Inficon Holding AG

SIX:IFCN

Q2-2025 Earnings Call

[Bernhard Schweizer]

Good morning, and welcome, everyone. My name is Bernhard Schweizer, Investor Relations contact at INFICON. I have the pleasure of hosting this webcast of our second quarter 2025 results conference.

With us today are Oliver Wyrsch, CEO of INFICON and Matthias Troendle, CFO of INFICON. The management team will first present the results and then take questions. [Operator Instructions]. You should have received by now a press release on the Q2 results, together with the link to the accompanying visual for this conference and the full half year report. All documents are available for download in the Investor Relations section of the INFICON website, inficon.com. I would also like to inform you that we record this web conference to archive the audio file later today on the INFICON website.

The oral statements made by INFICON during this session may contain forward-looking statements that do not relate solely to historical or current facts. These forward-looking statements are based on current plans and expectations of our management and are subject to a number of uncertainties and risks could significantly affect our current plans and expectations as well as future results of operations and financial condition. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Having said all that, I would like to hand over now to Oliver Wyrsch. Oliver, please.

[Oliver Wyrsch, executive]

Thank you very much, Bernard, for the introduction. Welcome, everybody, to the earnings release July 30 of Q2 2025. Let me jump to our agenda today.

First, I will tell you, as usual, a couple of key messages, the figures of the quarter, the review of the target markets and the full year expectations. Afterwards, I will hand over to Matthias Troendle, our CFO, for more details on the financials.

First, the overview of the 2025 Q2 results. INFICON continues on the growth path is a sequential growth in all regions and all markets, except for security and energy with a positive order trend again with a nice step-up in orders. We have continued is temporarily in Q2, the profitability got impact trade disputes. So when you look into more details, we increased the sales to USD 167 million. This is a plus of 6% quarter-on-quarter. The orders increased substantially with the continued book-to-bill ratio above 1 and we continue to have economic risks and uncertainties due to trade disputes.

If you look at the segment's high level, semiconductor continues to grow quarter-on-quarter plus 7%. Good orders, it's still low visibility and a lot of dynamics. We believe, though, that a recovery is continuing. At the same time, the broader semiconductor ramps that we are looking for most likely has now shifted into 2026. When we look at general vacuum, we continue on the growth path in 2025 after another good quarter quarter-on-quarter.

For RC auto sales, we continue to grow in recent quarters in a difficult market, consolidating EV and battery markets plus 7% quarter-on-quarter. The security and energy markets after strong growth here up to the 2024 record sales were another plus 21% on the full year. And we have a slower 2025. This is mainly due to the timing of government programs.

When we look at the operating result, the main impact here is the trade disputes. The operating income ends up at USD 25 million or 15.1% for Q2. The temporary impact of the trade disputes include on available tariffs, mainly in April, May, the accelerated relocation costs, some FX cost impact and some volume mix effects. I think in general, we can say we had to a little bit reflect and for us, it's an easy answer of what the decision is for us for this Q2 regarding market development and focus on our customers versus managing short-term cost impacts.

For INFICON, this is in our DNA. It was a clear decision. We stepped up our relocation efforts to reconfigure the global footprint. And really pushed these projects, some of them x2, x3. I will talk some more about it in a minute. And we're then able to transfer most of the products and lines within a quarter, which is, of course, much faster than this usually goes. We also decided to work together with the customers, our long-term partnerships are absolute priority for us. And hence, we also had to go and absorb some of the tariffs. With most customers, we find some good solutions. These discussions are still ongoing on how we navigate this difficult times. But we also then decided Q2 will absorb this extra impact in order to be adapting fast and then move forward and over strategy to rather gain market share in these difficult times, which is very well possible if you adapt fast to the new rule of this new trade world, I believe we have very good opportunities there.

Anyway, going back to close this sidebar for a minute, going back to the overview cash flow, robust at a stable high level of USD 18.7 million. And then regarding organization and future investment, the continued investment in R&D 8.3% sales and also capacity of USD 5.1 million. We still think depending on how the market develops, CapEx expectation roughly comes in at this USD 25 million to USD 30 million.

If I now look at the global regional development, you can see some interesting development in Asia with a very strong quarter, significant growth year-on-year, in Europe and especially America is slower. We have seen in Europe and Americas, rather sideward trends, but they wish some good positive signals for sure. If you then jump in to the target markets -- first, of course, semiconductor vacuum coating. We remain to be in a very strong position continuous growth in a really challenging environment, the low visibility.

We believe the recovery continues, but the ramp the broader ramp is probably delayed into 2026 after the most recent developments. The trade disputes definitely impact growth negatively causing investment delays, moving off projects even some cancellation, but mainly it's moving and delaying of projects.

If you look at the Q2 sales, they increased by plus 7% quarter-on-quarter and year-to-date plus 7%, which is also a nice development forward. We remain in #1 position for most of our product lines with the pressure measurement premium line and closing up to number one. Currently in position two. Good -- making good gains there in most regions, to be honest, in terms of design-in wins. The market expectation for 2025, flat to growth.

Again, the visibility stays low, but there is a reason for moderate optimism. As the recovery continues and we hopefully see our most realistic scenario, a little bit of a calming down of the trade tensions a bit more steady waters for the second half. And then the ramp looks like most likely will fall into 2026. Overall, the drivers are strong in this market. They remain strong, mid and long term. And what we see is a broadening trends, but still a narrow trend around AI investments. HPC is certainly interesting, also HBM. While memory, in general, is also dynamic this year. We still see a lot of investment in future nodes there and also an increased use of advanced sensors for these future nodes.

So this investments in leading-edge nodes, the advanced chip design are continuing, the pace is not actually slowing down. Advanced packaging is a bigger and bigger topic, but all kind of dimensions has been worked on. Exciting times in terms of R&D and in terms of new innovation and partnerships we have with our customers, there's a lot going on in the R&D pipeline while on the general economic front, it's a bit confusing with lower visibility, I believe insight and the technology road maps, there's a lot of exciting stuff happening, and we are right in the middle of it with all kind of new innovations in the pipeline.

Jumping to automotive, refrigeration, air conditioning market, strong position. Clearly, we have a continued multiyear growth in a very difficult environment. There's consolidation. Good development in Asia, America is around flat, Europe slower. So we see continued sales growth, plus 7% quarter-on-quarter, year-to-date plus 2%. And we remain #1 in our SE battery markets and we're making market share gains in a market that is generally not growing. We have seen some good positive signs, specifically in Q1 on the automotive market, but it hasn't really fully materialized. It's still relatively slow. While we think we might be past the trough. There is no real acceleration.

