Operator : Good morning, everyone, and a warm welcome to the PALFINGER earnings call for the H1 results for the fiscal year 2026. Today's speakers are Andreas Klauser, CEO of the company, and Felix Strohbichler, CFO of PALFINGER. They will walk us through the company's performance, touching on key milestones and the current market trends. Before we dive in, a quick housekeeping note. The conference is being recorded and all participants are in a listen-only mode. If you have any questions, please submit them using the chat box and we will address them in the Q&A session after the presentation. You can also ask a question directly via the microphone. Please type the word "question" into the chat box to be considered, and we will open your line at the beginning of the Q&A session. Now let me pass the word to Mr. Klauser and Mr. Strohbichler. The floor is all yours.
Andreas Klauser : Yes. Thank you, operator. Good morning, and a warm welcome as well here from our side to present our results first half 2026. If you go to the first slide, what you can see here is to share the current view and overall actions which we are planning. Yes, PALFINGER is in a strong position to navigate even in a very volatile market environment. Why? First of all, we are resilient because of the setup and the strong balance sheet we have. Secondly, sorry, the strategic initiatives are on track and really progressing well, and further on, the efficiency program, which we are currently introducing to improve productivity, increase profitability, and create strong additional financial flexibility. By executing this, we will as well be better and stronger in future than today. We move to the next slide. In terms of environment, yes, despite the tough environment, we are progressing well. What do we see in the marketplace? First of all, nothing new. Very volatile and challenging environment due to the geopolitical situation, especially in the Middle East, and as well the escalation of tariffs, which we have seen here in U.S. Delayed investment decisions across the markets, and because the cake is shrinking, very competitive and solid market environment. In terms of regional performance, we still see a positive development in Europe, Africa, Middle East. On the other hand, quite a strong lower level in North America in terms of stability is given, but slower than expected. APAC and Latin America with a solid performance. The global footprint helps us at this time to offset the shortfalls in the different regions. The business momentum itself, if you remember, marine was always challenging. It is now gaining momentum where we are getting quite good solid business out of it. We are becoming an integrated solution partner, especially on the defense ecosystems, which is also an important step forward. The growth opportunities which are coming out are clearly identified, and as well the packages we are currently seeing in terms of investment programs are helping us in North America and EMEA. In EMEA, we are still counting on Germany getting the programs right. We are managing based on strengthening our long-term positioning. I think it is also important not only talking about this year, but as well further on. What do we see here? Despite the major impact we are currently seeing here from Middle East in the performance on the first half of 2026, our revenue is currently sitting at EUR 1.165 billion. The EBIT is EUR 84.1 million at the moment. Felix Strohbichler will further bring some additional color here, how this is put together and how this is turning out. Quite important, we were quite successfully participating here in a major defense show, Eurosatory in Paris. Enabling the mission readiness for the different global armies. Quite important, we are counting on the air defense systems and the overall logistics solution we can provide. I am very happy to report that we are hosting our EMEA sales and service conference here in Austria. Nearly 400 participants showing new products, the way forward, everybody buying in, and a quite strong momentum which we have gained here. On the other hand as well, to secure major deals, this will also impact our business quite positively. In terms of numbers, I would like now to hand over to Felix to give some color on the results. Please, Felix, proceed.
