January because we closed 1st of February last year, and we had a negative $15 million FX effect.
Speaker #1: So looking at the organic growth that we are seeing, transport grew 6%. If you compare that to the reported number, it's an FX difference.
Speaker #1: There's nothing else included, but FX, the same on agriculture. So 6% growth in transport. New trailer business in North America is one of the driver.
Speaker #1: A strong export business in China, where we're growing with our Chinese OEMs that we supply and a growing demand in India that we see.
Speaker #1: We see a robust demand in Europe, Middle East, and Africa. And we've also launched a new product, which is the BusLink, in Europe. So that ramp-up, plus the market share gains, gave us those 6% growth in transport.
Speaker #1: If you look at agriculture, the biggest growth, 22% organic. That's a ramp-up of our organic projects that we had in South America, and in APAC, it's also the dealer business, especially in the US that is picking up, and a strong demand in Europe, Middle East, and Africa for our agricultural loaders and our implements.
Speaker #1: So that's a really impressive 22% that we were able to grow here in our agricultural business. If you look at hydraulics, of course, the report is 20% that includes the one-month of January.
Speaker #1: If we look at only the organic growth, there's 6%, and that is cross-selling synergies that we have in the US and demand in Brazil and the US.
Speaker #1: It's also new products, EPTOs, and digital tipping systems that are gradually ramping up in APAC, and that are systems that give us upselling potential.
Speaker #1: And cross-selling synergies in Pacific Americas and South Africa. So as I said, very happy with the organic growth that we're seeing. On top of the positive M&A effects of the HIVA acquisition.
Speaker #1: So let's go to the next slide, please. You've seen that it has changed a little bit, a bit more weight in Americas and in APAC.
Speaker #1: In our sales by destinations, Europe, Middle East, and Africa is 46%, and Americas and APAC are 27%. So a very good setup to also participate in the growing markets that we see in North America and in Asia, especially.
Speaker #1: If you look at where we earn our adjusted EBIT, it's almost a third, a third, a third between those regions and honorable explain you a bit more on that distribution.
Speaker #1: And also on business lines, you can see that for us, transport business is about 50% of our business, but we're also benefiting from the growth in infrastructure with our hydraulics business, and the stronger agricultural business that is 20% of our weight.
Speaker #1: With that, I would like to hand over to Oliver to give you a bit more detail on the financial numbers.
Speaker #2: Yeah, thanks, Joachim. Hello and welcome from my side to our this year's first half-year call. As usually, I will jump into the three regions before coming back to the group.
Speaker #2: A bit different to normally, I will focus more on the half-year numbers for one specific reason. You might remember that last year, with the half-year number.
Speaker #2: We showed the cranes business as discontinued operations, and that had an effect that we had to deconsolidate out of the sales numbers. For the second quarter, the full half-year numbers of cranes and that's an artificial effect in the prior year numbers.
Speaker #2: But I will come to that point once we are reaching the group figures. When we look into EMEA for the first half-year, we have seen an organic sales up by almost 6%, as Joachim has shown.
Speaker #2: And as he said, yeah. With strong growth for EMEA across all business lines and driven by, let's say, a large extent by a broad product portfolio.
Speaker #2: That we are offering here. There is an M&A impact of roughly $10 million in EMEA for the first half-year. And that's why then reported growth jumps up to 9%.
Speaker #2: The strongest growth come from the US agriculture product. We have seen continuously following already the improvement in the second half of last year, a demand for our agriculture products.
Speaker #2: And then what helps now is that also transport and hydraulics is starting to recover. The order intake in general remains very solid. We don't see at the moment direct demand impact negative diamonds demand effects from the Iran conflict so far.
Speaker #2: And overall, the FX effects have been very relatively low for the regions like Haven of 0.5 percent points in EMEA. When we look into the EBIT margin for the first half-year, went up by 9% to 24.4 million, and the adjusted EBIT margin reached 6%.
Speaker #2: Driven for sure by scale effects from the growth, but also definitely by realizing synergies and also by a mix towards the off-highway products. Keep in mind the region here is the group cost, right?
