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Operator: Ladies and gentlemen, welcome to the conference call on fourth quarter and full year 2025 results. I'm Moritz, the Chorus Call. [Operator Instructions] The conference is being recorded. [Operator Instructions] The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Juergen Rebel, Head of Investor Relations. Please go ahead, sir.
Juergen Rebel: Good morning, everyone. This is Juergen speaking. Welcome to today's call on fourth quarter and full fiscal year '25 results. Aldo, our CEO, will comment on business and strategy. Rainer, our CFO, will focus on the financials. During the call, we are referring to the Q4 earnings call presentation that you can find on our website. Aldo, please share your thoughts on fiscal '25 and Q4 with us.
Aldo Kamper: Thank you, Juergen, and good morning, everybody, also from my side. Let's start with Slide 3. 2025 was another year of disciplined execution. We built a stable foundation for further expansion as a leader in digital photonics. Our core semiconductor portfolio grew 7% year-on-year, underlining the strength of our focused positioning. And importantly, for the first time ever, ams-OSRAM holds the #1 position in the global LED market, a significant strategic milestone. Design win traction remained excellent with more than EUR 5 billion in new lifetime value added to the pipeline. Profitability also improved again, adjusted EBITDA margin up 1.5 percentage points year-on-year, driven by the accelerated execution of the Re-establish-the-Base program despite significant cost headwinds 1 year ahead of plan. We also delivered EUR 144 million free cash flow, including interest paid. And on top of that, our deleveraging plan progressed strongly. 2 portfolio transactions announced as of last week with proceeds of EUR 670 million and pro forma leverage at 2.5x. On to Slide 4. Q4 was a strong quarter. Revenues and adjusted EBITDA came in, in the upper band of our guidance, a clear beat, thanks to a super strong aftermarket lamps business. Revenue stayed almost flat compared to last year at first glance, but bear in mind, the weaker dollar cost us around EUR 55 million top line versus last year. Adjusted EBITDA increased 7% year-on-year despite FX headwinds, driven by the continued cost savings of the Re-establish-the-Base program. Let's move to Slide 5, looking at the segments. OS held up okay in a seasonally weaker quarter. Revenue dipped a bit more than what you would normally expect. I will comment on auto on the next slide. Margin dropped broadly in line with fall-through, but is still 5 percentage points higher than a year ago. CSA showed resilience after the typical peak in the third quarter, driven by good demand from custom sensor products for consumer handhelds and better industrial medical revenues compared to a year ago. Revenues were broadly stable quarter-on-quarter and slightly up compared to a year ago. However, adjusted EBITDA margins were down both sequentially and compared to a year ago, an unfortunate product mix, coupled with a strong impact from the weaker U.S. dollar and some inventory cleanup effects were the reasons for this. Lamps & Systems saw an exceptionally strong seasonal upswing. Aftermarket demand went through the roof as customers flooded us with short-notice orders after our closest competitor fell into financial troubles. We are trying to turn some of this into long-term business for sure. Specialty Lamps contributed for the last time for a full quarter before closing the transaction with Ushio later this quarter. In line with fall-through, profitability was up more than 80% compared to Q3. Overall, a good quarter across the portfolio. Now let's take a closer look at the semiconductor business on Slide 6. If you look through the weaker dollar in the noncore portfolio contribution, the clean core portfolio grew exactly in line with our semi target operating model, 8% year-on-year. The noncore portfolio was expected to be fully phased out latest by Q1 last year. However, customers kept ordering and ordering. For this, it still contributed a high double-digit million-euro revenue last year. This page highlights the underlying resilience of our semiconductor business. Automotive sequential decline, mostly seasonal. But the automotive supply chain continues to operate with extremely lean inventories and the competitive environment driven by the kind of war amongst the OEMs is unchanged. Although difficult to quantify the so-called Nexperia chip crisis at the beginning of last quarter, but we also had a bit of a negative impact on order intake. Year-on-year, softness is basically due to FX, the order pattern I just mentioned and that no real restocking in the supply chain happened. Industrial and Medical, this vertical is gradually improving. Finally, we are not out of the woods yet, but indicators are trending in the right direction. Orders in Industrial Automation and Medical came in a bit stronger, balancing the seasonal decline in horticulture, for example. Consumer, typical Q4 seasonal decline with U.S. dollar effects and the exit of the noncore portfolio. Let me hand over to Rainer for some comments about cash flow on Slide 7.
