Dätwyler Holding AG (DAE) Earnings Call Transcript & Summary

Good morning, everyone, And welcome to the Dätwyler's Capital Markets Day. First of all, it's great to see so many of you here at Zurich today. So it's overwhelming. I'm very happy that you took the road to the circle here at Zurich. And obviously, you're sharing the confidence in the road ahead with us, and that makes me very happy. And some of you may even join us on that journey. Also, a warm welcome to the participants of the live webcast. Ladies and gentlemen, it's a real privilege for me to stand here today not just as the CEO of the company, but as someone who is genuinely sharing the way forward and who is energized by the journey we are on together. And I think it's a really defining time for the company since end of last year, we have made a deliberate choice. We have made a choice that we will not only adapt to the changes around that, but we want to drive it. And this is what our transformation program ForwardNow is all about. And further than that, we have sharpened our strategy. We have strengthened our foundation and we have proven that focus and discipline drive real results. And all of this in a time where the world is simply refusing to stand still, as you all know. But this day is not about reporting numbers. It's about showing you the engine behind the numbers. To show you the strategy, the innovation, our culture and as well the conviction that drives our decisions. And today, you'll see how our efforts have transformed in a real momentum. And we are entering a phase where our opportunities become bigger. Our platform really gets stronger and as well our ambitions are sharper than ever before. And we're here because we want you to see what we clearly see. The Dätwyler is not waiting for the future to happen, but we're building it with a comprehensive strategy and as well with a credible plan to get there. So thank you for being here. Thank you for dialing in, and thank you for the trust and your partnership. And let's start today an open, dynamic and a forward-looking conversation. And before we dive in, I'd like to take you a moment to walk through how we structured today. We will begin together here in the plenary session with our presentations and a Q&A, both of which will be broadcasted live for those joining us online. At 11 a.m., we'll wrap up the live stream, take a short break, and then we'll move into the breakout sessions, which will start at 11:30. And there will be 2 rounds of sessions today, giving everyone the chance to explore different topics in more depth. For all of you here at Zurich, our team will guide you to the assigned room. You may also have a look on your batch where you can find either an A or a B, but we'll get there. So I'm not -- I'm sure we'll make that. And after the second session, we'll be delighted if you join us for light lunch just outside the corridor, and that's also a perfect opportunity and chance to continue the discussions and exchange ideas. And I'm really delighted to host this event together with the Dätwyler Executive Committee, who will cover the plenary session today. Judith, our CFO; Frank, our CTO; and Michael, our COO, for the division Industrial. And as well with leaders from both divisions as well as from our technology and innovation function, who will give you really a good insight on specific areas that really do matter today and the current times. And during the breakout sessions, you will get to know Francesco, Michael, Bram, Claudia, Emiel, Karl and Mattia. Our COO, Division Healthcare, Dirk sends his warm regards as he's not able to attend today due to personal matters. Throughout the day, we are opening the hood for you and giving you a deeper insight into our strategy, our progress and the opportunities ahead. And you will also meet more of our [indiscernible] and experts during the breaks and at lunch. They're here to share their experience and their perspectives with you. So please take also the opportunity to connect and to ask questions. And yes, you recognize them easily. They're the ones who proudly wear our beautiful Dätwyler jackets today. And I'm also delighted to introduce our future Head of Corporate Communications and Investor Relations, Catarina who will start at Dätwyler tomorrow, and is here today to get to know you for the first time. Catarina will take over from Guido Unternahrer, who will be leaving us at the end of the first quarter 2026 after a seamless transition process. And finally, a big thank you to everyone who worked so hard to make this day possible. On the preparation, the planning, the energy behind this event, it all comes really from a great team. Some of them were among those who greeted you warmly at the reception desk this morning and some others who will take care on the audio and everything around. Thank you very much for making this day possible. There are companies that have significant impact on the lives of millions of people every day without most people really being aware of it. Dätwyler is truly one of these companies. You don't see our products, you don't feel them. Yet they are really everywhere. They make a car safe, medicine effective, machine reliable and the coffee better. And they are small, they are precise and they are in conspicuous. And that's exactly why they are so crucial. If our components don't work, systems don't work, a lot of devices do not work either. And this is why whatever we develop and deliver must be reliable, must be safe, must be durable. So truly components for systems that must never fail. Dätwyler is a global industrial partner specialized on the joint development and the delivery of system-critical components primarily based on advanced elastomer materials. We collaborate with leading companies in the industries worldwide and supply also various key markets with 25 production sites on 4 continents, and 7,500 dedicated employees, we generate over CHF 1.1 billion annually. And with over 110 years of history and a strong anchor shareholder, the Pema Holding, we really combine legacy with a forward-looking approach. Every single day, we deliver more than 100 million components to customers around the world into every [indiscernible] into medical injection systems, into coffee capsules, machines, electronics, into the things that make modern life possible. And we all do that meeting the toughest regulatory environment and with the highest expectations on function and quality. Our business with system critical components is organized into 2 divisions, health care and industrial. And over 40% of our revenues come from health care, while the Industrial Division accounting for the remaining share. In health care, our portfolio includes components for injectable drugs along with related development and packaging services. In Industrial, we offer a broad range of custom molded seals, grommets, multi-component parts and, as you know, aluminum capsules for coffee. And these 2 divisions cover 4 key end markets. For the first half of 2025 around 42% of our revenue came from pharmaceutical and medical applications, 27% from the sector of automotive niche, applications and 20% from the food and beverage industry, coffee capsules. The remaining 11% from elastomer related products from other diversified industrial markets, such as oil and gas and industrial machinery. In total, this means that nearly 2/3 of our revenue is generated in markets with low cyclicality. And this is, for us, a factor of stability, particularly in uncertain times. And especially in those times when the world is becoming more unsettled with trade conflicts, supply chain issues, geopolitical tensions, the strength of our local-for-local approach comes really evident. We produce where our customers are and need our parts, and we source raw materials regionally wherever it is possible for us. And this allows us to remain independent, to remain flexible and resilient while also contributing to sustainability and regional value creation. And more than half of our revenues still comes from Europe, yet our growth centers are increasingly located in the Americas and in Asia. And this is where our future markets are emerging. All of our businesses go back to the mastery of 3 core competencies. And we do really master that in order to develop high-end product solutions for these key end markets. So material expertise, solution design and product industrialization at scale are key for us. This is the area we bring. And we enter our customers' development process usually very early, often already in the concept phase. And based on the requirements of our customers' applications, we develop materials, we designed the components and then join the customer's journey towards the scaling into a serious production with zero defects and sometimes with billions of units per year. And this combination of material expertise, solution design, and excellent manufacturing is really unique, and this is our promise to the market. And at the same time, this is the reason why we generate additional value for our customers in their applications. Now we're talking about -- we've talked a lot about system critical components, but what is a system critical component. And let me illustrate that with 2 examples. So our elastomer components are used in prefilled syringes, as you can see on the left side, in direct contact with the medication, the so-called primary packaging components must be absolutely pure, chemically resistant and functionally reliable. And if our components do not work perfect, the medication is not useful. We are the only company, by the way, that masters 2 possible coating processes, thin coating and spray coating. And this gives our customers security, flexibility, also for upcoming market regulation. We'll have a deep dive later in one of the breakout sessions on that topic because that really matters for us. In electro mobility, especially in the high-voltage area of an electric vehicle, such as connectors, charging units and this will drive every detail must be right. And our components seal protect and they insulate. If they fail, the safety of the vehicle or the main function of the vehicle is at risk. Both examples show clearly that our customers turn to us when there is simply no room for error. When decision purity, reliability are really system critical. And our components may represent only a small share of the customer's bill of materials, but they make really a big difference, often the decisive difference in performance in safety and in trust. Our customers trust us because we do really understand their business and their needs. We support them throughout the entire value chain from the initial idea to serious production in zero defect quality. We listen, we understand the application in that we designed the product and we continuously improve it. And that's how we create value and build partnerships that really last for many years and decades. And as these principles of generating customer value are similar for all of our end markets across the divisions, we also ensure that the synergies in the organization lead to a constant improvement in material development, in innovation management, in project management and in industrialization. So what's in for the investments? From my point of view, Dätwyler focuses on applications where quality, precision and trust matter and where we can be the best supplier in the market. And this creates high barriers of entry for competition and as well stable margins for us. We deliberately avoid products that quickly become commodities. And instead, we do invest in demanding niches where we can really deliver clear customer benefits. And that's sometimes really difficult for the teams to assess that while they have customer engagement, while at the other side, very crucial for our future portfolio. And you will learn more about these entry barriers throughout the day, while speaking to the people outside who can explain you all the products and depth and all the applications in that and as well throughout the breakout sessions. And this way, we really remain focused, we remain differentiated, and we will also become profitable long term. If you look at that every time you would consider a new product perhaps an acquisition or something that perhaps has to leave the portfolio, you have a guideline. You have really something that you can consider to find your way in all of that complexity we have around in all markets. And all the activities are specifically aligned with the megatrends