Krones AG

Well, ladies and gentlemen, good afternoon, and a warm welcome from my side. My name is Olaf Scholz, Head of Investor Relations here at Krones.

In a macroeconomic environment marked by uncertainties, we have confirmed our financial targets for 2025 and have also increased the profitability in the first half year '25. Christoph Klenk and Uta Anders will give you today more details about these figures and give you also additional information.

After the presentation, you will have the opportunity to ask questions. [Operator Instructions] Please be also reminded that this call will not be recorded, and please deactivate any functions of recording at your Teams.

I think we can start with the presentation. So I hand over to Christoph Klenk.

Christoph, the floor is yours.

Yes. Olaf, thanks a lot.

Warm welcome from Uta and myself. Happy to have you here in our conference call for the second quarter and the first half year.

As always, we run you very briefly through the presentation. Of course, we skipped the summary.

Most of it, Olaf has anyway done, and we come directly to the numbers. Here I can say without going to the numbers because you will see all of them.

But nevertheless, we are happy what we have achieved so far. Even it's not being contributed today in the share price, we see all the time some kind of a miracle for us that with those numbers, we are not matching expectations.

Let me come directly to order intake. Again, here, I can comment, we are quite happy with the, let me say, world economy in some areas in struggle because of all the things we know.

Nevertheless, we are happy what we have achieved here. It's more or less on the same level as last year.

And we had -- you remember in last year, in the Q1, a very strong order intake, and we are capable this year in both of the quarters, Q1 and Q2 being close to the numbers we had last year. So all in all, for us, a very good situation.

And I can say we believe our markets are still robust. Order intake has been influenced by some of the decisions which have been postponed in particular, in North America because of the uncertainty.

And we cannot yet really made a statement on what would be hopefully the deal which has been made on Sunday, and we all hear that there is -- there are uncertainties behind what that deal means for our customers in their way to do decisions for the projects which are pending. But nevertheless, we have been capable of compensating most of it with other regions and other countries.

So we are quite happy with that one. Looking to the order backlog, I mean, no surprise here.

It's actually in line with the order intake. You see we are still on a very comfortable level.

And with that level, we are reaching into Q2 next year with, let me say, capacity utilization, which gives us a quite safe situation in terms of the planning at least for the first half of next year. And we do not expect that order intake will go away.

So I would say security that 2026 goes on a good level is given there. Let's jump then to how the split is in the markets.

Even here, no surprise actually. I mean you might look at Central and North America, a bit more critical since you see there a decrease of the numbers.

But nevertheless, this has nothing to do with tariffs, first of all. This was expected because we saw that the -- let me say, the investment boom had a bit cooled down in North America, but we believe the 21% you see here is a quite stable level, which might continue for the future.

And we have, in particular, in North America, many projects, which are in the second half of the year for commissioning for our bottling lines and for intralogistics. So this might give a change maybe in the second half of the year to a certain extent.

I mean if we look to South America and the Middle East have developed very nicely. I'm quite happy with how things were going there.

And if you look to China, where everybody talks about the Chinese economy is in struggle. For us, it's still working good.

And if we look on the prospect we have right now, even we are satisfied with China. A bit more critical, we see Asia Pacific.

This could be on a higher level. And here, there's one country contributing to, let me say, the numbers which are not as high as they should be.

This is, in particular, India. Since there, the investments have a bit slowed down because so many investments were going into the country that needs to be first utilized and brought into the market and being harvested on before new investments are coming up.

But all in all, we believe even Asia Pacific is in a good condition and delivers fundamental for the future. So that's from, let me say, the market for the time being, my statements made, and I hand over with that to Uta.

Thank you, Christoph. Good afternoon also from my side.

And as usual, I will continue with P&L information segments and then later on everything around the balance sheet. Let's start with revenue development.

I mean, you can see EUR 2.727 billion, 6.7% growth year-over-year. And yes, the second quarter was only 0.6% growth.

I mean we had forecasted or communicated also in our conference call in Q1 that we expect the second quarter be a little bit lower just because of the fact that there is full Easter in it, that there is with Sunday and all the other public holidays, which we have here in Germany and which there we are lacking working days and with working days, of course, then also POC revenue recognition. So the revenue which we have recognized was in line with our expectations.

And looking at the full year, we are confirming our guidance, our guidance being 7% to 9% revenue growth. And yes, we are well aware that the second half of the fiscal year must be higher than the first one.