Felix Strohbichler : Thank you, Andreas. Good morning, ladies and gentlemen. As you know, we are steering the company, reporting our numbers in three segments. The first segment is the segment sales and service, which comprises all activities of PALFINGER, which, as the name says, include sales and service activities. You can see here the development on certain markets going a little bit deeper than what Andreas already mentioned. First of all, in North America, we still have an issue that tariffs are weighing on demand. Profitability is still under pressure due to the tariff situation. What came on top was the war in Iran, which unfortunately did not help to see the North American market to recover as we actually expected it a few months back. Still a challenging environment in North America. Going to Europe, in Europe, we do not have one single market. It's actually quite divided. Southern Europe has been strong for many years now. Northern Europe has now also gained momentum. Middle East obviously is impacted at the moment, but has been quite strong until the start of the war in Iran. What is still a pity to see is that in Germany we have no impact from the German infrastructure package yet. We do expect that this will kick in in 2027. The extent will have to be seen, but at the moment there is no impact yet. Going on to Russia, obviously sanctions and the overall economic development leads to a further downturn also of our operations in Russia, so there is no positive profit contribution from CIS. Going then to Latin America, the environment in Latin America has always been volatile. At the moment, we have overall a stable performance in Argentina as well as in Brazil. Marine is really a highlight. We have seen strong demand across several of our customer segments in marine, offshore wind, cruise business, oil and gas, and consistently solid order intake. However, what has been an impact to the marine business was especially because of the war in Iran, that we have a quite important part of our service business in the Middle East, which was actually stopped for quite some time, and this led to a decline in services due to the escalation in the Middle East. Last but not least, if you look at APAC, clearly India is the key growth driver in the region. If you look at China, there are no recovery signals, so still a very low market and difficult market environment. What does this mean in terms of numbers? First of all, you see a slight increase in external revenue by 2.6% to EUR 1.05 billion, with an EBIT margin of 8.3%. I always have to highlight here that the EBIT development of the individual segments is impacted heavily by intercompany prices and transfer prices or intercompany invoicing, also of services from holding, et cetera. You always have to look at the total picture, if you look at the EBIT margin. Important to show here is that the order book has remained stable despite of an increase in external revenue. The service revenue share has decreased, this is driven by the war in Middle East. As I explained before, we have quite an important part of our service business in the Middle East, this has come to a halt for several weeks or even months, this is reflected here in the service revenue share. Coming now to the segment operations, which comprises all assembly and manufacturing activities of the group. Obviously, the different developments in the regions also led to capacity adjustments in different directions across regions. First of all, we increased the capacity in Europe due to the overall positive development. On the other hand, in China and the U.S., we have quite some underutilization due to the market situation. Obviously also in Russia, the output has reduced, which leads to a very low capacity utilization at the Russian plants. If you look at the numbers, first of all, you see in the line external revenue, not what has been produced, but what has been sold to other OEMs in terms of manufacturing for third parties. This is only a smaller part of the business, here we can see a slight recovery from a low level, we are still not at the boom phase, obviously. This is a clear indication how the overall economy performs, if you look at the development of production for third parties. EBIT, again, has improved, again, this is also linked to transfer prices to an important extent. Coming to the third segment, called segment other non-reportable segments, which includes, on the one hand, the holding activities, projects on group level, strategic projects on group level, as well as the Tail Lift business, which has been carved out of the PALFINGER Global Organization. You can see here in the external revenue, the Tail Lift business, which has declined by 17%. Our core markets for Tail Lifts are in the U.S. and in Germany, both markets are quite under pressure with a very low demand at the moment. This you can see here in the external revenue. Again, the EBIT line here, the improvement is linked to mainly increase intercompany invoices of central services. What does this mean on PALFINGER group level? First of all, revenue increased by 2.3% to EUR 1.166 billion, as Andreas Klauser already mentioned. EBIT at EUR 84.1 million, which is a decrease of 7% compared to the previous year's first six months. Obviously, this is an impact of the Iran war in the U.S., Middle East, and Asia, where we can see on the one hand, lower demand, but also a lower service revenue share, in the Middle East, for example, pricing pressure from tariffs, et cetera. That in total, we have here a certain impact on profitability in the first half year, leading to an EBIT margin of 7.2%. What is positive is that the impact on the consolidated net result is limited with EUR 48 million. We are only EUR 2 million below the previous year. On the right side of the chart, you can see the revenue distribution by region, which has not significantly changed from the previous years. We're around 63% EMEA, 23% NAM, the other regions, 5%, respectively 4% in Russia. Free cash flow. We expect a free cash flow of EUR 100 million+ for the full year. At the moment, we stand at EUR 3.3 million. The number is lower than after six months in 2025 due to the fact that we have invested EUR 70 million this year. This is the main difference. Typically, we have a certain seasonality that we manage in the fourth quarter to substantially decrease the working capital. Here we are still on track to get to our target of EUR 100 million+ free cash flow for the full year 2026. Our balance sheet has massively improved after the sale of treasury shares last year. We have a very strong balance sheet structure, almost EUR 1 billion of equity with an equity ratio of almost 44%, gearing at 55.7%, and net debt EBITDA below 2.0. This is a very strong and healthy balance sheet. Net financial debt has also reduced significantly by around EUR 160 million, also driven by the sale of treasury shares of around EUR 100 million. Now we are standing at a net debt of EUR 527 million. What we are implementing at the moment, and what we will see, especially in 2027, impacting our profitability, is that in response to the market environment with a slower recovery of core markets than expected, that we have launched a comprehensive efficiency program which will address several cost positions. We expect to save around EUR 25 million, which equals to the expected inflation for 2027. In the end, we want to keep the cost base stable compared to 2026, and nevertheless, we still plan for growth. This does not impact our ability to grow in 2027, and even less so it does affect our capabilities to deliver on our 2030 growth targets. With this, I hand over to Andreas Klauser for the outlook.