Rainer Irle: Thank you, Aldo. Hello to everyone from my side. We delivered EUR 144 million free cash flow adjusted for the onetime positive cash in from changing the employee pension funds setup. Free cash flow above EUR 100 million, as we had promised. That includes a high double-digit million-euro inflow from the Austrian Chips Act. The same is true for the full year number, EUR 144 million, again, free cash flow when adjusting for the pension financing, as just described. CapEx remained disciplined, well below the 8% target. With that, let us take a look at liquidity and the maturity profile on the next slide. This is strong free cash flow in Q4. And the inflow from the change in the pension fund setup, our cash on hand was close to EUR 1.5 billion, and the available liquidity position rose to EUR 2.2 billion, backed by a diversified mix of instruments, cash revolver bilateral lines. In December, we also rolled EUR 100 million bank loan to '27. In January, we completed a EUR 200 million buyback of the outstanding '27 convertible. Including the expected proceeds from the 2 announced transactions, we have already today sufficient funds to repay the convertible bond due in '27 and the OSRAM minorities. This sets the stage for refinancing our high-yield maturities at improved terms. Back to Aldo now for a more detailed look at the full fiscal year '25.
Aldo Kamper: Thanks, Rainer. Slide 9 shows how the company has been progressing despite major headwinds from currency, automotive supply chain pattern changes, precious metal and raw material prices increases, et cetera. Our IFRS top line declined by 3% on a year-on-year basis, but it's worth looking deeper. EUR 100 million FX impact and a more than EUR 100 million noncore portfolio needs to be considered. With that in mind, the underlying core portfolio would have been up 4%. That is especially true when we look at our semiconductor segment. The core portfolio grew about 7% year-on-year at constant currencies, in line with our midterm growth ambition. The year-on-year decline in Lamps & Systems stems mostly from 2 topics: the decline in the OEM business, in line with the lower number of factory new cars with traditional lamps; and the Q2 supply chain adjustment after liberation day. On top, the weaker U.S. dollar also weighed in a bit on the top line. Adjusted EBITDA margin improved meaningfully, thanks to the implementation of Re-establish-the-Base run rate savings 1 year ahead of plan. Cost headwinds have been heavy, gold, silver, rare earths and the top line impact from the weaker dollar. Let's move to Slide 10. A key highlight, one that has always been a personal ambition for me for more than a decade, ams-OSRAM is now ranked #1 packaged LED supplier globally by value. We now clearly surpassed our long-term rival to the crown, NICHIA, helped by a weaker yen, but primarily by better relative performance from us in the marketplace last year. This further strengthened our position with automotive OEMs, professional lighting customers in emerging markets such as micro emitters. On to Slide 11, design win performance. Last year was, again, a green year, great year for winning new business, underpinning our semiconductor growth model. The tally reached more than EUR 5 billion, again, the third year in a row. After a strong Q3, we also booked more than EUR 1 billion of design wins in the last quarter. On this slide, we show outstanding design wins in the triple-digit million euro lifetime value. In consumer, for example, projects in display management and camera enhancement accumulated hundreds of millions. In automotive, the EVIYOS and intelligent RGB ambient lighting projects stood out. And professional lighting and medical imaging designers also contributed exceptionally. These examples show the strong structural momentum in our business. Design wins today are the revenues of tomorrow, and our pipeline is very healthy, underpinning our growth ambitions in the semiconductor core business and along the avenues of our key engineer-emerging digital photonics applications. Slide 12 shows the next wave of structural improvements. Thanks to the great execution of our teams, Re-establish-the-Base delivered its savings 1 year early, EUR 220 million. That's a huge success, but we have to get even more ambitious in view of the persisting headwinds. We're sharpening our profile towards the clear leader in digital photonics, we also want to transform the way we work and thereby save an additional EUR 200 million of annual cost. Cost, speed, agility are our guiding principles as we reshape our operating model. We want to further reduce overheads, which includes addressing stranded costs of the divestments. We want to improve our manufacturing costs by transferring production of established products fully to Asia and the productivity push through automation across the globe. We are developing cost-optimized product platforms and also product development shall become cheaper and more efficient by developing maturing product families in Asia and by using more AI. Expensive European resources are focused on advanced digital photonics topics. In total, around 2,000 colleagues will be affected, half of them in Europe, half of them in Asia. Certainly, we also want to get our share of productivity improvements by rolling out AI, as just mentioned. Let me ask Rainer to comment a bit on the progress when it comes to deleveraging our balance sheet.
