Thank you, Valentina. Good morning, ladies and gentlemen, welcome to our first half 2026 results conference call.

My name is Lars Brorson. I am Head of Investor Relations at Schindler.

I am here together with Paolo Compagna, our Chief Executive Officer, and Carla De Geyseleer, our Chief Financial Officer. As usual, Paolo will discuss the highlights of our first half results and our 2026 market outlook, Carla will take us through the financials.

After the presentation, we are happy to take your questions. We plan to close the call at 11:00 A.M.

With that, I hand over to Paolo. Paolo, please go ahead.

Good morning, everyone. Glad to be back to report on our first half-year results.

Overall, I am very pleased with our operational execution in the first half of the year as we reached another record operating profit. Let us start with our top-line development.

In the first half of the year, our order intake grew 2.9% in local currencies. Similar to the recent quarters, with a strong contribution of the modernization business, with a growth close to 13% in local currencies and a strong contribution from all regions.

That is on a tough comparison from last year, when we grew already 22% in the first half of the year. Order intake in new installation business in the first half of this year has an encouraging trend outside of China, particularly in EMEA and Asia Pacific.

Outside of China, we grew high single digit in value and low double digit in units. In EMEA, we grew order intake by over 12% in units in a market which we estimate grew low single digit.

It is a broad-based strength in Europe, including Germany, our biggest market. While China continues to be a headwind leading to the overall low single digit down in order intake.

Also, our modernization business is performing well in EMEA. Here we grew orders by 16%, and that was on a tough comparison, too, from first half of the year 2025, when we grew over 20%.

We see plenty of room for growth both on and off portfolio, we also believe we can continue to deliver above market growth here. Let me say a word on revenue growth, which came in at 1.4% in the first half of the year.

This is not a growth level we are happy with, but as Carla will explain shortly, we maintain our full-year guidance, which implies an acceleration in the second half of the year. We have the backlog, which is up 5.8% versus year-end 2025, and we are seeing favorable order trends outside the Chinese New Installation business.

We also believe our Modernization business can and will accelerate further in the second half of the year. Let me turn to our operating performance in the first half of the year.

We saw our operating margin expand by another 90 basis points to 13.2%, a record level for the group. This improvement is broad-based across our regional businesses.

Globally, we are executing well across our manufacturing and supply chains as well as our field operations. At the center of that is our product strategy.

We are seeing a good traction of our modular platform in the New Installation markets that were early in our global rollout, notably Europe. Not only is growth picking up here, but we are also seeing very visible improvements in terms of field installations efficiencies.

Our new mid-rise product in the U.S. is also leveraging the modular platform, and here we are seeing continued good momentum too.

Not at least, we expect that the rollout of our standardized Modernization packages will also facilitate further gains in competitiveness of our Modernization offering. Looking at the additional cost inflation we are facing this year from logistics, fuel, and commodities, Carla will later provide more details on the expected cost impact.

I can already say that we are actively working on mitigation measures, including pricing actions, in order to offset these cost pressures. Both list prices as well as surcharges across our New Installation, Modernization, and Service businesses.

We are working with our supply chain to manage efficiencies on the supplier side as well. A word on our strategy in light of the recent news in our industry.

Let me say there is no change to our strategy. This is working.

We have strong operational momentum and are committed to pursue with discipline and determination on profitable growth. As competitors merge, we remain focused on delivering on our promises to our partners and to all our customers to ensure they can count on us for stability and consistent long-term support.

Does that bring commercial opportunities? I believe so, yes.

I look forward to discussing our midterm strategy with those of you who are able to join us at our Capital Market Day in November. That leads me to conclude by highlighting three recognitions we received in recent months.

Schindler was recognized by Fortune as one of the Europe's Most Innovative Companies, and we received the prestigious Red Dot and iF DESIGN AWARD for the outstanding product design of the Schindler X8. Why is that important?

You will remember we launched the X8 last year in selected markets in Europe, and we are now starting to see the impact this innovation is having on the industry, on our customers and partners. We believe this is another good example of how Schindler continues to lead the industry in terms of innovation.

Moving to our market outlook for 2026 on slide four. While we do see potential for outlook upgrades in certain segments and regions, given the continued geopolitical uncertainty, we have opted for keeping our outlook unchanged for the time being.

We continue to closely monitor the implication of the situation in the Middle East on inflation, the construction and real estate markets, and the overall speed of decision-making. While higher energy prices increase construction costs and reduce housing affordability, which ultimately can have an impact on demand.

