Bertrandt Aktiengesellschaft (BDT.F) Q4 FY2025 Earnings Call Transcript & Summary

Good day, ladies and gentlemen, and a warm welcome to today's earnings call of the Bertrandt AG following the publication of the full year figures of the financial year 2024-2025. I'm delighted to welcome the CFO, Markus Ruf, as well as CSO, Michael Lucke; and Head of Investor Relations and M&A, Bjorn Voss, who will speak in a moment and guide us through the presentation and the results. Afterwards, we will move over to our Q&A session, in which you will be allowed to place your questions directly to them. Having said this, I'm handing over to Mr. Voss.

Yes. Good morning. Also from my side, a warm welcome to our Christmas annual report. Again, in December, we are presenting our full year numbers for the last fiscal year. Together with me is Markus, our CFO; and Michael, our CSO. Michael will run us through the market and customer environment we had last fiscal year, and Markus will, of course, present the numbers which resulted out of this market environment we've had. Michael will then give you a market outlook, how our customers are currently behaving, what we see in terms of R&D sourcing. And of course, what this means for our guidance will be presented by Markus. Again, afterwards, as Judith already said, we are ready for a Q&A session and happy to discuss all issues and questions. With this, I will hand over to Michael. Please, Michael.

Thank you, Bjorn. Good morning, ladies and gentlemen. I will give you an overview to the market development in the last business year. So we are embedded in the macroeconomic situation and what we saw. Of course, we have an impact on the geopolitical conflicts, the trade disputes and overall political uncertainties. What hit us really in a heavy manner was, in the second half of the business year, the trade disputes and the tariffs. It put a lot of stress on our customers. They have to decide where to produce and develop their products, in which area of the world. And all of them had an evaluation on their business case if they are still valid or not. And this had a direct impact on the outsourcing volume. So this was a huge impact for the second half of the business year. And overall, we have the international heterogeneous development in China, U.S., India, or in Europe. And in Europe and especially Germany, we still suffer on the structural problems and a weak economy. If we have a closer look at the automotive industry, uncertainties, trade disputes and, of course, some of our customers struggle with software supply chain or lack of competitiveness. So we saw a lot of different individual situation on the customer side where we have to reflect and manage the consequences. We saw a lot of profit warnings and short-term cost-cutting programs, which leads to in-sourcing, delayed decision and relocation of the R&D work in their global R&D network, with a major impact, of course, on the German workload. And then the expected recovery, our expected recovery for the second half of the business year did not materialize, the reason I mentioned before. So the consequence, even if we did a lot and we reduced our workforce in Germany, the top line drop was higher than expected. So we faced the consequences that we still had some overcapacities in Germany. And we saw a small growth outside of Germany, abroad. Markus Ruf will go in detail afterwards. So if we have a look at the other main branches for our business, it's surely aerospace. What we saw is a slight increase in the civil area and, of course, a double-digit growth in the defense area. We realized that there is a lot of investments, especially in the defense sector, and it will pay off in the next year or the next years. And we did a closer look on the civil area, the defense area and the space environment regarding our aerospace division. And space, as you know, it was not a growth business last year. Most of the German players had some restructuring programs ongoing. But we expect, with the new investments, the space segment will be interesting as well. Maybe not a huge growth market, but in some niches, it could be a relevant market for engineering service suppliers. We saw a slight decline in the domestic order intake in the electrical industry, a slight increase in our medical activities. And of course, the transportation sector, especially in Germany, is in a restructuring mode as well. So the current situation is not that good, but we see a lot of investment from the government, and we expect here new projects in the next years to come. Overall, as we mentioned before, geopolitical tensions, trade disputes and delays or in-sourcing tendencies on the customer base was one of the major problems in the second half of the business year. We saw a revenue and the EBIT drop on our customer side with consequences on the R&D budgets. And most of our customers started also redundancy programs. And in this space, especially the middle management of our customers, which is relevant for the outsourcing business, was not in a good mood and getting stable from month to month. So we expect hopefully that there will be a more reliable situation in the next year. And due to the cost optimizations and the local requirements from our customer side, so their requirement in China is different than the U.S. or in Europe, we saw that a lot of our customers redistributed their engineering work in their global engineering network. The consequences for us, we continue with our structural changes. We improved capacity and we strengthened our portfolio in our service environment. This was the major consequences from the market development in the last year. I hand over now to Markus and come back with the outlook later. Thank you.

