Kendrion (Euronext:KENDR) Q2 2026 Earnings Call

0:00 Morning, everybody here in the Novotel and on the webcast, and welcome to Kendrion's Q2 and First Half Year twenty twenty six Results Presentation. My name is Joob van Buerde, Kendrion's CEO, and with me here is Jeroen Heemer, our CFO. First, this morning's agenda. I will start by summarizing the key highlights of the first half of twenty twenty six and the strategic position of Kendrion after our move away from automotive as an industrial motion control specialist. I will then give you an update of the progress we have made operationally over the past half year. Jeroen will review our Q2 and first half twenty twenty six results. Next, I will discuss the outlook for 2026, look at our 2027 financial targets, preview our Capital Markets Day planned for the September 17 and go to Q and A.

0:53 Before discussing the strategic repositioning, I would like to draw your attention to the following. Certain statements contained in this presentation constitute forward looking statements, and these forward looking statements rely on several assumptions concerning future events and are subject to uncertainties and other factors, many of which are outside the company's control that could cause actual results to differ materially from such statements. Let us look at the highlights of the first half of twenty twenty six. Starting with the financials. Normalized EBITDA margin was 18.1% in the second quarter and 17.5% for the first half, at the upper end of our target range of 15% to 18%.

1:42 Normalized return on invested capital increased to 26.3% from 13.9% in the first half of last year on the back of a strong EBITA and much reduced capital base. That means we have met or exceeded our 2027 financial targets ahead of schedule. We also returned EUR $179,000,000 to shareholders in the first half. The order book is healthy, which supports a positive outlook for the second half. Strategically, we've completed the pivot to four carefully selected growth markets: Robotics and Automation, Healthcare and MedTech, energy and transmission infrastructure and industrial safety.

2:30 The project pipeline for these markets is at record levels. And mobility, which we are gradually exiting, continues to deliver a stable cash contribution with no further investment.

2:47 Let us move to the strategic and operational update. Kendrion is an industrial motion control specialist. One focus, one set of end markets, one investment case. We specialize in actuation, fluid control, braking and to control electronics that go with them, all for industrial applications. These four capabilities sit closely together technically. They share engineering, they share customers, and they are increasingly sold as systems rather than as components. We have deliberately concentrated on four end markets: robotics and automation health care and medtech energy and transmission infrastructure and industrial safety.

3:36 These are secular growth markets driven by automation, by AI, by electrification and by demographics, not by the industrial cycle. That selection was a choice, and we made it early. Now to the character of the products, because this is where the economics come from. Our products are what we call mission critical and built for durability. If a brake were to fail in a wind turbine or an actuator were to fail in a kidney dialysis machine, the impact for the customer and for the end user can be severe. At the same time, our products typically represent a small share of system total system cost.

4:22 High cost of failure, small share of cost, that is the combination that gives us pricing power and keeps us designed in. We believe the position is defensible. It rests on customer relationships measured in decades on advanced IP, on product quality, on long cycle co development, where we sit with the customer from the first specification and on regulatory certifications that take years to earn. Those are high barriers to entry, and they are why our designed in positions are stable and why this business earns the margins it does. Let us look in more detail at where we focus our Advanced Motion Control products.

5:11 The previous slide described what we are. This shows where we have pointed the company and the revenue already sitting behind each choice. These are 2025 numbers. Robotics and Automation represents our largest revenue segment at around €120,000,000 in 2025. Three forces drive it: the shortage and rising cost of manual labor the retooling of strategic industries to keep those costs in check and the reshoring of supply chains. The products needed for this market demand precision, efficiency and reliability, which is exactly where our industrial brakes compete. Health care and medtech is around EUR 20,000,000.