Rainer Irle: Now turning to Slide 13. Last April, we communicated our accelerated deleveraging plan. Since then, we have made a strong progress. First, improving the structural profitability. As Aldo just explained, we implemented Re-estab-the-Base savings 1 year ahead of plan and are launching the new program, Simplify. Second, generating proceeds well above EUR 500 million from divestments. We delivered. We will get EUR 670 million in cash from the 2 transactions that we have announced: the sale of the specialty lamps business to Ushio and the sale of the non-optical sensor business to Infineon. The transactions will also result in a onetime profit of about EUR 450 million to EUR 500 million. And third, the solution for Kulim 2, the sale and leaseback. We continue working hard on it. There's always been interest, discussions intensified recently, but it is really too early to call when exactly we will see a deal. But we are fully convinced that there will be a solution. We have always delivered so far, and we have no intention to change that. On a pro forma basis, the leverage has significantly improved, as we will show you in a minute. But the solution for the sale and leaseback and fixing some of the stranded cost of that factory might be needed to really get to below 2x. Nevertheless, I'm convinced that we will be able to refinance the senior notes much cheaper to bring interest cost down, the key impediment for strong free cash flow performance. After refinancing the high-yield bond, it is now likely that we land at below EUR 150 million annual interest cost. On Slide 14, we already showed that last week, you see the impact of the transactions on our leverage. We discussed the update of our balance sheet as of December '25 earlier in the presentation. With that, on a pro forma basis, including the divestment proceeds, leverage drops from 3.3x to 2.5x. Excluding the OSRAM put options, net debt would stand at around EUR 850 million, implying 1.6x. This is a major step forward and a prerequisite of refinancing our '29 maturities at lower costs. And on the next slide, Slide 15 summarizes our transformation journey, as Aldo outlined last week in detail, when we announced the sale of our non-optical sensor business to Infineon. The path consists of 3 phases. From '23 to '25, as you know, we stabilized and refocused the company, divestments, portfolio shaping, Re-estab-the Base and refinancing. '26 will be a transition year, reflecting the deconsolidation of sold business and temporary stranded costs. We will have to bear a temporary drop in adjusted EBITDA due to several one-off effects. For this and for making the company over more efficient and more agile, we launched a new program, Simplify. Also financing costs remain high in '26, approximately EUR 250 million to EUR 300 million until the refinancing of the senior notes, which we have on the radar for '27. And then from '27 onwards, we enter the growth and value creation phase. We want to see growth in the core business and growth along the lines of the existing and new digital photonics applications, highly pixelated forward lighting, micro-emitter projection arrays and spectral bio and distance sensing. Based on the Simplify program and growth, we will see margin expansion. With growing profitability and the solution for the Kulim 2, we will have a fully healthy balance sheet with leverage below 2x. And we want to see our financing costs below EUR 150 million. And the low run rate of restructuring costs is the basis to deliver strong free cash flow well above EUR 200 million. Before we move on to the exciting growth avenues of some of our digital photonics projects, we have to look a bit deeper in one of the aspects of the transition phase. Precious metal prices in here, namely gold, Slide 16. Gold is an important material in the production of LEDs. You need it for corrosion-free mirrors to get the light out of the EP layers, to put it simply. In normal years, that added to the COGS bill, a high double-digit million-euro figure. The unprecedented gold rate that accelerated in '25 cost us an additional EUR 35 million, that's 2% margin of the OS division. That was in '25. The price curve is taking an exceptional shape, as you can see on the left. The peak has come down the last 10 days. But when assuming an average price of about USD 5,000 per ounce, we have another EUR 60 million cost add-on compared to '25. That would be a 4% margin impact for OS and around 2% for the group. We are mitigating as best as we can. We are hedging and that limits further risk very much but doesn't solve the problem. But then we are also reducing precious metal usage by redesigning our product. So that takes a bit. And we are launching the Simplify program. I hate to say it, but on top of the divestments and the stranded costs, the gold price and precious metal prices overall will weigh further on margins and adjusted EBITDA in '26. And with that, back to Aldo for some words on digital photonics growth vectors that we'll kick in step by step and that, we presented in detail last week.