of our time. You all know them. Demographics, health, technology, geopolitical shifts and as well as sustainability. And these developments really shape our future markets, and on the other hand, open upgrade opportunities for us from medical, technology, to e-mobility, to robotics and automation. A lot of these applications, you will recognize outside and as well in the breakout sessions. And our local-for-local approach gives us the important resilience in serving our customers worldwide. And with the Platinum rating of Ecovadis, we are among the 1% of all rated companies worldwide when it comes to sustainability. This year, we have committed ourselves to the science-based target initiative, and are actively working to reduce our resource consumption, lower our CO2 emissions and make our materials and products more sustainable. We are convinced that the selective approach focusing on attractive niches will help us to overpass the average growth in the 4 end markets or market sectors we serve. In health care, our pure-play strategy opens all customer groups for us, drug manufacturers and system suppliers, and there we can succeed with our high-value offering more later into depth in the sessions of health care and in the breakouts. Our focus on automotive niches in that sector and as well on winning customers, which gets more and more difficult for us to assess, but we're mastering well in the respective regions will help us to navigate the vibrant environment in automotive with products where we can be really the best supplier for our customers. And the close collaboration with 2 leading key partners in the market for single-serve coffee capsules, and our focus on aluminum as the material of choice will be also key factors for us to succeed in that sector. In the industrial sector, we are confident that our profitability will continue to grow because we really, really clearly focus on high-value solutions. This is where we can really make the difference. So the targeted alignment of 6 drivers for us in the strategy also leading this cooperation is the essence of what counts for our business strategy. And this ensures a clear focus on what is really important and where we can create value. So we will unlock more product -- production capacity. And still, we have, especially in health care, some capacity from the investments from the recent years. We will improve our product mix, especially with the focus that I've outlined before. We also go more and more into the core development entering early cycles in the customers' development process. And we have a lot of opportunities with the new organizational model, especially in the area of industrial to do cross-sell of components and services. So in the innovation and with everything that is upcoming in terms of new products, we create scalable technology platforms because that is where we have to invest our resources. And with that, we will complete our portfolio in a targeted and structured way when it comes to inorganic growth in the long term. So what are the growth drivers or some of the growth drivers? We actively focus on applications that enable us to grow faster than the market sector on average. And let's have a look at 3 of those speed trains, as we call it, that we expect to experience particularly strong growth in the next years. So electromobility here, the electric powertrain, especially in China. The high-voltage connector is growing at also more than 10% CAGR for charging and energy distribution. And last but not least, the components for prefilled syringes in health care. Those are just 3 examples where we always have a clear focus on where we can offer a really, really good product portfolio that needs exactly the requirements to outpace the growth in that sector. And in all of these areas, we possess leading technologies, we have a strong customer relationship and we have also scalable production capacities. At the same time, we also remain disciplined and focused. We consolidate where necessary to pull our strengths and reallocate them accordingly. We all know that profitable growth needs structure. And then in that, you will not win in the mid and the long term. And this is why at the end of 2024, we have launched the transformation program ForwardNow. And this is not a cost-cutting program, but a program for the future. It's a strategic initiative that aligns Dätwyler for exactly this growth in the target sectors that we are heading to. So 4 areas of action are at the center, the production network, the commercial excellence, the product portfolio and the target operating model, we'll talk a little bit about that later when it comes to the divisions. But in total, we are implementing over 20 initiatives from these areas. And you learn more about that and what stands behind these activities throughout the day. Our head of corporate transformation, Marcel, is here as well. Feel free to get in touch with him. And after almost 1 year in a pretty turbulent economy, we are in plan. And we are also on a good part to deliver our promise. As we remember, cumulative effects of around CHF 52 million as well as step up in results of at least CHF 24 million per year after the completion of all of these initiatives latest by end of 2027. Our next generation of products and materials is perfectly aligned with our technology trends that are shaping the future. They can detect pressure. They move, they send signals from the human body, and they would send chemical elements that will come -- will become increasingly important in the years ahead. And the goal for us is to build scalable platforms that address customer problems with reliable solutions, smaller, more durable, more cost effective and more energy efficient. You'll also learn more about that from Frank and during the breakout sessions later. Let's have a look at our portfolio from a different perspective. Almost 60% of Dätwyler's sales come from the Industrial division. However, the division accounts for less than half of our EBIT contributions. So you see that represented by the upper left diamond in the chart. The Healthcare division, on the other hand, contributes more than half of our EBIT while generating just over 40% of sales, illustrated by the low right diamond. And now we did an exercise from how to find our path forward, where to allocate our capital and allocate our focus. The vertical axis shows the cyclicality of the business, while the horizontal axis represents the capital intensity of that business. So basically, the pay-to-play in that respective sector. And within the industrial portfolio, the cyclicality varies. The automotive and the industry belonging more to the cyclical parts whereas the food and beverage tends to be more stable with higher CapEx needs more in the lower end of the industrial shape. And in health care, cyclicality is generally low, but operating in this sector requires a significant structural investment. So overall, more than 60% of our sales, the food and beverage part and the health care part comes from businesses with low cyclicality. At the same time, most of the required structural investments in these areas are already in place for the midterm. Judith will show you later, based on that graph, where we will move financially and when it comes to the capital allocation. So when I look at Dätwyler today, I see more than numbers. I see more than factories or markets, I see an idea. I see the idea that excellence in small things can achieve great things and represent an attractive investment. Our products may be tiny, but their impact is really enormous. Let's go into it and start with the healthcare division. In our Healthcare division, we see great potential ahead. We are strongly positioned for growth, especially in our high-value offering. And this is also why we are confident that we'll outperform the average growth in the sector over the midterm. So today, around 1/3 of our portfolio belongs to the category of high value, including products from first line, rapid trend support and ready-to-use packaging services. And what's truly exciting is that roughly 2/3 of the growth we expect in the next years will come from new projects in that area. Emiel will give you a deep dive on that calculation later on in the breakout session. But the case of experience in Materials & Coatings, we work really side by side with our partners on an eye level. From leading drug manufacturers as well, with system suppliers due to the pure-play approach we take. We are really engaged early in co-development of the next-generation primary packaging for injectables. And because we operate first-line facilities in the United States, in Europe and in Asia, we can guarantee the same standards of quality and safety across every region. Our ambition is to be the partner of choice for new drug delivery solutions in our target markets. And to achieve this, we forehold the broadest component portfolio for large molecule solutions and home care applications. This is really what matters today. And we all know if you don't have it today when the market is really scaling up, you're 5 years to late or maybe even a decade. And a global network, and I always call it global to local network of experts, scientific teams and a state-of-the-art manufacturing technology. A pure-play position as a component supplier who is not in competition with system suppliers in the market, and a full set of processes and procedures to ensure end-to-end partnerships on an eye level with our partner from the idea to the high volume supply with zero defects quality. You remember the circle before everything is perfectly in shape for that business model of healthcare. So talking about timing, market dynamics. I possibly believe that it is now a perfect timing to leverage our position in the market. We have experienced the destocking phase over many months that we expect to be over now. Our half year results and our orders on hand for the months ahead give us the confidence that this is clearly the case. And our components portfolio fits well to the demand we experienced in chronic diseases, and in home care. And that require more prefilled syringes, more cartridges and auto injectors. And this is exactly the products we have developed over the last years, and there are now available in our portfolio. And we do answer already the rising regulatory standards regarding manufacturing practices, so good manufacturing practice NX1 with our first-line facilities and as well the materials such as the PFAS with our solutions already today. Also on that topic, we'll have breakout session later on. So our focus is clear -- sorry, we deliver premium products. We offer premium services based on our premium technology, and we improve our materials further, stay in the pure-play position and will enter the development cycles of our customers earlier and earlier. And this is how we generate exactly the value and the flexibility that our partners are looking for. Are we already perfect everywhere in healthcare? No. Our transformation program ForwardNow offers opportunities also in the division Healthcare and will accelerate our journey. We have uplifted our organization with experienced and proven leaders that prepare the division already today for the challenges in the years ahead. And we teach everyone what creates value for our partners and whatnot. And we improved our organization step-by-step based on a comprehensive target operating model. And our vision is that, for instance, an expert from our European site can support a product launch in another region from the day of arrival without adapting to other routines, other processes and other spends. And we will further adapt our portfolio for a high-value offering based on what we know today. PAUSE from our earlier customer engagement, and we will speed up our time to market for these products, with clear processes and clear directive. We will improve our manufacturing site in terms of utilization. Also on that topic, we have a deep dive later on. That's to benefit from our recent investments as long as possible and make our lounge routines more flexible and scalable. Without compromising for sure, the safety and quality of our components for our customers. And I'm really proud to see the teams improving every day, and I'm looking really forward to seeing the outcome of those initiatives in the near future. And with that, let me hand over to Michael, who will continue our plenary session with an overview of the Industrial division. Thank you very much.