6:00 Aging populations, shortage of expert clinical labor and the AI driven shift towards personalized medicine and diagnostics drive significant market growth over the coming years. We have a lot of traction in brakes for surgical robots. These robots need permanent magnet brakes as the requirement is so demanding. The robotic arm needs to stay exactly where the surgeon left it. Zero backlash, no drift, fail safe under all circumstances. The segment carries a high barrier to entry, and the traction we have is large and growing. Energy and Transmission infrastructure, around EUR 25,000,000. The global shift to electrification as a result of unprecedented growth in electric power demand from data centers, AI compute and automobiles.

6:56 That build out needs high performance critical motion control components like breakthrough wind power and high voltage circuit breakers for current switching. On a fault in the network, the switch needs to open in milliseconds, also when it hasn't been used for years. And industrial safety, around EUR 30,000,000. Machines and people increasingly work side by side, and strict regulatory frameworks govern that interaction. It calls for high precision components combined with safety control electronics, and it sits directly adjacent to robotics with largely the same customer base. Four markets close to €200,000,000 in revenue 2025 served from a single technology base.

7:46 The same actuation, braking and control electronics competencies run through all four. And the drivers behind them are structural, not cyclical. We will drill down on these segments in more detail at the Capital Markets Day, and we will also be displaying some of the products we have launched recently. Let us go to the operational update, starting with IAC. IAC revenue in the first half was 1% higher at €56,400,000 Behind that number, market demand continued to grow. The offset came from customer specific volumes at a limited number of accounts, not from underlying market conditions.

8:34 The order book is healthy, and we're seeing improved demand from the European machine building industry. We are running a high number of development projects for customer specific products across all of our markets of focus. In summary, order intake points to continuing growth in the second half. How about the longer term? Looking further ahead, I want to highlight products in three areas. First, actuators. Beverage dispenser valves are growing, and we expect more demand in the coming quarters. The automation and robotics market is showing high and increasing demand for oscillating rotary solenoids. And in Medical, our medical grade valves and pressure regulators have significant market traction.

9:24 Our shape memory alloy based lock development is finished, and we are ready to enter the parcel locking business. We will demo this lock on the September 17. Second, inductive heating. We have a high number of projects in the implementation phase. Our low power induction generator is in the testing phase at the customer side. And on the high power side, we have won a dryer project, requiring up to 1.5 megawatts.

9:53 Third, controls. We won an important project with our new 48 volt drive controller, the Viper platform. Viper is a highly efficient motor control platform, enabled to run the motor with up to 98% efficiency. It's used in battery powered tools and devices where the motor can be designed smaller and the duration of the battery until reloading is longer. Together, these are some of the building blocks of IAC's growth beyond this year. Next, IB. IB revenue in the first half was €51,500,000 up 8% on last year. That growth is driven by secular growth in our markets of choice, sustained demand in automation and robotics and an encouraging ramp up in medical application.

10:46 Profitability and cash flow were both well above the prior year. Looking ahead, the order book is healthy, and the secular growth trends in Robotics and Automation and in Healthcare and MedTech are expected to drive further growth in the second half and beyond. How about the longer term? First, Robotics and Automation. We have delivered our so called Perfect Duo servo motors drives servo motor brake prototypes, a small form factor slim permanent magnet brake and a high performance, slightly larger, high torque version. Together, they form a platform for industrial robots, for cobots and ultimately, for humanoids.

11:32 We have won customized ServoLine brakes for a new AGV motor platform in warehouse automation, and it's now in ramp up. And our new spring applied brake line for Intra Logistics is meeting strong interest as the IE5 top efficiency motor rollout gains momentum. We also see strong interest in our heavy rare earth free brakes across servo motor and robotics applications. Heavy rare earth elements like dysprosium and terbium is where the supply chain bottleneck is, and we develop PM brakes that do not use that heavy rare earth. Second, health care and medtech. We have a significant traction and ramping revenue in Surgical Robots and related equipments.

12:20 And our new HALO line is under evaluation for a surgical robot with potential of up to 20,000 units per year.