In spite of these headwinds, we continue also to witness vibrant activity modernization markets across almost all regions, with particularly robust growth in the areas where modernization is supported by government programs such as the example of China and Spain. With the number of elevators ripe for an upgrade approaching worldwide soon 10 million units, there is no shortage of modernization opportunities in all our zones.

In New Installation, the markets continue to develop positively across the regions, the only exception being China, where the key lead indicators for elevator demand, such as floor space started and real estate investment, not only did not improve, but in fact deteriorated sequentially again in June, reconfirming our outlook for another double-digit NI market contraction this year. In Europe, while the latest building permit statistics continue to show gradual pickup across the major markets such as Germany, the more high-frequency indicators such as construction PMI and other sentiment indices signal some hesitation to launch new projects and therefore some softness in new orders by builders.

Activity in Brazil remains good, driven by the social housing segment. In the U.S., multi-family permits and starts continue to rise, but the architectural building index in multi-family remaining slipped below 50 again during the second quarter.

Asia-Pacific continues to see healthy growth, driven by India and most Southeast Asian countries, with activities picking up in Australia too. Turning to slide five and our order intake in the first half of the year.

In service, our maintenance portfolio continued to expand with accelerated growth reported in China, followed by Asia-Pacific, excluding China. In Americas, we saw growth in value terms while we continued to be selective in terms of the units we decided to recapture from the market.

The modernization second quarter marked the sixth consecutive quarter of double-digit growth. We are very pleased with our consistently strong performance in this high growth, high potential part of the business.

Our average growth rate over those six quarters reached 17% and was well above the overall market growth. EMEA truly shined, driven by some of the largest Northern European markets as well as Spain, where the ITC regulation supports delivery of safety upgrades to our customers.

We also continued to enjoy high double-digit growth in China, driven by the bond program for equipment replacements. In New Installation, China was the only region to have seen declining order volumes.

In the rest of the world, our NI orders grew double-digit in units and similar to modernization. Europe was the standout region with above-market growth in all key markets.

We are pleased to have seen share gains also in Asia-Pacific, outside of China, according to our internal market estimates. With that, happy to turn over to Carla for financial details.

Thank you, Paolo. Good morning, ladies and gentlemen.

Happy to have you on the call. Let's start as usual with slide seven, that provides you with the performance of the current quarter compared to the last four.

As Paolo said already, we are very pleased with the operational momentum in the second quarter with EBIT margins up 90 basis points compared to quarter two last year, and up 40 basis points on an adjusted basis. On net profit, we passed the 10% margin level in quarter one and continue to move higher in quarter two.

In terms of our top-line development, order growth improved slightly to 2.9% in local currency in quarter two. Clearly, still not where we want it to be.

Revenue growth was at the lower end of what we expected in quarter two, let me give you some detail on the drivers behind this. Moving to the next slide, where you have our order and revenue bridge for quarter two.

We grew order intake in local currency in all regions outside of China. It is really the new installation segment in China, which continued to be a significant headwind to growth.

Excluding China, new installation order grew high single digits in value and low double digits in units in quarter two, driven by EMEA and APAC, ex-China, as Paolo mentioned before. In Europe, we saw a strong contribution from some of our key markets, including Germany and Spain.

Modernization that continued its nice growth journey and contributed strongly to the order intake in quarter two, growing at 11% on a reasonably tough comparison from quarter two last year, when modernization grew 24%. Again, here, EMEA contributed positively to growth in the quarter.

China also grew strongly, but on a tough comparison from last year when the Chinese modernization market saw a big step-up in the government's bond program, as you will recall. Finally, growth in our service business was accretive to group overall.

Moving on to our revenue, which grew 1.1% in local currency in quarter two. That was slightly lower than what we had expected, driven by a softer development in our NI segment, as well as timing on some of our larger projects in the modernization.

To be clear, we expect to catch up on these projects in the second half, which is partly why we are maintaining our full year guidance of low to mid single digit growth, as I will discuss shortly. Regionally, to complement Paolo's earlier comments on Europe, it's very pleasing to see our revenue growth gradually picking up here.

At mid single digit in the first half, and we expect that to continue to gradually accelerate in the second half. A quick note on currency impact.

We have been facing significant FX headwind in H1 with revenue impact of CHF 233 million. In quarter two, the impact was CHF 48 million.

