RENK Group AG (R3NK) Earnings Call Transcript

Good morning, everyone, and a very warm welcome to RENK 's Capital Markets Day 2025 here in Augsburg. It is great to see around 70 people here joining us in person today. Thank you all for traveling here to be with us for this special event. And then also, of course, a very warm welcome to everyone who is joining us via our webcast today. It is great to have you all here. My name is Melina Weiss, and I am delighted to be guiding you through today's event. With me here are, of course, today, our CEO, Dr. Alexander Sagel; our CFO, Anja Siebje; and our COO, Dr. Emmerich Schiller. Before we start, I kindly ask everyone here in the room to take a look and note the nearest emergency exits around you. We have two over here. Thank you, everyone. Well, whether you have known for RENK for a long time or you are with us here for the very first time today, we are confident that this event will provide you with a deeper insight into our business and the investment proposition it represents. So let me now outline our agenda for the day. Our CEO, Dr. Alexander Sagel, will start by presenting our strategy for the group, our priorities and our objectives. He will then be followed by our COO, Dr. Emmerich Schiller, who will provide a greater insight into the dynamics of RENK's operational excellence and how we deliver on our strategy and our products as efficiently and effectively as possible. After a 15-minute coffee break, Anja Siebje will then conclude the management presentations with a detailed look at our financial performance. Following this, we will open the floor for a Q&A session. This session is scheduled for 30 minutes, but I should stress that there will be plenty of time to ask additional questions throughout the day. To provide additional insight into our relationships with partners and as well into the future of land defense, we are very pleased to welcome two more guests today on our stage. Esa Rautalinko, CEO of Patria Group; and Michael Mazu, our CEO of the VMS segment. He will join later, of course, yes. Okay. Then after these two additional presentations, the webcast will end at 12:15 p.m. After a joint lunch at this location, we invite all of our in-person guests for a site visit at our nearby headquarters. And there, you have the opportunity to gain further insights into our operations, meet some of the teams and experience our products, technologies and latest innovations firsthand. And now please join me in welcoming our CEO, Dr. Alexander Sagel, to open today's event.