Speaker #2: And with the larger group, this is also increasing. That always is a little bit of a burden for the EMEA margin. And besides that, cranes effect that I mentioned already in the introduction, there is another effect, and that's also a structural effect that's going to be continued for the EMEA region.
Speaker #2: We have started beginning with the second quarter to shift certain highly profitable sales not for the sake of highly profitable, but in general as part of the business model change, into the regions those sales were rooted previously via HIVA International, which is a Dutch company.
Speaker #2: So consolidated in the EMEA region into the regions definitely following our steering model like we have it in US legacy, so to speak, that overall reduces the costs for the group.
Speaker #2: So it's for the benefit of even further synergies. It allows us also to weekly consolidate certain legal entities in Europe. But that has the offset effect for the EMEA region that certain profits are now shifted into the Americas and APAC region, where on the other side we see the positives EBIT impacts for the group is a zero impact.
Speaker #2: And on top, what we also slightly see is in the second quarter, the region has been burned a little bit by higher input costs.
Speaker #2: We see rising logistics and freight costs along supply chain that we have shipping parts from China, from India into Europe. To serve our markets here.
Speaker #2: And that comes with the higher costs. So that's a little bit, but overall, a very successful first half-year. We're fully in line with our internal expectations for the region EMEA.
Speaker #2: Now coming to Americas, half-year. Very strong organic growth. Despite challenging markets in both US and Brazil, as Joachim mentioned, sales went up organically by 10% reported by almost 12%.
Speaker #2: We see the synergies are ramping up. We have really a well-oiled machine, I would say, in Americas. At the moment, and although the US markets have remained challenging in the first half-year, we could show a very nice growth.
Speaker #2: From a sales perspective, 2022, 225 million sales in the first half-year represents an all-time high, for sure. And also what we see now in the especially in transport business, and that's in focus for the second half, I believe also from your questions, we see the sequence really improving now.
Speaker #2: And we see a strong order book in Americas for the second half. Yeah, the market definitely started to recover. And that should support a very nice Americas sales year in 2026.
Speaker #2: There's a slight FX segment in the top line of 2.9 percent points. That's because of the euro value versus the USD in the Brazilian REI also affected a bit from year-to-date average calculation.
Speaker #2: When we look into the adjusted EBIT margin, adjusted EBIT for the first half-year went up from 22 to 27.2 million euros. A margin step up of 120 basis points.
Speaker #2: Again, driven by the synergies driven by the market share gains that Joachim pointed out. We've seen a strong ramp up of profitable projects in South America.
Speaker #2: And that paired with the business model change that I was introducing in EMEA, which also has a slight positive effect here in Americas. Increased that margin to above 12%.
Speaker #2: And when we look here in the second quarter, it's even above 13%. And what we see at the moment is that we are probably able to run that ratio also going forward.
Speaker #2: Again, it seems to be a well-oiled machine here at the moment. Super good team. Congratulations to our teams over there. When we go then to APAC, also super strong organic growth with almost 15%.
Speaker #2: Basically across all business lines, and all subregions, we see still a very strong business in China. With our Chinese customers, that are increasing their expert shares, right?
Speaker #2: And we don't see that stopping. So that definitely is tailing for our APAC story. Sales went up from 187 to 223. Also here then absolute record in our history.
Speaker #2: And the growth rate in the second quarter was the first quarter is even slightly higher, right? Also undermining that India seems on a recovery track.
Speaker #2: And we're expecting that to continue also into the second half. Regarding FX, there's a slight headwind that mainly comes from India. And also what we see is a little bit of an ongoing weakness in the Indonesian mining market.
Speaker #2: However, that's going to be of temporary nature. When we hear and analyze the press. The news coming from over there, government is already actively working on incentive programs so there might be a positive upside towards probably more the end of the year, beginning of next year.
Speaker #2: Regarding the sales numbers in APAC. When we look into the adjusted EBIT, strong growth absolutely from 26.4 to 34.4. That's an increase by 30%.
Speaker #2: Margin reached 15.4%. Very strong. Yeah, that's driven by the synergy ramp up, as you know, the HIVA business has a higher share in Asia than compared to the other regions.
Speaker #2: So that means also the synergy potential is higher in the APAC region. And we are realizing that. But also we are seeing a very high capacity utilization especially in the transport plants that we have in the region.