Similar on the EV side, there is some positive signs and some development. We believe that probably in 2026, there is really an acceleration. Also here, the visibility is low. What is going to happen next policy landscape is also a little bit confusing also here. The trade disputes make it a bit more difficult to understand what the development exactly is going to be. So battery, I just mentioned, the consumer battery market is still more resilient and stable and with growth midterm outlook in the whole market, we see positive. Of course, the EV transition, we believe will come back. But also on the RAC side, we make continuous growth, specifically in the subsegment of the handheld after-sales service products, good growth over years. which is driven -- the whole RAC side is driven more by new refrigerants and the new regulations future sustainability.

So when you look at the chart on the right, you see over the year, we have a CAGR of 10% in a really difficult last 1, 2 years. For the last 5 years, a 10% CAGR. I think we have shown great deciles and growth and market share gains also in this market. When we move on, general vacuum after the quite slow 2024. We still remember '23 was opening up of COVID, the backlog reduction that went into the first quarter of 2024 and then we had a couple of slow quarters in 2024. But now we're back on the growth track with good Q1 and also good Q2. It's a broad industrial market that is addressed through multi-brand strategy with long-term talent partners. So there's different submarkets in here for each one, we build out our position or have already a very strong position as a most complete full liner for vacuum instrumentation, we are in #1 position overall.

So continued growth with plus 6% quarter-on-quarter and plus 19% year-on-year. We have good order improvements quarter-on-quarter and year-on-year. So this should continue like this. We see one more point. It's important we see not yet recovery of the solar business, which is part of the nice dynamic we see in '22, '23.

In terms of market development here, we saw probably only start to recover in 2026 as it looks right now, mainly to the overcapacity and the consolidation in the market there, mainly in China.

Overall, we have a strong position, also a good market development and R&D pipeline here in their respective submarkets. If you jump into the last of our target market, security and energy, strong position with the leading product also here. The cycles as most of you know, are largely dependent on government programs. They have their own dynamics. It's a good diversification factor in that sense versus the other end markets. So we expected this year to be slower after a 5-year growth, 9% CAGR. And now the next phase and the next timings of these programs is still in the initial phase, this is a normal process. Overall, the security budgets due to the global security situation are going up, specifically in Europe. We see these positive trends. So we have growth in Asia and Europe. We also have with a flagship product in this segment, the new hub sites a lot more applications that we can go in, which is also in the works. But same here. qualification process is relatively long on the time line, but we made very good gains. So we're optimistic here too, while 2025, certainly will be a slower year.

And with that, I come to a special topic around worldwide footprint. As I explained already in the last earnings release of Q1, we have had the last years a plan to adapt our footprint to the most recent geopolitical and economic situation and trends. So there is factors in there where the U.S. economy and the China economy derisk or decouple and similar trends in other parts. So one of the reasons why we opened up the Malaysia factory not exactly this anticipation of this. What we have in general, as you know, is a decentralized system of competency centers then can be adjusted relatively fast. Each one of these units has a fast reaction time is adaptable. And I think we could now really show our strength in Q2. The benefits will come over time, clearly, right, because now we needed to just show what we can do by readjusting this in accelerated time frame. So some of these projects, I was asking a team can you do this in 1/3 of the original time frame, and they have delivered. It was truly impressive. So the Malaysia factory has really added product lines now. Because of this, it was already planned, but most of them needed to be accelerated.

The China factory, similar thing. There was product lines moved there. The same in Cologne and the same in U.S. all of those with major relocation projects that we have all accelerated and have largely concluded in this 1 quarter, which you normally would expect this to be a number of quarters for such projects. So this is on, hence, also this impact on the operating income. The largest part, though there is and Matthias will say a few more words about this is around the unavoidable tariffs, we are committed to our customers, we deliver and we found solutions in many places of how to deliver and how to observe cost, but when we want to serve customers we serve customers. So a large part of this is about 2 percentage points is on available tariffs have mainly occurred in April, May, they already largely disappeared in June through the conclusion of this relocation projects.

And then we had some extra cost for this acceleration of the relocation, about 0.5 percentage point. And then about 1.5 percentage points around FX cost impacts, which we also see trade war related, which we have been starting to compensate more aggressively with cost measures. These programs are ongoing and take effect, but you will not see this yet in the Q2 numbers, obviously. These are being implemented and that will be seen in the following quarters.

So -- and then there's one more effect about volume and mix. Some of the volume got stuck, some of the shipments we agreed to the customer not to ship due to temporary really high tariffs that we had over 100% for certain constellations. So some of the volume got slowed down and it was also some of the volume that was high in margin. So there was a bit of a shift there too in terms of volume and mix. All right.

With that, I jump to the expectations, 2025. So overall, we see ourselves continuing on the growth track in spite of this difficult environment. So we had a good order entry again in semi, RAC auto and GV markets. The trade tensions stayed. They add uncertainty risk across all markets and the impact on profitability in future.

So we also see some positive momentum in the markets for signals, good things. However, through this additional uncertainty, we believe also there's a little different delay on investments. So semi ramp, most notably, will probably move into 2026.

Automotive was another example. We also believe there is rather an acceleration next year and similar solar. So there's a few of those that just on the time line moved.

In general, we believe this year is rather transitionary year. Unfortunately, again, we've seen some good Q1 signals. And I believe this trade disputes have just slowed this down a bit and muted it, but it's moving more on the time line than it disappeared or anything. So we get -- we end up with a guidance for 2025 based on all of this of sales of $660 million to $690 million. So we reduced the upper range, while the midpoint is in a similar area. The operating income we reduced due to this Q2 profitability impact around the trade dispute and so on. We reduced to 18 percentage points for the full year.

And with that, I conclude. The reminder, as always, if you want to know more about INFICON and all the good stuff we do, if you go to the moon, there's more space happening, there's more semi innovation happening is more automotive innovation happening. There's also other things that happen with our brilliant engineers and other things in the company follow us online. There is a lot to be seen there. And with that, I conclude my part, and I would like to hand over to our CFO, Matthias Troendle, for more details on the financials.

[Matthias Tröndle, executive]

On our second quarter call. As usual, I will cover the Q2 financial performance, quickly talk about the guidance and also cover the half year results. Let's start. Let's start with the highlights for Q2. The order situation improved compared to the previous quarters and the book-to-bill ratio was above 1. The sales showed a slight increase versus Q2 last year and did grow by 5.8% versus the previous quarter Q1.

The gross margin dropped really and hit by temporary impacts from trade-related disputes and reached low 43.1%. And we achieved an operating income of $25.3 million or 15.1% of sales. CapEx $5.1 million and ended on a similar level like in the previous quarter and also like in the last year. Cash flow ended with a solid $18.7 million and net cash did grow and ended by $38.5 million after the $68 million dividend payment in Q2 in April. And our equity ratio reached -- increased slightly and reached 65.3%.