Thank you, Michael. Also a warm welcome from my side. And following my colleague's remarks to market and customer, I will now present you our key financial indicators. So first of all, the challenging conditions are also reflected in the development of our sales and revenues. And so we achieved EUR 978 million. And so compared to the previous year, a minus 18% year-on-year. The most international subsidiaries are stable, except of France. There are also challenging French conditions. Sales share outside from (sic) [ of ] Germany at 24% is also stable compared to the previous year. And headcount aligned to market demand, 12,184 (sic) [ 12,185 ], means minus from (sic) [ of ] 1,843 year-on-year, and earnings improvement program accomplished and additional measures implemented. We are satisfied with our cost optimization program, and we expect it to fully impact in the current fiscal year. EBIT of minus EUR 36 million, but please consider including EUR 33 million one-off special items, additional restructuring, portfolio measures, also the cartel fine in France, but positive. So the first quarter after 5 quarters with losses, the Q4 was positive with the EBIT from (sic) [ of ] EUR 3.4 million. And I think important, a positive free cash flow from (sic) [ of ] EUR 18 million, and solid balance sheet ratio with around about 42% equity ratio. So at a glance, total sales, as I mentioned, EUR 978 million; employees, 12,185; EBIT from (sic) [ of ] minus EUR 36 million, but including one-offs from (sic) [ of ] EUR 33 million. Free cash flow, EUR 18 million; and equity ratio from (sic) [ of ] around about 42%. So customer-specific impact. Honestly, we started in the first quarter as expected. But then in the Q2 and Q3, we see a sales decline much more than anticipated. And so the Q3 (sic) [ Q2 ] and the Q3 were really, really challenging. And now Q4, as I mentioned, with EBIT from (sic) [ of ] EUR 3.4 million positive. But international, we see also minus 16% year-on-year, especially in France because of project-based reduced external services, and other countries are broadly stable. But Germany is our problem with a minus from (sic) [ of ] 18%. And honestly, also one customer group is our main problem, with one customer group we have here more than 50% of the sales decline to achieve. So we are on the way to more diversification as we launched in 2010. So we are on the way to 25% nonautomotive business. And in the last fiscal year, it was around about 14%, but our ambition '27 is 25%. And as my colleague mentioned, so we see also potential in aerospace, in defense, but also in health care, medical or in energy power. So heterogeneous segment performance. So we see also all segments are under pressure, especially our physical engineering, but we see also in the electric/electronic delayed and relocated R&D projects, we see also potential -- and we see also a lot of potential in the future, especially for electronic and software. So now let's have a deeper look on the special items. So as I mentioned, around about EUR 33 million one-offs. So additional restructuring costs for settlements and for costs for the period of notice from (sic) [ of ] around about EUR 15.6 million; portfolio measures, EUR 10.7 million; fine in France, around about EUR 3.6 million, so we are on the way to the court; and all the other one-offs like write-offs, customer receivables from (sic) [ of ] EUR 3.2 million. And we see also first benefits from our cost optimization program in the fiscal year '24/'25 around about EUR 55 million. And we are successful abroad. So our foreign subsidiaries with EBIT from (sic) [ of ] EUR 7.6 million; and non-IFRS, so excluding the one-offs, is around about EUR 14 million. And as I mentioned, we started in the Q1 as expected, but especially Q3 was real challenging for Bertrandt based on lower call-offs of [indiscernible] and project postponements. So our key expense ratios. So optimization on the personnel