And first of all, we have the backlog to achieve that. Secondly, production schedule also confirms it.

And thirdly, also everything, as Christoph already said, installation and commissioning, not only in North America, is scheduled in a way that we can achieve our 7% to 9% growth. Continuing on with EBITDA.

Yes, from our point of view, a good development, EUR 288.5 million EBITDA, which is a year-over-year growth by 12.6%. And looking at the margin, 10.6%, whereas last year, we had 10.0%.

There is still some diluting effect of Netstal included. And also, if we look at the second quarter stand-alone, also here, we have achieved 10.6%.

And with our numbers, which we show here, we confirm our guidance for the fiscal year, 10.2% to 10.8%. And this is why, I mean, we know the backlog, we know the price quality in the backlog.

We know the utilization of our resources and also the effects of the strategic measures, including cost reduction measures are as planned. EBT and EBT margin, year-to-date, EUR 205.5 million, 10.7% increase, 7.5% margin.

So here, you can see that compared to last year, it's only a 0.2 percentage points increase. And this has 2 reasons.

Reason number one is we had -- in last year, we had an extraordinary positive effect in financial income of EUR 4.5 million. So that contributed to the 7.3%.

There's none included in year-to-date 2025. And then secondly, also depreciation is increased compared to last year.

But overall, also EBT margin was in line with our expectations. Personnel and material expense, let's start with material costs.

I mean, as you can see, despite of the fact that we have increased revenue by 6.7%, we have only increased material cost by EUR 6 million, and that brings down the ratio to 47%. So very similar picture as we had it in quarter 1.

I mean that shows that we have realized cost reductions in material cost. On the other hand, we can see in the personnel cost, I mean, as we also saw it in quarter 1, we are above 30% -- and also we are above last year's number.

And this is because of some of the increases in the tariffs, but also because of the headcount we have increased. And looking at the full fiscal year, we expect the number to reduce -- the ratio to reduce.

Krones employees worldwide, we have slowed down the growth in employees, as you can see, compared to end of 2024, 333 people employees in addition, bringing it to 20,712, which is 1.6%. And I mean, if we look at where we have increased, I mean, first of all, the breakdown between Germany, Krones AG and outside of Germany is more or less as it was end of last year.

And if I look at what we increased, it's mainly service technicians. This is the bulk of the increase, more than 100.

And in addition to that, all what I had communicated also in the other calls, digitalization, but also strengthening, for instance, project management, but also being able to grow further. So far, overall information on profitability for the group.

Now let's come to the 3 segments. And I mean, Filling and Packaging Technology is very much in line with what I already mentioned with the whole group.

So first of all, if we look at the revenue development, EUR 2.301 billion, this is a 7% growth. So it's on the upper end -- on the upper end, lower end, sorry, on the lower end of the guidance of 7% to 9% year-to-date, but we see also a strong EBITDA development year-to-date with 10.8% and compared to last year, also an increase by 0.4 percentage points.

Also here, we confirm our guidance for both revenue growth as well as EBITDA margin. So 7% to 9% revenue growth and EBITDA margin, 10.5% to 11%.

Moving on to Process Technology. Revenue, EUR 252 million, as you can see, very similar to what we have recognized last year.

But if we look at the EBITDA margin, you can see that we have increased it further to 10.7% from 10.1% last year. And this is also because we have a better mix in here.

Yes, we have more component business, pumps and valves. And on the other hand, the customer or the turnkey projects there we have some little delay.

So that's why it's a better mix than also from a margin point of view. If I look at the guidance for Process Technology, also here, we confirm our guidance for revenue growth, which is 0% to 5% and EBITDA margin, which is 9% to 10%.

Last but not least, Intralogistics, -- year-to-date revenue, EUR 174 million, and this is EUR 22 million more than we had last year at this point of time, and it's a 14.4% growth. So slightly below our growth target for the whole fiscal year, but you know that in Intralogistics, we normally have a significantly higher second half of the fiscal year and the same we expect also this year.

Looking at the margin, on the other hand, I mean, we can see that we have increased margin significantly to 7.1%. And also here, I want to confirm both our guidance for revenue growth, 15% to 20%, but also 6.5% to 7.5% for EBITDA margin.

Now moving on to cash and equity. And looking at the middle side -- middle part of the slide, we can see that as of end of June, we were holding EUR 377 million cash.