Based on current spot rates, however, we do see that the FX headwind could ease in the coming quarters. Finally, a note on our order backlog, which was up 3% year-on-year in local currencies compared to quarter two last year, but up 6% year-to-date.

That is driven by the backlog in modernization, which was up 13% year-on-year. From a regional perspective, the total backlogs in EMEA and APAC grew mid-single digit and by high single digit in the Americas.

That was partly offset by China, where backlog was down mid-teens. Our backlog margin continue to improve sequentially, which is also a very positive message.

Moving on to the next slide, operating profit. Clearly the highlight of our first half, our EBIT margin was 13.2% in H1 and 13.5% on an adjusted basis.

We continue to make good progress on operational improvements, which was CHF 45 million in our H1 EBIT bridge, which we are happy with after the strong improvement last year. Overall, price mix were contributors, but less so than efficiency.

It's the efficiency improvement that continues to be driven by SG&A, by procurement, by supply chain, as well as efficiency in NI and MOD activities. We are also seeing a bit more cost inflation coming through in quarter two and expectedly also in H2, which I will touch on shortly when I turn to our full year guidance.

Moving on to the net profit on the next slide. As I mentioned, a good development in net profit driven by our operational improvements, which are more than offsetting a decline in financial income as well as FX headwinds.

Margins into double digit in H1, which we are also very pleased about. Moving to the cash flow.

Operating cash flow in H1 came in below last year strong level despite the uptake in our operating earnings, and here it is the net working capital, which we were not able to improve to the same level compared to the strong performance in H1 last year, and hence a headwind in our year-on-year bridge. This was related to two factors.

First, a decline in our Chinese new installation business, which is driving lower down payments, and secondly, we had an adverse impact on the networking capital from the implementation of the ERP system in our U.S. operations.

We spoke about that earlier this year. We expect this to be ironed out in the coming months, and therefore the adverse working capital development should reverse partly or completely in the second half.

Moving on to slide 12 and our full year guidance. We confirm the full year guidance.

First note on our revenue growth guidance of low to mid single digits in local currencies in 2026. Clearly that implies an acceleration from the 1.4% growth level in H1.

We expect a strong double-digit growth in modernization, a mid-single digit growth in service, and a gradual easing of the headwind in the new installations from that high single-digit decline in the first half. On to the margin guidance of 13% in 2026.

We were at 13.2% in H1, very much on track to deliver on the guidance of 13% for the full year. Obviously, the question will be why not be a bit more ambitious for the full year given the good performance for the first half year?

Let me comment on that. First of all, we had slightly more margin tailwind from mix in the first half than expected.

This was partly due to the lower New Installations revenue contribution, as well as timing of revenue recognition on some of the larger projects in our Modernization business, shifting from H1 to H2. Secondly, we are facing slightly more cost inflation in H2.

Based on our current assessment for the full year 2026, we expect the additional inflation from energy and commodity pricing to be circa CHF 35 million, split approximately 2/3 in the second half, 1/3 in the first half. On commodity inflation, this is primarily associated with higher copper and aluminum prices.

It's broadly in line with what we have communicated in April. We are working hard on mitigating actions to offset these in terms of pricing and in terms of efficiency.

Let me also say a brief word on tariffs. Tariffs remain a moving picture, but our estimate of the annual gross P&L impact remains largely unchanged from what we communicated in April, so approximately CHF 15 million.

Finally, before I close, I want to touch on an accounting topic which will be important going forward, and that's the implementation of IFRS 18. As you might know, this is an accounting change which will be effective from January 1, 2027 and affect the presentation and disclosure of our financial statements in 2027.

We have a detailed note in our interim financial report, which I will refer you to, as well as the backup slide in this presentation deck. To give you an idea about the financial impact on us, if IFRS 18 would have been applied on January 1, 2026, the operating profit would have been approximately CHF 20 million lower.

That is circa 40 basis points of EBIT margin. A level of margin impact you should expect going forward from this accounting change once it is effective, in 2027.

Obviously, this will all be taken into consideration when we communicate at a later point about our midterm targets. I'm reaching at the end of my presentation, it's important, I think, that you allow me to thank, together with my colleagues in the executive committee, our close to 70,000 employees across the globe for their efforts.

Many of them, and unfortunately more of them, continue to operate in exceptionally challenging circumstances. With that, I hand back to Lars.