costs, you can see, including the restructuring costs, especially based on the headcount development/redundancies program, but also short-time work. And we see also normalization on the depreciation and amortization with around about EUR 54 million. And you can also see the benefits from the cost optimization program in the other operating expenses. So we reduced, including the one-offs, as I mentioned. So EBT from (sic) [ of ] EUR 47 million and the net income from (sic) [ of ] EUR 53 million. So there's an impact for the carry loss forward. We do not evaluate all carry loss forward in the fiscal year. So there's a hidden reserve maybe for the future. And we see also EPS is better than before, but minus EUR 5.3. So summary, group profit and loss account. So total sales, so based on the capacity utilization, project-related decline and the capacity. Material expenses has a project-related decrease, especially in France. So optimization on the personnel costs, but also including restructuring charges and headcount reduction. Depreciation and amortization normalized after the impairment in the previous year. And operating expenses was EUR 85 million, including one-off items, as I mentioned. Other operating income was EUR 9.6 million. So let's come to CapEx and see on a low level. And the question is what is the new normal. And so we expect for the future around about EUR 20 million, but we are flexible. If it is sensible, we are ready to do more. Cash flow positive. Cash flow from (sic) [ of ] EUR 25.6 million. So we see also there is impact from the cash out for the provisions for the redundancy program in the fiscal year 2024/2025, so is also reflected in the cash flow from (sic) [ of ] EUR 25.6 million, a positive free cash flow, and stable -- and equity from (sic) [ of ] EUR 307 million, and a stable equity ratio from [ of ] 42%. So balance sheet. So reflects also the lower revenues with EUR 735 million. So working capital management, so optimization in the working capital from (sic) [ of ] EUR 338 million (sic) [ EUR 238 million ]. So cash from (sic) [ of ] EUR 85 million. So as I mentioned, including the cash out for the restructuring program, equity from (sic) [ of ] EUR 307 million. Equity ratio, as I mentioned, 42%. And net financial debt, so including the IFRS-16 impact, EUR 179 million, and without the IFRS-16 impact from (sic) [ of ] EUR 118 million. And gearing from (sic) [ of ] 59%; and excluding the IFRS-16 impact from (sic) [ of ] 39%. So let's come to our dividend policy. So after the second year with losses, so we will now pay a dividend, but we confirm our dividend policy from (sic) [ of ] 40% from the net income. So if we are successful in the future, we will pay dividend with our dividend policy from -- based on our dividend policy from (sic) [ of ] 40% of the net income. So let's come to our cost optimization program. So as I mentioned, we realized benefits of around about EUR 50 million, EUR 55 million in the last fiscal year, and we will see the full impact in the fiscal year 2025/'26 close to EUR 90 million, and this is helpful for the future. And you can see there are a lot of measures, more than 200 single measures over all disciplines. So for example, we optimized around about 26,000 square meters, and there's a benefit of around about EUR 5 million, and we will see the benefits in the current fiscal year and in the following years. So let's come to personnel headcount, '24/'25, as I mentioned. So we are coming from 14,500 employees. And then we see the crisis now with 12,100 (sic) [ 12,185 ] employees. And you can see a long-term trend. So we are growing international with a CAGR from (sic) [ of ] 8%. And we see there's a problem in Germany, and we see also in the future much more potential abroad, and we will see what happens in Germany. There are also opportunities, especially in the defense or aerospace, but also in automotive there. So thank you for your attention.