12:31 Next, Mobility, starting with a short reminder about the Knobremsa deal. The cooperation between Kendrion and Knobremsa is structured in two distinct phases, designed to ensure continuity, stability and a smooth long term transition of the CBU plant. In Phase one, where we are now, Kendrion remains the full owner of the plant and continues all existing operations exactly as today. Kendrion is manufacturing small volume Norbrenze prototype in pilot batches planned carefully so they do not affect current customer commitments. All CBO employees stay with Kendrion. We expect to flip ownership of the plant on the 12/31/2028.

13:19 And at that moment, the model reverses and KB produces for Kendrion. This ensures continuity and long term stability for the CBO team, and the corporation secures factory continuity and profitability as Kendrion volumes decline. So let us talk about how Mobility has been doing in the first half. Revenue in the first half was €20,900,000 up 4% compared to the first half of twenty twenty five.

13:50 The Fuel Pump Controller business is running well, while Sound is below expectation. But more importantly, this was an excellent six months on profitability. EBITDA was up 44% in the first half, and the margin rose to 24.9% from 17.9% last year. That reflects execution of the segment's cash generation strategy, and it reflects the cooperation agreement. That cooperation is working very well. Contractual milestone payments are on schedule, and one such payment of EUR 1,300,000 was recognized in the first half. This agreement has made the cost base of CBU largely variable.

14:36 So as the existing programs gradually phase out, Mobility continues to contribute positive cash flow with no further investment from us. I now hand over to Yaron for the financial review. Yes. Thank you, Juuk. So let me take you through the financials. Starting with the second quarter, revenue came in at €63,600,000 up 4% on the €61,400,000 we reported in Q2 last year. Growth was led by automation and robotics, our largest selected growth markets, driven by both a market recovery and a conversion of pipeline into revenue.

15:30 The more important line is below that. Normalized EBITDA ended at €11,500,000 up 16%, which translates into a margin of 18.1% against 16.1% a year ago. That is a 200 basis point improvement, and it's a record quarter for the company in margin terms. So the drivers of the EBITDA expansion were positive pricing, operating leverage on the higher volumes, lower staff costs as a result of the cost savings initiated at the end of last year and our cooperation agreement signed into Mobility, adding 900,000 contractual milestone contributions in the second quarter. EBITA ended at €8,400,000 up 27%, with a margin of 13.2% against 10.7% in the previous year.

16:22 And net profit before amortization from continuing operations was 5,900,000 up 37%. Then moving to the half year in the lower table. So revenue of €128,800,000 was up 4% reported and up 5% at constant currency. All three business units contributed to the increase. EBITDA for the first half was €22,500,000 up 18%, with the margin expanding two ten basis points to 17.5%. That puts us at the upper end of our target range at the half year mark.

17:02 Our added value margin remained essentially flat at 57.2%, with positive pricing effects offset by sales mix effects. EBITA increased 30% to 16,400,000 up 30% and net profit before amortization 26% to €11,100,000

17:27 Our return on invested capital almost doubled to 26.3 on a twelve month rolling basis, which is a reflection of EBITA growth in the numerator and a significantly reduced invested capital base in the denominator following the transformation. On cost, our operating expenses were up 2% in the half year, driven by stranded costs that were previously borne by the divested Chinese entity. These increased costs were, however, largely offset by increased other operating income. Then to the developments by segments. The chart on the left shows quarterly revenue over the past five quarters. The one next to it shows the same split for the half year.

18:12 Industrial brakes grew 8% in the quarter and 8% in the half year to €51,800,000 The demand is mainly coming from automation and robotics and from medical, the two markets where we have deliberately concentrated. Growth here is partially economic recovery, but as well clearly pipeline type pipeline conversion to new revenue. Industrial Actuators and Controls was down 2% in the quarter and up 1% in the first half year at €56,400,000 The quarterly decline is not a market signal. Underlying demand in our main segments is good. European machine building is improving and robotics and automation demand is improving as well.