It works human machine interface. Ladies and gentlemen, a very warm good morning. It's a great pleasure to see you here. I mean, I think the majority of you, we had the pleasure to have a nice dinner last night. And I think it was also interesting for you, hopefully, to listen carefully to the words of General Mais about the Bundeswehr and the current scenario here on the European theater. Melina, thank you very much for the nice introduction. But again, I would highlight the agenda today. The agenda, as you have seen this in the order of appearance is designed around our business model, where I'm more talking about strategy and the growth drivers and organic and organic growth drivers. We then, of course, need to talk about how to return the capital. If we talk about efficiency, margin expansion, if you talk about efficiency on the capital spending and of course, on cash generation. So I have the part. I talk a little bit about strategy. I talk about market, market drivers. I will cover also technology and then handing over to my dear colleagues, Emmerich and Anja in order to go for the return part of the story. Ladies and gentlemen, please allow me before we go into our more detailed presentation to make a quick recap where we are currently, who is RENK today? I'm sure you are a very educated audience -- but I think it's important to recognize RENK is the leading company in the world for mission-critical drive systems if we talk about land application and applications. We have a very broad diversified customer base. You can also follow this on the chart. We have, and I think this is a kind of very important unique point of RENK. We have a strong aftermarket business currently in the range of 40%, which is a quite sustainable business. And also, I think it's open and fair to say, a high-margin business. What we also are, and this you see in the revenue split with 3/4 of our revenues for defense, we are a defense company, full stop. And our slogan, "We power freedom" are not only some written and mixed words, this is a dedication and a motivation and a moral implication for -- not only for the management team or the entire RENK people here in the room for the entire 4,200 rank, how we call our employees to serve our customer, to serve our Bundeswehr and to serve and to make sure that we can support deterrent and a peaceful living together in the future. What is important, you will hear today about growth and using market opportunities. If you look on the financial figures, and I'm sure you know them quite well, we are doing this growth process from a position of a financial strength. It's important because we need to invest. We need to grow. We need to take care about supply chain. We need to take care about M&A. And for this, we need to have a solid financial basis, but I think this will be also covered later by Anja. Starting from there, like always, I think 14 months since the last Capital Market Day, so please allow me a quick review about what happened during the last 14 months. I will do it fast, not to bore you, because, again, I think you are quite in the topic. Starting first, expanding our footprint, internationalization. I think you heard about our acquisition in April, Cincinnati Gearing Systems in U.S., one of the two main gear suppliers to the U.S. Navy for us, a very strategic acquisition in order to open and to expand into the growing U.S. Navy market. Emmerich will touch it later on. I think the post-merger integration is on a good way and also the first customer projects coming in. So it's quite positive. Also, we had the inauguration of our new plant in India. India for us is a long-term strategic defense market. I will touch it later on. There are various programs if we talk about RENK'S, new generation of tanks, IFVs, et cetera, et cetera. But there's also business for the civil part of our group, the industrial transmissions, and we will cover both in our Indian plant. This -- I like this picture because you see all the RENK guys as of today, we are trressed in blue. It's our color, ladies and gentlemen. And what you see here, not only 40, 50 gentlemen, diversity is a little bit of problem here. But this is the team of our final assembly, you will see today, and you might have heard about our modular production line. This is the team who has accomplished this change. You see in the background, our modular production for the final assembly, you will see it also today in life and in color. I think this was a very important milestone for RENK on our growth path in order to prepare for capacity for the future business to come, especially here in Europe. Last word on REM. I think you are all familiar about what happened last year at RENK America. We had quite some problems on the supply chain. We fixed it. So the next step was, of course, to stabilize REM, RENK America. And also here, I don't want to spoiler Emmerich, I think we are on a good way. The production is running, and we clearly see improvement and it's stabilized to sum it up at this moment. Top line. Today, we will talk a lot about top line. So I don't want to spend too much time here. But if you look back during the last 12 months, if you take the order intake accumulated between Q4 2024 up to Q3 2025, we talk about more than EUR 1.8 billion of order intake, which is quite a strong signal for a small company like RENK. You see some of the main really main bigger projects during the last 12 months. We have our Bradley, we have K2 in Poland. We got, as you know, also two additional orders this year, very recently, the [ Leard ] family, where was the launch yesterday at KNDS. So overall, a very positive solid track on the top line, and this will continue. Technology, even we are not IT or software, whatever, we consider us as a technology company. Technology is key to maintain our market position for us, to be the technological North Star in our market segment is absolutely, absolutely relevant. And I will talk later about our next-gen mobility road map. Just as a spoiler of my own presentation, we launched this year, and we are very proud two new transmission types, one for the upper end of the weight class, next generation of main battle tank transmission and also one on the lower end side, which from our point of view, is the entrance into further digitalization and even unmanned platforms. We, as RENK, we are a strong company, but we are also still a small company. So if we talk about getting access to technical capabilities, having partners for localization in markets in order to grab opportunities or to develop together with partners, key platforms, we are looking on building up a network of strategic partnerships. And you can see this network here what we built up during the last 12, 14 months. I mean, if we talk about getting access to needed technological capabilities, we formed partnership with Kinetics and XP. The latest one was with [ Ax Robotics ]. If it's more about localization in order to support customers in their business, in their projects, if you talk about Italy, for example, I will touch it also later. We are teaming up with companies like Leonardo or IVECO. If you talk about new platforms, innovative concepts, driving the next generation. We are talking with partners like [ Patria Eza ], also from my side, a very warm welcome. Good to have you here. It's a pleasure. And so we are building up our network of strategic partnerships. And as of today, if we talk, for example, about technological capabilities, we do not see the need to involve capital in order to strengthen this cooperation, but I will talk about M&A later on. Last but not least, here, we are more formal. This was at the day when we had our promotion to the German [ MDAX ] mid-cap stock market. This team, what you see here is in charge since March this year, Emmerich, COO; Anja, CFO. And maybe from an outside-in perspective, the timing of the changes on the C level could have been perceived as a little bit challenging, but I can tell you, it was a long-term really successful succession planning. And I can tell you also together with our 4,200 employees, this team is absolutely motivated and committed to drive this company in the next phase of growth. This was looking back where we are today. Where we are today, I mean, you see it. I don't want to talk about the 9 months report. This is the job of Anja. But in a nutshell, very good, solid on track. Independent -- if you talk about order intake, backlog, if you talk about adjusted EBIT, if you talk about revenues, very solid double-digit growth rate. And that's all from my side so far. We walk the talk. Looking quickly on the capital market, and I'm sure you have followed yesterday's discussions, let me have a quick comment on the share price, and let me have a quick comment on our shareholder structure. The share price, I mean, like all industry and peer groups in the market, of course, have seen an incredible positive market sentiment starting with the Munich Security Conference, no one, and I will touch a point later, no one could expect that 12 months ago, this development, these new dynamics on the European market. Currently, the share price is somehow stabilizing. Really, actually, it's maybe somehow doing a little bit of deep dive. But I mean, this is a common sentiment. Immediately, if someone is talking about potential meetings between Mr. Trump and Mr. Putin, if you talk about any kind of peace talks, the share price is dropping. Two comments on this. First, good entry point, a very good entry point. And the second comment is at least for RENK, but I would also perceive for all other defense peers, the business opportunities really are starting if there is, hopefully, for the people in Ukraine, a peace agreement because then the business really starts rearming, restocking. But I'm always saying the capital market, you are determining the share price. All what we can do is to perform, to walk the talk and trying to be as transparent as possible in the communication. On our shareholding structure, easy to see, you know this major changes. Triton is out. Now we have a free float in the range of 84%. KNDS, our strategic partner is in with 16%, but I think this was also a trigger for the positive market sentiment. Also, what is the status quo is that we defined for the first time very clearly our segment strategies. As you know, we have two sectors. We have a defense sector, and we have the civil business. Civil means industrial business, where we are selling, developing and producing bearings, couplings and transmissions. And we have two different approaches to these segments. If you talk about the Defense segment, it's absolutely clear, it's full focus on profitable growth or as I'm always saying, full throttle. Here are the market opportunities. Here is the so-called defense super cycle, long-term opportunities despite discussions I just touched before. So Defense is clearly in the focus of capital allocation. If it comes to R&D projects, if it comes to CapEx, there's a strong push towards defense. If you talk about M&A, clearly only for the defense part of the business. On the other side, the civil business, we are very happy if the civil business is growing, and we're trying to support the growth, but it must be a profitable growth. So #1 focus on the civil business is manage for value, being very selective on the type of projects we are acquiring in regards to return, being much more focused on costs, on production costs, on product costs, being focused on reducing overcapacity. You might have recognized during our 9 months and 6 months report that our Industrial segment is facing quite some headwind from this all GDP-related market environment. So we have overcapacities, which is a fortune on one side because we can use this overcapacity to load it with needed defense production. But it's clearly two different approaches. As a result and driven by the market environment, we do see that from today, rule of thumb, 3/4 of our revenues, the share of the defense business, most likely towards the end of 2030 will increase to a level 85% or 90%, while the share of the civil business will be somewhere 10%, 12% in this range. So we are developing even more towards being a defense company. Please allow me before I go now step-by-step in the market to have a little review of what happened since the last Capital Market Day. And again, here, I don't need to make you more -- to bother you with statements because you all know the geopolitical tensions from China, from Middle East, here in Europe, Ukraine and Russia, they have not changed. They have absolutely not changed. But what has changed is, and this is what you can see on the right side in this time line is that since the Capital Market Day, there was a trigger event of the Munich security conferences, and this was the beginning of the rearm of Europe initiative, Chancellor Merz, whatever it takes, you heard it yesterday from General Mais, in principle, an unlimited check at least for Germany. And Europe is following according to the NATO Summit and the conclusions on this, the 3.5%, plus 1.5%, you have seen that Europe, the European Union launched a safe initiative, a long-term credit facility in order to support countries who are maybe not that strong and maybe a little bit weaker on the debt side of the financing. And last but not least, also what we see, and you could also recognize it now step-by-step, the programs are coming, getting approved in the so-called EUR 25 million pleaetaric approval process and the projects are coming now. It took a while, but they are coming now, and this is positive. So the market, again, I don't want to focus too much on the numbers, but the key statement is if you look on the key markets for RENK, Europe and North America, both markets are growing. Of course, there's a different dynamic in growth between North America and Europe for the reasons I just explained before. You see that Europe had in the year 2024, around about EUR 430 billion of defense budget depending on the financial capabilities of each member state, this will increase from our perspective, it will increase in 2030 to a level in the range of EUR 800 billion. A big driver for this is Germany. And of course, if the budgets are increasing, and this is what you see in the middle, also the procurement budget is increasing. We see going to 30% to 40% of the overall budget. And of course, this means the relevant domains for RENK, land and sea, they are also getting more money. But I think you had enough market feedback and statement during the last couple of weeks and months. What is important is the right side of this chart because this shows the industrial logic, how in case of Germany, from order intake programs coming to the primes, how this translates after a certain period of time into revenues, first into order intake for RENK as a Tier 1 supplier and then later on into revenues, OE revenues and later, later on into sustainable aftermarket business. And in our assumptions, you noticed we always shared this during our reports. We do assume and we see it now, our primes, our customers are starting to get contracts from the German customer with a certain delay of 3, 4, 5 months, we, as a Tier 1 are getting also the contracts from our primes. And then, of course, everyone needs to build up capacity. For example, our primes, they need to ramp up capacity. We assumed in our scenario, it takes around 2 years. So this means before 2028, for following, there will be no additional impact on our revenue lines from this 3.5% Germany or 3.5% NATO. This is important. In the time in between, and I will touch this point later on, if you talk about different growth dynamics, we will grow according to our total order backlog, fixed contracts, according to our operational execution and according to the delivery schedules of our customers. And after a lead time, if you take a land transmission, if this land transmission is sold to our customers after a certain lead time, this new transmission is generating an attractive downstream business in form of spare transmission, spare parts, MRO service, et cetera, et cetera. Now we go a little bit again into more details. So what is driving our top line, our visibility towards 2030 and beyond. We have, as you can see it here, four buckets. I'm always saying four buckets. It's maybe not professional, but I like this expression. The first three buckets, A, B and C are organic buckets. D, I will touch later, is an inorganic bucket. So starting with the first and most obvious, our total order backlog. As you know, as of today, 9 months report, it's in the range of EUR 6.4 billion. These are contracts we have or where we have an extremely high visibility that these contracts are coming, and it's all about analyst is just out. I'm always saying it's all about, please don't tell them this. It's all about operational execution, nothing else. But this is challenging enough, but I think we are on a very good track on the ring side. Pocket B or basket B is our normal project pipeline. As you know, we have introduced this last year in the capital market, we had this kind of bubble chart. In the bubble chart, we try to indicate what the growth potential is depending on the maturity level of a specific program for the regions, Germany, Europe -- Germany, Europe and Middle East and North America, the Americas and Asia Pacific. This time, we made a little change. We separated Germany out of this project pipeline and our view on Germany is undersea. But let's stay first for the time under our normal project pipeline. These are known projects. It's a bottom-up approach. They have a different maturity level. These are new business for the time being, and this is only focused on land, of course, and on sea because what I'm talking now about in general is only defense related. What we estimated over the regions, Europe, Middle East, North America and Asia Pacific, what we see until 2032 time frame, and this 32% is coming from the logic, how we evaluated it last year because we had a look until 2031 is somewhere in the range between EUR 11 billion to EUR 12 billion for new business. Do we get everything all of this business? No. There's, of course, competition. We have regions where we have 100% probability. But if you take our overall market position, our market feedback, the performance of our organization, the delivery performance and the product performance, I think there's a high [ Pwin ] probability to get a major share of this EUR 11 billion to EUR 12 billion out of this basket. C is Germany. I think this is -- I will highlight all of these ABCD later on. You see that we are still continue to work in ranges because -- and you heard it last night from [ Gener ], not all the volumes from Germany as part of the 3.5% are really final, final, finally defined. So we are working with ranges. We are working with a lower range and with the upper range. Our estimates regarding 2030 targets is somewhere in between and what we see today for the land and for the sea domain is an average between EUR 1.4 billion up to EUR 2.2 billion of revenues up to 2035. What is important for B and C, our project pipeline in Germany, we usually always talk about new business. But as I just indicated before, driven by the type of product we have, aftermarket is a very important business. So we try to estimate how much out of this new potential business from B and C could be translated into revenues up to a certain time line. We see it here up to 2035. Aftermarket business is quite complex. It depends on the number of training cycles, services coming today, coming in the future. It depends on spare part stocking or inventory strategies of our end users. For example, the German Bundeswehr also here, please remember the statement from General Mais. We try to estimate that between today and 2035, how many new transmissions we are selling and we could sell in the market as a potential and after a certain lead time, how this could come back aftermarket. From my own perception, I would rather consider this as on the conservative side, the EUR 3 billion up to EUR 4 billion of revenues coming out of the aftermarket business. But to be honest, we prefer to be a little bit more conservative. We are working hard in order to evaluate further how this business, especially if we look beyond 2035, is coming back into our pocket. I will touch this point later on. So A, B and C are the sources of organic growth. D, is inorganic growth, M&A. And as you know, RENK has quite a good track record for doing M&A. For example, our entire footprint in North America was done and created by M&A, and we have a good track record for post-merger integration. So of course, we will also, and I'll touch it later on in the M&A section, look further to continue the story. We have clear targets in regards to market, verticals or to technology. I will touch it later. But it's fair to assume that we could add between nothing if we are not successful or it doesn't work or theoretically, if we look on our targets and the time line in the next 5 years, up to EUR 1 billion as an estimate of inorganic growth. Important to mention for our midterm target, which is coming soon, we only consider organic growth. Every M&A is coming on top. Again, A, B, C, D is the -- no A, B, C is the source for our top line growth and leading to our midterm target. 