Speaker #2: And that also helps us to increase the margin from 13.7% to 15.7% in the second quarter. Again, there's a slight positive effect from that business model change.
Speaker #2: However, most of the increases of qualitative and structure nature. The only, let's say, little bit of a flip side that we see at the moment is India.
Speaker #2: Compared with the high growth there and compared with the, well, impaired with the high capacity utilization, we see higher supply chain costs there, which should be mainly of temporary nature.
Speaker #2: But it's driven by the business ramp up. So that's the regions. When we sum that up for the group, yeah, just to repeat, very strong growth.
Speaker #2: Second quarter and full half-year quarter organic growth at least 8.9%. We should say very strong in light of the current environment and the numbers that we see around us for an industrial company.
Speaker #2: I would say the positive M&A effect is 39 million, as Joachim just showed. And excluding that, we see the strongest growth definitely in the business and agriculture with 26% transport up by 4% organically, 6%.
Speaker #2: And even the business line hydraulics is with 6% organically growth. Absolutely on the right path to contribute to our ambition strategy. When we look into the EBIT margin, EBIT went up 21% from 72.8 to 87.9 for the first half-year.
Speaker #2: So that's 21% and also for the second quarter it went up by 18%. So I think very successful. We have a certain seasonality in our business.
Speaker #2: The first quarter is normally the strongest one for various reasons. We see the same pattern this year. And on top, I want to mention a small footnote here.
Speaker #2: When you look into the second quarter numbers, last year, they are a little bit artificially high in terms of the margin, as the full crane sales from February to June last year have been decontaminated in the second quarter last year.
Speaker #2: If you want to compare apples to apples, you probably would need to compare a 9.1% last year second quarter to 10% this year's quarter.
Speaker #2: So that's a 90 basis point step up. Fully in line with our expectations, I would say. So very successful. And then let's go a little bit into some balance sheet and cash flow numbers.
Speaker #2: First here, the adjusted net income bridge that you know. So that 88 million adjusted EBIT we have just talked about starts with a 32 million net income.
Speaker #2: And we add our taxes finance results coming up with the reported EBIT of 63 million for the first half-year. And then we do our adjustments as you know.
Speaker #2: That's mainly predominantly more than 70%. The PPA amortizations, that's 18 million. We have 7 million exceptionals. So compared also to the first quarter, we see that's further going down.
Speaker #2: Ending up then with the 88 million and then when you adjust again for the deduct again the finance results and the actual tax expenditure, you end up with that 53 million adjusted net income which is then 80% higher than last year.
Speaker #2: And turning into an adjusted EPS growth of 10% for the first half-year even with the higher number of shares circulating. Yeah, I would say also quite successful.
Speaker #2: Sharing our value creation through that six months next page. Yeah, one little detail regarding that exceptionals. You might remember when we announced the said for sure we want to realize that synergies in a range of 23 to 28 million.
Speaker #2: On a full-year basis, that comes with a certain amount of integration costs. We estimated that those integrations costs should be in the end between 12 and 24 million.
Speaker #2: We have reached now 18 million since we announced the deal. So pretty in line with that guidance, so to speak, in terms of the integration costs.
Speaker #2: There's a little bit of risk buffer for the next six months. Here and there still want to do some integration work. So it's probably more to the upper half of what we announced back in 2019 is what we disclosed.
Speaker #2: And also with a nice payback period of less than under a year. So that's some details. Let's go now to the capital efficiency and balance sheet figures.
Speaker #2: When we look into our rosy development, so versus end of last year, further sequential step-up of 60 basis points. Now reaching 16.3%. And I would say 16.3% after only one and a half years after the biggest acquisitions of within our history by this quite nice showcase for efficient capital allocation.
Speaker #2: We are very proud of that number versus the end of half-year one last year. That's a step-up of three and a half percent points.
Speaker #2: Equity ratio, I mean, as you know, we did the capital increase end of February, driven by that and driven by the net income despite having paid out 25 million dividends.