So good morning, everyone, and a warm welcome. My name is Michael Holler, and I joined Dätwyler at the beginning of 2025 as the COO of the division Industrial. My professional experience and background over the past around 30 years was mainly in the automotive industry, but also in industrial sectors. Our division Industrial is serving 3 pretty different markets. One is the automotive niches, which Volker already indicated, the second one is food and beverage and the third one are the industrial sectors. This market mix gives us resilient demands across market cycles, and is a strong base also for continued growth. Our business units, transportation and electronics, food and beverage and so-called general industry, are managed by regional sales organizations, are driven by engineering expertise, which we have embedded in our global product lines and are operational in global network, which is shared across the business units. This product line architecture reduces complexity, but also accelerates development solutions for our customers. In addition, we also leverage global synergies in engineering, but also in operations. We operate a manufacturing network that shares capacities, but also best practices, and we manufacture in a local to local approach to mitigate any tax, but also any foreign exchange impact to be foreseen. Our value focus is deliberate. We target market niches with sustainable growth cycles, and we compete in our core competencies to solve customer challenges. And we deliver high quality, but also high performance components. As a preferred innovation partner, we co-develop with our customers with the target to achieve shortest times to market. And shortest time to market also means shortest response times to our customer needs, which becomes more and more a differentiator. Let me give you the example of a customer inquiry in China. A Chinese local customer is not expecting us, as Dätwyler to respond to a request for quotation within weeks, but on average in about 3 working days. This requires us to have accelerated, but also very structured and solid processes being set up. In summary, we have a diversified and market focus, a customer-led innovation model and a scalable operations platform globally. That's how we target to convert our strategy into high-margin customer solutions. In the next minutes, I would like to outline to you for these 3 business units, our current positioning in the market, the respective market context, but also the way how we will contribute to the profitable growth of the Dätwyler Global Group. Let me start with our business units, Transportation and Electronics. Our ambition in this business unit is to be the preferred partner for high-value sealing products. Starting in automotive niches, but extending even beyond those niches. What makes that ambition realistic for us is our position across the value chain. We bring material expertise and solution design and take the products all the way through to the industrialization. Remember the wheel, which Volker had shown earlier in his presentation. We work hands on with our customers, embedding into their structures and embedding into their processes. We unlock cross-selling opportunities, which we had created by integrating both former business units, so-called mobility and connectors to the newly formed business unit, transportation and electronics. And we apply a regional sales and application focus, leveraging advanced elastomers, silicones and hybrid material solutions. Our business unit, Transportation and Electronics strives for high-margin niche applications in all our automotive sectors, building on the automotive and on the electronics strength and expertise. The products which are displayed on this slide, but also on the following pages will be shown to you and will be also explained to you by the group during the breaks, during the lunch break and during the coffee breaks in more detail. Looking at the automotive market in specific, the global automotive market is almost stagnating. The pure ICEs, the combustion engines are projected to rather decline whereas hybrids are seen to moderately grow in the next years. Whereas battery electric vehicles are foreseen to have the highest growth with a rate of approximately 15% CAGR. In the business unit, transportation and electronics, we are well positioned in components for electrified applications, especially in one of our focus regions, which is China. We approach successful customers in attractive and growing applications such as air suspension, thermal management or connector modules, and we will become powertrain-neutral. In air suspension, for instance, we have recently successfully acquired a new business from a local Chinese customer. We will extend our segments to high-margin niches beyond the classical passenger cars or commercial vehicles, to niches such as off-road, railways or naval applications. Our naming -- the new naming of the business unit, Transportation and Electronics reflects this shift already. Our business units will prioritize margin enhancement before pure growth development, and we will avoid becoming commoditized. Moving on to food and beverage. Here, we aim to advance our leading position for premium functional packaging. We will leverage our expertise for complex deep, grown processes, but also for advanced liquid sealed products, which are a clear differentiator to us -- for us, excuse me. We are ready to further scale up the opportunities we have based on the long experience and capabilities in high automated clean room manufacturing. Our ability to take design from laboratory to automated mask production reduces the time to market, but also any risk for global brands, which we're serving to. We aim also here for solution design on top of our industrialization expertise. Later on, our business unit leader, Karl Frei will share with you some more details during one of the breakout sessions. In the global coffee capsule market, the continued growth is expected. The packaging and packaging waste regulations are raising the requirements, promoting recyclability of materials such as aluminum, which has significant advantages with regards to functionality, but also shelf life and the coffee taste in general. The markets have already started to consolidate. During summertime, we got aware that Dr. Keurig Pepper had acquired JDE for the Nespresso compatible systems. In springtime, even earlier this year, Constantia and the packaging had acquired Aluflexpack. We see and we evaluate such changes rather as additional opportunities for us to expand our leading position in our classic coffee capsule market while also maintaining our barriers of entry. In addition to the classic coffee capsule business, we aim to explore adjacent market niches and applications for new coffee capsule formats or also for functional beverages such as ready-to-drink [ coolers ]. Our food and beverage will strengthen our market position for single-serve coffee capsules while entering new market niches in functional packaging opportunities. Moving on to general industry. Here, we are building the partner of choice for high-performance sales in higher margin niches, such as medical, such as energy or also aerospace niches. Applications where failure is not an option and performance and reliability are purchasing decisions. We differentiate by taking customers from our material expertise and solution design to the industrialization of our products. We established here co-developments and also manufacturing already strongly in Europe and also in the United States. We combine speed and proximity and a deep sector know-how. Our industry-specific elastomer and composite portfolio enabled sealing solutions, that withstand extreme conditions, but also meet stringent industry requirements. Our business unit industry, general industry will grow from its current traditional oil and gas business beyond to penetrate attractive new market niches. In the recent months, the oil price drops to a level around $60 per barrel. The OPEC had recently stated to open a new barrel -- excuse me, a new major well in Iraq that will be opened quite soon, which will increase also the supply to the global markets. In these market conditions, we are expecting a moderate midterm recovery of the oil and gas market in the range of about 3%. Today's low penetration in Asia, our low penetration in Asia will offer significant additional potentials for us. The business growth anticipated in aerospace defense and in medical application is more expected in a robust development. Such niche markets will position ourselves stronger to grow together with our customers. Let me give you an example of medical applications or medical devices we are targeting for. So here, we are seeing applications or components for instance, for diagnostic devices, for dialysis or also for dental equipment to go for, scaling these applications of our active materials, which is our next vector for growth will be another priority to go for. All this will be facilitated by using digital channels to our markets, such as AI supported web pages to attract our customers. Now summing it up. The division Industrial becomes an even more sustainable value contributor to the global Dätwyler group, fostered by our transformation program ForwardNow. Our new modular organization enables maximum synergies between the business units while generating global operational efficiencies. The merger of the former business units, mobility and connectors enables strengthened customer focus, but also cross-selling opportunities. With the consolidation of our manufacturing sites in Vandalia, Ohio, we have streamlined our manufacturing network in the United States. And we have optimized our fixed cost structure and improved our capital efficiencies. Besides those cost reduction measures realized, we invested in the development of new products and to support our niche market strategy. One example is today in the high-voltage applications, we have already a pipeline of about 50% of new business wins, which we are bringing to industrialization as we speak. In a nutshell, the division Industrial is a sum of attractive niche market applications. As a preferred partner in co-development, Dätwyler's division Industrial, such standards for innovation, responsiveness to market and for operational excellence. Thank you very much.

