Good morning, everyone. This is Jacques Esser from the Investor Relations department of TKMS.

Also on behalf of the entire Investor Relations team, I wish you a very warm welcome to our quarterly earnings presentation for first half of the financial year 25-26. With me in the room are Oliver Burkhard, our CEO, and Paul Glaser, our CFO, and we appreciate you joining us today to our H1 reporting event.

Our CEO, Oliver, will start with an overview of the half year's key highlights and recent developments shaping our market. Then, as always, CFO Paul Glaser will walk you through the detailed financial results and share our outlook for the year ahead.

Finally, and before I hand over, please allow me some housekeeping remarks. All the documents from today's earnings release and for this conference call are available on our Investor Relations website, and we will be also recording this call today and a replay will be available shortly afterwards on our Investor Relations homepage.

After presentation, we will open the floor for analysts and institutional investors. When asking a question, please state your name and institution so everyone in the room and on the webcast can follow.

Now, I would like to hand over to you, Oliver.

Thank you very much, Jacques. Moin, as we say from Kiel to all of you.

Warm welcome also from my side. I think, first of all, we can clearly report a solid, very solid second quarter, which was, let's say, just as eventful as the first.

Firstly, we signed a preliminary contract to provide the German Navy with a bridge solution to the F126, as which is more than four years delayed, based on our MEKO A-200 type frigate. Secondly, we signed a memorandum of understanding with Navantia—we'll come back to that later—for potential cooperation in naval shipbuilding, especially in submarines, honestly.

Thirdly, we delivered two legacy submarine projects to our customers while production of the newest 212CD type submarines ramp up, but we're also delivering, this is my message to you. Lastly, from next week onwards, the board of TKMS will be complemented by Dr.

Andreas Görgen as our new Chief Operations Officer. Let's—with that being said, I will walk you through now through major trends in our industry and how we see it as the maritime powerhouse.

We all know the defense budgets are further growing. Just written down here, in Germany, for example, the defense sector continues to grow steadily with an average growth rate of 16%.

This trend will continue in the years to come. I'm confident, very confident, these growth prospects will translate in concrete figures for TKMS.

Furthermore, I believe that the Iran conflict had and will have a profound impact on our industry and is once more highlighting the high demand for our products. Especially if you see in the Arabic Gulf region that the security narrative has changed, we see upcoming demand there also for maritime products.

On the other side, the US administration is considering to plan to punish certain NATO allies it views as insufficiently supportive in the Iran conflict, which might further increase the pressure on the remaining NATO countries to increase their defense budget. Also on the other side, growth perspectives.

Secondly, we have seen that the Gulf countries which have been attacked during the conflict are increasing their defense budgets by as much as 20% at the moment. Lastly, mine-clearing efforts, and you know that especially Atlas, our subsidiary, is one of those who is delivering products for that in the Strait of Hormuz will be necessary to safely reopen it to commercial traffic once the conflict is ended, has ended.

While the German Chancellor said, "This is not our war," I think TKMS, as an industrial partner of naval forces, will be very much involved nonetheless. TKMS is well positioned to support those developments and efforts with our product.

Let's have a short look on the major KPIs in the first half 25-26. Looking at the order backlog, I think we can record another increase up to €20.6 billion, representing a 13% since the end of the last year.

Sales grew in the first half by the year by 10% year-over-year, reaching nearly €1.2 billion. The adjusted EBIT grew by 14% year-over-year, resulting in an improved margin of 5.1%.

Lastly, free cash flow reached, as expected, a negative €72 million. This is not untypical for our industry, Paul will come back to that later, I'm pretty sure, which maybe looks a bit like the fly in the ointment of this half-year results.

However, this was simply caused by some timing effects in relation to milestone payments and project ramp-up, and again, not unusual for project-based business. A short view on the key milestones from an operation, technology, and customer campaign side.

Let's have a first view on the operations. We successfully continued to execute our legacy order book by the delivery, as I said earlier, of two submarines, one in November and the other one in January, and there's more to come within the end of our until the end of our fiscal year.

Second, we also achieved further project milestones for the new Polarstern as a scaled vessel model passed the icebreaking tests, which is very important for this ship. Furthermore, our chip on growth, the ramp-up in Wismar is on track and production will start in the course of the year.

Technology-wise, we further move forward in our innovation agenda and to position ourselves well for the future of naval warfare and to bring our innovations to the market. Let me give you some key examples for the second quarter.

We handed over the first BlueWhale to the German Navy. The BlueWhale is designed to support the German Navy in unmanned submarine defense, anti-submarine warfare, and covert maritime missions.

We also signed a teaming agreement for joint torpedo production with VEM, an Indian defense company, and you know India is also one of our running campaigns where we are very close to the finish line. We received an approval in principle, it's called AIP, don't mess it around with our AIP when it comes to our engines, but this approval in principle for the MUM demonstrator is the first as the first extra-large unmanned underwater vehicle from a German company.