Thank you, Carla. Let me remind you of our Capital Markets Day, which has been rescheduled for the 19th of November this year at our headquarter in Ebikon, Switzerland.

We look forward to seeing as many of you there as possible here on our campus. Please note that the registration for this event closed on the 30th of October and the number of participants is limited.

With that, Paolo and Carla are happy to take your questions. I would ask you please to limit yourself to two questions given the limited time we have available.

With that, operator, please.

Hi. Good morning.

Thank you for taking the questions. I'll stick to two.

The first one, I think you mentioned sort of on the original equipment outside of China, you had high single-digit growth in value and low double-digit in volume. Can you talk about sort of is the difference most that we're getting negative price in some of the regions, maybe where, or is it just down to regional mix?

The second question relates to, I guess you've kind of mentioned the savings or the efficiencies had a bigger impact into Q if I heard correctly. How should we think about sequentially the efficiencies impact into the inflation and upgrade guidance?

Thank you.

Good morning, Daniela. Paolo here.

First of all, to the order intake outside of China, if I got your question right about pricing there, we don't see a specific zone outside of China with a significant price decline, price pressure above the, let's say, normal competitive environment we are used to have. The year, especially also in Q2, where we saw a pick-up of our order intake, also, I said it before, based on our modular platform, you remember, which was introduced first in Europe when we started the rollout.

Therefore, not a special comment on pricing. It's more normal development, I would say, competitive environment if we exclude China.

On the efficiency, before hand over to Carla for more details. The development so far, it goes also hand in hand when we talk about field efficiencies with the modular platform, right?

When we introduced it, we were talking about there is one big component, which is the field efficiency, which we were striving to gain and improve three, four years back, right? Now, obviously, with the increased portion of those new products coming into what we say fulfillment, it means as in installation and hand over to customers, then this portion of the benefit comes in.

Obviously, this is not a one-off. This continues to stay as we then continue to sell and install these type of products.

Please, Carla, if you'd like to complete the picture on efficiencies.

Yes, I think you actually said it. When we look, Daniela, at the overall efficiency story, it continues to be pretty strong.

We are actually foreseeing also a good increment in H2. You know our building blocks very well, yes, there is a certain maturity in the procurement savings, but they are still at a solid level.

The operational efficiency, as Paolo pointed out, they actually are expected to further increase because that is really the result now of the implementation of the modular platform. I think that is very encouraging.

Yes, then your question will be, I guess, with respect to the margin in H2, it is really for the factors that I mentioned that we actually confirm the guidance, because there might be costs coming our way in H2. Yes.

Got it. Thank you.

Thank you.

Thank you, Daniela. Next question, please.

Yes, good morning. Thank you very much for taking my questions.

Can I just do two clarifications first quickly? Firstly, on IFRS 18, that change in operating profit by CHF 20 million, is that on full year basis or for H1?

This is for H1, so you could double it for the full year, to be clear.

Great. Thank you.

Back to the comment on orders growth. You saw a high single-digit growth ex China in value and low double-digit in units.

Did I get that right?

You got that right, yes.

Sorry, I probably have to ask the same question again then, but is it just mix then that resulted in that lower growth in value versus units, if you're saying there's no price pressure anywhere?

The figures you mentioned, sorry, Andre, to reconfirm, these relate to NI, so new installations only. Yeah.

Faster in units than in value, and you said there was no pricing pressure anywhere given that we're talking about ex China. Was it just purely mix then?

Andre, absolutely right. It's the mix.

It's a mix between large projects and in that case, modular platform, which contributes more into the low rise and mid rise. Absolutely, yes.

Got it. Thank you.

I think I've used up my time on the questions for this. I'll go back in the queue.

Thank you.

Thank you, Andre.

Thanks, Andre. Next question, please.

Hello. Good morning.

Thanks for the questions. I have two.

They're quite different, I'll ask them one at a time. The first one is on market share.

You talked about gains in Europe, I also understand the focus on selectivity elsewhere. It seems like that competitive intensity isn't going away anytime soon, including in North America on the service side.

What's driving the gains in Europe? How do you intend to address the competitive situation in North America on service, please?

That's question one.

Phil, I take the question. Good morning.

If we look at Europe, as mentioned before, the modular platform, which was introduced for everything, which is low-rise, mid-rise, it's absolutely supporting us also in gaining market shares. Without going to the individual markets, this is, I think, broad-based, a supportive argument in Europe.

You remember, the modular platform was introduced in sales one and a half years ago. We were starting selling in Europe.