Speaker #2: Shows an increase by almost 6 percent points up to rounded to 27%. And together now with the net debt leverage of 1.81, I think we are feeling now comfortable back in our strategic corridor to further execute our Ocean 2030 strategy, which as you know is a combination of organic growth, which I think we demonstrated with that number here, and are going to demonstrate even further.
Speaker #2: And potential M&A deals. I think we are now back in a situation where we can definitely further execute on this as we promised next page.
Speaker #2: Is cash flow figures. You might remember from the first quarter results, that we're a little bit burdened by the growth and then the driven working capital increases.
Speaker #2: That slowed down, turning now into a significantly positive free cash flow in the second quarter. And for the first half-year, that means then almost 16 million.
Speaker #2: Yes, that's year. But that's somehow the price for that strong organic growth for the second half. I expect that this working capital is going to be reversed at the growth rates.
Speaker #2: So to speak, are then more on a stable basis and that incremental working capital growth. Should then stop. So here definitely tailwind for the second half.
Speaker #2: In terms of our capex spending, we are well underway. We gave a guidance of maximum of 2.8% sales in capex for 2026 with 2.2% per half-year.
Speaker #2: I think we are well underway, giving us also a little bit of flexibility if there's opportunities to further invest into automation and efficiency projects.
Speaker #2: I mentioned that in the one or the other location, we have already very close to capacity limitations. But with that headroom, no problem at all.
Speaker #2: And networking capital ratio, we remain the same discipline like now for the last, I would say, two years more or less. And with 17.4% investment of sales, we showed an efficient networking capital manager for the second time, so to speak, in this year.
Speaker #2: There is definitely a payables growth. If you look into the numbers, but it has for one reason to do with the business increase and for the other reason is also that we are looking strategically at the moment.
Speaker #2: It's in our safety stocks, right? I mean, we said this already in May. We don't believe that this Middle East conflict is over on short notice.
Speaker #2: I think that's now proven by the development. And with that, we have a little bit buffer for our business. I think that's it. And with that, I hand over back to you for outlook and summary.
Speaker #1: Yeah, thank you, Oliver. So let's look at what we expect from a market for the remainder of the year. Well, for Europe, more or less, it continues to be a market that is bottoming out with a slight recovery.
Speaker #1: We expect for truck and trailer a slight growth from 0 to 5%. and for the hydraulics business. The biggest change to the previous assumptions, you see in Americas strong increase in the expectations for truck slight increase for trailers.
Speaker #1: Truck, mainly driven by the EPA 2027 pre-buy effect, and also quite honestly by a pent-up demand because production rates have been far lower than the long-term average.
Speaker #1: So we believe that with the momentum we've seen in the last weeks, that we may even exceed the perspective that you see here for the class A trucks in North America.
Speaker #1: As I mentioned, trailer slight increase tractors more or less the same as we've seen in so far. And also hydraulics only a slight increase.
Speaker #1: For Asia and Pacific, we expect the growth story to continue. And the Chinese truck OEMs, they are growing. They export to the global south.
Speaker #1: And we're benefiting from that with our market share that we have with these global OEMs. The demand in India has been growing and continues to grow.
Speaker #1: And we expect that to also continue throughout the year. And the same is true for tractors and on hydraulic, we see the market growing even stronger so that we believe that we can benefit with our hydraulic products from that.
Speaker #1: How does that translate to the overall business? Based on the strong first half-year and based on the market outlook, we feel very comfortable with the outlook that we've given.
Speaker #1: And the guidance can be confirmed. So we expect to grow single digit in sales to grow mid to high single digit in adjusted EBIT.
Speaker #1: And with that, we will improve our EBIT margin above last year where we had the 9.5%. Capex will be around 2.8% of sales. And our working capital will be in the range between 17.5 and 18.5.
Speaker #1: Percent of sales. So what should you take away from this call? For the first half-year sales were up 12% to 857 and adjusted EBIT up 21% to 88 million.
Speaker #1: With the margin improving 8 0.8% points to 10.3%. Well inside our strategic corridor of the 10 to 12%. The diversification that we have within the commercial vehicle industry is delivering organic growth around 9% organic growth in H1 in all regions and in all business lines paired with market share gains also across all business lines.