18:59 What we are seeing is reduced volumes at a limited number of specific accounts, and it does not change our view of the market. The order book in IAC is healthy, and we have a record number of customer specific development projects running. Mobility revenue was up 8% in the quarter and 4% in the half year at €20,800,000 Project ramp ups more than offset the phase out of existing programs.

19:25 This business is running down by design, but it's running down profitably. Industrial EBITDA rose from 15,400,000 to 17,300,000 with a margin improving around 120 basis points on pricing, volume and cost discipline. And Mobility EBITDA rose from 3,600,000 to €5,200,000 with the margin stepping up to around 25%. This reflected good volumes plus the contribution from the cooperation agreement with Knoebremsen. So the Mobility phase out is doing what we told you it would do. It is generating cash and margin on the way out without absorbing further investments.

20:12 Then finally, cash flow and financial position. Our normalized free cash flow in the first half was €4,000,000 Year to date cash flow is affected by the seasonal buildup of working capital that we see in every first half year. I would expect the usual unwind in the second half. The bridge on the left walks you from the net debt of €30,300,000 at the end of twenty twenty five to €48,100,000 at the half year mark. Normalized cash flow from operations contributed 7,500,000 positive. And against that, we had €3,500,000 one off cash out and €3,400,000 of capital investments and the largest bar, 18,100,000 of capital returned to shareholders through the dividends and the share repurchase program following the transformation to an industrial motion control specialist.

21:07 On CapEx, euros 3,400,000 against a depreciation of €6,100,000 The reduced invested capital base I mentioned on the first slide is a direct consequence of this discipline, and it's also part of the ROI increase. Our balance sheet is in good shape. The leverage ratio is 1.2 against 2.4 a year ago. And on our refinancing, we have agreed on key terms for a new €70,000,000 committed credit facility to refinance the facilities that mature in 2027. So to summarize our financial position, we realized broad based growth. We have a healthy order book. Our EBITDA margin is at the top of the target range. Our ROI close to double and our leverage halved. And that is the basis that we go into the second half year with. And with that, I hand back to Hube.

22:08 Thank you, Jeroen. So before we go to Q and A, we'll talk about the outlook.

22:18 Macroeconomic visibility remains limited and geopolitical and trade uncertainty persists. Against that backdrop, Kendrion expects its strong performance to continue in the second half, supporting by a healthy order book and a strong pipeline. Over the longer term, we are well positioned to benefit from structural growth in the high value segments of Robotics and Automation, Health Care and MedTech, Energy and Transmission Infrastructure and Industrial Safety. As industrial systems become smarter and more autonomous, the need for safe, precise and reliable motion solutions is increasing, and we see these trends as important drivers of sustainable and profitable growth for Kendrion in the years ahead. Our markets of focus are structural growth markets, and we are confident in delivering further profitable growth in 2026 and beyond.

23:12 We will set out our strategy and financial targets for 2027 to 2030, and we'll present them at our Capital Markets Day on the September 17 here in the Novotel in Amsterdam. Next, our 2027 financial targets. This slide shows these targets unchanged against where we stand after the first half. Revenue growth, our expectation is 5% to 8% annually over 2024 to 2027. And in the first half, we grew 5% at constant currency. EBITDA margin, the target is 15% to 18% from 2025, and we delivered 17.5% in the first half, so at the upper end.

23:58 Return on invested capital, the target is 23% to 27% from 2027, and we are at 26.3% today, so one years point early and at the upper end here of the range two. And dividend, at least 50% of normalized net profit, and our payout was 61%. So we've met or exceeded our 2027 financial targets ahead of schedule. In our view, this is unmistakable evidence that the transformation is paying off. But it also means that these targets have served their purpose. And at the Capital Markets Day on the September 17, we will present our new our strategy and new financial targets for 2027 to 2030.