Starting, by the way, also in some selected markets. Therefore, that's one part of the answer.

You assume it right, it's about the modular platform supporting our low and mid-range in Europe. On the North America specialty service, I mentioned before, in value terms, we do a good progress.

In units term, we stayed in the first half of this year, second quarter, very much to our strategy of not pulling in big tenders which come with high number of units and very low values, which actually looks good in numbers of units, but don't add, let's say, meat to the bone, going forward. We also mentioned introduction of the mid-rise product, equal modular platform in the U.S., which actually going forward will also help us.

Thank you. That's helpful.

The second question is in relation to the Capital Markets Day, which was delayed obviously to November. I assume that that was because the Kone TKE announcement was just beforehand.

The November timeframe, is that set in stone and purely focused on organic topics, or was it in any way predicated on some internal views on timelines of potential remedies or M&A from your side, in which case perhaps the date could move again? Any kind of color on the assumptions behind the date in November would be great.

Thanks.

Yeah. In November, we will be happy to share with you our midterm plans, focus on what we aim to do and what is in our hands.

Again, very straightforward. Thank you.

Thank you, Phil. Next question, please.

Yeah, good morning. Thank you for taking my questions.

Just going back to the Americas order intake service. From Q3, you'll start to annualize that negative order intake.

Based on the actions you've taken to be more selective, do you think that that can inflect positively in the second half?

Lewis, good morning. Yes.

That's absolutely our intention. First of all, we see already in the new order intake, but also in modernization, first signs of picking up there.

If you ask about service, our intention is also to have a gradually improving recovery. Also in terms of units, not only value, which we already did in Q2, so Q3, Q4, we intend to further progress also new units in North America.

Absolutely, yes.

Okay. Clear.

Just on China, the pace of new installation decline in orders continues to be in excess of 10%. Some of your peers have started to see those declines moderate somewhat, so high single digit levels.

Do you see that based on the current order run rate and the comps you are facing, we can see the pace of those declines start to moderate in the second half as well?

Well, that's philosophical now, Lewis. I was in the past always looking a bit more on the dark side of the Chinese development, market development, while competitors were more positive.

Unfortunately, I must say, we were proven right in the past. If you ask now about the second half of the year, difficult to say.

However, every leading indicator right now would indicate we would be rather at a low double-digit decline rather than on a single-digit decline, which would indicate, as you mentioned, a recovery or let's say softening situation. However, no one has a crystal ball.

However, it will be between high single digit and low double digit. Or so, Chinese New Installation, we say explicitly, New Installation remains challenging.

Thank you very much.

Thank you, Lewis. Next question, please.

Yes. Good morning.

Thanks for taking my questions. I have two, and will ask them one at a time.

First, can you provide some color on Modernization by region, maybe in terms of growth? If I may, how big is your Modernization business now in percentage of sales?

Delphine, good morning. Let me, for the first question answer, that normally we don't disclose individual business lines in their individual contribution.

Where Modernization is growing, I'm happy to share it's growing in every part of the world. We call it zones.

In every of our zones, the Modernization business is growing, well, double-digit. You can say there's no part of the world, let me include here explicitly, also China in that regard, which is not contributing on high levels to the growth.

By the way, let me repeat, compared to a tough comparison to the H1 of last year, where we were already growing all over the place, double-digit. Here we have a continued acceleration of growth, you can say.

This is in all zones, North America, South America, Europe, China, Asia, Pacific. The second question I have to leave open as we don't disclose single business lines.

I tried. The next one is, and sorry if I may have missed it, but did margin in backlog grow sequentially?

Yes.

Yes. The backlog margin grew sequentially.

It's actually quite a nice development. Obviously that is related to the healthy intake from a profitability perspective.

Thank you.

Thank you.

Next question, please.

Yes. Good morning, everyone.

My two questions. First of all, on the Chinese market again.

What is the situation regarding payment terms and bad debt allowances among Chinese customers? Do you make any concessions with down payments here?

I confirm we don't make any concessions with down payments because it would expose us too much. We also see a bit overall on a deterioration in the credit risk.

We stick to our policy in a very disciplined way, I can tell you.

Is this the same for mod orders and NI orders, or is there something which we should take into consideration?

No. We apply the same rules for modernization as for the new installation.

Okay. Thank you.

The second question is on U.S. tariffs, obviously we saw first companies that reported some tax or tariff refunds.