Speaker #1: The rolling last 12 months figures confirmed the profitable growth. Those 12 months figures are 1.627 million in sales. So from last year, 1st of July until 30th of June of this year, adjusted EBIT at 160 million.
Speaker #1: And adjusted EBIT margin of 9.8%. So we see the rolling LTM numbers grow quite nicely. Capital efficiency, there's high rosy up to 3.5 percentage points to 16.3% showcasing an effective capital allocation.
Speaker #1: Free cash flow up 17% closing the gap to prior year. And despite the fact that we allowed a broken capital increase in order to grow to allow the growth in sales and also to protect our supply chains to a certain degree, and as Oliver mentioned, we should have a little bit of support here in the second half year with the ability to release some of that broken capital with that.
Speaker #1: Our synergies are supporting our growth and our profitability. And we are very comfortable with our outlook for 2026 and can confirm that. So thank you very much.
Speaker #1: And we're now looking forward to your questions.
Speaker #2: Ladies and gentlemen, we will now begin the question and answer session. Anyone who wishes to ask a question from the webinar may click the Q&A button on the left side of the screen and then click the raise your hand button.
Speaker #2: For written questions, please click the Q&A button and the text button in the and type your questions. If you're connected by a phone, please press star followed by one on your telephone keypad.
Speaker #2: 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 the lower your hand button from the webinar or press star and two on your telephone.
Speaker #2: Anyone who has a question may queue up now. One moment for the first question, please. And the first question comes from Nikolai Kemp from Deutsche Bank.
Speaker #2: Please go ahead.
Speaker #3: Yeah, good morning. It's Nikolai here from Deutsche Bank. And let me start by saying congrats to a strong quarter. Couple of questions from my side.
Speaker #3: And I can take them one by one. Let's start with the US. And given the strong class eight orders we saw the last months, we also share your view that H2 will be much stronger.
Speaker #3: I'm just not sure how much is related to the market based on how high a freight rate. And how much is driven by the EPA 27 kind of a pre-buy effect.
Speaker #3: And the reason I'm asking is if it's driven by the freight rates, it would maybe point to an underlying improvement. If it's driven by the EPA pre-buy effect, then there could be kind of a not a big cliff, but there could be a slowdown again in 27.
Speaker #3: Start here.
Speaker #1: Yeah, Nikolai, thanks for the question. That's a million dollar question, obviously. But I think we have both. We have, and that's why I mentioned the pent-up demand I believe that we have a pent-up demand in North America because of bills rates, especially of class eight tractors have been quite a lot lower than the average.
Speaker #1: The vehicles are used and the new vehicles give you a benefit in fuel consumption. Some of them will actually be electric in the future also that will be a driver.
Speaker #1: So I think we have a combination of both. And I now believe more in a pent-up demand that will continue in 2027 than I did maybe three months ago.
Speaker #1: So yes, there is a certain EPA 2027, but that's not the only driver. One, because the regulations is not as strict as it used to be.
Speaker #1: Some of the OEMs will actually continue with the existing engines of the car just announced that they will continue with the existing engines. Until 2027.
Speaker #1: So not all of that is EPA driven. It is a base demand that is increasing due to the pent-up demand that has been generated.
Speaker #3: Okay, understood. Then moving to Europe, yes, you mentioned a bit of pressure with higher freight rates, high input costs. I assume you will raise prices to offset these?
Speaker #1: Yes. We typically have that effect when freight rates and energy cost goes up. In the aftermarket, we can relatively quickly adjust the prices. If we believe that it's a consistent price increase, then we will do that relatively quickly.
Speaker #1: In the OEM contracts, we have trailing price elements with the OEMs that we have agreed. So that means the pricing will be adjusted. After three months, six months partially after 12 months, but we've recalculated or we've reagreed that the 12 months will go to six months.
Speaker #1: So we had a few OEMs where we had the 12 months adjustments, but we're now with all OEMs to three or six months adjustments.
Speaker #1: So that means it can take until it's in the calculation and until it's then being paid more than six months until you see that effects and therefore the answer is yes, it will be driven into the prices.
Speaker #1: But we will have this delay that we typically have. And you probably remember when cost went down, we had a positive effect because we benefit from the higher prices even though we are experiencing the lower cost already.