24:43 And talking about that Capital Markets Day, here's a preview of what we will discuss. The key topics. We will open with the Kendrion strategy, a focused industrial specialist in motion control, and we will then go into more detail into the four markets of choice, the key application segments and where we see the secular growth opportunities.

25:05 Third, technology, why our content is mission critical and performance enhancing for our customers. Fourth, commercial traction. This is where we will give you more detail on key customers and on the project pipeline that I've referred to several times this morning. First, we'll do a short update on Mobility and the managed runoff with secured cash generation, and we will close with the financial section, how we are invested for growth and, as just mentioned, our financial targets for 2030. Of course, we will also demonstrate some products, and we look forward to seeing you here in the Novotel in Amsterdam. And with that, I would like to go to Q and A. Frank?

26:00 Thank you. Frank Glassen, Degroof Petercam. Question on the IAC, let's say, the decline in Q2. You say it's limited number of accounts, which showed a decline. Could you elaborate, is it in certain segments? And do you think it will be temporary so we can see normal growth again in as of in the second half?

26:23 Or yes, could you elaborate on this? Yes. So first of all, in IAC, it's more diverse than, for example, in IB. So typically, also in economic upturns and downturns, you see that IAC is a bit more flat than stable, you could say, than IB. We see the underlying growth in the main markets, as we said in the presentation, are

26:52 comparable. So Industrial Automation, the machine building industry, so what we also new projects ramping comparable to what we see in IB, but we have a number of customers. It's I would not say it is specific sector related. One sector, but it's only part of the explanation, is textile because it's a small sector that is indeed, yes, again, against the normal cycle. So that is not helping us. But like I said, that's only part of the explanation. It is a couple of individual accounts not specified to sectors besides the textile one.

27:29 We do expect it's temporary, so there's no not really a structural reason. Does that mean that it comes fully back in Q3? That remains to be seen. But the underlying strength in the market and also in the product pipeline is there. Okay. Then the added value margin, 57%,

27:55 quite stable. But there are quite a bit of movement, I would say, in raw materials. So what can you expect going forward in the dynamic of pricing, raw materials? What is happening on that front? Yes. So actually, on input prices, we see some pressure on especially copper. But yes, it's really limited, so I would say 1% or less. So on the pricing, pricing outweigh sales prices outweigh input prices in the first half year and also in the second quarter, and we do expect that to continue in Q3 and in Q4. So the only reason why it's stable despite positive pricing is the mix effects, what I mentioned, so the stronger growth in Mobility versus more limited growth in IAC, for example.

28:47 Okay. And then finally, on the milestone payments, yes, what can you say about going forward? How should we model this? Or yes. I think when we announced this cooperation agreement yes, so to simplify it over the course of four years since we announced it, which was at the end of last year, we will receive roughly EUR 2,000,000 per year from this contribution. Half of that is more or less stable. And so that is monthly contributions to our fixed cost base. And the other half is more lump sum related based on milestones.

29:34 So for this year, the milestone payment has been recognized in the first half year. So let's say, if I guide €2,000,000 per year, 1,300,000 in the first half year, then you roughly know what you can expect for the rest. So basically, the one off in Q2 was a real the lump sum is a sort of one off, and that will be once a year normally in Q2? Or No, no, no. That we can really based on when that so that will remain lumpy. Yes. Thank you. Okay. Martin? Morning. Martin Andre for ABN AMRO. You've in the Q1 call, you when we talked about the order book, you said that we have good visibility for Q2.

30:22 And now you guide for profitable growth in H2 and beyond. So you seem much more confident about the order book and the expected growth. What has given you that stronger confidence to come up with these statements? Yes. Maybe similar to Q1, I talked specifically about the visibility of Q2. At the same point, we have now the order book that I referred to a couple of times basically is the same. It's the visibility into Q3. Of course, we're into Q3 already, similar level of confidence. The beyond part has to do with the pipeline. Now the pipeline doesn't build itself over one or two quarters, so that was already strong in Q1 as well. But it continues to build. And we say for the segments that we're active in, or you can say for the industrial part of the business, because our order book was, of course, always a mix between automotive and industrial.