And with used credit lines and free credit lines of EUR 2 and EUR 848 million, we have a solid liquidity situation of EUR 1.225 billion, which gives us the opportunities for future growth for M&A opportunities, but also gives us resilience in difficult macroeconomic times. Looking at equity situation, you can see that we have increased equity by EUR 46 million, and that's a composition of, first of all, net income, EUR 146 million Secondly, we paid out in the second quarter the dividend, EUR 82 million, and the remainder is a mix of non-income effects, which we have in equity.

All in all, and also with a constant balance sheet sum, we see that our equity ratio has increased to 41.4%. Working capital, first of all, in the middle part of the slide, we can see that overall, last 3 fiscal years, we are more or less stable at 17%, so well below our 20%, which we have always mentioned as kind of an orientation for us.

Looking at the breakdown of the working capital, there are 3 developments which I would call positive. There's one development which we will pay further attention to.

Let me start, first of all, with the positive ones. I mean, receivables POC, as you can see, 36% as we had it also end of last year.

Inventory 12.6%. So it reduced further.

That was what we also communicated throughout our last calls that we want to keep it constant despite of increased revenue, received prepayments is also more or less on the same level. Payables is where we're going to focus more on to because 13.1% is below our expectations here.

And if I look at the overall working capital as of end of June, we are holding EUR 985 million working capital, which is an increase by EUR 130 million, and the bulk of it is actually coming from payables. Free cash flow before M&A, as we also saw it in our communication is EUR 46.7 million, and it's broken down by the earnings before taxes, which we have communicated, other noncash changes where the bulk of it is depreciation, change in working capital, which I went through a minute ago.

Other assets and liabilities, a major portion here also tax payments and then cash flow from operating activities, EUR 103 million. CapEx still under proportional as we have it usually throughout the fiscal year and then EUR 46.7 million before M&A.

M&A activities are the same as we have communicated them in the first quarter and free cash flow as reported, EUR 44.5 million and financing activities other, that is mainly the dividend payment we had. And all in all, we have a change in net cash of EUR 65 million, which brings us to our EUR 377 million, which I communicated 2 pages ago.

Free cash flow for the whole fiscal year looking first half of the fiscal year and the rest, I mean, EUR 47 million, as I said. And we need a strong second half year of the fiscal year.

I mean, as you know, we usually have a very strong fourth quarter, and that's also what we count upon this fiscal year. ROCE as the last guiding figure, 19%.

So a small increase compared to 2024 and also in line with our guidance, which is 18% to 20%. And if I look at the breakdown, 2 components, as you know, we have a significant increase.

And if I look at the average working capital, we also see an increase because of the increased capital expenditure or the investment we are doing, but also because of working capital, as I had communicated a minute ago. Outlook.

Let me continue with the outlook. I mean, all has been said by me already.

We are confirming our outlook for revenue growth, 7% to 9% EBITDA margin, 10.2% to 10.8%, ROCE 18% to 20%. And the same is true for our segments, Filling and Packaging 7% to 9% revenue growth, 10.5% to 11% EBITDA, Process Technology, 0% to 5%, 9% to 10%; and Intralogistics, 15% to 20% and 6.5% to 7.5% Yes.

And our midterm targets for 2028 are also confirmed. And for the key takeaways, I hand over to Christoph.

Well, I mean, the key takeaways we have already said. So I think we can skip those.

I would say we go directly to Q&A since this is the most interesting part of the session today. Olaf, you are assisting it.

So let's have a look who has questions. As mentioned before, I already got some questions from Benjamin Thielmann want to ask some questions.

Ben? -- you question.

This is Ben from Berenberg. I have 6, but I would take 3 and then I go back into the queue and come back a few minutes later.

First question would be on Filling and Packaging Technology revenues in Q2, which came in flat. And I know that last year, Q2 was really strong for you, especially in that division, lots of holidays, bridge days in Germany, but I was wondering whether there was a negative impact in Q2 this year from order postponements, especially from the United States.

Not at all.

Okay. And then I would have a follow-up on that one.

I know that order cancellations were never really a risk for you guys, but now also considering we're a little bit into Q3 already, is there any significant change you could flag in terms of order postponement behavior from your customers?

Again, there is a no -- I give you a bit more insights on your question are. So let me talk a bit about it, in particular about the revenue in Q2 with BPE or Filling and packaging equipment.