Now let me go a little bit more into the details. As you have seen in the press release, we achieved sales of $167.4 million compared to Q2 last year. This represents a slight increase of 0.3%. Taking into account the positive currency impact of 2.2% and we posted an organic decrease of 1.9%. Oliver did already comment the end market developments compared to Q2.

Sales to the general Vaccum market increased for the second time in a row and did grow by 19%. Refrigeration, Air Conditioning and Automotive remained stable, and the Semi & Vacuum coating declined by 2.3% versus a strong quarter last year. Sales & Security & Energy dropped by 8%.

Compared to previous quarter, Q1, the picture looks a little bit better. We can report that sales did grow by 5.8%, and we had increases in all markets with the exception of the market for security and energy.

Looking at the regional distribution of sales on the right-hand side, you see that Asia developed well by 15%, where sales to all markets did grow, but especially general vacuum showed a strong improvement. Europe declined and Americas was slow due to weak security and energy business.

Let's go to the operational costs. R&D costs did increase by 6.3% due to our continued focus on development activities and related investments. SG&A costs did increase by 3.1%, but this increase was mainly driven by foreign currency impacts and the cost stayed tightly managed.

Now turning to the margin situation. Q2's margins have been under pressure and declined. The gross profit margin reached in Q2 43.1% and decreased by 4.1 percentage points compared to Q2. And the operating profit margin for the second quarter reached 15.1% compared to 20.2% a year ago, a reduction of 5.1 percentage points.

So what were the main reasons for that? We had several temporary negative impacts, whether direct or indirect related from trade-related disputes, which were cost peaks due to the tariff escalation, especially in April and May and increased basic tariffs as the main factors. Transition costs due to necessary acceleration of ongoing production relocation versus the second one. The third one was impact on sales volume, some temporary order deferrals and also swings in mix.

The SG&A operating expense increase was largely driven by the foreign currency impacts. As Oliver mentioned, we gave some indications of what the share is. So the tariff portion is around 2 percentage points of the transition cost and relocation cost about 0.5 percentage points impact. sales volume around 1%, and the operating expense foreign currency impact around 1.5% impact. So all impacts add up together for nearly 5 percentage points.

Now let's go to the income tax. The tax expense for the second quarter was at $3.4 million, which represents a tax rate of 15.5% and is slightly lower than Q2 last year where we recorded $6.2 million. Net profit reached $18.3 million or 10.9%. This is driven by the lower operating income and negative foreign currency impacts, partially compensated by the lower tax rate.

Now let's move to the balance sheet highlights. Our net cash reached $38.5 million, which is about $36 million lower than end of last year and about $24 million better than the previous year in Q2. The lower level compared to end of 2024 is mainly driven by the $58 million dividend payout we had in April this year. Returns for inventory remained stable at 2.4% and our DSO ratio had with 47.6 days, a good and comparable level to Q4 and also the previous quarters.

Our working capital closed up to $229 million or 34.2% of sales and the debt ended about $14 million higher than end of last year. The increase is driven by the change of inventory levels, which also is impacted by some unfavorable foreign currency impact. Our operating cash flow reached a solid level of $18.7 million, nearly unchanged to Q2, but -- Q2 last year, but could not reach a relatively high level of Q4 last year.

The balance sheet shows an improved structure with 65% equity ratio of the 64% in Q2 last year.

So these are all of my comments on the balance sheet and Q2 results. Now I come to the guidance. After the operational adjustments we made in the last month and the -- our assessment of the various markets and credibly improving order patterns and some positive dynamics. We updated and narrowed the guidance and expect now revenue of $660 million to $690 million for the full year of 2025. With an operating income margin of around 18%, including the trade and tariff impact.

Finally, I quickly want to comment our last year performance. And here, I can say the net sales for the first 6 months reached $325.7 million compared with $321.2 million for the same period last year. Representing a 1.4% increase or adjusted for currency effects as a plus of 1.2% organically.

Similar to the sales development in Q2, the first half of 2025 showed growth in all end markets, except security and energy. Semiconductor did grow by 6.6%, mainly driven by Asia. Refrigeration air conditioning in automotive increased by 1.5% and General Vacuum recovered from last year's swap and gained 1.1%. Security and energy declined by 33% due to the meeting large public sector orders.

The gross profit percentage decreased to 46.2% after 47.2% last year, and the operating income reached with $57.2 million or 17.6% after after $65 million last year or 20.2% last year. Both gross margins and operating income have been impacted by the temporary tariff impacts we just discussed.

The operating cash flow developed nearly stable compared to the first half of last year and reached $37 million, and the balance sheet shows, yes, as mentioned, 65% equity ratio after 64% last year. As mentioned in our press release, the complete half year report of 2025 with more details is available in the Investors section of our website.

With that, I would like to close the presentation. The next events here are here is basically our Q3 conference call in end of October. And then we have followed by an analyst visit in Balzers here in Liechtenstein in November. So we are now ready to answer your questions.

[Bernhard Schweizer]

Thank you, gentlemen. We have a nice year of people wanting to ask questions. The first questions come from Jörn Iffert.

[Joern Iffert, analyst]

Taking my questions. It's a couple of questions, subquestions, please, on the margin development, if you allow me, and then one follow-up on the premium market. But maybe I would take the margin question step by step. The first one is, just -- I mean, you mentioned of this 500 basis points, 200 basis points of direct tariff, then 50 basis points were the capacity relocations. And then you mentioned 100 basis points volumes where these deferrals of higher-margin products. And then you also mentioned 1.5 percentage points operating expenses, SG&A due to FX. Is this just to summarize, isn't that correct?

[Oliver Wyrsch, executive]

Correct. Yes.

[Joern Iffert, analyst]

Okay. And then second question, pricing power. I mean many companies in Switzerland immediately priced the tariffs to the customer. Why has you decided not to do it?

[Oliver Wyrsch, executive]

Yes. And that's what -- I mean I earlier mentioned, there's a bit of a decision that I think you can make with your customers. I think we repeatedly talked about pricing power. And we see it is a bit different. Yes, we have pricing power, but this is a short-term thinking. I think for a year or 2, you can price when you locked in when you designed in easily. But that's -- what you do when you overdo this is you will be replaced one way or another, over time. So you really think long term in terms of your strategic partnership, and we have a strong relationship with all players in semi, chip makers and OEMs.

So for us, the first step is not going to the price tool and increase it. For us, the first set is having a discussion and find out what do we do? Some things we didn't chip. Some things we changed the shipping route, but we couldn't do it just yet in April, right? So there is a couple of tariffs that we just had to absorb, we'll have post discussion on this after. But what we will not do is a thing like we're not shipping you if you don't pay an extra for tarrifs or things like that. We have trust in this relationship that we continue.