31:17 So if you forget that, you just look at the industrial side, it's really at record levels. And it's related to the trends that I'll be talking about and that we will be talking a lot more about on September 17. So the beyond has to do with the pipeline. The second half, Q3, Q4, has to do with the order book. Understood. Now you mentioned that record pipeline project pipeline yourself. But can you give us without providing details that you're actually looking to give us on the Capital Markets Day, but can you roughly break that down between the growth segments, so Robotics and Automation, Healthcare and MedTech and other? We will at the Capital Markets Day, give you a sense. We're not going to, of course, do these types of forecasting. I mean these projects, as you know, design in cycles are long. That's also part of the protection and part of the moat that we have in these segments.

32:08 It's really you're working together the medical side, for instance, but also in robotics with our customers. But if you look at the revenue makeup of these segments today, the largest is automotive sorry, automotive automation and robotics. So you can imagine that if you look at the size of the pipeline in that segment, it's also larger than the others. Having said that, the traction is excellent in all four. And just a follow-up on that. Is there any defense related growth or for at least projects in the project pipeline? Or is that still something that is a bit of a promise? Sorry, any? Defense.

32:53 Defense, that is we are talking to these guys, it's long cycles. So the reason I mean, you can say this is also automation in a way. But today, we don't it doesn't warrant to be broken out as a separate segment, but we are definitely looking at opportunities there. Got it. And then my third question. If we take out the €1,300,000 and I assume, Jurgen, that you've recognized it as revenue. Other operating income. Okay. But it's still in revenue? Yes. Yes. If you take that 1,300,000,000 out, both on revenue and on EBITDA, in fact, for Q2, you get to an adjusted EBITDA normalized EBITDA margin of 16.4%, whereas you report 16.9% in Q1.

33:40 So why has the EBITDA margin declined in Q2? It's 16.6% because in Q2, the, let's say, one off, for some years recurring, contribution from the agreement was 0.9%. In the first quarter, we also had 0.4%. So the yes, I would say the margin development in Q1 and Q2 is reasonably similar despite the lower revenue, which is fully caused by also the lower number of working days in the second quarter. So underlying profitability, I would say, actually has improved Slightly. Got it. And then just a bookkeeping question, I guess, more or less.

34:28 At the 20 yes, I'll give the microphone to another analyst in a second. At the 2025 results presentation in the Q and A, there was a question about CapEx. And you said, okay, the outlook for 2026, roughly around $11,000,000 You've done now 3,400,000 That's significantly lower. What should we expect? Is this is that 11,000,000 still valid? And what should we think about 2027, given these and I already see you shaking your head. What should we think about 2027? 2027? Yes. Yes. Probably would ask 2026. So 2026, it will be significantly below the 11 So it will ramp up in the second half year. So it will be more than two times to 3.5%, let's say, 910%.

35:19 2027 so I think we did guide well below depreciation, so there around €10,000,000 maybe between 10,000,000 and 11,000,000 So there are no major yes, expansions or refreshments needed. So most are, let's say, automation investments. We have investments in our ERP program and, of course, the usual replacements that you need to do, but nothing out of the ordinary, I would say. Got it. Thank you. Thijs? Thijs, Ondoste, Henri. I had the same question because my good feel is that on the Capital Markets Day, there will be indeed a lot of focus on future growth.

36:08 I think that you have become less cyclical compared to the past. So the strategic decision is, I think, working quite well, but still there's, of course, the GDP element. So if you're, let's say, in theory, growing rather fast, so in a high single digit organic growth, what is, let's say, the room before you have to announce basically expansion CapEx programs Yes. Okay. So you're asking after, for instance, production capacity and stuff? Yes. How much room and I understand there's many different equipments you have lined up, but Yes. Please. Yes. So we said between 58% growth as an expectation for Industrial.