No one else has an approval like this, made by independent source, it's called DNV. If you look at some example in terms of customer contacts and campaigns, there are also significant achievements made.

Importantly, as Norway approved the purchase of additional 212CD submarines in January. Also, Germany signed a further contract to enable the potential delivery of the first MEKO A-100 to the German Navy by 2029.

We expect here, as well, to get to the final contract for four vessels within the near term. A bit deeper are three latest developments which may interest you.

Starting with Dr. Andreas Görgen, he will complement our executive board as Chief Operations Officer.

In his new role, he will ensure the proper execution of our record order backlog of more than €20 billion, which is absolutely important for us forward. We thank him very much because I think he has a good mix of political experience as well as of business experience.

Very, very warm welcome to him. I think he will also explore, this is the second big task, new partnerships for international growth.

Andreas, all the best. Starting with the second topic, and it's quite close connected to Andreas' responsibilities, TKMS and Navantia signed an MoU to explore cooperation on naval projects.

Maybe to elaborate on that a bit to give you a better understanding, this potential collaboration includes production of TKMS vessels, particularly submarines, at Navantia shipyards in Spain. Let me state here, we do not need additional capacity to execute our current order backlog.

Even if we were to win all our current campaigns, this deal is not a necessity for us. What it would do is the following: it would increase our flexibility and would also provide additional strategic optionality beyond the current order backlog.

Let me say my words again: we can become faster, which is a big USP and a big asset for everyone in the industry at the moment. Because you know the pattern, in the past they all had time but no money, now everybody has budgets but no time anymore.

This is I think it's for us necessary that we think about how can we speed up our processes to deliver more, because our customers really need it faster. Is it open?

I don't know the end of this, let's say, elaboration with Navantia, but we started and teams were exchanged, and we try to find out whether it would be a good opportunity to speed up, let's say, delivery for especially here in this case our submarines. First talks have started.

As I said, those talks are being conducted in an open-ended fashion, and we will likely come to a conclusion with this year's summer months, I'm pretty sure. Finally, on the right side of this slide, which makes us very happy, we delivered, of course, the first out of four Tamandaré frigates to Brazil.

I would say in budget and on time, no delays and no cost overruns, which is in Brazil a task, but I think we managed it very well from the beginning. Congrats to our team there on one side.

On the other side, the success was underlined by the signing of a MoU for an additional batch of four vessels by the customers. I think we all, you all have to understand there are a lot of events before it comes to a final contract.

Sometimes I make the joke and say you get congrats 80 times before you have one signature. Then, I think we have to understand that this is really a milestone because we can leave this shipyard open in Brazil and we have further order backlog to employ people there and to deliver wonderful frigates for the Brazilian Navy.

Then last slide from my side so far is just a view on the order intake and our relevant new orders. As I mentioned, 212CD option Norway confirmed; heavyweight torpedoes, the price is confidential, but it's the biggest order we ever had on heavyweight torpedoes, to understand this is a big bunch; and also when it comes to mine hunting, and I spoke earlier about this, we also sold some of those mine hunting sonars to the German Navy.

In the campaigns: India, material packages for India to be assembled by MDL in India then further on, on the final, final, really line, and I think the finish line is already in view. Don't forget, maybe also some educational stuff, this is a campaign running for the last 24 years.

Everybody who's saying, "Well, I'm getting a bit nervous, why is that not coming?" Relax, calm.

We know what we're doing. We know our customer, we know India.

Sometimes it takes a bit longer, but the decision will come, and I'm pretty confident that we will make it because we are the last ones in this in this campaign. Second one, big, big bunch: Canadian Patrol Submarine Program.

As we are together competing with Hanwha to win this campaign, 7 to 12 vessels. Very interesting, a lot of a lot of, let's say, noise at the moment, especially in Canada, but also swapping over here on the European side.

I think it's really a strategic decision of Canada. They have their own sovereignty.

You don't At the end, you know it when you know it and not before, but I think we have done a very good job here together with the German and the Norwegian government, together with our colleagues and friends from the industrial side, which is a big, big approach for Canada, and I hope that we have a good time. Sooner or later, we expect that by mid-June there could be a decision possible.

They speeded up the process more than one and a half year faster than expected, but I think we made it well, and cross fingers that we win that one, because it's a very important one and it's NATO and it's conventional submarines, it's exactly what TKMS can do best. F127, due to the fact that others maybe see delays here, I don't see them at the moment.

Why I am quite confident: I know that this ship is really, really needed. It has capabilities which no other ship in the German Navy has.

We also made promises to the NATO that we will have sooner or later this capacity and this possibilities to to to deliver ships like this. We see up to eight of them.

Whether that is true or not, but it will be, that is for sure, the biggest ship that the German Navy ever run after Second World War. I think you know that already 66% of this ship is built in our entity and 33% at NVL, which is now part of another company.

A-200, I also mentioned earlier, we had the pre-contract here. Almost quarter billion is in the funds at the moment to help us to have started the production, which we already did.