Andreas Klauser : Thank you, Felix. Now looking forward to our outlook. What you can clearly see here, all the measures, all the actions we are planning. First of all, hunt for growth. This is based on the Strategy 2030+, which we introduced last year, as well, a major impact to drive our service business, so to push our parts and service strategy. And last but not least, as well, as Felix Strohbichler mentioned already, increase efficiency by implementing a cost reduction program. The outlook in terms of split over the years. By 2026, the current year, we expect to be above for previous year levels. This means hitting the targets as we committed and as we introduced some months ago. Secondly, 2027, as you have heard, and as you can notice here, the delay in the economic recovery, especially in U.S. and Germany, is impacting us. This means that our 2027 results, the famous EUR 2.7 billion 12% ROCE and 10% EBIT, will be reached later than planned. Nevertheless, we are fully sticking to our financial targets 2030, which are remaining unchanged. Let's look into our 2030 targets. Just to summarize here, it's still talking about the EUR 3 billion revenue, the 12% EBIT margin and 15% ROCE, and being the number one provider for lifting solutions in the entire industry. And this combination, I think, will satisfy all your requirements and as well, will secure our growth. What does this mean now in terms of where the growth is expected to come from? As we mentioned already earlier, we are heavily counting, but as well, we are already in the defensive infrastructure business, which has a quite significant impact further on electrification and the urban transformation. With all our solutions, even working inside towns overnight and 24/7. As well, the productivity and service, which we mentioned, is strong focus, really to have strong solutions for our customers to make them even more successful than currently. Important to know is here that nearly all our growth triggers are still in place. This means everything we are counted on, nothing went to waste. Certain things were delayed and postponed due to different matters, but we can stick to the plan and all these triggers are in place. What does this mean in terms of equity story? What makes us quite unique? First of all, we are the technology industrial leader in the entire industry. We manage our growth. What you have seen here, the Strategy 2030+ is fully kicking in already and starting to further materialize in the years to come. We are resilient. Despite the fact, Iran war, other stuff, we are quite strong and solid, and we have a huge earnings potential based on the Strategy 2030+ and all the actions which are currently in place. This concludes my presentation. I want to thank you for your attention, and I think we are now ready to take your questions.
Operator : Thanks a lot so far for the insights you've provided. A brief reminder from my side for the Q&A session, you can ask a question directly via the microphone. Please type the word "question" into the chat box to be considered, and we will open your line or submit your question via the chat function. I would like to start with the questions received via the chat as we have several already. Let's start with the first one. How do you expect to catch up margins in H2 to meet your full year 2026 guidance on EBIT level?
Felix Strohbichler : Well, first of all, we have here a certain hockey stick in the second half year in terms of output. Very importantly, we also count on a recovery on the service side, especially in the Middle East. Of course, at the moment, we still have ongoing escalations and everyday news about the situation there. However, our expectation is that the mix, the output, and also the service revenue share will help to get to a level which is comparable or slightly above the previous year.
Operator : Thank you. Next question is also regarding the outlook. When do you expect full year 2027 guidance to materialize? Is full year 2028 reasonable or too early to say?