36:56 So I say for the coming four years, we should be good. Of course, when you have new programs launching, you will like tooling investments and things like that, but that will be within the guidance of investments well below depreciation. I do not expect in the coming four years that we need to do big expansions. And so we have done, especially in IB, IAC is anyhow not capital intensive. And so we have good capacity there, relatively modern machine estate, so we're good. And there's also always the possibility to add a shift. So in many of the factories, we use a shift and a half or two. So you can then go to three. And then obviously, that expands the capacity. And specifically, as Johan mentioned, in IB a few years ago, we had an upcycle.

37:51 We invested quite significantly then in capacity. It's good. Very positive. So does that mean that you already have stepped up, let's say, your negotiations with potential takeover targets? Has that increased? The focus we have on potential takeover targets? Yes, you too. Yes. Look, mean, we've talked about this. We have very clear we'll definitely also touch upon that on the seventeenth, but we have very clear criteria for this. It has to be adjacent. It has to be mission critical. It has to be the second has to be adjacent. The technology has to be something we understand, so we can integrate it competently. And of course, then there's the whole financial aspect. You have to pay a premium. Are the synergies real? Is it some can you effectuate them reasonably quickly?

38:44 That's a long that's a lot of bullets. Now we've done two in Torq and 3T. That hasn't changed. So that is still the way we're going about. We get a lot of teasers. You know how this works. With these criteria in hand, most of the time, we can say no immediately. If it looks interesting, then we sign the NDA and we look. Okay. And then a question for Jurgen on the refinancing. The Schuldschein and the existing bank loan, they're due April next year? That's You're correct, already in advanced stage with the negotiations. Will the do you expect, let's say, that there will be features special features in the new debt loan? No, it will be very comparable to what we have, slightly cheaper.

39:31 And we have a signed term sheet. So I expect to have the final documentation in somewhere in October or something. Okay. Slightly cheaper, and that's also the follow-up. And then the final question from my side on the yes, the one off costs, there's a small restructuring charges in which area? That was mainly in actuators and controls and related to a shift of R and D capabilities to from The Netherlands to CBU. And no major things expected for the coming quarters? No. No. Okay. And then in the because you specifically mentioned that the underlying free cash flow would have been better if the cash outflow on former provisions was not there.

40:25 Is the EUR 4,000,000 on the balance sheet short term provisions, is that, let's say, the cash risk still for the coming quarters? Yes, that will gradually go out. Euros 1,500,000,000 of that, yes, will take years. Yes, that's on the long term side. And the €400,000,000 is that the one off cost in Q2? Yes. Okay. That's very clear. Thank you. Okay. Martin? Martin Baker, dear dear. Firstly, some clarifications, please. You mentioned that you have met or exceeded your midterm financial targets. But if I look at your EBITDA margin target and your ROIC targets, what you have presented is within that range, so a bit puzzled by the exceeded puzzled by the exceeded on the Q2 segment.

41:20 EBITDA margin. Just on a single quarter basis? Absolutely. Okay. Then, also where did I write it down? Yep. With CPU, you mentioned that you you faced issues or the the the the sound business disappointed you. Yes. But if I recall well, in '24, you took a €7,000,000 charge for the discontinuation of that business. So I thought that was gone. No, it's part of Mobility. The sound business, you mean? Yes. Yes, that's part of Mobility. So we have we run it off. And within so I mean, Mobility did extremely well in the first half, even a bit of growth year over year because some of these projects that we're running off have recently started, and they're still in ramp up phase. Now of course, that will change because we don't invest.

42:17 Sound is not in that bucket. And compared to the original, say, forecast that we had, that was slightly less performing. And on the fuel pump controllers, it was better. So if you talk about sound of what kind of number do we have to think about in revenues? I would so of the €40,000,000 automotive mobility last year, slightly less than 20,000,000 it still sounds related. So the charge was basically to stop all future activity, so R and D. There was actually still one project in the pipeline that we actually finalized. So yes, it will take some years before that is completely run out.