So our approach is probably slightly different. We very strongly believe this is the better approach long term. So there is always in a situation like this where you have very long time, and you need to move fast you make fast decisions. Not every decision is 100%. But I think we have actually strengthened our very strong foundation in the market with how we behave and how we navigate and then how we communicated in Q2 .

[Joern Iffert, analyst]

And the second out of third subquestion to this topic, please. Where exactly were the tariffs occurring? Is it from the U.S. to China? Is it to China to U.S? Are these the main routes?

[Oliver Wyrsch, executive]

Yes. I mean, the tariffs that really bite were the ones between U.S. and China, right? And then of course, from China to the U.S. Historically, we have our China factory for 25 years, not -- everybody has had the China factory is very established also our footprint and our connections to Chinese customer. We talked about that in prior earnings releases. We had to reconfigure it. Not everything was already moved out. Not everything we could avoid shipping. So that's where some of these things or some of these tariffs were incurred.

And the same from the U.S. to China, we are very committed to the Chinese market. I think we can show how we grow in this market, how we make wins. We have a very good position actually there going forward compared to Western competition and also against Chinese. We've shown that, especially in the auto market. So there also, not everything was ready even though it was in our strategic plans.

Hence, also, we have this 0.5 percentage point, accelerated relocation costs that we just felt, hey, now we're going to just do it. We steer the whole company towards this for a quarter. And now we can also go back to business and building long-term business up with R&D partnerships and developing customers and all these strategic topics. So we just to the sense of ripping off the Band-Aid fast and then move straight back to building up long term. That makes sense.

[Joern Iffert, analyst]

And maybe the last subquestion, looking forward, looking at the second half, I think your guidance implies already a material sequential margin improvement, again, closer to the 19%, around 19% in the second half. So does it mean the tariffs more or less have disappeared under the recent deals we have seen? Does it mean your relocation capacity is finished already, that you subsectors anymore? And does it also mean you find some the sales volumes, which were delayed are now being shipped again in Q3 already. And also, do you see the margin improvement going close to 19% already or in Q3?

[Oliver Wyrsch, executive]

A little bit yes to all of it, but to be specific, yes, these projects, we really push them. And as I mentioned earlier, when I was talking about the global footprint, we have been successfully to relocate the largest part of it. All the big flagship products are now in the new location.

Often, it's two locations now, right, because that's how you serve the global market. There's more trade barriers and other export regulations in different places. That's a little bit of development of the recent years, hence also our strategy there to develop this footprint. So yes, that's what we've seen going away. And regarding tariffs, we've already seen this improvement in the recent months. So April was the main hit and May a bit less than June as a further improvement.

So given that, yes, I would say. Also the shipments that couldn't be shipped for this or the other reason right, when you change the product line. It's complicated to do the whole customs. SAP needs to move there. There is hiccups and bumps. So these have been worked through largely, but a few more things remain. I think we are now in a very good position for this scenario that we've seen.

What we don't know is how this trade disputes continue. They're clearly not gone. There could be a scenario where you say it's a bit of a more cold situation less volatile in the second half. So you can settle in a little bit to where you're going. But not everything is yet announced, right? So we notably have the Swiss deal with U.S. is not announced. I think the European agreement has been outlined, but not fleshed out. There is ASEAN countries that have not all been negotiated.

I'm not the one you should ask about this kind of analysis. I can only share with you our thoughts how we see it. So I see a clear improvement in the second half based on our realistic scenario, right? We always have at least two or three scenarios. So I believe that's where we will land also based on the most recent months. Matthias, If you want to add?

[Matthias Tröndle, executive]

I only can agree with what you said. And so we expect certain belief for it on this -- on the tariffs, that will they disappear? No. There will be some, but the heavy uplift, I would say, due to this April 2, I think liberation day reciprocal tariffs, right, I think this is definitely lower to be expected, and then we need to wait where and how the final agreements will be, right, going forward? Will it be about 15% for Europe, yes or now and when and how is the transition period.

So there should be some relief definitely also some relief on the relocation cost and impacts, they will not stop. There are still certain activities. We said it's nearly or largely completed what we started in Q2, but there will be steady some, but there should be some improvement in some relief, definitely.

[Oliver Wyrsch, executive]

I just want to stress that the core of INFICON is strong. And actually, I believe we have gained points with our customers how we navigate in Q2. So you will have to take my word for it for now, but let's see how it develops into the future. I think this was a very good move. We have gotten very positive feedback of how we navigated this and also the speed of how we adapted and changed around our configurations in accordance with the discussions with our customers.

And of course, also suppliers are always very important in this when you strengthen your supply chain. This was a chain in the last 2, 3 years. I think this really showed we have a whole different company here that can adapt to extreme scenarios in a really short time. Anyway, back to you, Jörn, you said you have a few questions.

[Joern Iffert, analyst]

No, sorry, I don't want to occupy the line, I go back in the queue and maybe follow-up later.

[Bernhard Schweizer]

The next question is come from [indiscernible].

[Unknown Analyst]

Maybe the first one on the orders since we've covered a lot of margin. I mean, it's above 1 which maybe is a bit of surprise looking at VAT ASML. And certainly, the positive, you're also right. You've seen a substantial improvement year-over-year sequentially. Can you maybe break that down a bit? I mean, how high is the debt improvement? Just give us a bit more color on that? That will be my first question.

[Oliver Wyrsch, executive]

Yes. Yes, probably as to do it by end market. I mean, first of all, I would say this, the security and energy market is a bit of a diversification factor for us, right? It grows nicely. We've shown that in the last 5 years because it's all dynamic. It helped us last year, certainly as it had a higher share, clearly, and it is slowed this year.

So if you were taking -- energy on the same level, right, if you remove it from this general economic development, then you could say we had a good growth this year when you look at these sectors, which just shows the resilience and the strength of INFICON also in difficult markets, it shows also our clear focus to go for market share long-term partnerships, building this out, building on it, this is all something that comes over time. And Security & Energy will also come when the timing of these programs are clear.

You can imagine, when you look at the Security & Energy market, there's a bit of a confusion. In terms of investment, a lot of money is allocated based on very clear how to spend and where to spend and what problem needs to be adapting in half. So maybe that as an overall picture. If you go through each one.

I think semiconductor -- in Q1, we felt this is the year where we have -- where we see a broader up-cycle. It looked like it. I think this Q2 trade disputes were muting this upside dynamic and delaying it. Hence, we would see it now next year. And it's still mainly dynamics are on these leading edge nodes, which a lot is connected with this data centers, HPC and HPM. Well, of course, also memory is a bit of the recovery, it's a bit going sideways again, right?