Speaker #1: Now we're having to a certain degree to assume those higher prices until the higher cost until we can forward it to the higher prices.
Speaker #3: Makes sense. Okay. And last one, a bit of housekeeping. Did notice that you're tax rate was a bit more elevated in H1. At 40, 34%.
Speaker #3: Is that the full year run rate or should we expect a lower run rate for the income tax rate for the full year?
Speaker #1: To be honest, difficult to assess from my point of view our tax rate based on report. I'm assuming you are linking that to reported net income.
Speaker #1: And I would recommend that you give Romy a call afterwards. From my point of view, there is all these PPAs adjustments that you have seen in the net income bridge as an example, which we are 17 or whatever for the first half year.
Speaker #1: These are not tax deducted. So at least you should add those 17, right? Then ending up probably with 50 or so. And if you then do your math, I think you're coming to in a much better ratio, which is relatively typical for a corporate between 25 and 30%.
Speaker #1: To a certain extent, you are right. We are seeing higher tax rates in China at the moment. And that's a structural effect that's going to continue.
Speaker #3: Okay, understood. Thank you.
Speaker #2: Then the next question comes from Yasmin Steilen from Berenberg. Please go ahead.
Speaker #4: Yeah, many thanks for taking my questions. I have also three, if I may, and will also take them one by one. So the first one on your guidance.
Speaker #4: I'm fully aware of the historic finality with Q1, H1 being stronger than the second half. However, even adjusting for the divestments of the tipper business, your sales guidance, at least at the lower end, looks or implies for H2 significant deterioration of the 9% organic growth rates we have seen in H1.
Speaker #4: Could you walk us through the assumptions also as you became more optimistic on the OE industry outlook for trailer in Americas? But also for hydraulics in Americas and APAC.
Speaker #4: That would be very helpful.
Speaker #1: Yeah. I'll try to start and then I'll hand it over. I'll let the CEO do the math. Now, as I mentioned, we are very comfortable with the guidance at this point in time.
Speaker #1: But if you look at the last 12 months figures, you see that we had 6% of sales growth in the last 12 months. And we will compare to a second quarter of or to a third quarter and the fourth quarter of last year that have been structurally better than the first two quarters.
Speaker #1: So we will not see the same growth. Of course, you're right. We expect that organic growth to be consistent and to also flow through.
Speaker #1: So with that, looking at the last 12 months numbers, and the outlook, we're certainly at the upper end and quite comfortable with the guidance we have at this point in time.
Speaker #1: But we would like to reassess the situation once we have all the call-ups for North America. We get the call-ups updated typically after the vacation period.
Speaker #1: And some of the announcements that we had from the our customers that we've seen in the press, they have not yet translated into the EDI call-ups that we have.
Speaker #1: So we'd like to see those and then reassess if we are still in the guidance or not.
Speaker #5: And just let me add with some numbers, right? For sure. We are not talking about the lower end of the guidance, but let's talk about the typical seasonality and the midpoint of the guidance.
Speaker #5: If you just do that seasonality math, you would, and just for the sake of a disclaimer, just doing math had nothing to do with our guidance.
Speaker #5: You would end up with 1645 or so. I just did this morning. And when you're done execute, I don't know, eight or 10 million for from the potential sale of the tipper business, if that closes end of September or beginning of October, you end up with 1635 or something.
Speaker #5: When you then compare when you compare that with the consensus I think we are fully comfortable with that. And then basically is the basis for us at the moment to say we are fine with the consensus for us that shows from a current point of view fair assumption of the outlook.
Speaker #5: Which is probably in the middle of a little bit up of the midpoint of our guidance. And as you said, we will reassess that around the IAA etc.
Speaker #4: Okay, perfect. Thanks very much. Then my second question is on the agribusiness. So we have seen SEMA business monitors stabilizing on the reduced levels.
Speaker #4: And I'm aware that you exposure is more on the livestock than arable or harvesting equipment. However, we have heard kind of some negative noise from pig farmers, for example.
Speaker #4: That seems to struggle. Could you share your view on your intake or any indications you receive from your agri customers in Europe currently?