2024, as you know, it was EUR 1.1 billion as on the revenue side, 2025, we will be above the EUR 1.3 billion, fulfilling our guidance. By A, B, C and the combination into aftermarket business, we foresee a range as our new midterm target between EUR 2.8 billion and EUR 3.2 billion of revenues. If you ask me, do I feel well with this? Do I feel nervous? I feel very solid about this range. But it's important to give a little bit more color of this, also to explain why we see this range. First of all, there are three major criterias which are impacting our ramp-up. Number one, it's 100% in RENK'S responsibility. Do we have enough cash in order to finance our growth? In the average, we are spending in the range of 2% to 3% of CapEx. Do we have a production strategy which is in place in order to execute this expected growth? And [ Mel ] will talk about this, yes, tick in the box. Second point, only in the responsibility of RENK, do we have our suppliers under control and are our suppliers growing with our demand. We have various of activities running from lead time reduction, selective in-sourcing cost, whatever, new frame contracts. We had some -- quite some lessons learned from last year's experience at RENK America. Overall saying, tick in the box. Does it mean that we will not have red flags on a weekly, on a monthly basis for certain components, we will have this. And we are having this today, but this is normal operational management. This is how to need to manage growth. And also one last final comment, we do not have yet a strong dependencies on any semiconductors, PCBs or whatever. We are a mechanical-driven company, which also helps, including a deep vertical integration of 70%. So overall, tick in the box. What we need to do, we will do. The second point is -- or the third point is, of course, like we need to ramp up capacity, our partners, our brands need to ramp up capacity. And there's an absorption rate. We cannot produce or what we can could produce. Our customers need to have a certain capacity and, of course, a delivery schedule. But if you have seen during the last weeks, I'm sure on our customers in Germany, for example, there are many, many activities. They are fully focused on ramping up the capacity, and we are very, very positive here. But the range is also determined simply because if you take Germany, we are working with ranges. And then, of course, the range is also determined by the fact that for some of the projects out of our project pipeline, there is a lower level of maturity, meaning maybe the final volumes are not defined. Maybe the final SOP or T0 for contract is yet not defined. So this is the reason why we are working with ranges, the EUR 2.8 billion up to EUR 3.2 billion. And as I said, do I have sleepless nights? Absolutely not. We do feel solid about this. But it's important, two comments. First, there are key enablers. You see it on the below. It's technology. We need to maintain our position and having the right and needed technologies in place. And the second one is operation. It's just about operations, just about operations. This is my good position, by the way. But it's also important to underline the dynamics of growth from a crew perspective. And I think this is important what we try to highlight here on this chart and again, take on top the process, the industrial process of getting contracts from our primes to convert it into revenues. Before 2028, if the contracts to our primes are flowing in now and we get the contracts during 2026, maybe in '27, there's a lead time. And from our today's point of view, before 2028, there will be no significant impact on the revenue line, simply driven by the industrial logic. Before we do our growth from our total order backlog of EUR 6.4 billion. And we do it by converting it by improving excellent operations and according to customer deliveries. Then, of course, after 2028, when the contracts are coming in, the revenues are coming on the top line of us, of course, you have a different acceleration. And the key question is, what will happen beyond 2035. We are working on this in order to get more visibility, but I will show it at the end of this presentation. you should not be concerned that after 2030 and 2031, suddenly RENK is not growing anymore. There will be continuous growth. There will be continuous growth on the OE business, maybe not after 2035 or whatever time line in a double-digit mode, in a single-digit mode. But then after 2035, the impact of the aftermarket business should really kick in. So now I will spend a little bit of time to run through the A, B, C and D buckets. Some of this I already discussed, so I will make it faster. I start with the total order backlog. And this is nothing else what we have presented on our 9 months report 2 weeks ago. You see EUR 6.4 billion independent if you compare us on the fixed order backlog or on the soft order backlog compared to fiscal year -- financial year 2024, we see everywhere improvements. You see some of the projects, some of the customers we can name, other customers we cannot name. You are quite familiar with our store contracts in U.S. for the HMPT transmissions. We have international customer, a good international customer who is buying engines and transmissions. Two, three orders this year, very positive. We had various of naval programs. Interesting, if you talk about the Eastern part of Europe, I mean, you heard about the book business of the AJAX for the Baltics. K2 is quite a success story. We got a contract last year before Christmas, a big one. We got in the meantime during Q3, another contract. We got in the first week of October, another contract. K2 is really performing. So -- but I don't want to spend too much time on this year because now it gets complicated because we talk about our pipeline. So we talk about the bucket B. And I will really try to do my very best to make it as smooth as possible. I'm very happy to answer all questions in the break wherever because overall, and this is maybe starting with this, the logic for our bucket list is we take known projects, known projects who are in the market, maybe they are not finalized in regards to the timing. They are not finalized in regards to the volumes. And we have, as you see it here for our bucket B, we have three regions: Europe and Middle East. We have not the Americas, which is 100% North America and 98% U.S. and we have Asia Pacific. Overall, what we have currently in this project pipeline as a visibility is between EUR 11 billion and EUR 12 billion. If you check our last year's presentation of the pipeline, there was first Germany included, but it had no impact because last year in September, we had booked everything for Germany and the potential, what we had here in this bubble chart for Germany, you could not see it, because we saw no potential. So no one could expect what happened with the Munich Security conference. The second important point in our last year's chart, we had included the soft order backlog. This time, we took out Germany and we took out the soft order backlog. Soft order backlog was under the total order backlog. And what you see here are really the market potentials we are seeing in the next 6 to 7 years. We could go through all this, but I think one observation is the biggest bubbles and therefore, the biggest market potential is, of course, in Europe. You have as a main driver, IFV programs, APC programs from various regions. We have Patria sitting here. They have a very innovative APC concept. But you also see Asia, and this is interesting because Asia in this kind of middle category is pretty much driven by India. India, new light battle tanks, main battle tanks, [ Aun ], where we are currently supplier, if you talk about new IFV programs. And if you talk about new frigate corvette and destroyer programs. On the right side, you see some of the very prominent programs. Again, K2, we do expect more batches to come. We see various IFV programs, for example, in Italy, in the Ukrainian coming, hopefully, when there are soon a peace agreement. We see various frigates in Europe also about Asia Pacific, I just talked before, for example, the light battle tank and also interesting, and I guess that's would be a source for questions, the Abrams tank. What we took out of this bubble chart and we had it last year in was the transmission business, the potential transmission business for the [ M1,E3 ], the next gen. You all know that [ Sapa ], a Spanish company, got the go for the development and qualification program. So we took it for the time being out. On the other side, if you read carefully, we are still in the race on the [ M1, E3 ] with our [ TRV ] systems. And I would consider this as a very high probability for RENK to be in this [ Airbraance ] program, at least in the qualification phase. You need to pass the qualification phase successfully. Otherwise, you do not have a chance for the serious ramp-up. And I would consider us as being well positioned here. So this is B. If you talk more about B, talk about Europe, overall, we see a potential of almost EUR 6 billion. In Europe, it's, of course, key to get as much as possible market share from the ISVs, from the MBTs, from the Navy programs. But for customers, for some customers, we also need to think about localization, localization of the production, at least partial localization of the production. We have two cases. You see on the right side, Italy, you are all aware about it. We founded RENK Italia last year on the premises of Leonardo and we formed a partnership with Leonardo and IVECO to prepare for the future IMBT, the Italian main battle tank program and the IFV program. If RENK would be successful together with the partners, we would do a localization in Italia in order to build up local supply chain to have -- to enforce local workforces and to be close to our customers. It's the same if you look about Eastern Europe. And as you all know, on the Eastern side in Ukraine, in Poland, on the Baltics, we see a significant demand for aftermarket overhaul business. So what is a natural step is that we will build up an MRO center in Eastern Europe. If you look carefully on the chart, you could get the idea where this will be. I promised to our communication chef that we will not talk about Poland. But please expect in the next weeks an announcement in this regard to building up an MRO hub in Eastern Europe to serve the local market, but also the adjacent Baltics and Ukraine. Quickly still staying on the -- on our pipeline, U.S., we see a different dynamic of growth. The dynamics of growth in U.S. is different, lower than in U.S. for all the reasons we discussed before. But if you follow up the RENK strategy, you could pretty see pre-IPO by acquisition, we built up the footprint. 2024, we had to do quite some work in order to fix the operations, to fix the supply chain. We were successful. 2025, we start to expand. I mean, if you talk about the land domain, REM to produce according to customer requirements and delivery schedules, but also expanding by the acquisition of [ Syconetic ] Gearing Systems to have a local footprint, at least of 85% of value chain, a localized value chain, which is needed in order to be considered in upcoming larger Navy contracts like the DDG and the FDG program. If you look in the future, I think now in the meantime, RENK has 7 sites in U.S. We are serving the domain land. We are serving the domain sea. We still have some smaller industrial business. So what we feel is we need to build up an organization, lean and clean to better orchestrate all of our U.S. organizations and activities towards our end customer, towards the government, towards our customers. So 2026 will be most likely seeing the foundation of a kind of RENK in organization. And of course, looking always and seeking for attractive M&A opportunities. To make a little spoiler, U.S. was and is and will be always in the focus of M&A for us, maybe not on the land domain because we have a good footprint, but maybe going into Navy domain. [ Expend ] 2030, if we are successful doing this, we should have access to the larger Navy programs, which are kicking in on the revenue side starting 2030 and of course, to further continue on the land side, especially looking on repowering of platforms. Coming to sea, again, I think you had some profound detailed ideas and thoughts from last -- from yesterday's speech of General Mais. You know this chart from our 6 months report. The principle saying is Germany has two phases from today up to 2035 in the first phase up to 2029, 2030 is to get at least ready for fight. And the second phase is then to scale up in quantity and innovations. We discussed the logic, the contract starting now to come in towards our primes. They are moving through the EUR 25 million parliamentary process. So we are expecting to get the first contracts out of this 3.5% increase in orders in 2026, in the first half 2026, the first one, but this will come in gradually. Overall, then starting 2028 to see it materializing on the top line in form of revenues and of course, going further. You see the numbers I talked before on the land side, we have a potential between EUR 1.3 billion and EUR 2.1 billion. I think what is important without going into too many details, you see our assumptions here in regards to volumes. We're still working with ranges because it depends really what the German customer will do until 2030 up to 2035 and beyond. And I think one point which is yet not clear is how many main battle tanks or how many Leopard 2 families will really materialize. And as you see it here, if you talk about Leopard 2, which includes main battle tanks, but also the family platforms, bridge layer, recovery, engineering vehicles could be between 500 up to 1,100. So we are working hard to understand this better. We have more transparency and visibility, for example, on the [ PUMA ], where we see us on the higher end coming in of the numbers here. But overall, it's a quite interesting, attractive revenue potential. I talked a lot about aftermarket. I talked about the source of aftermarket. We have, as I just said before, spare transmission, spare parts doing overhaul. If you talk about Navy, we have field service on board. And as I also said before, it's not that easy to make really a precise estimate how much of aftermarket is kicking in. You have a certain lead time until the first transmissions are coming back. This depends on the user frequency, on the training frequency, for example. It depends if you talk about spare parts on the stocking inventory strategy of our customers. But as a rule of thumb, but this is really very rough. One new transmission you are selling on the land system side, you will get back 3 to 4x over lifetime in value over the life of a platform. And the platform life is in the range between 20 to 30 years. So this is attractive because, for example, this does not consider an enhanced increased training frequency exercise. If you take the Bundeswehr, for example, the transmissions are coming back after 800 or 1,000 hours. If you take the transmissions coming back from customers who are in a hot conflict, they're coming back after 40 to 50 hours, just to give you an idea about how training and use and concept of operations are impacting this. Overall, a very, very attractive business today on a 40% -- round about 40% share. And if you look on a timeline beyond 2030, 2035, when most likely somehow new business is normalizing, still growing, to get me absolutely clear, but maybe not on a double digit, then the aftermarket is steadily growing and might lead to the fact that we will overall increase our share of aftermarket from today 40%, maybe in the range of above 40%. M&A, I touched this before. You see this range from EUR 0 to EUR 1 billion. We have a clear set of criteria, of course, return of investment of the capital. It must contribute to our profitable growth strategy in the relevant segment, Navy and land segment. We have, as I'm just saying, around about three handful of companies we are observing some of these companies, we are just following, tracking them with some of these companies, we are maybe in first discussions, a warm-up and maybe with one or two of these companies, we are short before, let's see, maybe going into a structured process. But all this is as of today. We have three allocation criteria for potential targets. First, do we close the market gap. So we talk about market consolidation. As I just said before, U.S. will be was and will be always in the focus. But if you talk market consolidation, we might look also to Europe, not on the land side, neither in U.S. or in Europe, but maybe looking on the consolidation on the naval side in Europe. From the verticals, from the product, of course, we are searching if there's an attractive way maybe to go half a step upward in the value chain. And from technology, as I said before, in principle, we are also looking for M&A targets. But so far, we are moving forward with our network partner strategy. Technology, we introduced last year, we have four key technological segments. One is the core technology, our today's products to optimize in regards to performance, weight, power density and even costs, of course, cost down activities. Then we have the new tech electrification and hybridization. We talk about in the third one, digitalization, including technologies for unmanned vehicles where we do believe the so-called UGVs are getting more and more relevant because you heard it yesterday, soldiers are a very rare good. And in the future, we see beyond 2030, a very well-balanced mix between conventional platforms, manned and also unmanned platforms, by the way, not only on the crown, but also in the air and the industry. Last but not least, system engineering. Some of our customers are requiring that we do more than just transmissions or more than just engines. They want that we integrate engine, transmission and maybe even the drive system. And I think here we have, you will see later, quite a unique competence just if you look on our test rigs. Overall, to sum it up, in our next-gen mobility road map, we have two phases. The first phase is until the end of this decade to upgrade our main products on the Navy side and on the land side in regards to the traditional performance parameters, but also in regards to hybridization, electrification, digitalization. And then beyond 2030, seeking for new product opportunities based on our core mobility systems, on our transmission, on our damping systems. Just very quick, if you talk about the two transmissions I mentioned before, we are very proud. We have launched our next-gen main battery tech transmission during a media campaign during last summer. Our 4 -- 6 transmissions for weights up to 60, 75 tonnes. It will definitely set a new benchmark in power rating, in weight and weight reduction. It will set also a benchmark in modularity because as of today, each new tank, if you develop a new tank platform as of today requires a new tank transmission. This transmission has a modular approach saying for new platforms, but even for repowering of platforms, you can use one transmission type, which could be an interesting aspect if you talk about logistics in the future, if you have in a NATO environment, 2, 3, 4, you know this, different platforms and you talk about spare part management in the theater. So if you have one subsystem who is modular and one size fits all, we believe it's very attractive. On the other end of the weight class, our 76, it's our -- I'm always saying our small beauty. It has a different power rating, of course, like the NBT transmission, but it also has only this size. You will see today, 760 kilogram for us, very important and also proud to have this developed in this case, together with Patria. For tracked vehicles between 10 to 20 tons. You will hear later more about these kind of tracked vehicles. But this is interesting because with this small transmission fully digitalized and drive by wire, we are opening the access to remote control driving and even semiautonomous or autonomous driving of tracked platforms. This is the idea what we have to understand if we should go and if we can go from our core product offering, mobility with our today's systems by digitalization into mobility systems for UGVs in the future in this weight class, tracked UGVs and maybe even to make a little step further to go from only mobility supplier to go with key partners and provide maybe full UGVs who could then be used in a various of use cases from transporting ammunition or including effectors. The key for all of this is the digitalization of the transmission and it is especially the drive by wire system. And RENK will have the first worldwide certified according to the [ AS ] norms, Germany, fully qualified [ drive-y-wire ] system. What does it mean if you talk about UGV components and maybe even going into UGV role together with partners, we have a presentation today. Michael Masur, the CEO of VMS will talk more about this. But of course, I need to show it also here also kind of spoiler. So we have prepared a little video just as a teaser, and please expect more in Paris in June next year on this. Just look on our teaser as forgetting a kind of flavor. [Presentation]