What is your view here? Are there any tax refunds being taken into H1 results or not at all yet?

Well, we started actually in the first half to file for refunds, and is working. Yeah.

Okay. Is there an indication on the possible full refund over the next couple of quarters?

Difficult to say. It obviously will be something that, yes, a couple of millions, but it's not something that now really will change our results overall.

Yes, it's true that the refunds are started. Yeah.

Thank you.

Thank you, Martin. Next question.

Hello. Hi, good morning.

Thanks for taking my question. Schindler's competitive position changed to drive this such outperformance compared to the market.

Is there any evidence that current industry consolidation is creating opportunities to win business from distracted competitors? This would be the first one.

All right. Let's take me.

Well, competitiveness, I can talk about ourself. As is mentioned before, the modular platform which we launched is helping us absolutely also in competitiveness, but also in efficiency and in internal processes, which is the second part of efficiencies, even as an internal gain, right?

On this one could assume it has a benefit, but I think I would leave it to the market to decide. On the second part of the question, do we see opportunities by distracted competitors?

I don't know what competitors will do, but I know what we do, and we stay fully focused, I said it before, on delivering to our customers the best service we can. This we always did, and we do now even more.

Actually for us, it's no change to our dedication to our customers, and this includes obviously also New Installations customers, which also includes for sure the low and mid-range part of the business.

Got it. Thank you.

The second one is on Americas services. Perhaps can you elaborate a bit further on what gives you the confidence besides the Asia comps of around the improvement in Americas services when we look at the second half of this year?

Thank you.

We look forward to our bits we have out there. For now, we know what is in the pipeline.

We know how the quality of our offers in the pipeline is and the customers we have now offered to. Here we have a bit of a confidence that we can continue our dedication to, as Carla was mentioning before, making sure that our order intake stays on positive levels, but also in service with an increased trajectory on units.

Thank you very much.

Thank you, Aron. Next question.

Hi. Good morning.

I'm wondering if we could drill down a bit into Europe. Sorry if I missed this.

Could we get some color on NI in the European markets? I know EMEA was quite strong for you, and well done on that, but I'm looking for color on Europe itself.

I seem to remember Southern Europe was quite strong as markets, but you spoke about Germany, I believe. Any color in what I'd characterize as Central or Northern Europe?

Happily, we can say quarter two was confirming for us a strong order intake, new installation all over Europe. I mean, what we call Europe, right?

Yeah.

That's first of all, the first part of your question and assumption is right, is all over Europe. If we look to mid or Northern Europe, I was mentioning Germany.

Germany is now not exploding, to be crystal clear. We see that our order intake also in Germany is now in a better trajectory than it was in the past.

Remember, we were looking also in Germany for years on a declining market, then stagnating market. Here, one is to say, it has slightly improved and has some signs of recovery.

A bit different between low rise and commercial projects. However, we see our position here strengthened and also gaining in the market.

Fantastic. A second unrelated question.

If we think about dynamics in China as the market continues to contract, do you have a view as to when your revenue mix will come into balance in the sense that modernization and service are growing and MBS or NI continues to contract? Is that journey or market rebalance within the next few years, you could argue?

Yeah. John, I think the argumentation, it's a bit of philosophical preassumption.

However, if it continues at that pace, that New Installation declines high single, low double digit every year, and the market in Modernization grows every a double digit, one could do a calculation and assume, rightly so, you say, that one day Modernization and service will be the bigger part of the business. Well, difficult to say, no, this will not take place.

Should NI pick up again, then the story changes. You are right.

I think looking forward, this is the scenario which could happen, that Modernization and service become bigger than New Installation. This cannot be excluded over the next years to come.

Okay. Thank you.

Thank you, John. Next.

Hello. Thanks for taking my questions.

My first one is on new installations in the Americas region. We saw it was down in the quarter.

I'm just wondering if that's a comps effect or if there's anything else in there. I guess more broadly on Americas NI, I think order intake, in 2024, 2025 and H1 2026 was generally quite good.

Just any comments on backlog conversion there and whether we could see some kind of an acceleration into 2027 would be great. Thanks.

Nick, let me take the first one on Americas, I know that the numbers might not be giving the right impression at the beginning. We compare Q2 to a very strong Q2 last year in America.

Actually, we don't look at all unhappy on the OIT as order intake in Americas on Q2 this year. The comparison was very tough for us, as last year we had some large jobs booked in.