We are waiting—not waiting, we're negotiating and wait for the final solution before the summer break of the German parliament to get the blessing from their side so that we can build up to four frigates A-200 to fill the gap which others have left when they have messed up one contract, which is meanwhile four years delayed. Financial and delays does not fit together, because we delivered well, and with further no further delays up to Paul and the financial update and outlook.

Yes, thank you very much, Oliver. Before we go into the details of our group results for the first half, let me give you some overview with regards to financial perspective.

You see a gradual margin increase. We did very well in the submarine.

We promised you a turnaround and we kept that turnaround and promise. Our order backlog, Oliver just mentioned, over €20 billion now, very strong, gives high revenue visibility for the years to come.

All of this is based on a very disciplined, execution set up that we are running. Overall, that trajectory has shown quite well with regards to the first half.

Speaking about our order intake, we are now slightly standing at roughly €3.4 billion. This is translating into a very solid, strong book-to-bill ratio of 3x, and the main drivers, as already mentioned by Oliver, were 212CD submarines for Norway and the record torpedo contracts at ATLAS ELEKTRONIK.

I know that some of you always making comparison also then to previous years or quarters. Please keep in mind that in the previous year we had a strong order intake of €5.6 billion, mainly due to the contractual wins for four submarines for the German Navy and the polar icebreaker for the Surface Vessels segment.

When looking into sales development, very nice development, sales was up in the first half for 10%, now almost reaching €1.2 billion, and it's a very solid increase reflects a strong gross momentum, especially in Q2, where we have seen in Q1 a rather stable development. Now if you look into the first half and the first six months as a whole, I think that this new development really underpins and better reflects the gross trends of our business.

In particular, news projects are ramping up, they're having an increasing impact on our P&L, while we are executing, as our legacy backlog as planned, and this gives, yeah, that very nice picture that we have a stronger gross in our EBIT than in sales, it was ahead of it with a 14% year-over-year, and a stable or slightly up margin improvement of 0.1 percentage points now to 5.1%. This increase in sales really was driven, and we're going to speak about that, by the strong performance in our Submarines unit, as well as ATLAS, and this did offset some spin-off-related cost burdens as well as higher selling and R&D expenses for our ongoing campaigns and technological leadership.

Overall, that last year first-half EBIT adjusted, as was supported also by some positive one-offs of more than €10 million in total, while this year we had a low single-digit euro amount of net negative one-offs. If you make a like-for-like comparison, our development is even better operationally.

Lastly, also would like to remind everyone in this call that our first-half margins are in our businesses structurally always a little bit lower than what we're going to see in the second half of our fiscal year, and therefore, our expectations as a board, me as CFO, we are clearly in line here with what we had in our budget planning for the first half and going to see the tendency now of raising productivities and results for the second half to come. As a group perspective now changing to our Submarines unit, the key takeaway for our Submarines unit is that we did not only improve our EBIT strongly, but we are also phasing out our legacy projects, and this combination gives you that clear turnaround that we have promised you and that I did promise you in February, and that we as a company have kept.

As I already said in the Q1 call, the performance in Q1 was actually more a reflection of, yeah, certain shifts on a quarterly basis that can happen as a large EPC player. Therefore, again, I encourage you not to get carried away too much by quarterly numbers, and instead, please focus on the long-term structural trend of the business.

You can see that indeed in the first half that this is much better reflection of the underlying trend, that structural shift that new orders are being playing a much more important role in the P&L of the Submarine segment than in the past. Speaking about order intake, here again, you see our two submarines that we booked for the Norwegian Navy, and in combination with the four submarines for the German Navy that we booked in the previous year, in December 2024.

Now this is completing the second batch of the 212CD program, meaning we have 12 212CD units in our order backlog. This is, yeah, a small sequence if you would say, not like in aviation, but still for us as submarine manufacturer gives us nice scaling effects that we can utilize and harvest on, and we're definitely going to see that in the future.

With regards to sales, broadly stable development, slightly down to €600 million. Again, this is a seasonal picture that you can sometimes see, and it's quite common in our project business, always depending on in what time of costs you are booking from your supplier.

Then if you look now into the EBIT adjusted dynamics, you really can see the catch-up in Q2 here, a strong improvement of our EBIT adjusted to €21 million, also translating into a margin improvement of 3.1 percentage points versus last year. This is really a true sign of successful execution of our current order book, that we get the conversion right, that we get the margins that we have booked and planned for, and that we are phasing out, as I said, those legacy contracts and increasingly benefiting from that due to impact of our new projects in our P&L.

These positive impacts, they really have overcompensated the cost increases not only in our selling expenses for the campaigns that Oliver just mentions, but also out of the G&A costs that mainly are coming from our spin-off and are spin-off-related, but we really want to grow that business here. We want to have new projects running, new campaigns running, and also invest in R&D in order that we can fully have our technological leadership and bring that to our customers into the market.