So this is also we see some acceleration and deacceleration in the different submarkets for sure. There is some hesitancies in the investment projects and everybody looks at their investment projects under the timing and price or 3x these days.

But overall, semiconductor, as I said, the dynamic of how we work together with the customer, the opportunities that we see -- when I look at the broader strategy, we see gains of how we access more market and where we can get market share over time. So I think positive trend, it doesn't entirely connect back to a cart normally, right? This is more of something that you need to look at bigger time spends.

Maybe Matthias can also say a thing in a minute about the market. Just quickly when you go through automotive, there we saw good positive signals also there in Q2. Now it's a bit muted again. However, it's kind of stabilizing on a lower level, maybe with some positive signals. And next year, we will see some more dynamic. I think the orders come from share gains at this point. There's still -- especially in the battery market, a lot of dynamics of what is the latest technology, what's going to be the next step and so on. On the RAC side some of it is connected with the auto.

But on the RAC side, we have more of a continuous growth that we've seen over the last years and also will continue into the future. There is, as I said earlier, especially this after-service handhelds, they have seen very good growth with always a couple of new submarkets opening up, new applications, more automation.

There's also some robotics aspect to it. So there is a bit more of a steady growth on that end for it, whereas the other extreme is battery, which is more step and more volatile. And then when you look at general vacuum, yes, this is a market with 20 submarkets in it and about half of it we serve through private label.

Private label has really recovered. The general industrial market has recovered versus the trough last year. And I think we are on a level where this can continue like this. All of these statements, we cannot predict if there's another escalation of this trade disputes. But the way we see it, the realistic scenario, right, that kind of view on it, we would be optimistic there. You see also our outlook statements per segment there. Yes, I hope this help and giving a bit more color. Do you want to add some more numbers maybe?

[Matthias Tröndle, executive]

Number, I know maybe a few more comments. So the honest developed bends as we said, and they grow the second time in a row. So from Q4 to Q1, we have growth in Q1 to Q2, we had growth -- I think that's positive. And when we look at the previous quarter, I think we had also here in 3 out of 4 markets, we had positive order development majority really in Semi and Vacuum Coating of the order increase from Q1 to Q2.

And when we take a look, where does it come from, it was mainly Asia and Europe, where we had good developments while the U.S. was more or less stable. And -- but also we had in GV -- on General Vacuum on RAC. We had a little bit of growth compared to Q1, which is also good. The only market, similar like the comments for the sales side is security energy, whether the order pattern is weak, really, RAC, and it doesn't show really strong development in these days. But Semi very good, I would say, in the GV and RAC be a good development as well. And Semi, as I said, coming from Asia and Europe mainly.

Maybe this helps a little bit to size. And the book-to-bill above 1, the second time, while revenues are increasing from Q1 to Q2 is also not that.

[Oliver Wyrsch, executive]

Yes, it also made that jump up, right? Obviously. Is that helpful? Hopefully.

[Unknown Analyst]

That's helpful. And maybe just on some of this reconfiguration. I mean if we go to your factories, right, normally, you show these machines and you say it takes 1 year for certain stuff to get trained. I mean you now say that reconfiguration is largely completed and you have this 50 bps of an impact.

I mean how certain you are that this is really over now? Because I can imagine you also would have to order some machines. I mean the CapEx really hasn't increased year-over-year. I mean, is this really largely completed? .

[Oliver Wyrsch, executive]

Yes. I mean some of this CapEx is not something right if you look about a period of depreciation and then you have it already somewhere in your budgets, the impact is not so high. I'll let also Matthias comment on it.

Yes, for this reconfiguration that we needed to do based on this new landscape in Q2, yes. But again, the big disclaimer is, I do not know how these trade disputes will continue, what escalations we have. And also -- my fear is rather actually not this because then we'll just adapt to it. And we've just shown how we can do that. Maybe there's another configuration needed. At this point, -- we don't see a big step like this again needed, right?

The biggest one was this decoupling U.S.-China theme, not only but this. So we rather look now into next year and there's concerns about inflation and more economic slowdown. When these effects of Q2 will work itself through the system, there could be supply chain concerns. We don't know more than all of you.

You've got great research departments, right? So we're just trying to understand what then that next step will be. I believe our footprint is fit. We showed it. We've proven it. We can speed it up and we will absorb and then move on. This is not going to -- the core of INFICON has not changed.

We could go and do some math of what hypothetically the all big would be without the trade disputes, it's a new point because, yes, there is no alternate reality. In the alternate reality, we gave you the guidance what we think for this year.

The new reality is this, the new playbook is this. I believe many of the effects other companies will still see. We just try to be really proactive and forthcoming with information, but also proactive in the implementation. So quick rip off the band aid move on is the general INFICON way for things like that. So maybe help...

[Matthias Tröndle, executive]

Lot of uncertainty and a lot of low visibility. Maybe just let me add one comment. You asked why is CapEx low and you did many things and largely complete. This really depends on what kind of projects and product lines you transfer, some are more CapEx intensive, some are less. And also sometimes you see that you transfer internally, right, some of the production equipment from location A to B.

So this is not really a CapEx. And then you have tools, instruments, you have people costs and maybe training and setup costs, which are impacting the P&L and not so much more at least in the moment of CapEx -- that's one thing. And regarding your question, is it really largely completed, I would say all the projects and tasks we initiated, they are largely completed. Will this be the final end stage? We don't know yet.

As Oliver said, we only know what we know today. Will there be the need eventually to do something else, right, in the next coming months and to think about the structure could be, we don't know yet. I only can say we are ready and we are watching this, right? And if decisions are needed to make, we do it, right? But the projects we talked about, they are largely completed.

[Oliver Wyrsch, executive]

I think one point I want to stress again what Matthias just said, which will help to illustrate that we don't actually have growth this year. I mean we have growth from INFICON, but the market itself hasn't done this ramp. And as you all know, we have been preparing second half last year to do this ramp, right, where there will be real growth, right?

So it's cool growth, 7%, all that good, but we're talking about a ramp, 20%, 30%, sometimes even more. So we are ready for that still, not all activated, not all staffed, still same thing. But of course, you can then -- when you move a product line, you take that product line from one place and ship it over to somewhere else. It doesn't need more equipment. Plus we would even have more equipment from this ramp if we needed it.

But again, this acceleration of this semi ramp isn't happening this year, it looks like. It's just good solid growth on this basis where we are that we're currently showing. So you don't need necessarily a lot more CapEx, if that makes sense, right?

Because also the buildings there -- when you think buildings, we need to think 2 ramps or 3 ramps ahead, meaning 5, 10 years plan. So we have the buildings. We have the location that's part of our long-term strategy. So this is about what you put in there and what you're really making there, they are more a mix of what happens in the building, if that makes sense.