I don't know if you have seen this, there were some droplets from the rain on the chassis. This was just a teaser. It's a kind of outlook where RENK is maybe trying to go. In a nutshell, our technology strategy, it's very simple. We are coming from the core for the land and for the sea with our transmissions, our engines, our drive systems, our e-generators, PTOs, et cetera, et cetera, advanced silence drive compact propulsion technologies for naval application. And as a step I just highlighted, digitalization will not only take part on our today's product portfolio, transmissions and [ damping ] systems. For example, what we are offering as a proposal to the M1, E3 on the drive system is a fully digital drive system. I'm always saying a smart drive systems. Our CTO is always angry. But anyway, and as a further step with this to go into future mobility to deliver systems and components who are intelligent into so-called unmanned ground vehicles, we are on the ground and we are on the sea. We are not in the air, not in the space. We are very, very focused in our business. And maybe later on, looking on what I just indicated with this little movie, maybe stepping together with partners, prime partners into the role of [ UGV ] providers. Having said this, I'm almost done, and I'm perfect in time. I just see this here. Let me give you two comments more. First of all, what is beyond 2030. I mean the first statement, and again, we are trying to quantify this more in real figures is the [ OE ] business of the conventional platforms will not stop beyond 2030. I mean I talked before about our pipeline. You see name of the programs. For example, the big bunch of the German programs are expected to come in the second phase. If you talk about all the Navy programs in U.S., if you talk about India, India always takes time. But again, we, as RENK are prepared from our footprint as of today. So this business is continuing. It might be not always on a double digit. It might normalize to a normal growth rate. But the second point is the aftermarket business. Each new transmission, if you talk about land transmission, we are selling during the next years is generating a sustainable aftermarket business, adding on our huge installed base, always another layer, another layer of long-term sustainable, profitable business. And third, we will, of course, try to add additional layers from new products and new market segments where we are not in today with our existing core technologies. What is also important is we have today technologies, if you talk about energy change, regenerative energies, et cetera, which are unique in the market. If you talk about the entire value chain of hydrogen, we believe with our industrial part of couplings and transmissions, this could kick in, could be relevant beyond -- far beyond 2030, somewhere in the middle of next decade. Sooner or later, human mankind has to react on the climate change. Today, there's a strong focus on defense. This strong focus, super cycle defense will maintain the next 10, 15 years, 20 years. But of course, we try to seek opportunities with our technology, our competencies, if there are markets, we also would grow these markets. This is a perspective, a qualitative perspective on 2030. Organization is, of course, key. And as I just said before, we are a defense company with an increasing share of defense business going in the range in the next years, almost close to 90%. This also implies changes in the organization. If you see today on the left side, we have three segments. VMS is the largest segment, M&I and we have slide bearings. VMS is more or less 100% defense. M&I really as a rule of thumb, 50-50, 50% it's defense business, 50% is industrial business. And slide bearings, of course, almost 90% slide bearing business, triggered by the organic growth which is predominantly taking place on the domain land in the VMS segment. And triggered by potential acquisitions, we will refocus the organization, refocus on really pure defense land, pure defense naval. If we are successful, what I just said before, looking towards 2030, maybe to have our own separate business unit for new tech, for example, [ UGV ] mobility. And last but not least, we will consolidate the existing civil part of our group into one organization in order really to maximize the synergies from the customer point of view, which is, as of today, not given simply. Having said this and referring to my statement in the beginning, this is my last slide now. But I think it's important because this is not only the bridge from strategy growth and growth levers. It's the bridge towards my dear colleagues. And it shows the business model, which is also not no rocket science, but crystal clear. Growth and growth levers, I try to explain, organic, full focus on organic growth. But of course, if the opportunities are there, also inorganic growth. But then it's all about the return on capital. It's about how to improve the margin, volume effects, efficiency, working on the COGS side, on supply side, working on the product mix. By nature, the product mix is changing. The capital productivity, I mean, how to use our capital, I just said we are in a pleased starting situation to capture this growth because we are starting from a well-invested industrial base due to the history. We will grow in the future on the CapEx in the range till the 3%. We will have 2 years, '26 and '27, where we will be slightly above this. But on the average, we are staying and we consider us to be very efficient on the CapEx spending. We are using existing plants. We do not need to build up new plants. So all this is about capital. And at the very end, it's about the cash conversion, about the cash conversion rate, we will talk later. But this is our business model. And again, this is really my last word. I have 1 minute. We have a very focused business and product portfolio. This is the reason why all what we do here and what we tell here is not fancy. We do not need to follow specific trends. We need to execute. We need to execute on the operations. We need to execute on the financial efficiency, on the capital efficiency. And I think this is the mission what we as a team have. And for this reason, thank you very much. I would like to hand over now to Emmerich.