As a conclusion for Submarines, I really want to stress that the overriding theme for the Submarine segment remains fully in place. You sometimes see that quarter-to-quarter changes, but we continue to expect a strong improvement in profitability, as I said, as legacy contracts are being delivered, new-margin contracts are picking up, are being executed disciplined, and as we have an order book of currently over 20 submarines in place, this gives us multi-year sales visibility and a very solid foundation for profitable growth.

Having said that, I think it's a very, very strong segment performance that we saw, and like to move to the Surface Vessels unit now. When speaking about our Surface Vessels unit, we did see a very solid underlying financial performance in the first year, and again, the same, yeah, song that you can hear here is that we really had a disciplined execution of our existing order book.

The order book and the order backlog currently at Surface Vessels, of course, is not to be compared with the Submarines levels, order intake last year was mainly our research vessel, the icebreaking vessel new Polarstern with €1.2 billion. This first half, we had no major order intake, but as Oliver pointed out, we are working on those two main sales campaigns, the MEKO A-200 for the German Navy as well as the F127, and you also read it in the news and Oliver told you, also we are investigating and discussing with the Brazilian customer that we can extend the current very well run program there in Brazil for the Tamandaré project.

Tamandaré project is the right word. This is also why we see a very solid improvement here in our sales figures, up from €210 to €277 million, mainly reflecting the disciplined execution on time, on budget, in quality for the Tamandaré classes.

We delivered the first unit, the first A-100 product, as we call it, to the Brazilian Navy, and also the new Polarstern is ramping up as planned. We had the first testing and engineering tests and approvals here, it's really reflecting well in our sales baseline.

However, you see it in the numbers that our Surface Vessels unit is reporting slightly down by €5 million and also EBIT margin declined by 4.8 percentage points to 6.3 percentage points. Please keep in mind that in the prior year we had a significant currency effect.

This related especially to our Brazilian business. Last year, the Brazilian currency gained roughly 11% versus the euro during the first quarter, and this was creating a positive currency effect in the mid to high single-digit range, and this year, we only had a low mid to single-digit positive effect relating in our business in Egypt.

If you strip out these effects and make a like-for-like comparison, our EBIT performance was stable in the first half, and this despite the aforementioned higher administrative and selling expenses cost related to the ongoing campaigns, A-200 and F127, but also with regards to our spin-off activities. If we are now coming to the ATLAS ELEKTRONIK segment, I'm very pleased to, yeah, state those results to you, and you can see this here on the chart.

It's driving double-digit margins, we have a very strong execution, excellent track record with regards to order intake. It's a very, very strong trend that's going to continue, also in comparison to our Q1 numbers.

Let us start here with the order intake, and it increased by €1.6 billion and reached €1.8 billion in the first half. It's mainly related to our heavyweight torpedoes for the 212CD program and also follow-up orders that we received in the Q2, but besides that, we also received nice orders from the German Navy for the conversion of communication and command systems for 25 vessels, but also a very solid order intake at our subsidiary in the UK for the British Ministry of Defence for torpedo countermeasure systems, also very good track record here in our larger subsidiaries.

Again as a reminder for those of you who have not witnessed our Q1 call, we also signed in Q1 a contract for mine-hunting sonars for the German Navy. Overall, very strong performance, and you can see that in our sales increase now to close to €380 million, mainly driven by very good growth across the units of vessel systems, submarine systems, and naval weapons, which is our torpedo segment there in the ATLAS unit.

Definitely a very good progress in our Ukraine program for mine countermeasures playing a vital role here, and also very solid growth in our service business and spare-part business and repair services. This led to the fact that the EBIT adjusted increased by 73% to €41 million, and also margin-wise, we increased about 3 percentage points now to 11%, yeah, really strong, driven here by productivity gains that we expected to see also from the ATLAS unit, and also could offset higher G&A costs and really showed a very disciplined execution and cost control here.

Having said all of that about our three segments, I would like to come to our bridge here to give you some more color and flavor of what happened in the first half in comparison to the previous six months, on a year-on-year basis. In total, the group's adjusted EBIT margin slightly increased to 5.1 percentage points.

EBIT adjusted was up by €7 million, and we had main drivers here across all our three segments. The submarine was really driven by that strong execution I just mentioned, stronger trend in Q2, very dynamic turnaround, delivering an €80 million improvement EBIT year-over-year.

Surface vessels, as I said, mainly due to the significant currency effect and also higher costs, delivered a €6 million decline in EBIT year-over-year. ATLAS, with this strong and just-mentioned performance in Q2, delivered a very, very solid year-over-year addition of €17 million in adjusted EBIT.

However, and lastly, there was also negative contribution of -€23 million in our group and consolidation business line, and this year-over-year decline was mainly driven by three things. Firstly, last year, we had a mid-single-digit euro positive effect from a revaluation of a provision, which, of course, did not occur this year.

Secondly, this year, we had a negative effect from one-off pension funding exercise in the mid-single-digit million euro region. Lastly, there were some spin-off-related G&A cost increases this year.