Therefore, I would like to give you a second view of your assumption. When it comes to the backlog conversion, Carla, I don't know if you'd like to elaborate, but yes, backlog is growing nicely with, by the way, good C1.

Carla, please.

Definitely, that is what we will focus on is the pull-through, in the fulfillment in the second half. That is also one of the reasons why we are comfortable with confirming the guidance for the full year.

Okay, great. My quick follow-up is just on China service units, which grew 5%-10% in the quarter, which looks slightly out of keeping with the sharp declines in the new installation market.

I was just wondering if you could provide a comment on why that is and what we should expect in the next few quarters. Thanks.

Yeah. Nick, as you mentioned, right, or your colleague mentioned before.

The New Installation conversions are declining as we speak, right? As the New Installation went down for us and for the market, also for us sequentially.

What are the inflows? Number one, it is Modernization.

Modernization as inflow into service from Modernization is also increasing as we speak nicely. It's one source of additional units.

The second one is recoveries from the market where we remain, as Carla mentioned before, very diligent to all our rules. However, the market, it is and remains the largest market on this planet, there we also gain some recoveries, call them.

These two inflows into the portfolio is what you see in number of units, which absolutely doesn't reflect only the NI inflow, which obviously for all of us was the normality in the very past. You remember it was on the NI two years or a one year gap, it was NI inflow.

Now it has changed. Now we got Modernization, we got recoveries, this is what you see in the numbers.

Great. Thank you very much.

Thank you, Nick. Next question, please.

Thank you very much, everyone. Good morning.

My first question is a follow-up on backlog margin and price cost. You've commented that the backlog margin was up sequentially.

You've also commented that you're not really seeing price pressure. Given that the backlog margin is improving, clearly you're able to pass on some of the cost pressures.

Nonetheless, we can see that steel costs continue to rise. Given that you're not flagging price pressure, equally it doesn't sound like there are big price improvements coming through, could you maybe give us some color on how you're seeing your ability to pass on cost inflation?

Thank you.

Thank you very much. Your observations are all right.

When it comes to the cost inflation in the second half, I think where there is some uncertainty is definitely in the raw materials, call it a commodity, the aluminum, the copper, and the steel. Yes, elements like the energy and the logistics.

For the second half, as I said, we expect a bit of an acceleration of this cost. Yes, we will continue to work on the passing on.

Of course, it require work and mitigation factors, and I don't want to preempt the potential successful passing on yes or no. That's why we kept that caveat there.

Pricing overall, especially in the commodity, I reconfirm was outside of China, I need to say, was pretty solid.

Understood. Just to follow up on that, you commented about the second half.

It's clearly far too early to guide on 2027, just with one eye to beyond the second half into next year, how are you feeling about your ability to mitigate the impact of steel as we go into next year? Thank you.

Well, we obviously continue to work on it and how you own it. It's always a combination, first of all, in the supply chain, supply chain efficiency, but also, of course, try to negotiate better prices with the suppliers.

That remains, of course, a big part is also the increased pricing to the customer. That works not only for the new projects but also for the backlog through the variation orders, that we try to pass on to the customer.

It's always a combination of different elements.

Understood. My second question is around China New Installations, just how we should think about that development as we go through the second half, because there are two sort of factors here.

As you say, the market remains very challenging. At the same time, you had a much weaker second half last year, the comparison should get easier.

Is there a sense you can give us on how that decline rate should develop as we go through the year, particularly if some of your newer launches or self-help measures are able to get a little bit of traction and you could see some sequential improvement? Thank you.

Vivek, your assumption is right. First of all, if we look at the Chinese market, it's one part of the story, and our deliberate decisions, which we were talking also second half of last year, are the second part of the story.

In all transparency, we told you that we are working on ourself and resetting the way we do, especially we sell New Installation in China. This was done second half of last year and surely continued within this year.

Now if you compare on, as you do rightly, on our second half of last year, one could expect an easier comparison, yes. For sure, the products we are launching, the first we just launched, as you might have heard, more to come in the second half of the year, plus all the efficiency measures we have initiated second half of last year, first quarter of this year are in line with our expectation is that in the course of the second half of this year, we should see a bit of an easing of the NI installation or the intake in Schindler.

Which is on our side, and I repeat.

Very clear. Thank you.

Thank you, Vivek. Next question, please.

Yes, good morning. Thanks very much for taking my two questions.

I'll start with China. Is there any line of sight on when new equipment demand there can bottom?