Alexander, thank you. Also a warm welcome from my side. Good morning to everybody. I think -- or I'm sure you have seen what Alexander presented, and we are going to at least double the revenue within the next 5 years. And we had a discussion yesterday, Esa, and I like his picture. Doubling the revenue is counting beans. But it needs somebody and it needs a team to produce these beans before you can count them. And as Alexander just said, and this is how he welcomes me in the morning, it's just about operations. And this is what I'm going to tell you within the next couple of minutes. So I was called from [ Susanne ] 2 years before, if I would be interested to join RENK. And I think she has an idea in mind because she foresee that we need to prepare for that tremendous growth in the future. And one of the ideas, and we shared this thought yesterday on the table is to bring in experience from automotive. And therefore, let me briefly introduce myself. I was working for almost 30 years in automotive in mass production, but also in very small series production. So I was COO in [ AMG ] and CEO with the [ G-Class ], which is a low volume. And many of the things we are discussing today are similar to that what I did in this position. And therefore, I started the discussion with [ Susanne ]. And honestly, she convinced me and saying from today, if at least your heart beats a little bit for operations, this is one of the most exciting jobs you can have in the industry at the moment. So it's just about operations. We had the same discussion yesterday on the table. And maybe this is a little bit bold, but I'm absolutely convinced that this is the truth. So failure or success in or for any company in the defense business for the next years is answered in operations. If operations is able to scale up, if operations is able to fulfill the demand and if operations is able to transform to at least an industrial level, this is not there at the moment. And our idea is that we bring in automotive standards to our company and to adapt them to the company because it's not the same. You cannot put them to the company one by one. You have to find the right level and you have to find the right way to do it. If you compare automotive, for example, with the defense industry, there is a gap of at least 15 to 20 years in between. And the more we close the gap, the more we get the benefits from that. So the contribution for operations is pretty clear. We are supporting the growth or we are securing the growth. And it's -- you can summarize it in three words. It's -- the first is secure output. The second is enhance resilience and the third is increase efficiency. So it's all about these three words: output, resilience and efficiency. And you have seen the numbers on our 9 months report, but it was on your slides as well. Two figures, plus 19% in revenue and plus 25% in EBIT. And this, from my perspective, and this is very Sweden, I think we made somehow our homework, and we delivered on our promises. And you have to take into account, and you know that, we almost made the same numbers last year. So talking about 2 years, we increased the output by around 50% in 2 years. The challenge is to keep that momentum. And what is even more challenging, and I will go deeper in this in the following is how we prepare for a growth that is even steeper. Therefore, today, I would very much like to concentrate on [ VTA ]. [ VTA ] is our transmission production here in Augsburg, and we will visit this on our plant today. Why VTA? I think it's pretty obvious that VTA is our main driver for revenue and for EBIT. So it's worth to spend the time there. We will extremely grow, and therefore, we have the idle conditions to apply standards from automotive to this approach, and therefore, we see VTA as a role model for us or a blueprint that could be rolled out to all the company. So we are doing a stepwise approach. We are transferring ideas and methods from the automotive industry to our setup, then we prove the feasibility and prove the benefits. And if we can make a tick mark there, we define it as a standard and then roll it out into the company next line. So you have to keep that in mind when you see the numbers and the figures I'm going to present. So they are related to VTA, most of them. But I think what is important is you see the potential of these numbers if we roll out these approaches and this way of doing it to all the company within the next years. What we have achieved in the last 12 to 18 months, I think it has a measurable impact on our company and our situation, and I just gave you the two financial figures, 19% and 25%. I also have some production numbers there. So by applying the new assembly concept here in Augsburg, we started with this concept in August. So it's almost 3 months operative. So within these 3 months, we again increased the output in the existing system by 13%. And as Alexander already said, RENK is back on track more or less. So the colleagues the are producing three transmissions a day. On the procurement side, we tremendously reduced the lead time for our supplier parts by more than 50%. And we -- in addition to that, we stabilized our supply chain by more localizing our supply chain in Germany for VTA. So we have almost 100% of all the supplier parts around the [ church ], as I used to say. As I already mentioned, we are focusing on two dimensions. The first dimension, it's obvious we need to scale up for serious production. But the second is even more important. We need to scale up for serious supply. So the main levers are we are trying or not trying. We are expanding our capacity by adding additional machinery and equipment, yes, but what is even more important and what gains us more capacity at the moment is we are increasing efficiency tremendously. So the more the efficiency increases, the more capacity is there. And what we do in addition is we fully utilize the potential of our production network. So we are using capacity in our network. Then we are going to more localize our footprint. We need to do this because we want to have the opportunity to fulfill local content requirements. And I would like to dig a little bit deeper in what we call planned strategies or operation strategies. On the supply chain side, we really managed to enhance the resilience with different measures we took there. We are deeper, deeper in supplier management. And finally, we are talking about system suppliers. What this means, I will explain a little bit later. We talked a lot about the new assembly concept here in VTA and the participants who joined us in person, they will see it in the afternoon. I'm a little bit proud about it, but this is not the reason why we are showing it. The reason why we are presenting it is we see it. You can really see with this what we are doing and how we are thinking with this perspective. So you see the before and after picture. And I think it's totally different. It's a very traditional workshop on the right side, very manual. And if you are looking for processes there, honestly, you will not find many of them. On the right side, it's different. This is what you see. And what is important is it's -- you need to understand what it is behind it because it's not just what you see on the slide, it's even more what you don't see because changing to such a way of working is a fundamental rethinking production is a fundamental rethinking of supply chain. And I had the opportunity to install a very similar system in one of my former positions at [ AMG ]. And this was selected or was selected for the first prize in the Factory of the Year award from [ AT Kearney ]. So even in an automotive environment, it was somehow, I would say, outstanding. This slide, again, should demonstrate that we deliver on what we promised. So those of you who have been there last year, they might remember that I have shown some sketches of where we want to go. This was the second picture here, the 3D visualization on the left, on the very left, you can see my hand scribbled. I discussed the idea with the team. Then we had the reconstruction phase. This was similar to change the tire driving on the German auto by 180, and I avoided to go to the shop floor for 2 weeks because it was really a mess. I do not know how the people manage it because we had to do this in full utilization. And as I said, from August and July on, we are operative, and I think we can make a tick mark of what we have achieved so far. On the next slide or on the next slide, I will go -- I will show you a short, I would say, Am of what we are going to see this afternoon for those who join us on the factory tour. And for those who are online with us, hopefully, it convinces you to join us in person next year. So this is the film. [Presentation]