Aldo Kamper: Thank you, Rainer, and we are on Slide 17 now. Digital photonics is really opening up multiple highly attractive growth avenues across both emitters and sensors for us. On the emitter side, micro-emitter arrays are transforming 3 key markets: advanced automotive lighting with EVIYOS, where we already ship in volume and hold the clear design win lead; ultra-compact RGB micro-emitter arrays enabling bright, power-efficient and small AR displays for next-generation smart glasses; and multichannel micro-emitter-based optical links for AI data centers, wide and slow as it is called, interconnects that offer superior energy efficiency and unlock future chip-to-chip optical architectures. For each of these, we see additional revenue potential in the triple-digit million euro territory over a staggered period of time. On the sensor side, we are equally well positioned. Spectral sensing is already today a triple-digit million business, and we see it grow further, anchored in the premium smartphones and expanding further with new product generations and the right of foldables. Biosensing continues to scale as wearables at more optical measurable biomarkers creating incremental double-digit million opportunities. And finally, multi-zone direct time-of-flight sensors bring high-precision 3D awareness to smart devices, robotics and emerging humanoid platforms, with adoption curves that could drive significant revenues by 2030 and beyond. Also on the sensor side, we see additional revenue potential of double-digit million euros, in some cases, even triple-digit long term. Together, these 6 factors demonstrate our unique portfolio of emitter and sensor technologies positioned at the center of major global trends, automotive safety, AR, AI compute, personal health, intelligent robotics, each offering meaningful, scalable and compounding growth potential. Now let's quickly revisit our financial targets for 2030 that we published last week on Slide 18 now. This slide sets out our over-the-cycle target operating model for 2030 once divestitures, including Kulim 2, deleveraging, corporate simplification and debt refinancing are complete and with new applications contributing to growth. For semiconductors, we target mid- to high single-digit revenue growth starting in '27 based on a variety of growth factors that I just spoke about and the adjusted EBITDA margin of over 25%. Traditional auto lamps contributing to the group, as illustrated on the right-hand side, are expected to be flat and I guess a reliable cash source that helps fund the semiconductor transition and growth, consistently an adjusted EBITDA margin between 13% and 15%. With that, we target for the group a CapEx ratio of up to 8% of sales, which should end up typically lower than that. The group free cash flow, as Rainer explained before, well above EUR 200 million post refinancing and a net debt to adjusted EBITDA ratio below 2x. These are over-cycle targets. They reflect our operating model once the portfolio transition is complete. So let me summarize the key takeaways for Q4 and thereafter on Slide 19. Q4, we beat revenue and profitability guidance. The core semiconductor business grew 8% year-on-year on a like-for-like basis. Free cash flow was strong at EUR 144 million. RtB run rate savings were achieved 1 year ahead of plan. We also progressed well in deleveraging our balance sheet. Last week, we announced the sale of our non-optical sensor business to Infineon. Together with the sale of Specialty Lamps, we will get EUR 670 million in cash, exactly the more than EUR 500 million that we announced last year. We have ample liquidity of EUR 2.2 billion available. We bought back EUR 200 million of convertible notes in January. And most importantly, we have clearly defined the future direction of the company. We have laid out a strategic direction by creating the leader in digital photonics where we want to benefit from upcoming inflection points in this field. And we launched today the new transformation and savings program, Simplify, for saving further costs and transforming the way we work. Now on to the outlook for the first quarter. We expect revenues to come in between EUR 710 million and EUR 810 million with adjusted EBITDA around 15%, plus/minus 1.5 percentage points, based on a euro to dollar ratio of $1.19. Lamps & Systems will show the usual seasonal reduction, minus 1 month of deconsolidation of Specialty Lamps as that business will go to Ushio. Semiconductors will experience a typical seasonal decline. Given the coming change in the portfolio and the associated challenges for you in building a financial model, we also want to give some hint for the full year of '26. Group revenue might end up slightly softer than '25 given the divestments and a weaker U.S. dollar. Please remember that USD 0.1 equals roughly EUR 20 million more or less revenue per year. The move from $1.13 to $1.19, for example, would cost us another EUR 20 million in revenue. Adjusted EBITDA will be negatively impacted by several one-offs, the divestments where we effectively sell EBITDA to the buyer, stranded cost overheads that we are not transferring to the buyer, but of course, are working on as part of Simplify and higher precious metal prices and other factors beyond that. With that, we are now open for your questions.
Operator: [Operator Instructions] And the first question comes from Sebastien Sztabowicz from Kepler Cheuvreux.