Thank you, Markus. So I will explain our outlook on the market for the next business year. We start with the automotive industry. Here are some figures from the German association for automotive. And what they expect is a stable volume on the vehicle side, so from 81.3 million to 81.7 million in 2026. And with the distribution in the regions, we see still a growth in China and more or less rightward trend in the U.S. and in Europe. This is only one indicator of our business. More important is the development of the R&D budget and of course, the outsourcing ratio of these R&D budgets on our customer side. If we have a look at the R&D budgets, these are also figures from the association. We see that driven by regulation, competition and innovation, the budgets are still increasing, or at least are on a very high level. And we have now to evaluate, on each customer side, what will be the consequences regarding outsourcing and service portfolio of Bertrandt. So we estimate that if the political changes continue that we will have a certain level of uncertainty in the political arena. We saw that R&D budgets are still on a very high level, and we have to differentiate between the customers. What we see, especially driven by the regulation, that we have an extension of the portfolio of our customers. So most of them will go with EV, hybrid, range extenders, and ICEs. And this will have an impact on the outsourcing, and we expect that we see an increase in the existing business regarded to better call-offs or better call-offs, yes, in the existing contracts. And we expect that after the reduction of the workforce on the customer side, there will be some new project award -- so new project RFQs for derivates, because what we see, they have to increase time to market, most of our customers, and this will bring opportunities. What we say is the importance of the right global setup and the capability. So most of the customers reduced their workforce. We did it as well. And what we have to synchronize now, if there is a new demand regarding a derivative, we have to have the right skill set and the right team on board in order to deliver this. What will happen as well, in our point of view, we will see a continued price pressure or cost pressure because we still have overcapacity in the market. In comparison with the demand, it's still overcapacity in the market. We expect that this will be getting better over time. And one indicator is most of our customers really reduced their panels regarding the engineering service providers. So there will be more work for less engineering suppliers on the OEM side. And Bertrandt is well positioned. So we assume that we will be one of these engineering suppliers who have the chance to acquire more work through the consolidation process. It's not a digital topic. At the end, it's really dedicated to different projects. But overall, we expect that the consolidation will have a positive impact on the occupation. If we have a look at the other most important branch for our business, this is aerospace and defense. So you can see in the picture, this is not only aerospace, it's space, it's ground defense and also naval. And we worked a lot on our customer base in this area in the last year, and we are in contact with most of the European companies. And they are going through a transformation phase as well regarding the acceleration of their outsourcing. We are not familiar or that familiar with outsourcing, but now they receive a lot of money from the governments, and they have to deliver their products. And this is what we see, and we are in constant dialogue with them in order to improve their outsourcing models as well. So our expectation is that we will have a double-digit growth in this area. And our task is to enlarge our European footprint, because most of the huge defense customers have engineering centers in Germany, Spain, France, U.K., Italy. And if we want to gain the business, we have to be there where the business is. If we have a look at the civil segment of aerospace, here, our target is to enlarge our footprint inside the major customers. We are preparing ourselves for the decision of the OEM side to develop a new aircraft. We are very focused on engineering, not that on manufacturing that large. So our target is to strengthen our engineering footprint globally, because we expect if there is a new plane to develop, it will have an impact on Germany, France, U.K., India or the U.S. And this is what we are working on. If we have a look at the other industries, of course, they are embedded in the overall macroeconomical situation. We expect a slight increase in the electrical industry, further increase in medical, and in the transportation area. If the money from the government is placed to the customers and they transform it in projects, we will see a growth here. So for each segment, we have dedicated customer where we focus on. And we believe that overall, these industries will have an increase with the recovery of the overall economic situation. So if we have a deep dive in our segments, one of our target in automotive was to enlarge our customer base. We announced this year that we were nominated as a Tier 1 supplier for Volvo. It's a new customer for us. And now we try to position ourselves, and this gave us an opportunity not only for Volvo car, but also for the Volvo Group and maybe for Geely as well. So here, it's a diversification in automotive in another country and in a third topic in another industry in Sweden. Regarding defense, what we see, we are not -- no, we work on this topic with the whole range of services of Bertrandt. So not only, for example, in software development or cybersecurity or functional safety, what we see is an increasing need of our customer also in mechanical engineering and physical testing. We are still testing drones in our climate chambers. So if this works as we expected, there is a possibility to see a rapid scaling in the defense area because we could monetize the complete range of services in this customer segment. So we want to grow with our existing customers and step-by-step enlarge our customer base. And of course, as I mentioned before, we have to work on the European footprint. If we have a look at the other diversification in other industry, we took a lot of effort in strategic partnerships. So we were nominated as a Tier 1 or strategic supplier for Zeiss. This is a semiconductor business. We're working with some of our system suppliers, which enlarge their nonautomotive business as well, for example, Bosch-Siemens Hausgerate. So we support them with coffee machines, washing machines and some other topics, but it's an increasing business. And in the transportation system area, we established the first projects in Scandinavia. So it's accounting for the regional diversification then also for the branches. Another very important topic for us is continuing our internationalization. So we have the intention to scale our platforms in Romania and Morocco. We acquired a lot of projects with our customers, which will have an impact on our footprint in Morocco. We have partnerships in India for some especially software-driven topics. We have a clear plan how we want to increase our footprint in the U.S. and China. And this will not be only organic growth, also inorganic growth. Another very important topic is digitalization and AI. Here, we have really a dedicated team on board who drives the productivity and accelerate our processes together with the operations. We established an AI stack for Bertrandt, where we continuously develop new software models and support our operations, the administration, but also finding new business models for our customer. So one major topic is using the data from our test centers, put them in a huge data source and with AI, create new values for our customers. This will have an additional revenue stream in the future. And the last topic is really not only service business, but maybe there will be some product business in the future coming up with this digitalization initiatives. Okay. So far for the outlook of the market. I will hand over again to Markus.