Overall, I think you really see here a strong and pleasing performance for the first half, especially the fact that submarines delivered this dynamic catch-up in Q2, as we have stated to you, and also demonstrating that we're on the right track of converting that order book into growing profits and sales. Also demonstrate, again, that our quarterly numbers in a project-related business, it can always have some timing effects and maybe not be the right metric for us, the longer trend, the longer-term direction is this what matters to us also here as management.

As I mentioned earlier, there was a year-over-year headwind from one-off effects, which in total had a low double-digit million euro negative impact on us, if you do that exercise on a like-for-like basis, that EBIT bridge on this slide would even look better. If we now come to our balance sheet and brief look also into CapEx, looking into our balance sheet, you can clearly see it here.

We have a very strong liquidity position. We are doing our investments disciplined, especially into the Wismar shipyard, and our net financial position gives us the financial flexibility and muscles that we need in order to fund and fuel our sustained growth.

Looking into the balance sheet, you know that we have a high cash-generative business and are making a very prudent capital management, our net working capital in the first half clearly remained negative here at -€1.3 billion, which was stable year-over-year, which is nice to see versus the end of Q1, and as a reminder that negative net working capital reflects a substantial advance payments, of course, linked to new orders, and is the natural funding source and gives us funding advantages as we can operate here our business model with a very low capital employed and minimal reliance also on external financing, giving that flexibility whenever needed. Speaking about CapEx, it's very important, especially for me as CFO, to see here that we are spending the CapEx especially with our strategic priorities, driven into the modernization of our production facilities continuously, digitalization of our operations, and the entire ramp-up of our Wismar site, which is progressing as we are planning it.

As large share of this investment, this is why it makes such a nice business model with TKMS, is prefunded by customers, it really is ensuring that the cash impact of our investors remains limited here. This also leads to the fact that our financial position remains exceptionally strong with net cash of around €1 billion.

You see that liquidity decline here of roughly €370 million with a year-over-year end position. This mainly reflects the acquisitions of some remaining assets from the TK Group in context of the spin-off, we finalized that reorganization, technically speaking, prior to the spin-off of our company, and this has been concluded.

Despite that cash outflow, we are still have that high liquidity position I just mentioned of €1.35 billion, we really carry no external debt here, apart from certain lease and pension obligations, a fully financed and equity-financed business model, and to summarize that, I think that that approach really gives us everything we need to fund the company, keep that debt-free capital structure, and combine it with growing earnings and excellent foundation for a high cash-generative business, which directly brings me to our free cash flow development, and also going to explain to you a little bit as we and you are going to learn more and more about our business model why a small negative cash flow in a half-year result is actually not of any concern here. As our cash flow profile is driven by the timing of prepayments and milestone payments, and this is very common in a project-based business model like ours.

In the first half, we therefore report a negative free cash flow of €72 million, comparing with a positive free cash flow of 70 €55—€755 million in the previous-year period. If we recall in the previous-year period, we had to receive that significant prepayments in relation with the 4 212CD submarines for Germany, and in contrast, this year, we had no significant prepayment in the first year.

This doesn't mean that our orders are not overpaid. This simply means if you look into the reporting period, you have a high down payment there, now you do not have a high down payment, but still that order that we booked is still in the money, it's still net cash positive, as I call it, and this always can happen from a quarter-to-quarter.

This is simply based that we sometimes can temporarily have higher cash outflows as we are ramping up those projects as we planned, and of course, we are also increasing CapEx, as I mentioned that, we still remain a very high cash-generative business and I do expect positive free cash flows for the years to come from our programs. This is also a very excellent carryover for my final slide for today, speaking with you about our guidance.

We fully confirm all of our financial guidance for our current fiscal year. This means we continue to expect sales growth of 2 to 5 percentage points this year for the overall group.

The growth will be driven by significantly higher sales at ATLAS ELEKTRONIK along with moderate sales growth at Surface Vessels. For Submarines, we expect sales to be slightly lower this year, partly due to the typical sales between periods, which is quite common topic in large-scale project business, whenever you have a cost-to-cost recognition in your P&L, this always can vary from quarter to quarter a little.

For adjusted EBIT, we continue to target the margin to grow to above 6% this year. Regarding our mid-term guidance, this is fully confirmed as well.

This includes our target for a mid-term sales compound annual growth rate of 10% and the mid-term adjusted EBIT margin of more than 7%. Furthermore, as I just said, we also confirm the mid-term free cash flow target at cumulative more than €400 million over a three-year period starting this year.

All of the other elements of this guidance are also confirmed as well, as you can see on the slide, no worries, I'm not going to read them out to you that we also have some time for your questions. Before we go into Q&A, Oliver will briefly explain the most relevant takeaways of this call.

Yes, thank you, Paul. This is what we like to see, the mother of all slides.

Order backlog, 20.6 already mentioned. You have seen Paul described it.

I think a nice turnaround in submarines from first quarter to second quarter. Confirming the guidances, short-term and mid-term, both stable, also I think a plus.