Good morning, everybody. A warm welcome from my side. My name is Frank Schon. I'm responsible for technology and innovation. I'm almost 22 years now with Dätwyler in different R&D functions. And it is a pleasure for me to talk about innovation in the next 15 minutes. I want to explain you how we approach innovation. I will talk about some examples where we already start to be in serial applications, some examples about where we are close to market entry and also some projects which are in earlier development phases. By the way, on the picture here, you can see a tensile testing machine, which is used to qualify our -- or measure the mechanical properties of our elastomer materials. Our innovation focus is on product, process and material level, and we support with that profitable growth in high-value applications, as Volker mentioned, as Michael mentioned in their speeches. Triggered by technology trends, but also from market needs, our innovation funnel is filled with projects in early stages, midterm and long-term opportunities, and how do we prioritize now such innovation projects? Well, we have a stage gate process with decision gates after each phase of the innovation process. Let me be a bit more concrete here. Looking back to yields. In the first phase, we call that ideation, we had roughly 320 ideas, which we evaluated. And we concluded to go ahead with 60 of such ideas in a second phase, which is the so-called exploration phase where we put together a small team and look at the ideas and possibilities, market opportunities in more detail. Out of that 60 exploration processes or projects, we started 21 development projects, and I will give some examples later on. Once the development is successful, we start customer-specific projects and scale them up for serial production, that happens usually in the business units or I will talk also about our venture unit approach later on. In technology and innovation, we have 3 main pillars. The advanced technology team has multiple technology domain knowledge and is focusing on the early and mid-stage projects in development -- in technology development. And in this stage, we have also various cooperations with the universities. I mean, here in Switzerland, we have a great potential to work with ETH in Zurich, to work with [ EPL ], but we work also with start-ups and other technology partners to combine our internal knowledge with external knowledge and speed up the development cycles. In the area of material and surface technology, we built up over many years application-specific knowledge for the different markets, be it for health care, be it for division Industrial for the different business units. And from an innovation perspective, that is a very interesting aspect because we have kind of cross-industry knowledge and can combine the different perspective for our innovation projects. Bram Jongen will later explain you more details in the breakout session. With our venture unit concept, we want to commercialize breakthrough technologies as fast as possible, especially when the scope goes beyond 1 business unit. Currently, we have 2 such venture units. One is the variable sensors. And the other one is soft sensing and actuation. We have set them up to operate like a startup within Dätwyler to strengthen the entrepreneurial mindset of our teams. And Mattia will be leading a breakout session. You can also talk about the venture unit concept with him. The venture units go beyond our existing core, for example, by combining our elastomer components with electronics or software elements. And they feed our divisions with the next generation of products, always with a strong focus on scalability. Our SoftPulse products, which are softened dry elastomer electrodes have been developed during the last years as a solution for various variable devices and we have first year end sales based on that product. We transferred here our material knowledge from the healthcare area, where we are developing very clean materials to the venture unit, that is relevant that we have -- because we have skin contact that we don't have irritation. So also here, the materials need to be very clean. The product and process development takes now place in Switzerland with product designs for the different form factors of variable devices, be that headset, wristbands, smart glasses and so on. We started the journey with a focus on brain signal monitoring, EEG signals for long-term monitoring to make that more convenient for patients. However, beyond that medical applications for remote patient monitoring, also lifestyle applications get more and more interesting, be it for fitness, be it for virtual or augmented reality. A lot of startups develop very interesting innovative solutions to improve our concentration level to monitor our sleep quality and many more. And even more interesting, big tech companies like Meta, Google, Amazon, all of them are investing in that available applications. And there, our scalability and global footprint plays a very important role, which sets us, let's say, apart from competition. All in all, we assume the addressable market to be in the range of CHF 200 million to CHF 300 million. Currently, we see the biggest market traction for in-ear applications for smart glasses and wrist bands, where our electrodes enable high-precision body signal monitoring this compact designs, and we aim to expand our offering by providing reference solutions for the different form factors for high-quality data acquisition. So that should speed up the adoption of our products. And again, increase the entry barrier for competition. The next 2 product innovations, which are close to market entry are developed in the venture unit, soft sensing and actuation. We complemented our product offering here. We started with electroactive polymastic for actuation, and we added magnetically active polymer-based technology for sending solutions in order to use synergies in technology as well as in business development. Let me start here with the EAP based actuators. You can just imagine a piece of rubber, which starts moving when electrical voltage is applied. How is that possible? Well, such an EAP is based on very many layers of polymers and electrodes in between. They are contacted and when you apply the voltage [indiscernible] contract when it is discharged the stack expands again. With this technology, we provide energy-efficient and noise-free actuation solutions, and we can also make the solutions more compact. They operate in a broad temperature range, and we target, for example, look in with applications we set. Imagine how annoying it would be that the smart lock in your hotel room does not open anymore because the battery runs out of power. Our solution based on EAP would work without any battery. Very important trend for valves is miniaturization and compact designs. And here on the bottom right, you can see a difference, and you can later see its live. You see the size difference between EAP solution, which is much smaller compared to a solar need-based solution. Furthermore, we have customer developments ongoing this very thin EAP stacks and that is for haptic applications, for example, in a glove. We could successfully scale that unique process technology. Others only have it available on lab scale. We have now a pilot line available to scale that up together with our customers. Let's move to the magnetic active polymer sensors. Here, you can imagine a rubber part, which measures force or pressure or even gives information on the ceiling state. Well, the sensors are based on a magnetic elastomer. And if you deform that, the magnetic field would change. And you can translate that change of the magnetic field with algorithms into a change of force of pressure and use it, obviously, is a force of pressure sensor. Our solution offers there a very high design flexibility. We can produce basically every shape of such a sensor based on our elastomer technology. And we can use our material expertise to ensure that the sensor is stable against temperatures or even different media, which sets us apart from other sensors. Currently, we see 2 main application fields. In the field of robotics, there is a growing need for force and pressure sensing for complex and versatile gripping task. There it is, of course, very important that gripper does not damage the product and also slippage should be avoided. And our MAP-based sensors can be designed to fit on the fingertip of a robotic hand to allow sensitive gripping. The second target application would be condition monitoring in order to do predictive maintenance. Imagine seals, which are exposed to aggressive liquids or high pressures, for example, in the chemical industry. Today, the seals are replaced in a certain time sequence. When we can monitor the state of a seal, then the customer can replace it when it's really needed. The addressable market here, we estimate to be in the range of CHF 200 million to CHF 300 million. Apart from our activities in the venture units, I would like to highlight some additional important development projects. In healthcare, the patient safety is of utmost importance. And in line with that, the regulatory requirements are increasingly stringent. Our Materials & Coatings are already today tuned to give lowest levels of extractables and [indiscernible] and the team is working already now on the newest generations of materials and coatings, all this is the focused on highest cleanliness and chemical compliance. We run also various developments in cooperation, as I said in the beginning. We can see here in the middle picture, a micro fluid chip, which was developed here in Switzerland with the CSEM in the consortium project. This chip is designed for rapid and high precision analytics. You can see it also later outside. And last but not least, there is a clear trend to use more and more simulation. We do that already since many years in the industrial area. We transferred the knowledge and apply it also for health care applications. And we have set competent centers in Europe, in China and in the U.S. to be close to our customers to engage with them in early phases to do co-development projects. We characterize our material properties with special measurement techniques, [indiscernible], our own material models, which locks the customer in onto our material. And based on that model, we can support the customer to optimize the product design. We can also simulate the processability and optimize our malls before we build them. And last but not least, with digital twins, today, full production processes can be simulated. With that, I would like to close my short overview. You will get more information from Bram on the material topics from Mattia on the venture unit variable sensors. And in the break, please visit us to talk about the applications. Thank you.