Sébastien Sztabowicz: First of all, on the automotive market, inventories remain at a very low level across, I would say, the board. Do you see any room for kind of inventory replenishment in the coming months? And attached to that on automotive, do you see any specific risk of DRAM shortages impacting your customers and indirectly impacting your business? Second question is regarding the guide for 2026 in terms of revenue. What are the assumption in terms of asset disposals you have taken into your comment, both in terms of revenue contribution and in terms of timing, just to understand where we should land in terms of revenue in your euro term?
Aldo Kamper: Yes. On auto, as you mentioned, we see overall a very short-term order behavior. Inventories at our customers are low. We've got a lot of orders, still within our lead times. So far, we are able to deal with those. Is there room for replenishment? Yes, we have been hoping for that, honestly speaking. We feel that overall, the inventories are on the low side. We have started to kind of compensate a bit for that by putting a bit more inventory into our distribution channel. But at the moment, still overall inventories stay low. And I think that's because also a lot of our customers continue to manage their cash flow extremely carefully. Whether that is smart or not, time will tell. As you mentioned, memory is getting tight. And I think people are also a bit uneasy there on what it means for overall volumes. So far, no direct implications. But yes, there's, of course, a potential in that as well. Do you want to take the guidance question?
Rainer Irle: Yes. So the asset disposals kind of -- I mean, it's the business we are selling. The first one, the lamps, the industrial lamps business, that was roughly EUR 150 million of revenue and let's say, EUR 15 million of EBITDA, that will go out probably end of Q1. So in the guidance, we assume that it would still be in for 2 months, and the third month will be out. And for the non-optical sensor business, that was a revenue of EUR 200 million and EUR 60 million EBITDA, assuming that would go out mid of the year, then obviously, half of that will go out. And then there's also, yes, for both transactions, roughly EUR 30 million stranded costs that we will immediately tackle one after closing, but then we'll take up to a year to take it out. That is part of the Simplify program, the elimination of that stranded cost.
Sébastien Sztabowicz: And when you come for modest, I would say, revenue decline, modest is like a moderate to mid-single digit, is making sense?
Rainer Irle: Yes, that makes sense.
Operator: And the next question comes from Janardan Menon from Jefferies.
Janardan Menon: My question is just following on the '26 guidance but on the adjusted EBITDA margin. I'm just wondering how we should think about that. You've guided to 15% in Q1. Is that -- would that be a bottom? And should we think that things will gradually improve from there? Or when the non-optical business gets sold in the second half, will that have a sort of further negative effect on the margin as we go into the second half of the year? And then second one is just on the revenue beyond 2026, especially on the AR projection display and the AI data centers where you are targeting triple-digit million. What is roughly the time scale when you think you'll get material revenues, let's just say, materialize in low tens of millions of euros or something like that? Will that be from '27? Or is that beyond '27?
Rainer Irle: Yes. Maybe starting with the EBITDA. I mean the negative impact from gold and so on, we already see today. So that is included in the Q1 guidance and that will not get worse. Obviously, then when the revenue and the EBITDA goes out, I mean that goes together and has no major impact on the margin. Obviously, the stranded cost will then come once the business is out. If we are tackling those stranded costs immediately, we will try then to see the improvement already within this year. The typical seasonality certainly is kind of in Q2 then. I mean, in Q1, we still have 2 months in of the traditional lamps business that will be done in Q2. And anyway, Q2 is typically a seasonal very weak quarter. And then you always see the improvements in the second half of the year, and we should see the same this year.
Aldo Kamper: On the new growth topics, I think AR is much further along in its development than the AI topic. AR is already quite well advanced, and we will see revenues in the somewhat foreseeable future. But still, there is a bit of time before market introduction there. AI is at the moment in, I would call it, very advanced research stage, quick getting into product development stage. So you can imagine that is something for a bit later in the decade now. But once it comes, for both topics, we feel that these topics will scale quite rapidly because the markets are significant and the interest that we're getting shows that the programs that we're working on would be sizable.
Operator: Then the next question comes from Robert Sanders from Deutsche Bank.
Robert Sanders: I assume you've got works council approval for this restructuring and what you did with the pension trustees, et cetera. Is there anything you've done to guarantee the remaining employees as part of this deal? Just if you can give us some color. And where are these 2,000 headcount going to come out from the company? And then I have a follow-up.