A nice pipeline when it comes to campaigns and future orders given the fact that Canada, India, but also the German two surface vessels may be decided within this year. A big year for TKMS, it could be, 2026.

Solid balance sheet and free cash flow generation, I think Paul has showed you that. Last but not least, please remember we are the newbies, we are not that long on the stock market, but I think we kept our promises, we keep the words, we have enough I think potential for the future periods.

If you look back, you see that our track record is a good one, coming from almost zero margin in the 20 early 2020s, now to 6-plus and as we said, mid-term above 7. Therefore, I hope it generates a bit of trust.

I know we have to earn trust, but we pretty like to, therefore. Thank you, and now giving back to Jacques and managing your questions.

Perfect. Thank you, Oliver.

Thank you, Paul. Now we are ready for your questions.

When asking a question, please raise your hand in a first step, your virtual hand in the Teams. My colleagues will open your line then.

Please keep in mind it's also necessary that you have also to unmute yourself in addition. As always, please state your name and institution so everyone can follow.

I can see a lot of questions. The first one is coming from Charles.

Please unmute yourself Charles.

Yes, good morning. Thank you.

Charles Armitage at Citi. A couple of questions.

I missed the first 5-10 minutes because of technical issues, you may have covered it. You made an informal offer for GNYK, and now it seems that someone else has done the same.

What's going on there? Then the second question is slightly struggling with that other company.

They seem to be looking to grow 30% a year and with very high margins, and broadly speaking, in the same sort of market as you are in. You're growing much more slowly and have lower margin expectations.

Can we try and square that circle as well, please?

Sure. Thank you.

I was just a bit laughing when you said, "What's going on there?" That was so nice.

Charles, well, I start first of all. Yes, we made an informal offer to GNYK, that's a long time ago.

We're not scared or frightened if someone else does the same. I always said this is an opportunity for us, not a must, because our current order book and that what is maybe incoming over the year can be done with our facilities we already have.

We're looking forward, as I described, for example, with Navantia, to enlarge capacities or even join forces with others who may have not the same demand as we have it. At the end, I said this earlier in the media call related to money can buy you happiness, I would say money can build you ships.

Even though you have more money, which is obviously the case that others may have more potential to spend money, we have a clear track forward for TKMS whether we buy GNYK or not, because it's not a must. Again, this is why I said it's an opportunity.

From my point of view, we have clearly stated why we are able to take over the shipyard. Again, if somebody else would buy it, nothing will change to today, because someone else is owning a shipyard which is in the middle of our shipyard.

Nothing new, right? Therefore, I'm quite relaxed and calm, and believe me, Charles, we do have a price in our heads where we will stop this process if it's too expensive, and if not, then maybe we are the ones who take it over.

I think it's more than just dollars, and this is what I mean with money alone can't build you ships, which we see by the way in F126. The growth others expect, well, ask others, honestly.

We are delivering our figures. I think you may have understood that part of our order book is from legacy and part of our order book is, let's say, from the new time we're in, where it's more, let's say, a seller's market than a buyer's market as it was in the past.

Therefore, I think we will see an improvement. This is what we're stating, above 7, maybe sooner or later when all legacy contracts are out, even above that.

That's fair to expect and completely normal. I just saw slight interpretations on the others when they showed up with their figures.

I heard in the past it is above 15 in the margin, and now I heard it's 10 to 15. Let's see where we end at this.

Honestly, again, we are doing a serious business here. This is a long-term business.

We're not promising only blue skies. This is asset-base and driven, and we know what we do.

Therefore, I think you can count on us that we will deliver what we have promised.

Thank you, sir.

Thank you, Charles. Next question comes from Edwin.

Edwin, please unmute yourself.

Morning. Thank you.

This is Edwin from Bernstein. Thanks for taking my questions.

Can I ask one follow-up on the German naval yards, please? When do you expect to have a decision?

Then, I've got two more questions if that's okay. Could you please talk a little bit about margins, because it sounds like you're going to be way above the 6% threshold in H2, this is good to see, and I'm wondering if you could comment on what you expect for next year, are you going to be close to the medium-term target?

A third question, the torpedo order, please. This is good to see as well.

I believe this business is one of the reasons why one of your competitors is expecting very high margins, are the margins also going to be very good for you? Can you talk about profitability for torpedoes, please?

We'll do, Edwin. Maybe I give you the answer for your first question.

When do we expect that GNYK, let's say, negotiations will be over? Roughly by summer.

Germany summer starts from June until I don't know, August, and other countries it's just one month, but somewhere around that in summer we expect it. That's okay for us and for everyone, I think, involved in the process.

Given the fact to the margins, I think Paul has—

Yes, thank thank you. Of course.

No, thank you, Oliver, and also thank you, Edwin, for your for your questions. Absolutely right, what you what you highlighted.

Our typical margin profile is back-end loaded also in a in a in a current fiscal year, we tend to see a trend of improving track record from Q2 then Q2 through Q3 and Q4 normally being the the the strongest one. I think you can with our current margin profile and our current guidance above 6% quite well figure out what this means with regards to the profile of the of the second half.