So I'll give you an insight into that. Go ahead.

Okay. Perfect.

And then maybe on Asia Pacific, you mentioned already that EMEA seems to be slowing down year-over-year. We see that in Q2 numbers as well.

Q1 was up by nearly 30%. H1 is up by, I think, 1.5%.

So I was wondering what do you expect in terms of expenditures in India? I mean there was a time of lots of investments, as you mentioned, is that something that could drag into definitely the second half of the year, but when do you expect that to normalize?

Yes. All right.

So going back to your first question, how and why has Q2 being, let me say, slow compared to last year? I mean, Uta mentioned a couple of factors, but there is one other thing in.

We are scheduling in accordance to the required delivery times of our customers. So now -- and this is one of the reasons Uta said that earlier, the second half is significantly higher booked than the first half.

And that has simply to do with delivery times because we do not build and put machines on stock because otherwise, working capital would be in bad shape. So this is one of the reasons why it's this time backloaded the year and Q2 was not as strong on those 2 factors.

But I would say, for the time being, and this is started with July, I think we have the highest peak ever in terms of capacities booked, and this will continue until November. I have to say, December, we are, let me say, confident because December has all the time this week less.

So there will be, I would say, less revenue in December. But this is actually the reason where it's coming from.

And there are 2 factors. This is one in the factories where we have POC, but don't forget there is a part of commissioning, which is out in the field.

And unfortunately, many of those projects are scheduled in the second half of the year. That's the reason why the Q2 revenue looks not as good as you might think and where we are backloaded in the second half.

To the second question, did we see postponement of orders or cancellation due to whatever and in particular, due to the tariffs in the U.S.? No, not at all.

I mean, yes, some customers had really difficulties once they have heard that they have to pay 10% tariffs, which is true right now. But nevertheless, everybody expected much higher things in the future.

So some of them have been heavy to get their lines right now. And this is the reason why we didn't see any postponement nor any cancellation.

And again, cancellation with us is unusual since we have very tight agreements once an order is placed and the down payment is made, then we have very clear, let me say, contractual conditions. If somebody wants to cancel, it's not so easy.

It's -- we want to have full contribution of a customer when they book an order. So that's to the second question.

And number three, APAC and how do we -- and particularly India, I mentioned that, yes, India has been slowing down. But if we look to our analysis and the requirements the Indian market has in terms of beverage consumption, again, we look into India in the long run into a very promising country.

And we have a joke here. We call India the country of the not to fulfill promises because we have predicted already for, let me say, 25 years, this will be the country where things are going in the right direction.

But whatever we hear from our customers right now, whatever analysis we have for the beverage market, we are extremely confident within the Indian market, and that's the reason why we build their factory because we believe this will be a big contribution that we grab some of the market there more than we have today. Is that fine for you?

Very fine for me.

Thank you, Ben. The next question I have is Sven Weier from UBS.

I got 2. The first one is just when you look at your different end market verticals between brewery and nonalcoholic, I was just wondering about the different dynamics there because we've all seen some of the more tougher brewery results in Q2, especially on volumes.

So I was just wondering about the different dynamics, not just regionally as we discussed, but also end market-wise. And then I'll come back with the second question.

Yes. I mean, very clear and straightforward.

The dynamics in the brewing market is compared to previous years lower. I mean that's for sure.

And we see that definitely when we look on the order intake mix, in particular for returnable lines, that's pretty much down. And it's all compensated on the soft drink side, the nonalcoholic water and so on with PET and aseptic.

We see a shift in the portfolio with that by 3% to 4%. There are still orders even of breweries.

So it's not that they are completely gone, but they're investing a bit more careful. So the projects are getting smaller.

And this is particular, again, with the brewhouses from Steinecker, which is an issue. Nevertheless, since we have rebuilt Steinecker pretty much for smaller orders for more service business, it's not harming us in processing technology in the sense of there is lack of order intake or revenue and in particular, on -- not on profitability.

So I would say a brewery is really an issue. And if you talk to them, you will see that a lot of investments are going for them into still sustainable investments.

This is in particular because they have a lot of, let me say, heat and steam consumption. which they need to reorganize in order to get better CO2 balances and to keep their promises.

This is really what we see despite that the consumer is using less alcoholic beer. We see in some markets compensation of -- with nonalcoholic beer, particularly in Germany, for example.