[Bernhard Schweizer]

Next question comes from Martin Comtesse.

[Martin Comtesse, analyst]

Good morning, everyone, I would just like to go back quickly to the margin implications. Can you help me -- can you just elaborate a little bit on the negative FX component of 150 basis points where that comes from? And is it likely to persist at the current level also in the second half. That will be the first one. And then I might follow up with another one.

[Matthias Tröndle, executive]

I think let me try to explain a little bit the FX impact on the first and then Oliver can add. Well, it's relatively simple, I must say. We -- as you know, we have some exposure on the Swiss franc side, and we also have some exposure on the euro side. And when we take a look to the currency development year-over-year, I think we had 11% change in currency, Swiss franc versus U.S. dollar, 11%. That's a big number, right, Q2 to Q2, and we had about 7% change in euro, which is the other currency where based on our European business and the Cologne business, especially where we have also a certain exposure. And these 2 currencies mainly drive the currency impact we talk about.

[Martin Comtesse, analyst]

That's helpful. I'm just trying to -- what I'm trying to get to is basically what Jorn already mentioned earlier. If we take the midpoint of your new guidance, you're basically implying an 18.5% margin in the second half. So a meaningful step-up from Q2, 350 basis points or so.

So if I look at the individual moving parts, 150 basis points FX, which is likely not going away in the second half. We all don't have a crystal ball, but for now, we would expect currencies to stay where they are. Accelerated relocation, 50 bps is going to be done mostly. Sales volume, okay, done, but that still leaves me with quite a difference for you to move from 15% to 18%, 18.5%.

And I did understand that you will likely continue to price or share the gain with your clients in terms of the direct tariff impact, which was 200 basis points. So what I'm just trying to get to is how quickly can you get back -- realistically get back to the 48% to 49% gross profit margin?

And is it likely that you will also have a negative impact in 2026. I understand we don't know where tariffs are going, but let's assume for now tariffs are going to stay where they are -- where they were in Q2. Will there be below 20% margin next year? And where does the recovery in these 4 individual moving parts come from in the second half?

[Oliver Wyrsch, executive]

Yes. I think I will take general and then maybe Matthias can give some more positive numbers. Hey, look, the INFICON model is still at 20% plus of [indiscernible] and the one where we continuously try to further improve nothing of this has changed in long-term strategy.

Nothing of the strategic initiatives have changed on the growth side or on the efficiency side, operating efficiency, utilization other automation, nothing of this has changed. We know that this is going to go away because there are clear one-off effects that we can identify. So the building blocks in it.

In terms of FX, I mean, strong Swiss franc is never really good for Swiss companies. We have seen that in the past. We are much less exposed. If you look at our Swiss location, as you know, is just 1 of 3 big ones or 1 out of 11 competence centers. So we're much more diversified. That's why we also typically are -- have a much higher natural hedge on FX.

When you specifically look at, for instance, Swiss franc development got compared Q1 with Q2 and also Q4, it's a bit of an up and down. So yes, I know we kind of ended up at this very strong Swiss franc overall. But the dynamics are still higher than the situation will generally suggest in Q2. So there might be improvement on it.

But I would also say on short term, more identified, but in general, long term, we try to manage this strength of this currency, specifically the Swiss franc, for instance, also the euro to some degree with this relocation and cost optimization. So I don't know how quickly this will materialize or how quickly the effect will go reverse.

But I look at this with a relaxed perspective. I think this is manageable. We've seen this before. Again, we do not have a one concentrated location or two big locations. We are more diversified than that. If you compare the profile of our cost with the profile of our revenue, it's relatively balanced. The only thing is there is not many customers in Switzerland for semi, for auto, right? So that's the one thing that we need to watch a little bit. But again, for that, we also have this reconfiguration projects longer term. And we stepped it up a little bit because we do expect it to be a bit stronger in comparison.

So I think we can work through that. I would not worry about 2026. I mean -- the last 3 years were difficult to estimate, so how do I make a statement for next year at that age as well beyond a couple of months, right? But if I look at next year, I really can look at it optimism in spite of everything that happens in the world.

We're taking also pushing -- there's a lot of new innovation from the space to quantum computing to all these new tech nodes in semi. We are right there. We're right plugged in. There's a lot of new application and sense technology coming online.

Data analytics is on fire, oh my God this new products that we're making there and the stuff that's happening. All markets look like they grow next year versus this year. This is not guidance. This is just a general feeling of how the development is based on what I said earlier.

Hey, there's reason for optimism even though we're in the middle of a storm, frankly, because underlying factors haven't changed actually. I think they could even you could even say they have improved. So no reason for negativity or too much, we have to navigate it. That's what we're doing here at INFICON, but we are as excited as ever about our business and about our opportunities, frankly.

Isn't it a great time to leave? I mean all the stuff we do you just have a brand-new project I cannot talk about the moon and all this stuff in tech with AI. You can read my LinkedIn. I did my own coding project, we have two bots this summer. Super cool stuff.

Anyway, sorry, but you asked me about what's in the future, I'm excited about it as much this is a bit miserable. I get it. But this is not going to the core, it's not changing anything, it's not going to knock off anything, which just plow through. Rip-off the Band-Aid, move on, it's fine, execute further. Actually, rather more opportunities than less, frankly, when you compare to Q1. And you look at a long term perspective, yes.

[Martin Comtesse, analyst]

That sounds very good, but you know how dull we are at the capital market and always just look at pure numbers.

[Oliver Wyrsch, executive]

You guys -- when we talk about the tech stuff, I see sparkles in all of your eyes. I know we both have, right? We have to do numbers and we also talk about the exciting stuff in the industry. But again, I want to stress not that too much go off of attention. There's optimism to have for next year, I think. That should be the general statement. And while trade dispute settles down, the big drivers, they have actually accelerated. So yes. So everything is a little later. That's all.

[Martin Comtesse, analyst]

Just a small follow-up here. Do I understand correctly that the 200 basis points, the majority of that direct tariff impact is something that you would expect to see go away already in the course of the second half? Or is it...

[Oliver Wyrsch, executive]

It already has. The impact is mainly in April and then it was a little in May and yes, then it will further improve in June. Again, who knows, right? And when we do sudden movement in policy, there's going to be some kind of bump and scratches and bruises, but it's a temporary nature of it. So I think this is not -- in a realistic scenario, you don't see this anymore this year. So this has been largely around this decoupling logic I explained...

[Martin Comtesse, analyst]

Maybe a quick last one, if I may. The lower sales guidance on the lower half of your initial guidance, is that exclusively to do with the delay in the semi ramp-up? Or does it also have any other sector impact?