With regards to your second question with torpedoes, yes, it's a very attractive margin business, and we are definitely are ramping up our capacities there in the ATLAS ELEKTRONIK. I'm not going to disclose the margins there.

It's not as high as repair services and spare parts, yeah, I can I can tell you that, but it's definitely in the middle double-digit rate when we speak about gross margin and also EBIT margin very attractive. Always depends, and I think that's important to understand, torpedo orders normally come in higher quantities, larger higher batch sizes, it always depends also when, in what sequence the customer then demands the delivery of those shipments.

We are going definitely see a higher impact in sales and also margin impact in the ATLAS ELEKTRONIK segment now coming from the torpedo business also in the in the next years.

Thank you so much. Could I ask a very, very quick follow-up, please?

When is this order expected to be delivered, the torpedoes?

I cannot disclose that publicly, but normally having submarines without torpedoes doesn't make so much sense,

maybe

figure that out.

Thank you. Thank you very much.

Thanks, Edwin. The next question comes from Sriram.

Please unmute yourself.

Can you hear me now?

Yes,

we can hear you. We hear you.

Perfect. Thank you so much for taking my questions.

It's not going to be on GNYK. I would like to just focus a bit more on surface vessels business overall and if possible, a look at the medium-term as well.

I know currently we're making around €500 million worth of revenues in this one, but given the improvement in the business, especially with F128 and potentially with more orders coming from Brazil and hopefully from F127, can we safely say that 2025 or 2026 is the bottom for this business both from the top line and for the margin, and things can go much higher from here? Can you give some sort of indication of where this business is heading in the medium term?

That would be my first question.

It sounds like you have a second one, maybe you want to—

No, a second one is actually probably a very small one, I'll give it out, no big deal. With regards to the F127, you did mention that the orders will come through, no doubt about that one, but given the circumstances which we are hearing on the budget and its translation to actual orders, when do you think this order will actually come through to you, 2026, 2027, or is there a risk which will slip through even further out?

The

final, again, clarificatory question was on working capital. We know that you've received €3.4-€3.5 billion worth of orders in H1.

I would have assumed or hoped for some of that to translate into cash advances, but didn't happen this time. I know there is a timing element, but just trying to understand what's the dynamics behind that one.

That would be all. Thank you so much.

Okay. Thank you, Sriram.

Then I start with the surface vessels. You were asking, is this the bottom we reached?

I think so, yes, because I haven't seen something else coming up because as we look back, the Polarstern was one of the last order intakes the surface vessels had, and there before was very long time where we didn't have any order intake. We do expect that this is more or less the bottom we see.

Second, the F128, aka A-200 MEKO, this is, let's say, something we generated within the last four months because we offered an opportunity to the German Navy to fill that gap which is caused by this big delay of the F126. Because both ships will have so-called ASW capabilities, means anti-submarine warfare, and the A-200 or F128 is a much less expensive version of that, but has a lot of capabilities which almost reach close to the F126.

I think this is something we had generated ourselves because we offered something, and this is what I understood when we steer this company, time is a critical factor. We're not talking about critical budgets at the moment.

There will be a time when this will come back, I'm pretty sure, but at the moment, time is a critical factor. I told you I wasn't really happy when some of our peers have big trouble and delay projects like this because we didn't have any delays in the last time, just remembering Brazil on time, in budget.

I think we're able to do this, we have done this with A-200 again. This is why we are very confident that we can deliver the first of these ships by 2029, which is, let's say, a kind of a USP we have at the moment because it's something off the shelf.

It's not especially designed, it is already there, and we have the knowledge and capability to build it, and we do already, this is part of your question, I think, because you have a pre-contract which is almost worth a quarter billion where we already work on those ships to deliver them on time by end of 2029. When it comes to 127, we're talking about a different kind of ship.

It's almost double the size, it has a lot of capabilities more, it's a so-called AMD frigate. Can you hear me still, or is it, yeah, is it working?

We had some noise here, I'm sorry. This 127 is a AMD frigate, which means anti-missile defense, complete different ship.

The reason that we are pretty clear that it will come, the "if" is not anymore a question, it's just the "when" question, is that the Germans have promised to the NATO that they will have at least five or minimum five or even eight ships of this kind to defend the so-called north flank, and not only in the Baltic Sea, but also in the North Sea and in the northern part of the Atlantic. To keep this promise, Germany has to buy this.

I don't see where others see markets, but this market is already, let's say, the cake is shared because we have two-thirds of this special purpose company, and NVL, now Rheinmetall, has one-third. We have a common company which will build our design sooner or later.

At the moment, F127 is, of course, a big bunch of money to be released out of the budget because it's a big ship. What no one had in this calculation that F126, which should have been much more down the road and they have spent a lot, and hopefully it will come at the end to a good end, but this one is, let's say, a bit blocking the way.