It is fair to assume that it just continues to decline well beyond this year, given all macro and demographic trends that we're seeing over there? How you are positioning your China business for what is ahead, not just this year, but in the coming years.

Vlad, let me take the first part. Talking China in a market, as I mentioned before, let's hope that we get proven wrong this time.

In the past, we were the most, how to say, conservative looking forward, and we were proven right. I'm not proud of that, absolutely not, and I would wish myself to see the market picking up.

It would help. This being said, as I also mentioned before, there's a part of how we act in this market, and Carla mentioned before, we stay very diligent in making sure we don't go into projects, jobs, which then put forward in the future years.

Happy that we don't talk now only one quarter. Let's look quarters and years to come.

Here, I always say China is and remains, for the moment, the largest market, not only new installation, it's also modernization, it's also business of this planet. Therefore, for us, there is a business, there's a good business to be done, and this is not at least the reason why last year towards end of the year or second half of the year, we were starting our own recovery and reassessing and resetting the organization there.

Looking forward, China remains a key market to be looked at and going forward also with a big portion of business to be done.

That's great. Thank you for that.

The second one will be on accounting impact. Could you provide a bit more detail on what those CHF 20 million actually are, that are currently sitting in operating profit but will not be part of it as accounting rules change?

I'm happy to do that, Vlad. The main part of this CHF 20 million that are actually operating finance cost, obviously that were below the line before.

You have to think about bank fees, you have to think about credit card fees, you have to think about fees, financial costs that are related to financing of modernization activities. Obviously they were below the line, which was consistent with the previous call, it a pre-IFRS 18 rules, which promoted and still promotes a clear distinction between operating and financing results.

We applied that consistently, since the first time application of IFRS decades ago. Now obviously there is the change.

Then there is a smaller part which is actually related to FX gain and FX losses. Obviously, the nature of it is inherently volatile, and it depends both on the underlying FX exposure and the exchange rate movements at the reporting date.

I'm not so happy that we moved that above the line because it will create a bit of volatility. Look, it is what it is.

Yeah. I must say this smaller part is not material, so it will now not potentially derail our results it is what it is, yeah.

That's super helpful and clear. Thank you very much.

Thank you.

Thank you, Vlad. We'll take one final question, please.

Good morning again. Thanks very much for fitting me in.

Sorry if it's not going to be a short one, but I just wondered if you could put some numbers on the operating profit bridge for H1 and expected H2 between savings, i.e. what you achieved in H1 and are we on track to get to that close to CHF 200 million in the second half?

Then you very helpfully quantified the expected impact from inflation of CHF 35 million being split 1/3, 2/3. Could you give some indication of what's happened to pricing in H1, and whether that can follow that kind of 2x pattern in the second half?

Yeah, I'm happy to take the part in the impact bridge. As Paolo pointed out, pricing in H1 was definitely With respect to service repair very much in line where we expected it to be.

We also believe that that part will continue in H2. When it comes to that the progress is actually solid and that we are well on track to deliver the CHF 200 million, so it might be even a bit, I would say, yeah, stronger than that.

Let's see. There is inspiration coming from the modular platform in all the countries where we rolled it out.

Obviously, it comes gradually and incrementally, so I expect that it also track nicely. Now in terms of inflation, also in line with where we expected it to be, but we have that uncertainty, I repeat now for H2 when it comes to energy and commodity, but it's mainly actually the volatility in the commodity.

These are a bit the major blocks as, and you know them well, in our impact bridge. Yeah.

Thank you, Carla. If I may just double check the CHF 200 million+ of efficiency, would you expect that now to be more H1 or H2 weighted given is this over delivery in H1 or is it looking better for second half?

To be honest with you, if our plans are executed properly, I would rather see a bit of a stronger H2 than H1, to be honest with you. Yeah.

Of course, in field operations in so many countries, you need to be careful because there is always a bit of volatility. It's always also impacted by the rollout of the large projects, that's where sometimes you have less of visibility.

If some of these large projects move to Q1 2027, you can already have quite a big impact. Yeah.

That's why I'm careful. Yeah.

Very helpful. Thank you very much.

Thank you.

Thank you, Andre.

Thank you, Valentina. Thank you very much for attending today's call.

Please feel free to reach out to me and the IR department with any follow-ups you might have. The next scheduled event is the presentation of our Q3 results on October 22nd.

With that, thank you and goodbye.