In [ AMG ], it was one man, engine. This is one man, one transmission. And I see some of you smiling. And I think you can imagine what it makes with a person. So before he was working in a line and he just assembled a part of this transmission. Now it's his transmission, and it makes a difference. And I think you can really feel it. And it was his idea in the movie to stand like this because it was his transmission. So it's not just a change in how we work. It's not just a change how we apply the things. It's a change of we work together as an operations team. So results are quite positive. As I said before, it's not just what you see, it's even more what you don't see. I would like to give you an example on this slide. So on the picture, you see a logistic worker picking the parts. This is what we call a lineback principle. Lineback principle, again, is a method which is well known from automotive, where we concentrate on the value adding at the workplace, the value adding from the assembly worker. So we are trying to avoid everything which is not value adding at this station because assembly worker is highly educated. It's highly -- it's difficult to find. And therefore, we want to let him do his work to assemble the transmission and not running around and looking for parts. So this colleague there is picking the parts, is pre-picking the parts and then the assembly work, as you will see this afternoon, gets this in the right order, in the right quantity at his workplace. We optimize the material flow, and we even integrate the supply chain. So we are going upstream and optimizing everything according to that principle. So the efficiency is much higher. We increased the quality with this. So just to give you an example or to underscore that, we have had the highest -- all-time highest first run rate in October in the system. And I think this is how -- it shows how it works. The first run rate is almost double as high as it was in '23 on average of the whole year. We reduced costs for sure, and we reduced the lead time tremendously. So the shift from a very manual system to a small serious system, I see it as a game changer. You see some of the advantages on this slide. So we have 100% flexibility in the old system where we have had dedicated lines. It was difficult to react when the mix of the transmissions has changed. Now we are 100% tight flexible. So we can produce or assemble any transmission on any workplace or we can react on changes in the volume because with the line, you have to go in the second shift with the whole -- with the entire line with a single workplace, you can go to the next shift with just one station, and this is much more efficient than with the old system. We -- for sure, we reduced the space in the factory because we have less logistic effort there. We are estimating it by 50% and therefore, avoiding additional investment in buildings, for example. Qualification time for the people is by far less. So I was surprised. I was calculating 20% to 30%. But my foreman who is working with the people there, he said it's 60%. So 60% less training and qualification time. And what is also already stated is it's a 30% of additional increase in efficiency. So what I said in the beginning, it's a tick mark. It proves to be the right situation. And therefore, we go the next step. We define this as a standard because it's not just made for Augsburg, it's made for the entire RENK Group. And therefore, again, we are looking on what is the automotive industry doing. And many of you know the Toyota production system, which is the most famous one. I had the opportunity to work on the first production system from Mercedes in the '90s. So it makes me a little bit old, but maybe it's a little bit experience behind it. And our RENK production system will be designed in a very similar way. So the production system is a kind of a cooking book or story book of how we plan, how we design and how we operate accordingly in all our factories. It defines our production philosophy and it defines our methods. So one of the key methods or core messages there is continuous improvement. And there, again, standardization is key. So if you have a standard process, you can work on the standard process and you can improve it and then define it as a new process or as a new standard. And finally, we need this production -- or we need and use this production system for qualification of our employees, but also for our management people for our team leads to work accordingly to standard, which is a game changer. So the idea is that in the future, we will work accordingly to a standard in every single plant. For sure, there are some differences in land transmissions and gearboxes. But I don't see any reason. And I think you will fully agree, there is no reason why we should work differently on a plant transmission in Plant A and Plant B. If there is one best way to do it, we should apply this best way in every plant. To give you another example of this idea of modularization is -- and Alexander, I think you have referred on this on several times talking to the analysts and talking to the people. We defined a module for the final assembly of the -- not just final assembly of the assembly of the transmissions. And this module is defined for 100 to 150 transmissions a year. And it is predesigned. And therefore, it's a kind of a bill of material. We know exactly the needed machinery. We know the defined test rigs. We know what infrastructure we need. We know the assembly equipment, the tools for machining, et cetera. We know the supplier parts, et cetera, et cetera. It's like a bill of material, as I said, and therefore, we have a fully cost transparency of what we need there. Another advantage is we do not need to plant every time from scratch because we have this standard. We know the needed personnel and their qualification, et cetera, et cetera. And the idea is it's similar to a LEGO brick so that you can apply this LEGO brick whenever you need to increase capacity in an existing plant or you can bring this LEGO brick to a new plant or a facility where you want to ramp up it. And again, the advantage of this standardization is it makes us flexible in our production network. So when you're working accordingly to the same standard in Plant A and Plant B, it's pretty easy to shift the transmission from Plant A to Plant B whenever you need more capacity or if you want to speed up or whatever. We have had a discussion with the teams from slide bearings yesterday, and they come up with a similar idea. So we are applying this approach of standardization of modularization across the company. This helps us to get the full advantage from our footprint from our global production network. And you see here just one example of how we work together on the German production network. We are currently assembling and producing a transmission, the 295. We are final assembling part of the volume in France as well as subassemblies. We are producing components in our plant in [ Reine ]. So [ Reine ] is more and more transforming into a VTA or VMS or land transmission plant. We are producing components. So wherever we have any spare capacity, we are using it before we are going to invest into new machinery. This is just, again, the starting point and step-by-step and using standards, we are able to increase the benefits from this production system. We have not just done our homework at Augsburg at VTA, as Alexander already said, the colleagues in the U.S. also made their homework. They transferred parts of the standards we designed in VTA to their production system. They added additional capacity, again, according to the standards. And what was the most driver is they managed to stabilize their supply chain. And therefore, it's a small number, but it's a good number. They are back on track, and they are producing three and going to four transmission every single working day. All these approaches will help us to go to the next step. The next step is we are going to go global, and we are going to go local. Why do we need to do this? Well, we had the discussion yesterday on the table. Many of the governments see the defense industry as a kind of a possibility to get work into the country. And therefore, the local content requirements, I'm sure, will increase. I experienced the same in the automotive industry, and we need to be prepared for that. And therefore, we have this standardization, the modular approach. We are preparing at the moment with three sites. The first one is India. We officially launched that at the beginning of the year. We are already producing industrial stuff there, but this is not the main reason. The main reason for this site is that we are prepared to produce local whenever a tank program is coming up in India. Same in Poland. It will start as an [ MRO ] hub for Eastern Europe. But again, it's an entry ticket if there is a request for local production for a potential new [ K2 ] program. And finally, Italy, as Alexander just said, we are sitting on the premises of Leonardo. And therefore, I think it's a strong commitment in the upcoming European main battle tank program. And again, if you would reinvent the wheel on every single site again and again, it would be impossible to do all this within the next 5 years. And therefore, I think standardization, transferring the right approaches from automotive is exactly what we need to do. What is fitting ideally in this picture is the acquisition of our newest sister plant, the plant in Cincinnati, former Cincinnati Gearing Systems. You see the Milford plant there. It's really a good -- it's a great plant, and it's a great team there. And Alexander and myself had the opportunity to welcome the team on day 1, which was in April. And from that on, really, we are integrating the colleagues there. We're adapting them to our processes. We are integrating them in our production system. We are trying to harmonize all the processes. And so step by step, I think we make really a good progress there, and we help the people to integrate there. CGS is, again, an entry ticket because CGS has a long time. It has decades of experience in gear manufacturing and has a strong relationship to the U.S. Navy. You see one of the products there is not the Hovercraft, but the transmission for that Hovercraft what the colleagues are producing. And therefore, again, I think it's our crystal ball or starting point for really increasing our business, our naval business in the U.S. with a strong footprint in the U.S. Let me briefly address on our supplier side, what did we achieve there. On the supplier side, it's -- I would make it easy. It's -- I just want to have the port. So it's all about resilience. We need to build up a supply chain that needs to be resilient against any disruption. So we need to really think about where do we need a double source or not just a single source, how we work together with the suppliers, then we need to run something which is supplier management because as Alexander already said, I'm in this business now for 30 years, and I have never had 1 week without any disruption. This is -- I should have learned something different. But this is why everybody wants to become a CEO, not a COO. But you have to work differently with the suppliers. When I'm looking back what we did so far, and I was surprised when I came into RENK is every time we placed an order, we made a request in the market and we placed an order. It was pretty clear who got the order, but we made a request and placed the order. Looking again on automotive, this is not common sense in automotive. In automotive, you're making frame contracts. So what gives the opportunity to the suppliers to prepare because they know the volume upfront, at least in benches or in ranges and so they can rely on it. And it gives us the opportunity not just to order something, it gives us the opportunity to just make a call of it's much more easy. It runs through the process and nobody has to take care about it. And finally, and we discussed this with Benjamin, with [ Kevin ] yesterday on the table as well, system suppliers. What is the system supplier? System supplier is somebody who is supplying a component or subcomponent. And for example, we have a very deep vertical integration at the moment, even in final. And therefore, we have a high complexity because imagine a component which is subassembled out of 50 parts. If you make it in-house, you have to order these 50 parts, you have to take them into the plant, you have to transport them, you have to store them and then you have to assemble it. When you order subassembly, it's just one part number. And again, this is common practice in automotive to reduce complexity, and we are thinking about this way step by step in the future as well, really to handle the growth, which is in front of us. Therefore, we had a what we called Supplier Day with the core suppliers from BTA in August, now it is in June this year. And we invited around 70 suppliers, mostly the long lead items suppliers to have a discussion with us. And the discussion for sure was economical discussion. It was about contracts. But the main question in the setup was how can we manage to reduce the lead time down to maximum 120 days, 1 quarter. And you have to make -- you have to have in mind that we have had lead times in the past, which were even longer than 2 years. So 2 years means whenever you want to react, your braking distance is 2 years, which is quite long. if you want to avoid anything in this time, you need to increase your network -- your stock material, your stored material. And therefore, it's extremely important that we reduce this. The idea honestly came up during the discussion, and I said 120 days. Today, I would have said 80 days because I think then it would be even lower. But this will be the next time, but you see the outcome. The outcome is we reduced the average lead time by 100% within the set of suppliers. And again, I think it's a good way of achieving it. My general idea of working together with suppliers is more partnering. There is a big openness at the moment. And there are many suppliers who are losing automotive business at the moment. So they are really interested to working together with us working together with a successful defense company. So this is so far our operational homework that we made. And again, looking on the figures, I think it was quite okay. This is something I would like to go a little bit deeper in because I think it's even more important for the future. So when you look on the numbers, when you look on the numbers, Alexander just presented and Anja is going more in detail, we will double the output of the company within the next 5 years, doubling the output within the next 5 years. And everybody who has some experience with operations should be pretty, pretty clear that this is not just something that happens somehow, and it's a step into the next level. It's not a linear scaling anymore. We have to completely rethink the way how we work, how we operate because if we add the same process, the same way we do it today, we will not survive the complexity and everything will kill us. And before that background, parallel to all these operational things we are doing at the moment, we are heavily working on an operations strategy. And with this operation strategy, we want to foresee what is needed for the next 5 to 10 years that we need to decide now that we need to install to be prepared when we -- when the volume is coming because it's not just about counting the beans, it's about producing the beans. And therefore, we started a very structured process, what we call an operation strategy or business plans. The starting point for sure is the forecasted demands. then we make a Capacity planning. Capacity planning includes already an ambition increasing efficiency. So there is something in between. Then we make very, very detailed SWOT analysis in every single plant. We run something what we call a health check. health check is for machinery, for example, how old is the machining, what would be the impact if it is the breakdown, et cetera, et cetera. And then we come to ambitions and we come to measures and we come to projects, which are described and defined in a so-called business plan, which is then the foundation for the plant manager, for the responsible operations manager and operations team to make it for the next 5 years. We track the milestones. We have defined targets and goals there. Some of you might know the methods, which is [ OKRs ]. And this is how we now are preparing for the next future. And with the business plans, we know exactly the need for capacity. We know exactly the need for additional investment. We know the need for additional personnel when we need to start hiring them and qualifying them. This is, I think, the most important thing what we need today. So really being prepared for the volume that will be there in the next years. And just to give you one example, and Alexander just mentioned it, in VTA, this year, we will produce north than 700 transmissions. The forecasted number is almost 2x higher. So we are close to 2,000 transmissions. At the moment, it's close to 1,800. We will see what it will be at the beginning. When I came in into the company, I started a program in VTA, which was VTA 800. And honestly, the team was a little bit smiling because they thought I'm crazy. Next year, we will produce this number almost. So within 2 years. In final assembly, we are still working in shift due to our efficiency measures. This was possible. When I came in, we had the idea to go into a second shift already 2024, so last year. We can avoid the second shift even next year. So earliest in '27, we will have to do that due to our efficiency increase and due to our new final assembly concept there. In machining and in test bench, this is pretty clear. We are trying to fully utilize this cost-intensive equipment. We are already in three shifts. But with a detailed business plan, we know upfront when we need to implement the next step from the module I just presented to you. And with this in mind, for example, we know where we need to invest in which plant we need to invest and the advantage of having all these business plans for all the facilities, we can coordinate the spending, we can coordinate the capacity and therefore, we can keep the CapEx level quite low, and there is still the commitment from the Board that we will stay within the 3% line -- till the 3% line within average for -- until 2030. We will have a slightly increase in '25 and '26 and '27 to prepare for the extreme volume growth, which we are expecting from Germany, but then it's almost done. And on average, we will stick to the 3%/ so this is my last slide. It should give a small summary and an outlook of what we are going to do. I think the numbers prove that we have done our homework in the last 2 years, '24 and '26. It was more fixing the basics. We scaled up to serious productions in Augsburg. We scaled up to serious supply. This will now be approached stepwise into the company whenever it's fitting there with the volume, which we are expecting, as I already said, we now need to go to the next level. We need to optimize and further professionalize our processes. We have to qualify our people. We need to go more local, blah, blah, blah. I think this is -- we know what we need to do there. And our ambition and the very personal ambition because I'm very competitive is that we want to be the benchmark in the defense industry latest at the end of this decade, meaning that we are highly flexible that we always deliver on demand that we are growing in margin by far over proportional to the revenue, et cetera, et cetera. So hopefully, I gave you a feeling of what we have achieved so far. This is history, it's water under the bridge. What is even more important is, hopefully, you got a first flavor, and you will see it in the afternoon on the factory tour that we have a picture of where we want to go, where we want to be. And what is even more important, we have a plan how to go there. Is it finished yet? No, it's not finished. Will it be easy? No. It will be hard work, but I'm absolutely convinced it will also be hard fun, yes. And I'm really excited to do it with my team. So thanks a lot, and I'm excited for your questions.