Because the debate of F126 is also related with A-200 because we offered to fill that gap, and F126 is a kind of a bottleneck where all the process have to go through because at the moment, in a normal constitution, in a normal, let's say, situation, F126 would be nothing the parliament would deal with because this is already a done deal. I'm always wondering and saying, "Well, I get a new contract for €12 billion," saying, "Well, this sounds great, but honestly, it's already done.

This deal is made five years ago." What we now have is 127, and maybe there are some short delays, but again, the "if" of that the F127 comes already ticked the box because the Germans have promised it, and other words, they wouldn't break their promise.

It's just a question of when, and it looks like that the German parliament is serious to handle all the three big maritime projects, 126, 127, 128, in this year. Therefore, I think we're still optimistic that there will be a decision, and yeah, we're looking forward to it to build these ships on time.

With regards to your question of cash dynamics in the first half, yes, you're absolutely right, we did not receive any major down payments from the order intake, mainly from the two submarines. Why is that?

I think you need to understand that the German customer as well as the Norwegian customer see that project as one project, yeah? This means this project also has one payment curve, in a way, that is linked between the two customers.

Therefore, we are benefiting from that high down payment that we received previously in December 2024, and therefore, it was never intended to receive on the two submarines from Norway an down payment. Of course, we could get one if we want one with regards to using our bank guarantee facilities, but always keep in mind that if I can avoid it due to our strong liquidity position, I always tend to avoid huge down payments in order not to shorten the way how long the inflation clauses are generating inflation buffers in our contracts, yeah?

Because always when you get a 100% contract structure and you get 30% down payment, only 70% are subject to that clause. When you are avoiding that, that's actually quite good with regards to risk management, and it was never intended to get these down payments, and therefore, we are fully running our cash expectations for the fiscal year as planned.

Perfect. Sriram, did you have—

Thanks so much. Very clear.

Perfect. Great.

Then the next question comes from Lorenzo. Please unmute yourself, Lorenzo.

Hi. Hello.

Good morning. This is Lorenzo from Banca Akros.

First I wanted to ask on the ATLAS margin, there was a strong step-up year-on-year, and you flagged better-than-expected productivity gains and cost management. What further productivity benefits should we expect there near to medium term?

Then, as a follow-up, what are the drivers of the ATLAS margin medium term? How should we expect it to evolve?

Then, separately on Wismar, you had quite a bit of ramp-up costs in Q1, but it seems like these have finished in this quarter. Can you give us an update on when you think it will be operational, when should we expect it to contribute more, and what progression from there?

Thank you. No,

thank you very much, Lorenzo, for your questions. I'm going to start with ATLAS, and you're absolutely right what you highlighted and pointed out with regards to productivity gains.

ATLAS was coming from that high single digit now to double-digit margin portfolio, and we definitely are going to see that in the medium term and also an accelerated way in the ATLAS ELEKTRONIK unit that it's going to continue in that path. If you make comparisons with other electronic players in the market like Saab, Thales, or Hensoldt, you sometimes see a tendency that they're slightly a little bit higher than ATLAS.

We do expect to close the gap to the competition there. That's the discussions that we're having with the local management.

Why are we quite confident that we are going to manage to step by step close that gap is because we see especially in the naval weapon segment, heavyweight torpedoes, including our new product SeaSpider, the anti-torpedo torpedo, it sounds funny, but actually it's a very, very unique product that we will bring to market, is that it's a very cyclical business, or was a cyclical business. In the past, there were years where we maybe delivered only 5 to 10 torpedoes per year.

Now we're looking into much more higher single-digit delivery volumes per year of torpedoes, yeah? This is why it's a very important productivity driver for the next 2 to 3 years to come.

Good. Lorenzo, did you have any more questions, or—

Then on Wismar.

Oh, sorry.

Okay. Wismar, yes, exact.

Thank you. Wismar, we are gradually continuing with our investments there.

Now we always said we're going to invest those roughly 200 millions over the next three years, I believe that the majority of the investments will be this and next year, and then some gradual smaller investments in the third year to come. We're already ramping up production, we have first activities there with regards to the 212CD program and also other orders from our Southeast Asian customer are going to commence still this year.

We are roughly over 400 employees already in Wismar, gradually increasing the hiring rates, it's actually looking quite well. It's not a point-in-time question that you have turnkey and then Wismar is a facility producing.

It's a step-by-step approach over the next 2 to 3 years until we want to see Wismar fully operational, still planning roughly between 1,500 to 2,000 employees, depending on the order portfolio that we are going to finally see in Wismar.

Great.

Great. Thank you.

Thank you, Lorenzo. Perfect.

We are pretty good on time. However, I would like to make a last call if there are any questions at the moment, then please raise your hand.

Otherwise, good. If there are no further questions at this point of stage, then I would like to conduct the call at the moment.

Would like to say thank you to everyone outside for being interested and for joining us today. If there are questions left, as the entire Investor Relations team is always available, and we look forward to stay in touch with you.

With that, I would like to conclude our call, and thank you very much, and bye-bye.

Bye-bye.