Thank you. So let's come to our group forecast. And so our traditional disclaimer. So there are some influences outside the management here. So as you know, economic and geopolitical environment remain volatile and challenging. But we see ongoing and accelerated transfer of our R&D into international locations, and we are prepared for the transfer. So we are in China, we are in the U.S. So we think there's a good basis for the future. And we expect also a normalization in capacity call-offs expected from H2. Because we have the contract, so we are waiting on the call-offs. And so we see also mounting cost benefits, as I mentioned. And so also, I think, helpful for Bertrandt and for us as an engineering service provider, a lot of customers announced many new models and technology for the next 2, 3 years. And technology diversification, new models drive R&D budgets, and high R&D budgets are helpful for Bertrandt. And we see also diversification to balance customer base. And additionally, regulatory requirements, competitive and innovation pressure drive also investment in R&D. Also the decision from the EU government the day before yesterday is also helpful for Bertrandt. So for the new fiscal year '25/'26, we are expecting a moderate growth from the revenues, and we expect also a significant optimization of our EBIT to a positive value in '25/'26, also a positive operating cash flow. And we confirm also our midterm margin ambition between 6% and 9% in a normalized sourcing environment and also based on our cost optimization program. So summary, we have seen the market development weaker than originally assumed, especially with project postponements and the capacity utilization, but we are really satisfied with the implementation of our Fit for Future program. And so we will see the benefits fully impact for the current fiscal year. Also, we are on the way, we are on track with the successful diversification and internationalization in line with group strategy. And so we see also peak RFQ, many new models announced, as I mentioned, and broad technology solutions also helpful for Bertrandt. So business expected to normalize during '25/'26, but honestly, the first quarter is still challenging, but we will see the optimization especially in the H2 and with the beginning of January, February. So thank you for your attention.