But this is only, let me say, European approach to the beer market. You won't see pretty much of nonalcoholic beer all over the place in other continents around the world.

So it's pretty much related to Europe. So yes, brewery is slow.

And it has as always a bit of a cycle. Let's see how things will turn out.

Nevertheless, we could compensate with other markets.

Yes. Almost -- I was just wondering within Process Technology, when you look at the order intake, so did you say that also within PT, you compensate maybe weakness at Steinecker with other areas of business?

Absolutely. Absolutely.

Yes, definitely, yes. Other businesses are developing good in processing technology.

And since you see -- I mean, we are flat in terms of revenue and order intake in processing. And if you look to that, this is a big compensation of the, let me say, turnkey projects, which we had in a magnitude of EUR 30 million to EUR 80 million in the past 3, 4 of them, maybe in the last years, maybe 2 of them a year, but we compensated all of that so far.

Sounds good. The second and last question I had was just on order intake in the second half.

I mean we all know the Drinktec coming in September, and you know that I keep on asking it. in terms of order intake, every time you tell me, don't expect this to be a big ordering trade show anymore.

But still, I mean, I wonder, could there be like a small effect? And would you also think that this kind of po tariff agreement that we have now is kind of enough for the American clients starting to go ahead?

Or do they need to see more for coming back to order?

Yes. Maybe I should ask my colleague from sales, Thomas Ricker, which you know quite well.

I mean he's more enthusiastic about getting more orders in Drinktec than I am. But I'm looking still to the numbers, what I know from the previous years, and I will still see the way that Drinktec is not an exhibition where we do particular orders.

But I would say, this time, we believe it's really an important exhibition because we believe that with the developments we have made and the outstanding thing is that -- we had only 3 years between the 2 Drinktec, and we are really coming up with significant new innovations, and they are already in operation. And this is something where customers might look at, oh, this is cool because we have been never as fast as we are this time in getting in that magnitude something new on this exhibition and having it already with one customer in operation.

So this gives certainly a lift in terms of fundament for new order intake, let me say, in the consequence of Drinktec. But again, I'm still the opinion that the fare itself will not deliver extraordinary order intake, maybe with one exception, if Mr.

Trump times the agreement on the tariffs rock solid just 10 days before Drinktec, I think we might have a bit of a boom from the North American customers. And commenting on that a bit, the agreement at least led to the point that we received the last 2 days already 2 orders from North America, where customers hold them back so far because they were saying, okay, it looks like it's somewhere in the 15% range, and it's better than what we thought before.

Nevertheless, we have not a clear picture how our customers judge the agreement. And since the last couple of hours days, more uncertainty came into the agreement, some of them already gave a feedback, let's wait until things are more fixed in terms of, let me say, contractual fixed agreements rather than a shake hand, which is true so far.

So I would say that's the summary I can see Drinktec and how we see things.

And I guess your guidance on orders of book-to-bill of around 1 implies kind of a stable H2 against H1, roughly speaking.

Yes. Yes, definitely.

We are -- I mean this is the most discussed issue we had, how does order intake develop? And our clear statement is we stay with the statements we have made.

And this is proven by the pipeline and the order intake we had, in particular, let me say, after 1st of April because that was an important indication for us in seeing now July, seeing the pipeline we have, let me say, the postponement behavior, which we had in terms of decision that this is going to be reduced slightly. So that's the reason why we stay with the book-to-bill ratio around 1 and being for the time being, quite confident on that.

And is the cost -- I mean, just also talking about the cost of Drinktec. Is that something that is visible in the Q3 results, something we should keep in mind for our models?

It's visible in the second half of the fiscal year and Q3, yes, some of it will be in Q3, some of it will be in Q4. But it's definitely going to impact in terms of that is cost, but not in the margin for second half of the fiscal year.

So is it like a low single-digit million amount or Hopefully...

It's a high single-digit amount, yes.

High single-digit million amount.

I mean we can name it. It's not so difficult.

It's around EUR 10 million. What is it in total.

And this is what we manage. This is nothing new.

This is the same number as we had over the years once Drinktec was [indiscernible].

So the next question coming from Adrian Pehl from ODDO.

Actually, I've got 3 questions. One is on the strong gross profit that you had in the second quarter.