Speaker #1: I mean, it's a market that has a lot of drivers, huh? And but what we see in Europe is that the dealers are continuing to buy.
Speaker #1: And I cannot confirm that we see any weakness. Of course, the SEMA index is an indication, but it's not necessarily that drives the farmer to the dealer to buy more implements or to buy a new loader.
Speaker #1: So we, as I mentioned, we expect as we've shown in the guidance that a slight increase in Europe of the market between 0 and 5%.
Speaker #1: And that is what we also hear from our dealers. And yes, your SEMA index can be fluctuating. But we combine that with what we hear from our sales people that visit the dealers and visit some of the large farmers.
Speaker #1: And that's our view, the 0 to 5%.
Speaker #5: Yeah. And I mean, on top of probably market fluctuations and we have a growth now in Europe, which might affect the one or the other, right?
Speaker #5: We see a strong growth in our implements portfolio and that's probably also a little bit of a capital allocation that the farmers do at the moment, right?
Speaker #5: Even if in case they are not super certain about the recovery of the whole industry, so to speak, they invest in the implements. Because they need to do the work on the farms, right?
Speaker #5: And they have replacements. And we have a nice portfolio ramped up. Part of our ocean strategy and we are seeing here double-digit organic growth in that implement portfolio continuously.
Speaker #5: And that comes with a very good margin.
Speaker #1: Yeah. And the harvest so far has not been bad. So cereal harvest in Europe has been quite well. Despite the lack of water, but that was not impacted.
Speaker #1: So we'll see later in the year when we talk about corn, there may be a negative impact. But that also does not necessarily translate into our sales because they still need the equipment.
Speaker #4: So basically, you assume that the demand you currently see from the dealers is underlying demand from the farmers and not a rebuild of the stocks at the dealer inventory level.
Speaker #4: So my question is, do you expect kind of a solid development continuing also into '27 or might we see a risk of destocking again?
Speaker #1: No, I believe that the stock levels that we see at the dealers right now is appropriate for their selling level. Last year it was there were reducing the stocks.
Speaker #1: They were building up stocks and we've probably benefited to a certain degree in the first half year. With that, that's why we had a strong growth in agriculture.
Speaker #1: But what we have considered in our guidance and in the market outview that I gave that assumes more or less stable stocks. And I think that is the right assumption.
Speaker #1: Or the business that the dealers expect.
Speaker #4: Okay, perfect. That's all very clear. And I'll step back into the line. Thank you.
Speaker #5: Thank you. I think that's some written questions, right? Or written posts.
Speaker #4: Yes, if you would like to ask a question from the webinar, please click the Q&A button on the left side of the screen and then click to raise your hand button for written questions.
Speaker #4: Please click the Q&A button on the text button and then type in your questions. If you are connected via phone, please press star followed by one.
Speaker #2: Yes, we have a written question from Sebastian Ubert from MPCM. Can you stay at above 10% margin in the quarters to come with his first question and then do you still see just finishing 2026 at the upper end of the guidance like you flagged with Q1 in the second one?
Speaker #5: I can if you start you may ask him but in general that's our goal and underlying so to speak that should be the case but keep in mind and I mentioned that we have a seasonality in our business and that's also going to happen in 2026.
Speaker #5: So just based off that we might not see the same strong margins that at least we have seen in the first quarter. So that's a topic but the underlying runway of the business especially from driven by the synergies should support that.
Speaker #5: What was the second part of your CEO's finishing the other end of the guidance like effects? As I mentioned a little bit, right? So we just were talking about the sales guidance and the consensus is around 6%.
Speaker #5: Our guidance is that EBIT will grow higher than sales. So yes, that by itself implies that we are with the profitability guidance probably at the upper end of the curve at the moment.
Speaker #5: I don't know if you.
Speaker #1: Yeah. No, and nothing to add to that. I think we've talked about the guidance and yes, we can confirm we're very comfortable with it and certainly at the upper end.
Speaker #2: Okay. There are no further questions right now that I see on the written or on the line. So correct.
Speaker #1: Great. Then I would like to thank you for your interest and your attention. For our records, first half year, and we're looking forward to see you either at the IAA or then at the next call of our Q3 numbers.