[Oliver Wyrsch, executive]

Semi is certainly a big thing, right? Also why we clicked off the upper part there, we just don't see this upside. I mean if you look at how we try to communicate with you, we try to communicate early and what we know. And so we already in full year presentation, so 2 earnings release back, we talked about this year maybe not being as exciting as we all hope for, with a full fat semi ramp in the middle of it.

And I think then in Q2, we continued this. So this is basically a bit of a confirmation on a little bit the lower end scenario of the ramp is just not really materializing this year. And so that is the main factor. And there's some others, right? I mean, automotive in Q1, we saw good signals, as I mentioned, and there was a few other things. At one point, even we felt solar maybe it's also going to happen next year.

So that's just why this whole guidance now is on a similar comparable level with like last year. I mean you see the resilience in it. And you could say we're doing a growth if you take out the SME market, which has its own dynamic, right? That's a little bit's what I tried to explain earlier in the discussion with [inaudible] but it's not broad-based, right? So I hope that helps.

[Bernhard Schweizer]

Next questions come from Michael Foeth.

[Michael Foeth, analyst]

Just 2 quick ones for me. The one coming back to your last answer. There are a lot of fab projects out there in semiconductor. And I'm just trying to understand what's triggering this delay that you're seeing. I mean you're not the only ones, obviously, the whole industry is seeing more specifically from a fab project perspective, if you can help us what is triggering that delay specifically? And what makes you confident that the ramp is going to come in 2026? That's the first question.

And the second one would be if you could give some granularity on your semiconductor sales in terms of the demand from OEMs versus end users and sensor sensor solutions versus software and fab card. That would be helpful.

[Oliver Wyrsch, executive]

All right. Yes. Let's do it one by one. So first, about the fab projects. Generally, they're all still there. And generally, everybody is planning to implement them and many are in implementation, right? Obviously, we have good orders out of Asia, China and outside China.

With the big players that you know well. Don't need to catch up. Some are plowing ahead at the front. It's a mix. And then in China, there's a bit of a different dynamic always. You see a lot of displacement of OEMs of Western OEMs there, good growth, also more resilient than we maybe thought. So -- but on the fab projects, this is just some investment delays mainly, very few cancellations. I mean the most notable one is probably Intel and Magdeburg.

There's a long time coming, right? We kind of had to expect this. And then there's also some financial troubles that some others got into. That is mainly where maybe a cancellation happens. All the other projects, the assumption is this is going to come. It just shifts a couple of quarters. generally in the average, right? This does not mean every project is moved, but in the average, a little bit further, some come just a quarter later. That's a bit of flavor.

And you see this also with the top spenders in CapEx that they look at the project twice. I mean wouldn't anybody understand that we do that as well at INFICON for our microscopic CapEx projects in comparison that we look at it twice in this time. Why? Because there's a lot of uncertainty. Do I need this capacity really? When do I need it and so on, right? And where do I need it?

So let's do another round of discussion, and that's what we exactly also see with our customers in both actually, end users chip makers and tool makers, we see these effects. Again, I believe this is rather a delay. Actually, most of it is delaying and a little bit wait and see until this trade dispute settles down, I think. But all of them are super confident on midterm plans, R&D projects, everything strategic is full on plowing forward.

Frankly, nothing has changed. I think, again, the underlying drivers are there. Consumption is not super exciting, maybe you could say, and that's something that also makes things a bit slower, maybe another factor. We have one super exciting application, obviously, with AI really finding proper applications now and really shows first productivity gains.

And that's something that will further expand, but it is still narrow at this time, right? It's not broad-based for everybody in the semi space. All the OEMs and all the chip makers are not profiting from it. And then maybe often we had other killer applications out there, right, where maybe a new consumer product would really plow ahead. And they are in the works, but it isn't here yet.

So maybe to a little bit give you the picture of the dynamics there. Where our growth is coming from, it's similar to what I explained in last year a lot. We look at the semi market as a number of submarkets and now we almost need to look at customer by customer because they're kind of different dynamics. Some need to catch up, some need to catch up in one area, some need to plow ahead, some make a move into a new space.

So all of them have something strategic technologically wise they're working on and that scales up in some places already or is a full step like really leading foundries. But there's also, in some areas, is a bit slowed, as I mentioned earlier. So I mentioned there are some good dynamics in China OEMs. I think we have seen chip maker dynamics last year in China quite a lot.

And then we see in Asia in general, a good trend this year in China and outside of China. Europe could be more dynamic. It's not bad. Of course, there's one big name or one big OEM that is a bit slowed, but it's not a broad-based dynamic. And in U.S., there is maybe some wait and see there. I mean the epicenter of the trade dispute and maybe cause for more uncertainty to some degree.

And hence, there's more thinking. But again, there, when we talk with our strategic partners about strategic projects, there is no delay. There's no question marks that we move ahead. but it is a very fragmented picture, right? The visibility is low. And again, each customer has a couple of things that are almost ramping and a couple of things that are a bit in the doldrums.

So that's why you get this very murky picture overall. I hope this helps. It doesn't -- it's not so easy to give you the list and pinpoint it, right? Apology. We would love to have that too. Maybe next year, when this gets more broadband and everybody scales it up, then that will happen.

[Bernhard Schweizer]

The next questions come from Michael Inauen.

[Michael Inauen, analyst]

Just two questions actually. I was trying to understand what you make of the tariff let's call it, solution or tariff deal that we have between the European Union and the U.S. I mean, there's still 15% tariffs now. It's actually a lot. I mean, it's better than what was probably anticipated, but it's still a lot. So I was wondering if your production in Germany, if there's any impact with that. .

And the second, what I'm trying to understand a little bit the fact that you basically took some tariffs from your customers, as I understand it. We had a similar situation, I remember during COVID when you also shared the pain with your clients on customers, for example, and the higher cost channel.

Yes, exactly. So I was just trying to understand, is it -- does this happen out of discussion that you had with your clients? Or is there actual pressure from your clients to take some of these costs? Or is it your own decision to not have this discussion actually? So I'm just trying to understand, is there a real risk that the client tells you look, if you don't take over some of these costs I'm moving over to whoever MKS or whoever there, just to get a feeling for it.

[Oliver Wyrsch, executive]

Yes, sure. Look, no, there is no real pressure. I think on short notice, everybody can go and raise prices. And some suppliers did it in the last time when we had this high inflation 3 years back. And guess what, they're all replaced. It's like when you do this at home, right, somebody makes the remodeling of your house and really rips you off. You're never going to go ever invite that contractor back into your house even if you pay more somewhere else. And this is the way how we look at strategic partnerships. It is always a discussion.