Rainer Irle: Yes. I mean the pension and the Simplify program are completely independent, right? So the -- I mean, the pension, what we did is we really took some time to go through all of that and kind of see where we had covered it. We basically had a double insurance and so on. So we resolved that and now the pensions are just secured exactly onetime and everything, the pensions plus the pension increases. So we clean it up, and now there's a really good system, and that helped a bit the liquidity in Q4. Now the headcount reduction from the Simplify program, and we are talking about roughly 2,000 people. A good half of that will be out of Europe with a strong emphasis of Germany, and we had already announced a few months ago the closure of one of the traditional factories in Germany. And with the traditional halogen business declining, we certainly have to do more adjustments, but it will also affect our Regensburg site, where we move some of the manufacturing of some R&D to Asia. But also, as Aldo pointed out, we will invest massively in automation and particularly on the back end, and that is then in Asia. And then we will also see a significant reduction in our Asian workforce. Because of that, automation/productivity improvement/AI.
Robert Sanders: Got it. Just to follow up on a question on the previous call. I just want to double check that the Premstaetten fab, Infineon has been very clear they're going to move their volumes very quickly over to Kulim. So what percent of that fab wafer capacity is relating to the businesses that you've sold to Infineon? But that's what I just want to double check.
Aldo Kamper: Well, I think actually, yes, they will move product over, but it will not be immediate. They will have to also prepare their factories for it. They have to get customer approval for it. And also, we have agreed on a smooth transition so that we have the time to develop new businesses to compensate for that. The factory has 3 areas in -- the filter making that we mainly use for the display sensors is completely untouched by this transaction. So it stays fully loaded and stays fully there. TSV, that's a specific technology on how you connect different layers in your semiconductor, is also only to a very small extent used by the type of products that Infineon is taking over. And then the more generic CMOS is where the product lines that Infineon is using is probably in the 30%, 40% range of that capacity. So that's where we see, over time, a step-wise reduction and where we feel we can compensate that by expanding, on the one hand, our internal business. We spoke about the emitter arrays, both on headlamps, but also, for example, on AR, those need to be controlled by CMOS building blocks, if you will, or steering blocks on the backside of this product, and they will increasingly come out of Premstaetten. So that's, for example, one of the internal growth factors externally beyond the business that we keep, we also see that actually the foundry business is a part of the growth story here as well as selected PMIC on customers and applications, where we have a good access and a right to play. So we feel quite comfortable with these growth factors and with the time that the transition will take because it's quite a number of smaller products. It's not one product with a huge volume that is in this product line. Industrial Automation and Medical are usually smaller programs running for a long time but are very specific in their technological needs and also in the customer approvals. And therefore, it was a logical combination that we agreed on a time schedule in the step down that allows them to do a good preparation and gives us the time that we need to then refill the fab with good new business.
Robert Sanders: Got it. If I could just squeeze in one more. Just about auto LED, I mean, that business, in the past, you said, could grow at sort of 10% per year. Obviously, this year looks like a difficult year for the car industry. But is there anything that would prevent auto LED growing at 10% per year, maybe changes in mix or something that you see from today's perspective?
Aldo Kamper: Well, there are 2 factors, I would say. The one hand, we see a clear push to more of these highly integrated, high-performance headlamps like EVIYOS. And we have now a variety of flavors in that, and we see really good traction now across the globe. It used to be a very European program. Then a number of the Chinese jumped on. And now with the new regulation in the U.S. also enabling adaptive driving beam, we also see much more interest from the U.S. So that category will significantly outgrow that percentage that you just mentioned. At the same time, of course, the saturation in the car with standard LEDs is already quite a bit higher. And there, of course, we are also confronted with price pressure, especially in China. You can imagine that the war amongst the OEMs has also an impact there. And that's why the efforts that we put in, in Simplify and also in a lot of the product cost optimization that we are doing, are very important to defend our shares there, but that weighs a bit on the growth rate. So overall, I would say mid- to high single digit would still be my view given the mix of topics that I just outlined.
Operator: The next question comes from Craig McDowell from JPMorgan.
Craig Mcdowell: The first one, just on the pension trustee piece. Can you explain what that means in practical terms for cash? What's actually happened in practice? And just to confirm, there's no restriction on the cash released from this arrangement? And then secondly, thanks for the color on the adjusted EBITDA of the divested assets. Just wondering whether you give any indication on gross margin of those sold assets as well, just to help modeling.