Uta, you were already referring to some savings you had on the material side in the quarter, but I was still wondering if that was supported also by mix, maybe also a little bit higher service share in the quarter. And the nucleus of the question is what should we expect in terms of the effects that we saw in Q2 for the second half?

And the second question is on your personnel expenses. Obviously, the ratio was above 30% in the first half.

Actually, in Q2, there was quite some growth on the personnel expenses side year-over-year. You mentioned that you were slowing down a bit the personnel buildup, but I was wondering if you are taking further measures in the second half to improve the ratio.

And very lastly, on the FX effects that you saw in the second quarter, I noticed obviously that the other operating income, not quite sure if that was coming from there, but I suspect it was quite high year-over-year, helped the margin, obviously, to some degree. Maybe some thoughts on FX in general would be helpful.

And how should we think of it in the second half?

Yes. Let me start with the third question.

I mean it's, I think, a mix of about 30 currencies, which we have. And if I look at the translative effect onto the P&L, it's rather minimal because if you look at the quarter -- year-over-year, if you look at the U.S.

dollar, year-over-year average is very low change. So looking at all, I mean, we had the dollar, which is very slightly lower than we had other currencies, which were also a little bit higher.

So coming from a translative effect for the first half of the year, there is not so much effect. If I look at the balance sheet, I mean, there are some effects.

Some of them are in other operating income. At the same time, we have also FX losses.

which are part of the other operating expenses. So it is more to the other operating income, if I look at the overall balance.

But all in all, if we look at the fiscal year, we do also from a top line perspective, do not expect a major effect coming from FX. And also, if we look at the bottom line, the same is also true.

I mean we are managing it through hedges. We are managing it through also partly price increases if needed.

And that's -- and some of it, you also saw if you looked at the equity schedule, you saw that we also had some income uneffective effects here, which came from the balance sheet items. So it's really a mixture of a lot of topics.

It is from a P&L point of view, not of major concern for us. Continuing on with personnel expense.

First of all, it's the reflection of the increases we have done and also it's the reflection of the tariff agreements with the collective bargaining agreement, which came into play in Germany also on April 1. And speaking about the first point, reflection of the headcount or FTE increases.

I mean, I talked a lot also about service technicians increase, yes. Over the years, we have increased them significantly.

And it takes a bit of time for them to get trained to become fully effective. So that means we have their payroll right now, but we do not yet have all the effects then which come beyond 2025 in them being fully operational.

So that's why we believe that it's going to come down also throughout the fiscal year and also for the benefit in the future of higher service revenue also just to take that as an example. Now let's talk about material cost, I mean, 47% and also after the first half, that is a significant decrease.

It has to do with the savings, which we have realized in particular last year, but also this year. And it has also a certain effect coming from mix.

I mean we talked about the lower new machine volume overall in the first half of the fiscal year. And all in all, this brought it down.

We believe it's going to increase over the fiscal year again. Does that answer your question?

That does.

Thanks to you, Adrian. So I see Ben again on my list with the second time.

Yes, exactly. Just #4 and 5 because Sven asked one of my questions.

But may I ask what share of your APAC revenues is actually coming from India because China is not included in here. So I would assume that India is by far the majority of that.

Let me just think that I must say something wrong how big India is into that. I mean, first of all, India was rising over the last 3 years significantly.

And if I look to the total order intake, it went up in some of the years up to, let me say, 15%. And I would say we are down to, I would say, 10% to 12% coming from India.

The rest is coming from all over the place. Don't forget that we have with Indonesia, Malaysia and Vietnam, Thailand, very big countries there, which are contributing to the order intake in APAC.

Just Indonesia was having 250 million people there and it is quite important for us as a market. So India was not too big.

I think I was a bit low with the number in 1 year because we had 1 year, I think, in 2023, where it exceeded even the 20% part of the order intake in APAC. But so far, it's not, let me say, outstanding big.

What we saw is a good growth rate there and that we believe that once we are localized more, we can grab more on the smaller orders, which will contribute then to the market and particular developing customers.

Okay. That is very helpful.

And then my last question, if I may. Regarding full-time employees, you have shown that you right now have roughly 21,000 people working for you, roughly 1,600 of that in the United States.

What is the sustainable headcount level you guys feel comfortable with? I mean, roughly 8% of your headcount is in the U.S.

and you're somewhat shifting away production from Germany, but is there any short-term hiring we should expect in the U.S. or in any other country?