The first thing when liberation day happens and the whole management team actually was traveling at the time and actually talking to customers as it happens coincidentally even together, we first talked to the customer. That's the first step. So how are we going to navigate this? Like everything else, that's partnership.

If you send them a letter, here's a price increase, they will say, no choice, we'll do it. But you for sure lose branding points. So yes, it's not a bad comparison, honestly, back then when we had this increased chip costs. The choice was always first, we need to ship. Everybody was in the expansion there, right? Some of our product lines, they actually quadrupled in volume. You're not going to go and hold back and make a negotiation and we will not ship and some of our suppliers did that. Some of our board suppliers did that. I mean it's clear what you do, right?

There is an entire team that goes and replace them as fast as possible. So back then also, we focused on shipping. It's the same behavior. It's the DNA. You don't change the DNA of a company quickly. Anyway, I like the comparison a lot, honestly, Michael. This was not a big discussion in the team here. It was more about, hey, what's first, what's not important, who does what?

And frankly, I'm always a fan of when the CEO doesn't have to say much, but people do the right things because what then happened is that we all set up great teams that care about their business and that go for it, they make mistake, but they're moving fast and they do it to their best knowledge. And that's exactly what happened in Q2. I'm immensely proud of how they reacted. And so they moved on.

And yes, for some things, we need to have a discussion. We have price increases, but we did that with deliberation and with discussion. And first, it's about the strategic wins and then it's about compensating short-term op profitability topics, right? That's always the right play if you want to be in the game. We're in the game for 50-something years. So we are not going to go away. They're not going to go away. It's like a family, right?

So you still invite the old uncle to Thanksgiving or to your barbecue in summer or to your birthday party, which is how it is, right? So -- but some guys maybe like more and you do a little bit more with. And we would like to rather be the guys that are easy to make business with do innovation to really wow them on how we saw things. And so that's how we navigated this. Now I hope I answered your question properly. Was it -- all right.

[Michael Inauen, analyst]

It was interesting important to understand, I guess because exactly the COVID situation was somewhat similar, I mean completely different, but still somewhat similar, so just trying to make sure that you are not really under pressure. .

[Oliver Wyrsch, executive]

No, in fact you see what your team is made of and how much do you need to manage yourself. I think that's exactly comparable. I like it. Thanks, Michael.

[Michael Inauen, analyst]

And can you say something to the European U.S. deal? .

[Oliver Wyrsch, executive]

That was still the question. That's right. Some of this we expected. I mean, we were at 10% and then liberation there was 20% and the later was 30%. So the general tendency seems to be there is generally more tariffs between trading blocks and or general barriers. This seems to be the new world, right? If you look at the analysis, what happened in the last 100 years, we always reduce them everywhere, free trade agreements and so on.

And it seems to be now a bit of a paradigm shift. And so we anticipated that too. So now we need to go and find out what this 50% really means. As I mentioned in the last earnings release, when these announcements are made, like last time, the example was the China, the U.S. made an agreement and they said it's 10% and 30% now. When we then did the investigation and you need to call up experts, you pull together your own experts, you actually file requests to understand it with the authorities.

We found out it's not 30%, it's 55% because tariff stays, this one stays, this is a special category, some even fell away. So we need to analyze what it truly means. And sometimes they also fall away. It's not only more. So we'll look at it, but 10% or 15% is a similar kind of range. A reconfiguration of our footprint will continue. That is part of our strategy now for the last 3, 4 years.

We built this capability up. So yes, we might move something out of Germany to the U.S. or to China based on this, but the projects that are already ongoing. So it's not as dramatic as this liberation day shock with the upgrades to it, right, which we're currently at 50-something percent of tariffs from China to the U.S. So that is a much smaller scope.

Again, we need to also see what the Swiss U.S. agreement will look like. There's voices out there that it could be comparable, and we'll have to just look at it and then analyze it and we will take a week or 2 until we know. And then I'm sure the teams are motoring away. We have scenario plans already for how extreme it is.

So we also have to expect maybe 30%. And so in that sense, it's better. EU and U.S. trade policy and agreement, there's a shift there, right? We're also studying this closely where will this really end up with and what really stays long term and what will not.

We look at this different than between China and U.S. from our humble view, right? Again, please ask the real experts about policy or global trade policy. But we believe there is solutions to be found normally between these 2 blocks. And some things need to be worked out, might be still a bit bumpy in the next months, but they will be working some things out. Yes, I hope that helps...

[Matthias Tröndle, executive]

It's a long discussion, but just let me add, right, sometimes we say well tariff, tariff is an easy word, right, 5 letters or -- but it's really complex, right? What's really -- there are so many dependencies and rules you need to understand, you need to apply. And also very much depending is, of course, who's paying the customs, right, or the tariffs, right? And number one is this is all defined mainly in the Incoterms.

So the Incoterms define a lot, right, who's really paying, who's importing the goods. That's one thing. And then there are so many other aspects, right? Will the goods be brought out of the country again after a couple of days. And then maybe it's -- and all these things we must watch and analyze and try to get a good understanding and then we can judge and basically what we said earlier.

Of course, we watch it and we need to watch and then we need to make the right decisions, right? When we have some clarity, what could be the impact. And as Oliver said, even today, right, 2 days before the official day, I think, August 1, we don't know what's the agreement with Switzerland and eventually, we don't know yet. And what we will see and then we look at our structure, our product streams and product flows right into the world, and then we need to make the right decisions.

[Oliver Wyrsch, executive]

And that's very good addition to Matthias made here, just to show you the complexity of it. It really breaks down in complex process. And then there's also the customer discussion, who does what or do we change the revenue stream or the shipping stream or yes, and then we'll work through it.

But it shouldn't be that extreme. It's not a great deal, right? I mean we are fans of the world before where there's a couple of percentage between the blocks, especially the major trading blocks, right, excluding maybe U.S. and China. That is good, right, free room to operate, not too many tax burdens and regulations. It's obvious, right?

That's the easiest to make business and grow business. But the world is what the world is. So you navigate where you are. It's the same rules for everybody, right? And I believe we are just in a very good place to navigate this. So we remain confident whatever will be thrown at us.

[Bernhard Schweizer]

At this moment, I don't see anyone else wanting to ask questions. So maybe this is the point for closing remarks.

[Oliver Wyrsch, executive]

All right. Then thank you very much, everybody, for your interest, for your continuous support. And we meet again soon in a quarter, interesting time. And as I mentioned earlier, also very exciting times at the same time.

So I would say the same thing, we remain confident and optimistic here. and see what the future brings. And then with that, we meet again soon as Matthias has outlined in the next date for the next earnings release and other events, we will participate. Thank you very much, and have a wonderful day.

[Matthias Tröndle, executive]

Thank you.