Thank you, Markus. Thank you, Michael. Isabella, I think we have already some questions in the chat room. So maybe you can guide us through the Q&A process.

Yes, we do. Thank you very much for the presentation, gentlemen. We will move over to our Q&A session. [Operator Instructions] And I will start with the first question. The EUR 33 million EO items, how are they spread on the quarters?

That's an interesting question, yes. So mostly in the Q3, but also one part in the Q4 and one small part was in the Q2. So it depends.

Thank you. I will move over to our audio question from Miro Zuzak.

Just one question. Because obviously, it's a difficult year. And obviously, we hear this from everybody else exposed to the German automotive sector. I mean that we've discussed it already in the past calls. But if you look at your outlook, there seems to be a kind of, I think your word is, normalization by positive EBIT, you can argue, and it's still not a normalization. But if you look at your business, it's really shrinking. So taken from the number of employees from 14,000 now to 12,000. Do you really see a change in like the overall trend? Because, frankly speaking, I cannot see it. Looking at the German OEMs, I think it's a stable negative trend.

Yes, in the last 2 years, it was a stable negative trend. And certainly, it will not happen from one day to another. But to be honest, if our customers, mainly the German ones want to compete with the global competition, they have to develop new products. And if you have a look at, for example, BMW and Mercedes, there are new products, they are very competitive. And what we see behind the scenes, everyone working on such a new portfolio. So we believe that there will be a recovery. To be honest, we said it 2 years ago, then the tariffs happened. It's really not easy to predict when it will happen. But as I mentioned before, what we see, with the decision from the regulation, most of the customers try to have something in their portfolio for EV, range extender, hybrid. This will boost the development overall. And hopefully, we see this during 2026 in our existing business, but also with new products. And then we expect a recovery in automotive. And yes, the headcount, we reduced the headcount. It's not a secret. We have a huge stake in Germany and the business is more global in the future. This is what we are adjusting at the moment to find the right setup for growth in the future.

Okay. And an additional one, if I may, and then I'll step back into the queue. We hear from many other companies that they are dislocating employees into other countries as you -- I mean, you also have the chart that you showed in the presentation. Even to Switzerland. Steel, for example, they moved over employees to even Switzerland. Do you think that, as long as this is happening, that this turnaround will happen? I mean, it seems like a broader pattern, the industrialization of Germany, I mean, it's probably a tough word, but it's happening. Do you think this has to stop before you can grow again in Germany? Or do you think you can grow still against this trend?

So there is work in Germany, for example, in aerospace and defense. Most of the work is under like security clearances. So some of the work is Germanized only. And as I explained, the defense sector will grow, maybe not from 1 year to another in an extent that it could compensate the drop in automotive, but it will grow, and we work on our position. I think overall, this position is good. So there will be work in Germany as well. In automotive, what we see or saw in the last 2 years that most of our customers redistributing the work in their global R&D centers. And the German centers are still strong, and there will be outsourcing work in Germany. And I mentioned also that we see a consolidation process in the engineering service panel of the OEMs. So even if the market not increased, there is room to grow in Germany with the existing customers in the engineering topics. And this is what we believe. Maybe again, it's not very fast double digit. But if the market recovers a little bit, we will see a growth. And maybe last question, Markus mentioned, we still have some overcapacity in Germany. So if the work comes back, it will have a direct impact on revenue and profit.

I will go over to our Qs in the chat box. Is the targeted moderate growth of sales in 2026 realistic without expanding the number of employees?

Yes, also a good question. So it is realistic because we are expecting much more call-offs on existing contracts. This is also helpful, and we expect also a normalization of utilization and gross margin, especially in the second half of the fiscal year.

The next question. Considering the impressive EUR 52 billion defense order announced last week, should we expect some indirect boost of activity for Bertrandt?

I already explained what we expect. What we have to consider, most of these companies are not used to work in a very huge scale with engineering service suppliers. But they are in this transformation phase. And what we see is that the projects are getting bigger. But again, not from one day to another. But it's moving on and there will be a lot of money and these customers change their behavior to work with external service providers. So we believe that there will be a growth in the future, next 3 years with this customer.

And I think we are well positioned, and we are close to the customers. So we are in a really good dialogue with our customers, and this is additional potential for Bertrandt.

Regarding 2025 and 2026 guidance for the EBIT, significant growth and positive. Could you refine the part of this growth that will be driven by non-repeating one-off costs and underlying improvement, including Fit for Future?

So as I mentioned, first of all, if we see the normalization -- expect normalization, so we have a one-on-one impact on the EBIT line. And also, we will receive the full impact of our cost optimization program. And so we see the potential and so we see the way back to a positive EBIT.

And the last question in our chat for now. What is the outlook for CapEx in 2026 and beyond? Is the CapEx of 2% of sales a reasonable expectation?

So as I mentioned, so the question is how is the new normal. So we are flexible, but 2%, I think, is a good figure roughly.

Sorry, we can't hear you anymore. Yes, here we go. Now we can hear you again.

Okay. How much sequential sales growth do you need in 2026 to offset the embedded revenue decline from 2025?

So it's a little bit difficult to say because we reduced our breakeven point with the cost optimization program. So if we see the revenue level from this year, so then we are breakeven.

And we have one more question from Miro.

Can you hear me?

Yes.