As Volker mentioned, we've tried to give you an overview of the engine that is behind our numbers. Even so, we will not forget the numbers, and I will deep dive and give you a financial outlook and overview for the midterm. I would like to say that based on the market trends that we have shared with you, based also on our chosen positioning in these markets that we are well positioned to reach our midterm financial targets. We're anticipating a higher single-digit growth in our net revenue and an EBIT margin of 17% plus. In other words, we are confirming the midterm outlook that we have given and shared with you in February this year. I wouldn't be financed. If I wouldn't put a disclaimer in somewhere, we assume normal operating market conditions. Now this translates into different numbers for our 2 divisions. Healthcare will outgrow the market. And you may recall that we set the market growth at 5% to 7%. The EBIT margin will be around 22%, so well above the 20%. Industrial, on the other hand, will face a single-digit growth more in the mid-range and a strong EBIT margin in the lower single or the lower double-digit range, yes, around 12%. If we look at the next slide, the question then is naturally from these numbers, you will see that we will and are foreseeing a material increase in our EBIT margin. In 2024, we ended the year at around 10%, corrected for the provision that we booked for our ForwardNow transformation program. And we're aiming in the mid-term to get to that 17% plus. The ForwardNow program is critical in this one because it helps us unlock the potential that we have in our organization. I would like to highlight a few factors that matter in this respect. First of all, as mentioned already, we have significant operational leverage from the fact that we currently still have underutilized facilities. Particularly in healthcare, we have invested in the period '21 to '23 in top-notch facilities, and then we're facing the fate of destocking, which basically meant that we could not optimally use our production capacities. However, with destocking being over and growth coming back, what we see is that without major investments in the midterm in new plants, we will actually be able to accommodate for the growth that we are foreseeing. Therefore, the fall-through is high. We've seen this already in our half year numbers, and we expect that this will continue in the mid-term. Michael highlighted the importance of the optimization of the production network. This is important in Industrial, but I would argue it's equally well important in Healthcare. And our Head of Operations, Claudia will speak to that at a later stage. It allows us to basically take out unnecessary cost to leverage synergies. But most of all, it allows us to place our production in those areas where we need to be able to scale up and to effectively manage that. Now that is actually only possible if we work in parallel on centralized standards and processes. We're not fully there yet, but we're moving in the right direction, thanks to ForwardNow to ensure that, indeed, it doesn't matter where you are and that we can basically ensure a higher compatibility and consistency in our production capabilities across the globe. The key word for me is the streamlining of our product portfolio and with that, our client portfolio. With our explicit focus on higher value offering, it also means that there are areas where we need to put in our resources and invest. And there are areas where we need to let go and streamline the products and potentially the customers out of that portfolio over time. We have to upscale basically the portfolio that we are currently sitting on. And already, over the last year, we've made good progress in that area. That allows for a mix improvement, higher margin and also for value-based pricing. Helping us improve our financial performance will naturally have a positive impact on our operating cash flow. Another factor that is equally important is actually to improve our net working capital. And with that, I particular mean the capital that we are currently locking into accounts receivables and our inventories and naturally accounts payable as well. The actions we've started and where we see the first results coming through in terms of being much more disciplined and focused in terms of our collection processes of accounts receivables of really looking at the end-to-end stream -- value stream and see where our inventory sits and what do we really need wear and a very, but strengthening of our procurement organization help us deliver significant improvements in that area today, but definitely over that 3- to 5-year time period. Now why does operating free cash flow matter? It matters because it allows us to reinvest in growth, and increase our CapEx as a percentage of sales. If we go to the next slide, I would like to then it then raises the question about where would we invest? And I'd like to come back to Volker's diamond slide. As he mentioned, we have 2 divisions, 1 accounts for around 60% of the sale. However, less than 50% of the EBIT and the other one accounts for around 40% of the sales and has a disproportionally higher EBIT contribution. In Industrial, we've learned from Michael that actually the mix offers a lot of interesting potential, provided we focus on those market niches where we have high entry barriers, higher growth, higher margins. Some of those niches or some of the areas where we currently play have a higher cyclicality. Oil and gas is a good example. On the other hand, we also have segments, food and beverages that deliver sustained high margin in a noncyclical way, and that's where we want to play. We want to play in that area of industrial, where we do have those higher margins and yet have less cyclicality. In the area of health care, it is very much about building on what we have, unlocking the capacities and the competencies that we have and working with our customers in offering those solutions to their problems. Capital intensity plays a role in healthcare. And we've seen that in that period of '21 to '23 when we made all those big investments. So the sweet spots that we're also looking for in terms of driving our organic growth are very much in the area where we can leverage our competencies and yet not have to make huge capital investments. We will not move in that direction where we would move away from the pure play, for example, in healthcare. And focus on system integration, which would also add to the capital intensity that is needed. So a balanced approach in our capital allocation between profitability, finding industries, market segments, niches that are less cyclical and CapEx intensity will drive our internal investments, our CapEx and sustain basically the growth that we're looking for. This is also applicable to any inorganic growth that we might be looking for. So we have set certain clear guardrails. If we move to the next slide, then a few considerations around how we are reflecting our strategic objectives in that capital allocation strategy. Our first focus will be on internal growth. What can we drive from our own facilities, our capabilities, our competencies, our people within that rider itself. And I would like to highlight, in particular, 2 aspects, which is CapEx and which is ROCE. Our CapEx to date, and you have seen that in the half year results are around 4% of sales. We do expect that over the midterm that percentage of sales will grow, not because we have to in the 5-year time period, put new plans in place. But because we have to make the additional investments that are needed, machine-wise, visual inspection wise, automation wise, that are needed to support our growth in the various growth areas that we have across both divisions. So we do expect that the CapEx ratio will increase, hence, the importance of having tight net working capital management and better operating results. Our ROCE is expected to increase in line with what our main competitors are doing, and possibly despite the fact that we have also segments that deliver a lower return on investment. So we're aiming there for over 17% return on our capital employed. While our main focus will be on our internally driven growth, that doesn't mean that we close doors for inorganic growth. In fact, improving our capabilities and space to allow inorganic growth is very important. We've made great improvements in our leverage over the last 2 years. We will continue this path to reduce our debt and our net debt and naturally improve our EBITDA so that our leverage will trend over that time period in the direction of the 1.5 multiple or lower. You will see this already coming through to a large extent in the 2025 time period. To the extent that we would do external acquisitions, they would be very targeted. There has to be a strategic fit. They have to follow the guardrails that we've set in that diamond slide. And clearly adds to our strategic agenda and our overarching goals. Shareholder returns, a very important way in which you also can allocate your capital, Dätwyler has taken pride in keeping a good earnings or dividend per barrel share over the last years, that was not necessarily connected to the underlying earnings that were there. What you can expect from us is that we will stay at that level or above, yet that over time, we will link it back to the underlying earnings, which leads to basically the guidance of an over 50% payout ratio. This brings me then to the last topic, and that is a summary of the reasons why one should invest in Dätwyler. I would actually like to state or start with the item in the middle. In our strategy, we stay truthful to our original purpose of delivering system critical components. We take pride in that, and I hope we have been able to share with you how important it is and how important these components are. They may be small, but they have a huge impact. We have, however, sharpened our focus to ensure that we truly put our emphasis, our resources and our efforts on a product portfolio offering that will drive higher value and that will drive growth in the longer term. Our core competencies will be critical for that because without those core competencies, we would not have those entry barriers, but we would also not have that competitive edge that is needed to support our customers and compare favorably against our competitors. I would like to highlight there, in particular, that what we can do with our close collaboration and our customer orientation is that we work together with our customers to help them solve their problems. And that's where we make a difference for our customers. So thank you very much.