Felix Strohbichler : Actually, it's too early to say. I would be now careful because in the end, we counted on a recovery of Germany and the U.S. already in 2026, which did not materialize for several reasons. At the moment, we still hope that in Germany, the infrastructure package will kick in in 2027, but only at the earliest in Q2. For the U.S., I still hope that it will also kick in relatively soon, but in the end, nobody knows. It would be a crystal ball. I think as soon as we see that some bottlenecks open up, the situation improves, we are able to say when we can reach the target. It can well be 2028, but frankly speaking, it's too early to say. We prefer to wait until we have clear signals from the two key markets, Germany and U.S.
Operator : You already answered the next question, but potentially there's more to say. When would you expect the German infrastructure spending to show first effects?
Andreas Klauser : First of all, we can already see now that the offers out in the marketplace, our customers are just waiting to get awarded to this. The pipeline is full. It's just a question of time and like some smaller projects, Deutsche Autobahn is already materializing, but it's by far slower than expected. We can see it's coming.
Operator : Regarding the planned savings, can you provide details on the planned cost savings?
Felix Strohbichler : Well, in the end, it's a cost-saving program which is targeted at structural cost, which means that we will address all cost positions you can imagine. On the structural cost side, it will be a global cost-saving program, so it will not be targeted at single regions. Of course, those regions where we have a lower performance will eventually have to contribute more. It's a broad program where we will strive for leaner processes, higher productivity, and I don't think I can give you now more details than this. We clearly have the target that in every single region on local currency base, we will keep the cost stable. Of course, on the holding side, we want to even increase a little bit more the pressure to reduce structural costs.
Operator : Thank you. Let's have a look to the U.S. Any implications from Hiab's acquisition of Labrie Environmental Group, which is active in waste and recycling, on your U.S. business, and how big is your U.S. revenue share from these two verticals?
Andreas Klauser : I think first of all, the impact of this acquisition of Hiab is nearly zero to us. They are further expanding a completely different business, and we have to see how this evolves. As you know, if somebody is targeting a new business, it's usually a big question mark, but this is not really in our focus. On the other hand, the key business which we have, the classical loader cranes, truck-mounted forklifts, we are further growing. All these ingredients we have, it's unfortunately a bit slower than expected. I think this is something we can clearly admit here, but we keep the focus on it, and we are quite confident that we can further gain share and volume at the end of the day. In overall, this is not really critical to us, and it even might help us, let's say, since we are quite focusing on the other lifting solutions which we are currently providing in the U.S.
Operator : Thank you for this answer. Let's have a look on the defense portfolio. How is the defense portfolio developing? Are you planning to expand your unmanned system portfolio, for example, with the CRAYLER?
Andreas Klauser : No. Currently, let's say we are in all the logistics solutions which we can provide coming from hooklifts and loader crane. As well, on the other hand, we are quite strong in the air defense side, so supporting here different missions and solutions for the customers globally, which is required currently. Yes, we are working on autonomous projects, not only in the crawler crane, as well on lifting stuff, et cetera. We can't disclose here at this point in time, but these autonomous systems are helping us that we are ahead of competition with our solutions for the different customers we have.
Operator : Thank you. With a possible end of war in mind, are your margins in these regions, which are Eastern Europe, Russia, Middle East, higher than in Western markets due to a higher service share?
Felix Strohbichler : This is not true for Russia, it's mainly true for the Middle East. In the Middle East, we have quite an important activity in the marine business, where we are servicing a lot of ships, oil rigs, et cetera, for the Gulf region. This activity has almost come to a standstill for obvious reasons. As soon as this will kick in again, of course, this is a major profitability driver because this is one of the most profitable parts of the group, actually. It's limited material consumption and high margins.
Operator : A follow-up question regarding this topic. Can you mention service revenues lost in H1 2026 in Middle East?
Felix Strohbichler : Middle East service revenues, we are down. Yes, we are down in the first half, I think we can't disclose here any detailed number. It's a double-digit million amount. A lower number than the million.
Operator : Okay, thanks. The consensus envisages full year 2026 sales and EBIT to increase by +4% and respectively +10%, especially with regard to the EBIT consensus. Do you regard this as achievable?
Felix Strohbichler : Sorry, you asked about the 2027 consensus?