Thank you, Emmerich and Alexander, for two comprehensive presentations. And now dear ladies and gentlemen, it is time for our 15-minute coffee break. Please enjoy some refreshments and a will signal when the break has ended. [Break]

Thank you, everyone, for returning to your seats. And for our next presentation, please join me in welcoming our CFO, Anja Manz-Siebje to the stage.

So hello also a very warm welcome from my side. I can only add to my 2 colleagues who already stated that already. We are very happy to have you all here, and we really appreciate you spending your time with us today. So thank you for that. And just picking up the picture, Emily introduced in the last session, I would like you now to invite you to do some bean-counting with me. So let's talk about financials. This is a very important picture for us at RENK. This is the RENK machine. This is how we actually power our profitability and our growth. These are our 5 gear cogs, and what you can see is we have 2 growth levels. These have been explained very, very well by Alexander this morning in his strategy section, it's organic and M&A. Then we have 3 year cogs. They are powering return on capital. Emmerich started already explaining us how operation is driving the margin expansion. And I will add to that, and we'll definitely talk about capital productivity and cash conversion. So let's start with a small recap of our financial figures. We have RENK. As you can see, we have been in the last years through 2 ownership structures. So the very first phase was PE-owned. And then since February 2024, we actually started our life as a listed company. If we look on the left-hand side, we can see that revenue in 2021 was at EUR 689 million. We ended last year with a revenue of EUR 1.1 billion. And I confirm our year-end guidance for 2025 revenue being above EUR 1.3 billion. If we then turn to our adjusted EBIT, it's a very similar picture. We started out in '21 with EUR 91 million adjusted EBIT. We ended last year with EUR 189 million, which represented our upper end of the guidance we have given for that year. And I confirm today our range of EUR 210 million to EUR 235 million for the year-end 2025. If you look at the CAGR, we can see that the CAGRs of revenue is about 17%. The CAGR of our adjusted EBIT is 16.6%. What you can actually see is that our adjusted EBIT CAGR outperformed our revenue CAGR. And this is really growth what we do and what we like. On the right-hand side, what we see is our LTM September 2025, some highlights. So we have a book-to-bill ratio of 1.4x, we have a ROCE of 22%. Our free cash flow grew by EUR 94 million, and our cash conversion stood at about 81%. So this whole thing shows that our past really is a true growth story. So bear with me a little more moment and spend slight look on our 9 months numbers 2025, which we have presented to you already in our last week's earnings call. If you look on the left page, side, we see that our revenue grew by 19%. And our adjusted EBIT grew by 25% compared with the prior year period. And this also shows that our adjusted EBIT growth outgrew again our revenue growth. Looking at order intake, that grew by 45%. And then our total order backlog stood at EUR 6.4 billion by the end of September 2025 and grew by 34%. So this shows when we consider what Emmerich told us in his presentation that we doubled our output that we are doubling the output, increasing our revenue and still adding to our total order backlog. So we really have a great total order backlog. On the right side -- right-hand side of this page, what you actually see is how did the most part of this growth. And you can see that vehicle mobility solution, our biggest segment and which is mostly defense driven, really contributed the most. It grew by revenue by 25% at a margin of 18.1%, and we are at 105 adjusted EBIT by the end of 9 months. Also our M&I segment, which is also with a very big portion defense driven, also contributed a lot. We have a revenue growth here of 16%, and we have a margin of 11.6% with compared to prior year 10%. Here, you need to keep in mind, please, that EUR 1.5 million of this margin really was a onetime effort because we were able to convince an insurance to pay us for warranty. That was also a success, but this also explains why we have such a great margin in our M&I business, which is truly impacted by the industry developments. Site bearings, as always, is very stable on a very high level and solidly contributes to our overall group success. If you look at that, our growth momentum is here and it will continue. This is what we would like to share with you on the next slide. This is the EBIT walk. Alexander explained the revenue work really well. And when you look at this, you can see immediately that the EBIT walk really follows the revenue walk. Let's start on the left-hand side. We confirm our adjusted EBIT range for this year 2025 between 210 and 235. Then we have 4 building blocks. 2 of them covering growth and 2 of them covering operational improvement. And then we end up in 2030 by above 20% of adjusted EBIT margin. So let's talk about the building blocks. We have 4 of them. The very first one is capturing sales potential. This is explained very well by Alexander this morning. It's really converting our big order backlog into revenues. It's as easy as it is and Emmerich is going to produce the beans. It's just about operations exactly. So this is the very first building block. The next building block, obviously, is aftermarket. By growing our installed base, we will definitely by itself, get more maintenance, more spare parts and so on and so on. Then we have another bits and piece here. We have read in the newspapers, everyone did that, that all these tanks and so on is going to be practiced many more times. It's going to be used many more times. So also their additional aftermarket will kick in. These building blocks cover the growth story. Then let's have a look at the other building blocks, scale and capacity and efficiency and optimize supply chain, they make up for operational improvements. Building Block 3, it's scale capacity and efficiency. This is all what Emmerich was talking about this morning. It's about getting the scales done, also being more efficient and rolling out our new production system worldwide and actually using our plans where we have less industry and put more defense in there. This is building Block 3. Building Block 4, it's all about optimizing supply chain. That was also explained by Emmerich this morning. It's about leveraging our increasing base and having more negotiation power and also optimizing our supply chain colleagues so this is how we come there. Let's have a look at the timing on how this will happen. When you look at this page, it's the same concept as for the before page. It's really the EBIT walk follows the revenue walk, which was explained by Alexander this morning. We start on the left-hand side, we reconfirm the guidance of adjusted EBIT, the range of 210 to 235. And then we have Building Block 2, 3 and 4 kicking in. That brings us to 2027. And here, we confirm the guidance for 2027 of above EUR 300 million adjusted EBIT, which we have confirmed to you in last year's Capital Market Day. After 2027, so starting 2028, an acceleration really kicks in, which is back-end loaded. And here, the building block 1, 2 and 3 really kick in, and they bring us ultimately to 2030 with an adjusted EBIT margin bigger than 20%. So to recap that page, it's really revenue shows the same pattern as the adjusted EBIT. It will kick in and accelerate starting 2028. And it will be back-end loaded. And by year-end 2030, we stand with an adjusted EBIT margin above 20%. Let's talk about the 2 numbers we have introduced to you in the last Capital Market Day, it's cash conversion rate and [indiscernible] see. On the left-hand side, you see our cash conversion rate with LTM September 2025, we stand at 81%. Compared to year-end '24, we were at 48.4. Now you can say, okay, where is the dip coming from? The dip is coming from our net working capital because we are a growing company. And therefore, this is what we've always been telling, we are in the process to optimize it. But however, we will definitely make sure that our inventory stands at a level which allows us to fully capture the growth and deliver on time as based on customer needs. This is cash conversion. However, we still stand for our ambition over time that our cash conversion is around 80%. So we confirm that what we have mentioned to you last year on the Capital Market Day. In last year's Capital Market Day, we also implemented ROCE. We defined it, we discussed it. And since this year, it's also included in the long-term incentive scheme of top management. LTM numbers, September 2025, it's 22.1 and compared to year-end 2024, it was at 19.7, so it increased. Why did it increase? You have heard that. Emmerich really explained that very well in his section. It's really all about utilizing our invested capital base, optimize it and really will integrate our well-invested platform. Our midterm ambition, we confirm, we also confirmed that last year on our Capital Market Day will be above 20% over the years. Let's talk about net working capital. We have been touching that chapter with all of you many, many times. We are a growing defense business. And so we all see that we do have cash sitting locked in our inventory. And we would want to unlock that. We are working on that. However, we still want to capture all the growth, and we still need to have the inventory in order to deliver on time and capture all the growth. So this is kind of a little bit a contract conflicting topics, but we will still manage that. And what we can manage is here actually in the middle of the page. Everybody knows the building blocks of net working capital. And what we really are working on is what we heard, what Emmerich told us -- we're working on optimizing our supply chain on reducing the lead time of the crucial parts on all our parts. We are also working on excellent project management and therefore, reducing the cash coming in cash time, so reduce the cash cycle. However, there are also topics which we cannot control. And that's pre-payments the part of the pre-payments, what we can control, that is what we're doing. We go into the negotiations with our customer, and we really ask for prepayments, and we are negotiating hard. However, it depends on when the contract is actually signed and when the prepayment actually hits our bank account. And then -- it depends on when is my cut-off date for the quarterly reporting what we're doing to you. And sometimes, it's just too bad, yes. We are having a deadline, so it's end of June. And the money is in fourth of July. So that's when we actually that's a cutoff issue. We cannot change that. So therefore, we tend to look at net working capital rather on an overtime basis. So maybe 1 or 2 years to kind of leverage out these once in a while cutoff topics what we have. However, considering everything what we have said here, we still think that over time, our net working capital is at around 20%. This is our ambition. We also talked last year about capital contribution. And we're really confirming our capital contribution priorities from last year. So firstly, we definitely invest in growth. because in essence, what you have seen and what you've seen this morning, we are a growth company. So we will invest definitely in CapEx. Emmerich alluded that and an average from 2024 to 2030, we will spend around 3% of revenue into our CapEx. We will have 2 peaks in '26 and '27, but we will stay in '26 below 5% and in '27 below 4%. And on an average, we stay with our 3%. Then Alexander this morning, explain to us the M&A defense part. Yes, if there is a possibility, if it makes sense, if it's value accretive, if it fits into our portfolio, and we have learned, it's either a technical topic, it's a regional topic, but it's definitely defense. Yes, then we will do that. But M&A is never really predictable but it will be 1 part of our investment in growth. Secondly, our capital allocation framework is balance sheet strength. That is important for us because we want to come to an investment-grade rating, meaning that our leverage ratio stays a bit below 1.5x and we stick to that. We also said that in our last week's Capital Market Day. And lastly, but not leastly, we want to pay an attractive dividend to our shareholders. Therefore, we confirm our dividend policy, which we have been living for the last 2 years already. And that means we are staying between 40% to 50% of our adjusted net income of a dividend. We believe that all these 3 parts come to a shareholder value creation of a ROCE target above 20%. And this is our financial foundation of growth, and we actually have 2 big levers. And then we have one chapter, which is underpinning that whole thing. So cash focus, what we've learned here, it's important for us to unlock the cash as much as possible while we are optimizing net working capital. Also, our capital allocation. Here, we want to align our capital allocation with our investor expectation as well as with accelerating market growth. This all is underpinned by our environmental targets. We have governmental, social and governance targets. You can see them since last year, we are fully compliant with our ESG reporting. It's regulated and we are CSRD compliant. I would like to highlight you one topic. This year, we are implementing relative total shareholder return as one key metric, which will also be ultimately, next year, part of the top management long-term incentive plan. With that, that was the last component, which was missing in that long-term incentive scheme of top management, we are aligning top management decision even further to shareholder value creation. And if you remember, in last year's Capital Markets Day, we did the same thing with ROCE. We implemented the key metric. And then we ultimately put that into the long-term incentive scheme top management. And we're doing it today with the relative total shareholder return in the same manner. This is the summary of our updated financial framework. We reconfirm our short-term guidance for 2025 with revenue being above EUR 1.3 billion with adjusted EBIT in the range of EUR 210 million to EUR 235 million. We are also reconfirming the metrics we told you during last year's Capital Market Day. So in 2028, revenue being above EUR 2 billion and adjusted EBIT margin being in 2027 above 300. Our new midterm guidance for 2030, revenue stands at a bandwidth EUR 2.8 billion to EUR 3.2 billion. And please make sure there is no M&I included at the moment, and our adjusted EBIT margin is above 20%. These are our guidance figures. And obviously, they are supported by additional financial metrics. You know them very well because we also mentioned them last year. The CapEx in percentage of revenue stays between the years 2024 to 30% as an average of 3%. And the ROCE mid-term is above 20%. The cash conversion rate over time is around 80%. And net working capital as a percentage of revenue stays over time or comes over time to 20%. And the leverage ratio is over time, below 1.5%, meaning investment-grade rating. So with this, we are best equipped for our next growth period, which will start next year, and we are in a position to drive rank to the next years. And with that, I would like to hand over to Melina, and I thank you for your time and attention.

For that update and for linking our strategic ambitions to the financials and the [indiscernible] that is now time for our Q&A session. Therefore, I kindly ask Alexander and Emmerich on stage with us. Gains. Before we start, let me just quickly introduce the Q&A. We look very much forward to answering your questions during the next 30 minutes. [Operator Instructions] And yes, we have participants joining via the webcast. It would be great if you could state your name and organization before starting your question. And once you have a question, we have colleagues over here that will hand over a microphone to you. And with that, let's just jump into the first question. I see one right over here in the front.

Samuel Burgess Goldman Sachs. If I could just ask a couple, if that's okay. On the operations side, it was quite notable there was one supplier still at over 180 days. And I guess you're only as quick as your slowest supplier. Is there any visibility you could give around that?

Well, it's -- so in the past, we did not really have all the transparencies. As I said in my speech, we made a request and then placed an order, and then this was the average of the return. So with this special supplier, the target was to be below the 120, and I want to be very open, very transparent, and I should have I could have left it out with what is not what I'm doing. So I was aware that there might come up a question. The question is how do you deal with this? So if we know that there is a longer lead time with this specific supplier, we have to react on it. Maybe the stock is a little bit higher or we have to go into another round in the negotiation with the supplier. But I'm not nervous about that. The average accounts now we know where we have a problem. And I am satisfied with this 80 days in average. No. I even want to reduce it, but this is the first level we have reached, and then we are renting. And I think the more we work together with the suppliers -- they know that we are reliable and then we even can reduce the lead times.

May I just add a little comment just to what Emmerich is explaining, Today, we have lead times. Some of these there are over 700 days. So if you look on the projects coming up front on the industrial logic, if we would wait until we have the contract despite the fact that this procurement team is working hard to reduce the lead time. We could not start production before 2029. So what we are doing for selective components where we see we still have this long lead time we are buying more than what we maybe need for the next 2 years to come. So by purpose, we are increasing our stock. And I'm always saying, we are all incentivized as a management also in our STI on the inventory level. But sometimes you have to take entrepreneurial decisions because what we will not do is give up profitable growth profitable millions because we had not put a little bit on stock side of these critical components.

Perfect. Great. Great. That's really helpful. And if I can just add one more. The targets you gave, I presume there's no Ukraine aftermarket baked into those. So in the current context, just be quite hopeful to get visibility on how you're thinking about that.

Well, I think it's important to mention to everyone, and this I think it's an important question, if you see the sentiment on the Ukrainian war, there, as I said before, one discussion about Mr. Trump and Mr. Putin are talking are the share prices going down. So far, we did not really participate from an economic point of view, from the Ukrainian war. Sometimes we got some call-offs from our U.S. customer in order to send some spare transmissions to Ukraine but the first time we really realized and got contracted happened in the -- so where we got for the first time a contract with the Ukrainian MOD for servicing and for shipping spare parts and spare transmission to Ukraine. So if you look on Ukraine, hopefully, there will be peace agreement, to be honest, because if you look on the people there, it's just devastating. From a business point of view, Ukraine will have a significant demand in rearming restocking which includes not only new business, but it also does include, of course, follow-on aftermarket business. And what we are intending to launch in Poland, obviously, even if it's not published yet. If we talk about MRO, this would be the next step. Subsequently, if there is [indiscernible] to go even for MRO into Ukraine. Today, we have some projects where we are sending people from the workers here in order to make service in Ukraine. But this is just really on very small project specific. Does this help you answer the question?