So a warm welcome from my side. We have reached the end of our plenary presentations, and I would now ask Volker, Michael and Frank to join the stage and we will start our Q&A session. And I would like to remind you, we have a webcast going on. So also the Q&A session will be broadcasted. So I kindly ask you to wait for the microphone until you start asking your question, and please also mention your name before you start your question. So who wants to start? Charlie?

I'm not sure if I'm -- how to read your guidance exactly you're implementing your ForwardNow program until 2027. So does this mean that this 70 plus EBIT margin is reach for first time in 2028?

We typically take a 3- to 5-year view on the midterm. So I would say it's between 3 and 5 years, counting from '25 that we would hit the 70% plus. The ForwardNow program is absolutely valid for the 3-year time period. So when we speak about the CHF 52 million kind of accumulated benefits and the sustained base -- cost base reduction of CHF 24 million. That is applicable as of '28 and is one of the factors, not the only one, but one of the factors to drive our financial results.

I have a question about capital allocation in regard to M&A. You said strategic fit, strategic fit will be high growth, higher margin. So you would not invest into Industrial Solutions. You would only focus on the health care solutions, is this correct? And secondly, on that, you said leverage 1.5x net debt EBITDA. But what does it mean when you make an acquisition, what would be the higher level? Or would you take this 1.5x?

Perhaps on your first question, I mean, I wouldn't exclude Industrial Solutions in general. But as we've explained, we have this bucket of Industrial Solutions business models. And some of them are less cyclical and some of them are more cyclical, yes? So we would not exclude to do that, but our focus is basically in the middle, in between these 2 diamonds or within the health care as such. So this is clearly the focus. And when it comes to the 1.5, I mean, depending on the intensity of such a potential inorganic growth, we would take a reasonable time frame to go back to this 1.5 once we would have a spending that we just go -- yes, which has changed that ratio massively.

Yes. To add to that, the absorbability of any potential future acquisition will have to be taken into both financially as well as in terms of the integration within our organization. However, the target of 1.5 in that time period stays.

So when the opportunity window would open again from your perspective to do acquisition?

It's hard to assess. It depends. You -- now purely refer to when are we financially in a position that we can start considering this, right? So I would say when we get to the level of multiple of 2 or below, and I do believe that is within reach.

Benjamin Thielmann from Berenberg. I would have 2 questions, if I may. First question is on CapEx. You said it's -- sorry, now it works -- sorry. Benjamin Thielmann from Berenberg. You said CapEx is 5% to 8% of revenues. Could you maybe split that across the 2 divisions that you have? You mentioned already there is some investments into automation. There seems to be a couple of machines that need to be replaced. There are necessary investments that you need to do? How much of those 5% to 8%, can I assume it's going to be split into your Healthcare division? And how much of that goes into the industrial business?

Yes. So typically, we don't provide split. However, it is fair to say that the CapEx will follow the growth that we're foreseeing. So that gives you good indication of the answer.

And then maybe a follow-up question on your 1.5x EBITDA leverage or slightly below 1.5x that you're guiding for. You also confirmed the dividend strategy. There is no change in that regard. Do you aim to actively pay down debt in the future? Or is that multiple solely coming from the EBITDA recovery that you expect in the next 3 to 5 years?

No. It's both, an absolute need to improve and continue to improve our operational results of course, but we continue to pay down debt. We have paid off CHF 25 million of our debt to payment in the first half of the year. And you can expect that we continue doing so in the second half as well as next year. At some point in time, '27 basically our bond becomes due and that's also a critical point in time for us.