Operator : It's 2026. 2026 sales consensus +4%, EBIT in full year 2026 +10%, Do you regard the EBIT consensus as achievable?
Felix Strohbichler : Well, the revenue consensus is not far off. The EBIT consensus, obviously, we already mentioned that we believe that we will be above prior year levels, but this will be slightly above prior year levels. 10% is a too high assumption.
Operator : Thanks. How much of the expected improvement in H2 is supported by orders already booked, and what triggers should be seen to improve the market conditions in the U.S.?
Andreas Klauser : I think it's first of all is the volatility which kicks in by the tariffs. Different announcements are not happening and not helping at this point in time. On the other hand, we got to know here that the USMCA agreement, the Mexican-Canadian-U.S. Agreement, is still in place. Since we are having as well some supply out of Canada, different stuff, we see here some positive lights. Still, the customers are not really willing to place all the orders immediately. They are calling off orders tranche by tranche. This means not all the orders which have been awarded to us, they have been calling immediately off because they're always wanting to get the best tariffs. Overall, we see more stability kicking in from U.S., but still slower than expected.
Operator : Thank you. Q2 EBIT margins were some of the weakest for Q2 in recent years. Could you provide some additional color on the key drivers for this?
Felix Strohbichler : Yeah. It was a mixture of service revenue, share down, plus also lower output than expected. This also was a negative mix impact. In the end, contribution margin in the second half year was not as expected.
Operator : It's starting to be a little bit a technical question. I will read it out and if there are any further questions, please let me know. Can you explain the details? What drove the decline in profitability and segment sales and service in H1 2026? Could you bridge the EUR 17.6 million gap between the EUR 104.5 million EBIT for H1 2025 and the EUR 86.9 million EBIT for H1 2026, despite an increase in sales of +EUR 27 million?
Felix Strohbichler : Well, first of all, I have to repeat myself that the EBIT margins in the individual segments are heavily impacted by intercompany prices, which are, to a large extent, not our choice, but imposed by OECD guidelines in terms of tax issues and tax requirements. This means you cannot just look at this number and assume that this is a pure change compared to the operation performance of the previous first six months. Actually, the main impact is a higher level of intercompany invoicing and change transfer prices. For example, we have increased our underutilization charge from operations to sales and service, which means that if the volume which has been planned is not actually taken off by the segment sales and service, the operation plant is an external supplier would do it, charged for the underutilization. This has not been the case at the same extent, for example, in the last half year.
Operator : Thanks a lot. For the time being, there's one question left. As a reminder to all participants, you can submit a question via the chat box and we will address them. Next question is: to which extent will your technical innovations in defense transfer in non-defense markets, e.g., with respect to civil use of drones, aerial or sea? Which economic effects do you foresee from those new markets?
Andreas Klauser : I think for us it's important that we can further work on our autonomous vehicles, autonomous systems. I think this is quite important. On the other hand as well, the entire control systems are getting more solid, these two together will help us as well in future more for civil application to be even stronger than today.
Operator : Mm-hmm. Thank you. The last question, which just popped up: is the market of 3D constructions, house printing, a seriously developing market for PALFINGER optimization, or currently more or less a feasible stage?
Andreas Klauser : It's a somewhat combination. It's a feasible stage because there are still opportunities we can grab in future. We are currently using it in our engineering area for prototyping, et cetera. That's already helping us. In terms of business model itself, we are at an early stage, but there's still opportunities.
Operator : Okay. Thank you. That was actually the last question at the moment, and nobody else is typing. I guess this would conclude our call for today, and I just want to say thank you for your insightful question, and a big thank you to you, Mr. Klauser and Mr. Strohbichler. To our participants, we appreciate your time and the interest in PALFINGER, and we kindly ask you to share your feedback with the company, and a short email has been sent to your inbox for this purpose. With this, I want to say goodbye from my side, and now handing over to PALFINGER for some final remarks.
Andreas Klauser : Yeah. Thank you very much, operator. I think it was a quite interesting discussion, good questions. You can fully count on us. Please do not forget the equity story, which makes us unique, considering PALFINGER in your recommendations. Thank you very much.
Operator : Sure. See you, and goodbye.
Felix Strohbichler : Bye.