I ask this because I always have to press things here on the screen. So I'm always unsure. Okay. Good. Can you please -- I'm referring to your presentation on Page 12, where you have the split between aerospace and defense. If I take the 6% this year, you made roughly EUR 60 million in aerospace and defense revenues in the past year. Can you elaborate how much of this is classical aerospace? Airbus, I think, is a client? And how much is true like defense?

So the main stake is in defense. And Markus mentioned it before, we said in our Strategy 2027, our target was at least EUR 100 million until 2027. We are pretty sure to achieve this and overachieve it maybe. So it will be between EUR 100 million, EUR 150 million until 2027, I would say.

And so the growth comes definitely from the defense part of the business, while our civil part is more or less stable as long as we don't see a new aircraft development. But this is also around the corner as Airbus already announced it. So this should add more business after '27, or maybe already in '27.

Okay. And if I then basically look at your guidance backwards, basically, if I extrapolate from this chart, actually going from 6% to 15% would imply at current sales levels from EUR 60 million to EUR 150 million. If I extrapolate, that would mean like EUR 100 million or so, EUR 110 million in 2026. That's just now a linear extrapolation. But given your guidance of moderate growth, or what was the wording exactly? So you would basically then also still imply that the automotive sector basically downtrend continues. That's the main -- how we should understand it?

Yes and no. We expect a volume growth in automotive and normalization of project placement. But as our Board members said, we expect this volume growth predominantly happen in foreign countries at lower prices. So this is the calculation behind this.

So that will be true. So in euros, sales still going down, but offset -- more than offset by defense growth?

Yes. Hopefully, we will end up a bit better than this. But yes, that is the basic assumption.

Okay. Then 2 more questions. In which segment are these defense contracts booked?

Over all 3 segments, because we have also physical projects in the validation testing, but mostly in the electronics software segment.

Okay. And the last question. Could you elaborate more on what kind of -- what type of clients you have? You mentioned drone testing in the weather box. There might be -- there is Rheinmetall, obviously, with tanks and so on. There is no Hensoldt or Renk, but these are not OEMs. Can you elaborate a bit on what we have to imagine there, what you do?

Not really, because we have NDAs with all customers, and this is really sensitive. But be sure, we are in dialogue with all potential customers internally, but also in Spain, in France, in Italy.

Including submarines, stuff like that?

Exactly. Exactly.

Okay.

And all the services we also offer for our automotive customers can be used also in the military and defense field. So we have almost an 80% overlap in terms of our headcount skills.

Okay. And I don't know how many people are in the queue. I have more questions. Shall I continue? Or shall I go back?

I have 2 more questions in our chat box. I would...

Okay. I go back, then I'll come back later.

Yes, and I will come back to you. Thank you very much. So can you quantify the overcapacity that you still have?

Yes, we have around about 500 people in short-time work still at the moment. So this is what you could call overcapacity, but to be honest, as what we see in terms of customer dialogue and in terms of the RFQs we have, there is a reason why we are currently not laying these people off, because of the projects we see on the horizon. But this is what you could currently define as an overcapacity.

And also in terms of FTEs?

Yes, as I said, about 500 people.

So, Miro, you are back in the queue.

Sorry, Markus has to leave for a press interview now, but Michael and I will stay here and answer all the other questions.

Thank you very much for your attention, for good dialogue in the last year, and wish you a Merry Christmas and a Happy New Year.

Thank you, Mr. Ruf.

Regarding the utilization levels, in the past, you mentioned the percentage number like 90% or so. Where would you stand right now?

So in the average of the last 3 months, we are 88%, 89%.

Okay. Then a bit lower. Then another question related to the labor unions and negotiations, because I guess you're also impacted by negotiations with the unions. We have seen in Austria a bit of a change there because the Austrian unions realized that the businesses are dying and they've forgone -- as they said, we omit wage increases which have been previously agreed upon. They said, okay, that makes no sense to basically consume these wage increases for the next year. We don't increase by, I think, 3.8%, we increase only by 1.8%. And that was pushed by the labor unions, which was a bit astonishing. We also heard from VW that the labor unions are a bit more flexible. They understand that things have to change. Can you confirm that you basically experience the same with the unions that you work with, that you have more flexibility and, for example, no overtime hours, in-home office, stuff like that, or also the number of people, sick days. I mean it's what the numbers we hear from Germany is 20 plus, which is, I mean, I think in Switzerland, it's 3 or 4. So maybe you can -- do you feel that there is a change actually happening?