We have another question over the there.

Sven Sauer of Kepler Shaver. I have 2 questions. The first one is on the pipeline on Slide 21. I'm not sure if you want to show it. But I'm just wondering where the X30 is in that picture in the pipeline?

Thanks Sauer and a very good question. If you recall last year's pipeline, we had big bubbles in the U.S. because we consider the full M13 potential transmission and drive system, and we had the X30 in transmissions and drive system. So we have it included. I cannot show you what you have it in front of you in the U.S. bubbles, but we only included the drive systems for the because we are set for both potential primes to deliver this. Then we have included the M1 E3 tribe systems, but we excluded the transmission business so far. I mean we also need to be fair. And this is also valid for us for the trial systems. If you look on the E the nomination currently is for the EMD phase for the development phase. And everyone subsystem and of course, the prime to go through this phase. We also need to go through the space on the tribe system side and making sure we are passing this qualification positively. Only if you pass it positively, then you have a chance for service supply. So let's wait and see.

Okay. And the second question is on the margin expansion over the coming years. I'm not sure how to frame this question. But if we look at the 2028 guidance, I mean, this implies a margin roughly 18.5%, somewhere in that range, plus/minus yes. And this is the time when you will be getting lots of OE orders and aftermarket share in '28 and '29, I mean, I think, at least will go down because the aftermarket will only come after a few years after. So against this backdrop, I'm wondering how from '28 roughly 18.5% margin, you're going to increase it to above 20% in only 2 years with such high influx of OE orders that have a materially lower margin than the aftermarket.

Sauer that's is a very good question, and I must take care because one of my potential customers sitting here, but this is full trust, by the way. I mean just very roughly talking about the margin expectation. So if you look on 2028, we see us clearly above the 19%, clearly above the 19%, somewhere in the range between 19% and 20%. Secondly, the new business is indeed starting to kick in on the revenue line on 2028 and fourth following. Naturally, the share of the aftermarket business might drop, I don't know, a certain percentage. But even if you see today, if you take the Q3 and if you take the 9, our aftermarket share is somewhere on the 35%. So even today, we have a fluctuation between 35 up to 42%, and it depends simply also on the call of frequency of our customers. The third comment and either -- the third comment is, of course, if you talk about margin profitability on the aftermarket business, I think it's fair to compare to jet engine providers, for example, but this does not mean that our new business is not supporting our margin work towards 19% to 20%, somewhere in this range for 2020, 28 and beyond. And finally, if you listen carefully, to the presentation of Emmerich for us, more of the same. More of the same transmission is the enabler not only to leverage more efficiency more volume effect and even rank started since last year, maybe a little bit too late to work on supplier base, on COGS optimization, should cost analysis, but more of the same is supporting not only price reductions based on the volumes, but also further allowing us optimization of the bottom line. So this is the reason why we see this increase when we're giving this range for 20%, 30% above 20%. And by the way, last question or last answer. I need to say it. Our product mix will change. Today, we have 3/4 of our business is defense in the future. I mean, as a thumb indication, it might be at 85% or 90%. The Civil business is maybe not really that strong on the margin side for good reasons. So also from this macroscopic impact, you will see a driver of our business model, if you talk about margin optimization.

There was another question in the same row.

Chloe Lemarie from Jefferies. I have 2, please. The first one is on the margin guide. If you go split it out by divisions. That would be very helpful. And the second one is on the M&A. Is it fair to assume that given you have a focus on U.S. Navy, maybe. Could it be dilutive to the margin if we include up to EUR 1 billion target into the guide?

It will be split up I pass to [indiscernible] to like always to the CFO, I talk about M&A. I think it's important we are not doing -- we will not do acquisitions where after a short time, we will have an improvement of our overall business margin and quality. And as you see, if you talk about Navy and if you talk about land system side, you know the margins on the Land Systems side. BMS had at the end of 2024 round about 20.5%, 20.6%. This margin will increase. So whatever acquisition we would do on the land side this must be value accretive. But as I said it, we are not focusing so much on the land side because we are pretty consolidated and feeling very well here. On the Navy side, it must support our margin improvement of our Navy business. As you could imagine, a potential acquisition might have an impact on the net leverage. And for us, it's clear if there's an increase of the net leverage to bring it down by synergies in a quite short time frame. This was an answer, I hope, on the M&A side.

And I take over the margin side. We steer our company in accordance to the segments, you're right there. And we are fully aware that we want to give you the most transparency what we have therefore, we do our guidance on a group level. However, if you think about what we have all been telling you this morning and in the in bean accounting session, bean counting. So we think, yes, we are transforming more and more to a defense side. And if you look at our segments, there is 1 which is largely defense driven and we also report in our quarterly sessions on a sector side. And you can see which is the main driver of that margin and that is clearly defense. It's revenue growth and its profitability. That's clearly defense-driven.

And again, as an indication, BMS last year at 20.5%, the center of gravity for all volume leverage, efficiency gains, cost optimization. So I think you can expect that the BMS margin will not stand on 20.5%. Absolutely. It's the main driver. -- has another question.

[indiscernible] Cantor Fitzgerald. I have 3 questions. The first 1 pertains to orders. and Israel. So the expert band has been lifted? And how long would it take for you to be able to deliver again? And would it come this year? The second question on the order side is the Italian main battle tank topic and the infantry fighting vehicles that go with it, can you give us at least a range of what it could represent in terms of million euros. So these are -- this is the first set of order related questions.

The first, about Israel. I mean, we were extremely positively surprised when we learned the news that the German government, I mean the German transferred lifted the export embargo. However, driven by the processes -- now it takes a while until this -- from this principle goal, it will be transfer and processed in the entire administration. So we do not expect to have any impact we cannot deliver in the year 2025. So we do expect that during Q1. Finally, we have it on the paper, the export permission. We continue to produce by the way, also in the net working capital what Anja discussed, we have it currently fully included the transmission, and we are waiting for the final approval and this is also important, how this delivery and the approval will take place. Will it be one approval for the planned figures in 2026 for all the planned volumes in 2026? Or do we get it slide by slide. This is something what we do not know yet and it could impact 2026. If, for example, we're getting sizes in the range of 20, then we need to wait for the next approval. This is not clear yet, but overall, it's a positive in for the IBT and the ICS, the MBT programs in Italy and the IFE programs in Italy, I mean you can make the math you are all extremely educated. If you talk about a lifetime volume of [indiscernible] for example, lifetime volume for 1,000 IVs. If you multiply it with the average transmission price you all have in your books, you see it's a quite important business, and it's the same for the main better tank. But clearly, in Italy, the volume driver coming from the IFRS.

Thanks to the math. And the second question pertains to short-term guidance. The bottom end is -- would imply a contraction versus last year at adjusted EBIT margin level -- so what is the scenario behind this? What is the story behind the scenario? Why would you guide something like this in light of everything we had.

You guide what the 2030 target.

And I'm talking about 25 the bottom end of our adjusted EBIT guidance would imply on EUR 1.3 billion of revs a contraction year-on-year? Right?

Yes. I mean we are not doing a contraction. I mean, just -- and I'm sure you know this, this year, rank and many other companies faced first tariff -- we always communicated a single-digit million. We faced exchange rate. We have a high exposure in U.S. We faced a significant headwind from our industrial in the high double-digit revenue side, maybe not impacting so much on the profitability side. And last but not least, we did -- we cannot deliver what we had planned in the Q4 for the Israelis. So this is the reason why we did not we all accommodate all this. We are still confirming the guidance, and you can be sure we will have a good position in this guidance.

Okay. The last question has to do with 2030. What about the slide Bearings business? It's part of this sale. And I mean we didn't discuss it today so much, obviously, because the focus was on defense, but is there any portfolio kind of your thinking around this?

I think the message -- I'm sure you have received this that as a part of a future reorganization to have focus on crystal clear defense domains and the second step to bundle the existing industrial part of the business is in order to make it more attractive and to gain more of our sector strategies executed as. Of today, I mean, as you know, Slide [ Barings ] is a beautiful business. steadily growing cash generation. Now there are some current problems may be temporary from the end for the time being, it's always on the -- I mean there is no news, but what is important? We are doing, of course, like what we're doing with all the 3 segments annually strategy reviews. And we look exactly on the product portfolio on the market situation on our impact on the business and the next round is somewhere at the end of January, where we have our internal target setting. So far, no news, but let's see.

Yes. There was one question over there. And then the second.

Cantor Rochas, BNP Paribas. The first on revenue. So considering you very -- you feel very strongly about the increased 2030 revenue target range, EUR 2.8 billion to EUR 3.2 billion, but you haven't changed the revenue target of EUR 228 million above EUR 2 billion. So first of all, could you maybe quantify what that above EUR 2 billion would mean? And then how should we think about the cadence of that growth from -- in 2026, 2027 to 2028. Are you still aiming for double-digit top line growth every year?

I mean, should I should you? So I'll start maybe and you with [indiscernible] more precise than I am maybe -- we have these 2 kind of dynamics. After 2028, all the potential order intakes and contracts are converting into revenue. So we will have a different double-digit growth than what we always have communicated by the way, also since last capital market, and we are growing between 24 and 28 double digit, but maybe not on that double-digit growth, what we will see 2028 and fourth following. So to comment on your question about our EUR 2 billion, we are very confident it will be above EUR 2 billion. Will it be at EUR 2.1 billion, EUR 2.3 billion, EUR 2.4 billion. Let's see, but it will be above EUR 2 billion. Please keep in mind nothing has changed compared to our last Capital Market Day in regards to the execution of this first phase. What came on top is really starting after -- I mean, on the revenue line, starting after '28 all this increase in the defense spending. And also, if you look on our margin side, I mean, you can be always very critical, but honestly, from a 16.5% or 16.6% what we have shown before, last year, financial year-end 2024, we are working in the year 2027 where we had our milestone now above 300, as I just said, through a margin most likely in the range of 18%. And if you go to 2028, we will be in the range between 19% and 20%. Are we at 19.2% or at 19.8%, or even maybe a 20%? We will see. But the overall market development -- yes, the market development, our business development, I think we should be optimistic and solid and proud about this.

I can only add to it, because you need to think about the acceleration. That's what we've been telling in the EBIT and the revenue walk. It's really until '28, then the acceleration kicks in. And what we mean with that is there is the real impact of the scale effects are coming. And this is what really boosts us up.

David Perry from JPMorgan. I guess the thing I took from your presentation, Alexander, was so much of the business is still international in the next few years. It's a bit different to maybe the other 2 German CMDs of the last week. So just on the target of over 1,800 transmissions in 2030, just how many of those are international versus Germany? And you said last year, 27% of the sales were Germany. Will that be higher, lower, the same in 2030? And I guess one follow-up. Given how much is international, can you give any more color on some of the sizes of the international programs, like which are more important, less important in ranking?