Okay. Perfect. Maybe one follow-up, if I may. Just quickly, maybe it's one for the breakout sessions. But you were mentioning low double-digit growth expectations for the prefilled syringe market. I mean GLP-1 is a big growth driver, but there is not only the preference, right? There is the glass vial. And we see, for example, Eli Lilly is developing a pill, for example, okay, for GLP-1. And I was just wondering how would that affect you guys? I mean, on a net basis, it's probably everything is growing because the market is overall growing pretty strongly on the volumes. But do you see any headwinds that there is a move away from prefilled syringes and glass wired [indiscernible]? And what is the margin different for you guys? Let's say you said the plungers for the prefit syringe, but you're also selling the aluminum cap for the glass bio that then goes into like a shot or a [indiscernible]. Does it make a difference for you if drug comes in a preference syringe or if it comes in a glass vial?

I mean -- just to address the first part of your question, so how to assess this overall GLP-1 market is, I think, fair to assume that there will be alternative therapies in the market. But with the massively downgrade the growth expectation with injectables, we believe, no, because we see what our customers and partners are investing still in facilities and in production to scale that business for the next, let's say, 5 to 10 years to come. So I mean, in addition to our current deliveries, we are engaged with some of our partners into new medications, all of them injectables that go into the GLP-1 generics, if you would call it, and this is for us still a growth part. It's clearly important to us. On the other hand, as we have proven that we are able to scale and to launch such a product, there are more doors opening with customers that now rely on our capabilities here. And this is even more important for us than the sole GLP-1 traction. It has really proven that we can do that, that we can do that fast, that we can do that reliable and this serves very much to us now in that field. And the last part of your question, for sure, a preferred syringe is a little bit more complex when it comes to the development and to the co-engineering with the customers. So in some cases, you could argue that there is a higher price for the component, although I have to put it in relative terms, not in every case, yes? So I'm also still learning in health care. It's sometimes really astonishing how the market dynamics is going on. But also, I can underline that Emiel will give an overview on the breakout session and some valuable additional information on that.

If I could add one thing, what is typically -- so if there's a new development in the market, we are always tacking naturally what does this mean for us, right? So oral drugs right now, at least in GLP-1 area are less effective than the injectables. And that's a topic that we need to take into account, right? So possibly that threat may not be the most immediate one, but by virtual is working very, very closely with our system integrators and the pharmaceutical companies themselves, we are very close to where it's happening and what is the likely development where do we need to take this. And I think that makes a big difference.

[indiscernible] JMS Invest. I have a question regarding Page 18 of the presentation where you have your assessment of the market growth numbers, which, if I compare it to the numbers that you had published in the past, are in 2 areas much lower now. So the first one is in food and beverage. You used to say 6% to 8%, I would say 2% to 3% and in general industry from 6% to 2% to 3%. Now the question is [indiscernible] there a change in the market? Or was it like a different assessment of this market that you've changed your view about the market?

[indiscernible] I think it is the next one, [indiscernible] right? So you're referring to the health care market -- the food and beverage market and the automotive market?

Actually, the industries and the other ones are just a bit lower, in food and beverage industries [indiscernible] significant.

I mean in food and beverage, we for sure see that especially the classic espresso system is somehow getting saturated in the market, and the growth is getting a little bit less in terms of volumes from our side. This is what we see, although we have a good market share here. What is something we cannot 100% confirm right now, which might have been taken into consideration is also a trend, how strong is the trend from plastic into aluminum. So we're talking here about aluminum capsules, perhaps the previous assessment was done on plastics on aluminum and every competitive capsule. So this is the relevant market for us. Also here, we'll have a breakout showing the numbers, how we have basically created this assumption here later in the breakout sessions. On the industries, it is mainly shaping a little bit more the direction as we've laid out the high-value segment. So where are the segments where we can really make a difference. So if you take the whole market, there are some segments that may render into commodity sooner than others, yes? So that's why we also sharpened a little bit our targets for the topics where we can really make a difference and where we can then also come across with better margins with higher margins. And that is clearly an influence here in the industry sectors. Positive impact is the part in the connectors that comes from the acquisition of QSR back in 2022. Another part is that is maybe a little bit less optimistic is the oil and gas market because although we've expected that, we know it's very cyclical. It is depending on the oil price, and there are so many factors where we stay a little bit softer right now in assessing the midterm.

[indiscernible] from NZZ. Two questions. You've mentioned that the growth in the future, will be rather in Asia and in the Americas rather than Europe. So how concerned are you maybe about this -- in this -- the industrialization in Europe? I mean, is this porting you maybe and especially, of course, with regard to the automotive sector, but not only -- the second question is, I mean, you've also mentioned that you have seen a turbulent year. So what about the transformation program? Is this really it? Or would you have to take further measures maybe in order to maybe cut costs?

So your first question, deindustrialization is clearly impacting the overall sentiment in the industry. So when you look at automotive in Europe, when you look at automotive and industrial in Europe, it's softer than most of us would have expected it to be a couple of years ago. Are we impacted by relocations of product to more customers to China? Yes, this is the case. On the other hand, what we are doing against is clearly, we're focusing on the high-value products that we can keep in Europe, in Switzerland and in our sites in Germany now regarding the industrial business. And we do believe that this is important as well to feed our innovation cycles with our sites in Europe. This is clearly our target. The focus on these high-value components will give us a little bit more resilience because the markets here are not so efficient. We need to react on relocations, react on volume versus price and so on, yes. So a major part of our portfolio is we need in that segment is really strong. And so we are confident that we can also keep a part of our business here in the industrial and automotive part. Second part of your question, the timing, I spoke a little bit of the timing in ForwardNow. Did we expect in November -- October, November, December when we designed the ForwardNow program, that this would come end of January and February 2025, obviously not, yes. But on the other hand, if you look at the 4 areas that we are tackling. This has been exactly the right -- the right playing fields for that, yes? And so to your question, do we have to add more measures. Clearly, no. We don't see it currently from the market situation. We're expecting at the moment. We do strongly believe today that ForwardNow is -- has the real -- the right answer to the question also to the additional questions that came across from February 2025.

[indiscernible] can you please switch to your innovation section, please. You have provided details on the products that you're developing, and it appears they have been more or less the same that you presented 2 years ago, but you're progressing towards commercialization. Now what's a big missing is the timing. We can see the ambitious targets of the impressive opportunities for those products, but will they already make a difference next year, the following year? Or when do we expect significant volumes here to see in the P&L?

Thank you for the question. As I explained, we are already in serial sales with the wearable sensors. You will hear more from Mattia later. There, we expect in the next 12, 15 months, 7 digit figures in terms of sales and, let's say, on midterm, we assume to go into the mid million range, single-digit million range in these areas. For the EAP based products, I mean we did a significant progress in scaling that technology from a lab scale to a pilot line. We have active customer projects and yes, we are not yet in serial sales, but we have different potentials, and we added the magnetic active polymer sensors to it to have a broader base.

Perhaps to add SoftPulse is a little bit unfair when you look only at this advance and normally, we forget what is already in serial applications. So NeoFlex has been also an innovation 5 years ago. And just remind NeoFlex is really kicking in this year with a good progress, a good traction. And I mean, for us, it's very, very important that when we get such a product in the market such as NeoFlex there is no room for error, yes? So -- and that's why we may take a little bit more steps to make sure that these products are safe, reliable and that they really add to our promise in the market. And so that's a little bit balancing that. But I'm really confident you will enjoy Mattia's insights into the variables later on in the breakout session, and that gives really a good insight on what is possible with these products.