In general, certainly, they realize what is the overall situation. But to be honest, it's -- the discussion is lasting very long. And if I compare it with the necessary speed we have to or the speed we need to turn the situation, it's not a huge change, in my point of view.

But Miro, I can tell you, we have not had any kind of wage increases in Germany last fiscal year and the year before. So 2 years without any regular wage increases. It's a bit different in our foreign subsidiaries. And I have also shown a ratio on one of the charts with a voluntary fluctuation rate of just 4%, that also gives an indication what -- I mean, how our people, even if we don't have unions, are currently reacting with regard to job security.

They hold on to their positions, of course, right, at this point in time, they don't find...

Especially here in the southern part of Germany.

No, that's clear. If I look at your numbers, if I may continue, and you interrupt me, right? You did if you think it's too much. If you look at your numbers, the personnel expenses, Q4, EUR 180 million roughly, compared to a level of last year, EUR 220-ish million per quarter and EUR 200 million this year. Now we are at EUR 180 million in Q4. Well done. Good job, I think. Is this a sustainable level, like the EUR 180 million per quarter?

Yes. As long as we don't see any kind of headcount growth. We would see headcount growth if we see the project awards normalizing abroad. But this is a sustainable level. There are even some one-off costs also in Q4. And you might have seen that we have installed some additional measures on top of the Fit for Future program. For example, we ceased one hierarchy level in June, July. So these are also the effects which we will only see in the next fiscal year. So it should actually drop a bit further in this fiscal year.

How much was the one-off, do you remember?

I think total for restructure -- within the personnel cost item, I have to scroll back. It's in the presentation. I think it was EUR 15 million. Yes. Give me a second. We have it in here.

In the meantime, ladies and gentlemen, let me remind you that we have 3 minutes left planned for this call. And if you still have questions, please place them now.

Yes, Miro, it was actually EUR 16 million.

16, 1-6?

Yes. But quite equally spread over the quarters.

Okay. Good. So roughly EUR 4 million still in Q4. And the other cost lines, especially material costs, EUR 24 million, significantly down versus last year EUR 34 million, coming from EUR 40 million and more than EUR 40 million. Is this also -- are these basically the measures that you have taken? Also other operating expenses down to EUR 17 million in Q4. That are all very good numbers. Is this sustainable? Or was there also some one-off effect maybe helping a bit?

Miro, to be honest, we saved everything we could. And you can't do this forever. So there will be a time when you have to clean your windows again. But generally speaking, we try to be cost conscious in the future as well.

I think there was one major project in France, where we had a lot of material, and this was ended during the last business year or at the end of this year. So this will have another impact on the material costs. So both, we saved a lot, and there was one major project with a lot of materials which comes to an end.

And I have one last question in our chat box. What is the rationale for an acquisition in the U.S.?

To be honest, we see quite a nice growth and demand, not only in low-cost countries, but also in other international subsidiaries like in Spain, like in China, but also in the U.S. So our customers, for example, the Volkswagen Group, is currently investing also in the U.S. You might have heard about Audi also thinking about a production plant in the U.S. So we will strengthen our footprint, or could strengthen our footprint in the U.S. and enlarge our services there.

Okay. Thank you very much. In the meantime, we have received no further questions. We, therefore, come to the end of today's earnings call. Thank you for joining, listening and all your questions. A big thank you also to the gentlemen for your presentation and the time you took to answer the questions. Should further questions arise at a later time, please feel free to contact Mr. Voss. I wish you all a lovely and healthy pre-Christmas time and handing back over to Mr. Voss for some final remarks.

Yes. Thank you very much for your moderation again. Thank you all in the line for having joined us today and for your patience and for the questions. Really appreciate it. And also from our side, Merry Christmas and a Happy New Year. And I'm looking forward to see you in January back on all the conferences and earnings calls. Thank you.

Thank you very much.