Rainer Irle: Yes. Craig, yes, sure. Yes, I can confirm, I mean, the cash on hand that we had end of last year that included the pension transaction which was close to EUR 1.5 billion, is no restricted cash, right? It's on our bank accounts, and we can use it. We can use it for operational matters. We can use it to repay the debt. And as I said, together with the divestment proceeds, we have all the money on hand that we need to repay both the convertible and the minorities. Now with the adjusted EBITDA that goes out for the transactions, I would say that just the margins are comparable to the business we keep, though. The manufacturing services that we will then provide to the buyers, that holds true for both transactions, those typically have a lower margin.
Operator: [Operator Instructions] The next question comes from Harry Blaiklock from UBS.
Harry Blaiklock: Aldo, you kind of mentioned in a previous question around the Chinese market and potential pricing pressure from -- given the pressure that OEMs are seeing there. And I know you have decent exposure and the market is obviously, as you mentioned, softening after a few strong years. Can you maybe comment a bit more around the dynamics that you're seeing in that market? And then also your view on Chinese competition currently, kind of whether that's intensified over the last year or so?
Aldo Kamper: Yes. I think China is a bit of a question mark for '26 now in terms of volumes. At least at the moment, it seems to start a little slower and also the projections are a bit lower. At the same time, I think if we think back a number of years, every time when things truly started to slow down, there were incentives put into the system to make sure that everybody in brackets can survive. So let's see how '26 truly plays out. China will still remain an important market, both in terms of volume but also in terms of innovation. As I said before, one of the markets where a lot of our new products get accepted very quickly and where we see high adoption rates, for example, of EVIYOS. So it is always important for us to be the clear innovation partner for our customers and at the same time, have a cost position that allows us to also continue to capture a very significant share in the more established products. But that second part requires a lot of work. I mean prices are coming down, and we need to do a lot of work to take cost out of our products to be able to continue to enjoy that business. And that's not easy. But so far, we are able to pretty well defend our shares, but there's definitely pressure, and we acknowledge that, and therefore, we take action to counter that.
Harry Blaiklock: Got it. Makes sense. And then on the EBITDA margin target for the semiconductor business of over 25%. Obviously, you gave that last week, which was before the announcement of the plan, but I'm sure the Simplify plan was obviously baked into that. But I'm wondering would you be able to hit that over 25% margin target without the Simplify plan? Like does the Simplify plan provide some kind of upside to where you could have got? And -- yes.
Aldo Kamper: I should say it was priced in. We didn't want to speak about it last week because it would very much confuse the messages. I think both topics, the deleveraging and the divestment, were an important topic to give the bandwidth to last week so that people, also our employees, could really understand what was going on. And now this, with Simplify this week, we give a lot more insight in how we want to defend and expand our margins. That was baked into this target. Obviously, what we, of course, will push for is to get these things implemented as quick as possible. And with that, get to the target margins as quick as possible. That's the key focus now. And then let's see how it goes. I mean with the last 2 programs, I think we have shown a pretty good track record of being aggressive, being quick, and that's what we would like to repeat. But obviously, it doesn't get easier. You need different levers, and we are now using very different levers than last time, for example, really reallocating the full standard product portfolio on the chip side from Regensburg to Malaysia, including the R&D that is associated with it to really compensate also these pressures that I spoke about before and to free up then room for highly automated innovative products, for example, on the AR side here in Germany. So it is quite a structural change that is important for competitiveness and important for innovation at the same time.
Harry Blaiklock: Got it. Super helpful. And one last question, if I may, just on the consumer business and any impact that you've seen there, like obviously not -- I'm sure you haven't seen kind of tangible impact yet from the memory disruption, but any conversations that you've been having with customers about their thoughts going into the second half of the year?
Aldo Kamper: Well, our customers are worried about it, but so far, say they have secured their volumes. Whether that is fully true or not, the year will tell. But it is acknowledged. Our customers are working on it. So far, no reductions in forecast or outlook yet. But can it happen? Well, AI pays top dollar to compete with a simple smartphone against that will not be trivial. At the same time, the industry have always found ways around it and to deal with it. So yes, it's too early to tell what the true impact will be at the moment.
Operator: There are no further questions at this time. So I would now like to turn the conference back over to Juergen Rebel for any closing remarks.
Juergen Rebel: Thank you, operator. Thanks, everyone, for joining today's call. If there are any follow-up questions, there's a lot of material on our website, and you can always reach out to the Investor Relations team. Thanks very much, and speaking to you soon.
Operator: Ladies and gentlemen, the conference has now concluded, and you may disconnect. Thank you for joining, and have a pleasant day. Goodbye.