Sebastian Vogel from UBS. I've got 3 questions, a couple of them on the guidance. With regard to the sales guidance, you mentioned that you aim for sort of a higher single-digit number over the medium term. Can you a little bit elaborate what means higher for you in that regard. It's a bit nearly, but nonetheless. Second question is on the margin guidance. You have also laid out that where you are, where you want to go and sort of the blocks or the steps to get there essentially. Is there a chance to elaborate also a little bit further how much the individual building blocks are supposed to be contributing to the sort of step up a little bit understand what is more relevant and what is the less relevant? And the third and last question is, if I compare it to Capital Markets there, I guess, in 2021, a long time ago, but nonetheless, and when I compare the margin ambition in health care that was laid out there compared to the one that you laid out today, if I'm not mistaken, it's like 200 basis points below that number, of course, 2021 is a long time ago. But nonetheless, if you can add a little bit of a comment there, what was driving the delta, that would be appreciated as well?

Yes. So maybe I'll start with the last one. So it's an earlier Capital Markets Day in 2021 or 2022, clearly, a higher range was indicated. That was based on the know-how and knowledge at that point in time. Please take into account that we've had since then COVID, which really changed the perspective. It helped us on the one hand side. On the other hand, it has also impacted the overall economic environment, and led, for example, to the destocking in the health care industry. And the second point is naturally what I would call the breakdown of the international trading order and the supply chains, which have particularly impacted the automotive industry, which were set up in a very, very global way, right? And I also strongly believe that even if we may be able as Dätwyler to manage the implications, for example, of the tariffs right now reasonably well. At the same time, the overarching economic environment is more conservative, right? So this is leading to us going in with what I would call an ambitious midterm target, but one that we also can stand behind. Now in terms of the factors that I mentioned, yes, that are needed to drive that EBIT margin, it's hard to say what is more important or is there 1 or 2 things that are really more important, right? I will not give a breakdown Sebastian between this line means ex that line means why, right, in our model. What is really essential and what is at the core of what we seek to do is that focus on higher value offering, improve your product mix systematically and be tough and take the hard decisions on where that is not the case. That guardrail is critical. In parallel, we are ensuring that we take unnecessary cost out, that we leverage our synergies, that we better optimize and use the resources and capabilities we have across the board. So it will be end-to-end, right? We can't drive that growth without in turn also that some of those preconditions for growth that are provided via the ForwardNow program are in place, yes. And then in the last term, we keep that open. We say high single digits for the group. I think you could make a rough estimation if you see the development of health care and the growth and what margin we expect there. It gives you probably a fair indication of where we end up, yes.

[indiscernible]. I've got 2 questions, please. The first one is co-development you were mentioning a couple of times. Is there also co-financing you could develop with your client or [indiscernible] just the upfront, you pay anything or...

It depends on the markets and to the kind of routines in the market. In health care, the earlier you start with the customer development, the more the customers willing to have a share of these costs. This is what we experienced clearly. And it always shows 2 things. First of all, the customer is serious to bring that product to a serial application or at least to the next stage in the development cycle. And second is that our value that we create is worth something, yes. So in health care, we have experienced that over the last 2 years, increasingly because we're also stepping up in the high-value segment, also going earlier and earlier with our customers starting the development. In automotive and general industry, it always depends on the application. I would say in the commodity field and automotive, clearly no. This is also why we will focus that less and less in the future, so we will focus on high value. And here, it depends really on the complexity of the application. If it's a standard application and you have your material specified or special material for that. Usually, this is easy prefinancing because this is your receipt, you all have it, you have the knowledge. Large investments normally get shared.

[indiscernible] also on the net working capital, the question to the CFO, does that help in the future have kind of prefinancing -- bringing the net working capital into a shape? Or is that not to the extent that helps the net working capital?

I mean I would say it helps in the sense that you have an additional source of revenue either under other operating income, yes. So in that sense, it helps, yes.

And then the second question is more on the product portfolio. I mean you were mentioning that the product portfolio goes more to the value-add components. And you're going to [indiscernible], if I may say, the existing product portfolio. Can you give us a feeling how much of your current product portfolio will be subject to reduction or phase out or I don't know how to call it. And maybe an additional question to this, do you see in the market, speed up of products that become commoditized, if I may say, with the point that you have to intensify the R&D development, maybe the dynamics in this area that would be of [indiscernible]?

I mean your first part or first question, you usually have 3 categories that you would tackle if you want to make a portfolio change. The first one is what you really need to get out, yes? So this is not a lot for us. You have to imagine that we have acquired many, many companies over the last decades. And some of them have started perhaps 20, 25 years ago as a small family-owned business and as well have some remaining parts in their portfolio that go back to that time. So we are no more the best supplier for these parts, yes? And this is basically the way you find other solutions with your customers. You look at it -- can you have an all-time demand just covered by one delivery. So this is somehow how we get that solved. Normally, I mean if you look at our portfolio in industry, this is clearly in the 1-digit million range, right? So it's not a large amount. The second part of the portfolio, this is something that you would let run out, also clearly look at your price position, your price position has to -- does not -- or it's not possible at this price position is strong in diluting your average portfolio. So we don't have strategic projects in the case that they would be very, very unprofitable. This is -- we have a clear transparency in our portfolio. This is not what we are doing. So this is going to run out with a decent price. And the third, I think, most important area of that is what are you acquiring as new business that will ramp up in industrial in 2 to 3 years. And in health care, where it is not so prone because we are mainly playing in high value, then in 5 to 7 years. And that also covers a little bit of second question. So if you look at the market for battery sealings, battery pack sealing, cell sealings in China. So we could really get a lot of business there while competing on price. But if you have a huge investment in ceiling toolings for battery pack sealings that are very simple and that will be commoditized in 2, 3 years from a Chinese local suppliers. This is not where we can compete, and this is not where we want to compete. And this is why the selective approach, what out of this area of possible applications in the battery, in the connectors and whatever in the powertrain of an electric is the -- are the ones that really fit to our core competencies. And this is exactly what we are focusing is what the teams get trained in and exactly the way forward.

In order to say in time, we can take one more question now in the plenary. And then I invite you to ask your questions during the coffee break to our team. So who would like to? Okay. So Charlie made the beginning and he makes the end.

I hope it's of common interest. I understand that today, you would like to talk about the midterm future. But I think we would also be a good [indiscernible] to give us an indication about your margin and your sales development in the current year, it's end of November, almost you may could say something to that?

I mean, during the half year results, we have indicated that we are positively optimistic and we can reinforce that statement today. So I think we are in line with the expectations that we gave ourselves and that we've communicated at that time.

Okay. This would be the end of our Q&A session here in the plenary. You have now the well-deserved coffee break ahead of you. So we'll take a 30-minute break. Outside in the aisle, the coffee should be ready. There's also a wide assortment of products that you can take a look at. There are a lot of colleagues from the business here to be able to explain to you those products. So please take the opportunity and talk to our people, talk to our management representatives. After the break, we will split this group into 2 groups. On your name tag, you have either an A or a B. So we have a group A, a Group B. We have 2 additional rooms right next to this room, where we have the so-called breakout sessions. And my colleague, David Friedman, and myself will then take Group A to room 5 and Group B to Room 6. But I'll remind you after the coffee break, again, with mic outside in the aisle. And the breakout session will start at 11:30. Thank you for your attention.