Any color on that would be helpful.

I would answer it this way. Even in case we want to hire, we wouldn't be able to because the biggest problem we see with shifting something to DS would be getting qualified people on board.

I mean we said that in several occasions that, for example, once we want to hire service technicians in the U.S. A big proportion of that, we are actually bringing over from the Philippines, from Pakistan, from the Middle East, where we have qualified service technicians, and we help them to mitigate into the U.S.

because we don't find the people on a qualified level. And once we talk about having more products in the U.S., and I'm very careful with that statement, I said that earlier, the 15% of tariffs, I would say, is exactly at the border line with the cost advantage we have here in Germany versus the U.S.

And there might be in the mid and long run, some of the shift of the products to the U.S. But really the limitation to a big extent is getting the right people on board.

We have been shifting the last 5 years, a bit of labeling technology back to the U.S., which we brought back in the 2000 and started to do that labeling business, new machine business again in the U.S. 5 years ago.

And the biggest problem was getting engineers and qualified mechanics and electricians that we do, let me say, final assembly in the U.S. and get those machines on a reasonable cost level out of the factory.

So that's the reason why we are so careful with that one. And in the long run, you can expect that the headcount in the U.S.

will be higher, but you wouldn't see any peak coming up just in a sudden that we are going to hire the people. We are happy to answer them.

Thanks a lot for your questions. I think the next one is Jorge González.

I would like to follow up on the FX impact and the order intake for the second part of the year. So following also on the question for the order intake in the second part of the year, I understood that you still expect onetime book-to-bill for the year or around that number, which, in fact, implies around 10% growth, some robust growth in the second part of the year compared to the first part.

Do you think Drinktec is going to support this or the typical seasonality is going to support this? Or are you expecting an acceleration on any other driver that you can share with us for the second part?

Well, again, Drinktec, I would see only as, let me say, laying the fundament for further orders, but then they are really coming in 2020 or beginning of 2026, let's see. But nevertheless, our estimate on order intake is definitely not based on the Drinktec.

It's based on the quotation pipeline we are preparing and the pipeline we have out at our customers. So we have a pretty good understanding how long it takes from, let me say, a quote, which is then renegotiated several times and redesign several times until we get the order on board.

And when we see how many of the decisions will be in the second half of the year, this is the fundament of our estimate that we say the order intake will be around 1. Can there be surprises on the -- let me say, on the upside?

I would say, yes, because the pipeline is good. And we do not know how much of those quotes in the pipeline will be further postponed the way we have seen, let me say, the last 3 months because we actually factored in the behavior of the last 3 months, how the pipeline in the second half will be decided.

If this is shortened, there might be upside. But this is far too early to really say something to that, and you know us, we have been, I would say, quite robust on our statements how we judge order intake.

And that's the reason why we stay for the time being with the statement, it will be around 1 year-over-year. And this can be -- can have a slight upward trend, yes, can be, but I wouldn't be far away from today saying this is something I can say this might be a good option.

And in your view is more backloaded into Q4? Or you're expecting some even...

Loaded into Q4. It's unfortunately, the order -- let me say, the order doesn't follow the queues we have.

I would say it's loaded between September and November because we see -- December is usually slowing down already to a certain extent, we all know because of the Christmas vacations are there. And August is slow because of summer vacation.

So it's between September and November, and this is why it's Q3 and Q4.

And allow me for the last one on the FX. So I can understand that in average, we are at similar level if the dollar remains at this level.

But now that you are having every time more exposure to the emerging countries and taking into account the strength of the euro, is this somehow changing your pricing policy for the future? Or it's not a problem you see that you can pass through pretty well the increases that this will suppose in the future.

Yes. I mean, if I look to the general scheme which we have, if we talk about line investments or investments of, let me say, bigger projects is anyway done in euro.

That's a very important message. So even in case we deal with Nigeria or with Ethiopia, the line orders are in euro.

This is sometimes a problem because, of course, limitation of foreign currency is a big limitation for those countries. There would be orders out there in case they could have the foreign FX and could run for it.

Now the issue comes then with the services, which are made mainly in local currencies. And there, of course, we adapt pricing, of course, because otherwise, we couldn't follow, let me say, a devaluation of the currency once we would be not able to do so.

But this is then, let me say, in the operational line. And this has nothing to do that what happens then later on in the P&L with translation or in the balance sheet.