43:06 Okay. Could you more or less give an indication about the ratio of revenues between KNOB REMSA and Kendrion within CBU? So any revenue of Knoebbehlmge will not go via our P and L. No, no, no, no. So it's and it is, in any case, not relevant because their payment is related to the amount of capacity that we will provide to them. And so it's more related to our revenue than it's related to their revenue. And yes, they are still in the start up phase. So it's mainly our our plan still if you look from a revenue perspective. Okay. For the time being, my last question, when you look at your order book, can you give more or less give an indication how much month of sales you do have in your order book today? How much month of?

44:00 Sales. Sales. So the first month is almost completely filled, then the second one, let's say, for 80% and the one after for 60% and so forth. So the visibility for three months is quite excellent, I would say. And then it starts to get really dependent on to what extent the 40% you get really to the 100%. So then it's yes. But this is, Martij, as it always is. So every in Q1, I can talk with a lot of confidence about Q2 and a little bit less confidence about Q3, etcetera. The same is true today. But effectively, in that so there, not much has changed. It's it was good, and it still is.

44:53 Any final remarks? Yes. I have one additional question. It's on working capital, so for Jurgen. Trade receivables was actually relatively high at the end of June, I felt. Was that due to higher levels of sales, particularly in the month of June? Yes. There were no specific big so payment behavior is reasonably good. There were no specific items, and revenue in June was good. Okay. That explains that. And in the Q1 call, you mentioned that you had some phased taxes being paid. You've paid now exactly the same cash taxes as you did in the whole of 2025. So can we assume that the cash taxes in the second half will be very, very modest relative to H1?

45:43 Well, we make more profit, so we also have to pay a little bit more tax. Apart from that Unfortunately, apart from that, yes. But you have to take into account that of the €3,900,000 I believe, tax payments, 2,000,000 were related to 2022. Got it. Thank you. One final from my side. Let's say, on the Capital Markets Day, the capital allocation slide, is there room for another element? What element? Physically on the slide or Can you answer the question, please? I would, but The share buyback, I mean, of course. Yes, yes. Okay. Recurring share buyback in case of a certain leverage ratio. On the look, it's clearly part of the consideration that we do. We are going to preview that.

46:47 But as you've seen in the past, so we've done share buybacks. We've done regular dividend at minimum 50%. It was a bit more. We've done the one off euro. So that all of that is in the armory. Yes. Clear. Thank you. Two questions left on my side. We discussed gross margin, but to be specific, because there was a mix. If you simply look just at Industrial and just at Mobility, both gross margins improved? Yes. Okay, clear. And then there's a major discussion in Germany about a takeover of Wacom Smelte by an American company. Could that affect you?

47:38 I've seen it. So Is is the supplier of you? So who is it? Is it? I don't think so. Could be, but but not another Not in a major way. It did I mean, certainly, it didn't didn't pop up on the radar to because they specialize in magnets for wind farms. Yes. No. It doesn't I so we'll check that and come back to you. If it's not so, but I would it would be very surprised. And another tactic, you mentioned on the M and A subject that you get a lot of teasers. Your multiples are not really high. I'm talking about the Kendrion multiples.

48:24 You're in you've mentioned the word upcycle. Are you getting interest yourself, approaches from other companies that are interested in Kendrion because of its exposure to robotics, automation, cobots, humanoids? Look, I mean, obviously, not here. If it were the case, we couldn't talk comment on it. The generic position that we have is we have a very clear strategy. It's an organic growth strategy with potentially additional M and A to strengthen our portfolio or to broaden out the opportunities that we see, and we're focused on that. Thank you. Okay.

49:10 Then I would like to thank you all for coming and for your questions. And I hope to see all of you back here in September. Thank you.