But for the -- let me say, for the operational perspective, those are the 2 major aspects. L business and let me say, investment business is done in Europe.

If we talk outside of the U.S., U.S. is a bit different.

And in Turk, we talk services, this is local currencies. And this will follow, of course, in the case there's a devaluation, we actually fix or change the pricing that we can live with the devaluation.

However, then it comes to us part is the P&L and the balance sheet. There we have an impact, let me say, which is quite reasonable.

Then the next question comes from Baader Bank, Peter Rothenaicher.

One question regarding services. Can you comment how was service revenues and orders performing in the second quarter?

I think on the one hand, you also had the problem in servicing of lower number of working days. On the other hand, you mentioned the delivery of lines was here under pressure.

So how was it developing? And overall, how do you perform in terms of machines connected and into your new service models?

Is there any progress? And how is this developing?

First of all, service is performing quite well. So we are happy with the results we have achieved, and we have further growing in terms of our services on a, let me say, single-digit number, but we are quite pleased how this is going, in particular in those more difficult times.

And if we look to -- with our service technicians, we serve 2 things. This is services at our customers for the installed equipment.

And of course, we are doing the commissioning of our lines with our service techs. As I said, the installation commissioning was a bit lower in Q2.

This helped us a lot on the other side to do the life cycle business with our customers. And that's the reason Uta mentioned that why we are hiring significantly still on service technicians because we have a kind of, let me say, quite high level of installations and commissioning for 2025 remaining and for the entire 2026 because don't forget those lines, which will be produced in the first half of 2026, that will be installed in the second half of 2026.

And this is going even into 2027 already. That's the reason why we are hiring on such a big magnitude service technicians.

Now to the point on how can we harvest on connected lines. Well, one of the answers, and I hope most of you come to Drinktec because we are going to show you what we have been calling line of the future because the essential part in the line of the future is how digitalization connected lines enables us to do new levels of services in the future.

And it would go far beyond now to say, okay, we can explain that today, but where we made extremely good progress, the number of lines being connected. And the problem in that was never us.

It was all the time our customers, which hesitated a lot to connect and to give data. But it seems to that this problem is overcome because, let me say, cybersecurity has been increasing.

We are approaching them professionally, blah, blah, blah, all of this. So I would say from the lines we ship, and it's around 300, 200 of them are going to be connected.

So that's a huge number. And if you look to machines, any lines carries around 10 machines and each of them is connected.

And this is a huge number. What goes along with that is our digital service centers, which are growing significantly.

There we have the issue that we need to train people. This is a totally different business than in the past.

Service technician travels to the customer, fix the machine with a spanner or do some reprogramming in a machine. That's not the case anymore.

We have kind of consultants sitting in our digital service centers, getting those data from the line and supporting the customers in various ways, calling them, giving them support into -- jumping into their PLCs or even sending our service technicians or even telling them, hey, guys, there's something wrong with your machine, better shut it down. We do an overhaul, whatever that things are going right.

So this is on a very good progress. And I would say it's delivering right now a great fundament for further service businesses around the world.

So you see me speaking quite enthusiastic about it because I was strong, let me say, advocate in the sense of being critical to it, but now it's getting really momentum. And we are going to show that on Drinktec with very good explanations how we are doing those things.

And the second question is on M&A. Anything new here?

How do you see the opportunities in the market?

Peter, I couldn't hear it, but I assume your question is about M&A in the sense of, is there anything new which we can say? No, there is nothing we can say right now, but we are in the progress on some smaller acquisitions, but they would have been not in a magnitude that you would actually incorporate those in your models to say there is a bigger scale coming up.

It's smaller technologies where we believe it's delivering good benefit in some of the markets to diversify a bit and to make ourselves a bit stronger in those markets. But nothing which we could name right now and which might not become true in the next 3 months, maybe by the end of the year or beginning of next year.

Thank you, Peter. Well, I will check my e-mail folder perhaps if there are additional questions.

No. Also no more questions coming over the Teams channel.

So no more question, I think. Christoph.

Yes. Then thanks a lot for taking the time and spending the time with us.

For those of you who have been not on summer vacation, nice summer vacation with better weather. I mean, in Bar, it's ugly.

So let's look forward that the sun is shining again, and hopefully, our share price goes up. Thank you very much.

Bye for now. Thank you.

Thank you.