Einhell Germany AG (EIN) Earnings Call Transcript & Summary

Ladies and gentlemen, we warmly welcome you to the H1 2026 Earnings Call of the Einhell Germany AG. I'm pleased to welcome Einhell's CFO, Michael Brunner; Head of Brand Management and Communications, Daniel Ritt; and Director of Finance, Helmut Angermeier. And with that, I'm handing directly over to you, Mr. Ritt.

Thank you very much. Good morning, and a very warm welcome also from my side to all of you joining our half year update call for Einhell Germany AG. My name is, as said, Daniel Ritt. I'm Head of Brand Management and Communications at Einhell, and it's my pleasure to start with a short introduction and some useful general information for you. Please, first of all, bear with us if not everything works right away. This is the first time we are holding this type of digital earnings call in collaboration with Airtime. Earlier today, we published our financial results for the first 6 months of fiscal year 2026, covering the period from 1st of January until the end of June 2026. From Einhell side, together with myself, in this call is our CFO, Michael Brunner; and Helmut Angermeier, Director of Finance and Authorized Representative responsible for Group Accounting, Finance and Investor Relations. Michael will be our main host today presenting the latest numbers. Helmut and me will be supporting the Q&A session later on. Please note that this conference call, including the Q&A session, will be recorded. Kindly also take note of the disclaimer, which applies to the entire presentation as well as the Q&A session. [Operator Instructions] All the technical details for the Q&A will be explained by our host, Ingmar Grapenbrade from our operator, Airtime, later on. First, to start with, let me give you a short, brief introduction to Einhell for those who do not know us yet. Coming from a history of being a manufacturer and distributor of mainly power tools and garden tools, Einhell based in Landau an der Isar in Lower Bavaria is nowadays the broadest lifestyle battery platform in the DIY and professional world. We, as Einhell, stand for maximum cordless excellence in the home, workshop, garden, and leisure sectors. With one battery for more than 350 tools, our battery platform Power X-Change ensures cordless freedom and complete flexibility. As an internationally successful company with 52 subsidiaries and over 2,600 employees worldwide, Einhell set standards in terms of performance, endurance, quality, and safety for all projects in the home workshop, garden, and leisure area. The constantly growing ecosystem, powerful products and visionary ideas make Einhell a pioneer in the field of battery technology for all DIY enthusiasts and professionals worldwide. In short, power wherever you need it, one battery for all. With that, I'm delighted to hand over to Michael, who takes us through the key developments in the first 6 months of this year. Over to you, Michael. The stage is yours.

Thank you, Daniel, and good morning, everyone, also from my side. It's a pleasure to welcome you to the first Einhell earnings call. Starting today, we will host this format with the publication of every following quarterly numbers and a more detailed version with the annual financial statements. This is part of extending our Investor Relations communication in several aspects. So in the following minutes, I will give you some insights on our financial performance during the first half year 2026. But before turning to the details, let me briefly outline the broader macroeconomic and retail environment we faced during this period. The Iran war and its far-reaching impact on global supply chains, particularly the significant increase in prices for oil-based fuels continue to weigh on consumer sentiment. In the second quarter of 2026, demand in the German DIY market showed signs of modest stabilization for some assortments. Nevertheless, consumers remain cautious with regard to larger purchases. However, in these circumstances, we have had a successful start to the new financial year with a sales growth of 2.7% in Q1. Following this, trading conditions were challenging in the second quarter. In addition to the weak consumer sentiment, unfavorable weather in Europe and Germany further slowed down the sellout and replenishment in the DIY markets. The beginning of the season around Easter was dominated by cold weather and now the long-lasting heat wave combined with dryness do not support the sales of garden tools to say it mildly, especially the assortments in lawn care and hedge cutting suffer and these purchases are hardly postponed to later in the year. So the group sales were already communicated in the course of our Annual General Meeting at the beginning of July. In total, with the sales amount of EUR 636 million, we have achieved again a record first half year in the company's history. Overall, and compared to peers in the market, we are very happy with these figures. In addition, we still expect a return to considerable growth during the second half of the year. I will explain details of our optimism towards the end of this presentation. So let me now guide you through our financial report. Basically, we will cover 3 topics. The first one, an overview of the half year key financial figures. The second one, details on the P&L, balance sheet and cash flow; and third, the guidance for the current fiscal year. So let's start with the key financial figures. Einhell net sales reached EUR 636 million, an increase of rounded 1% compared to last year. Like-for-like sales, so adjusted for FX effects grew by 1.1%. So only a small difference here with a positive impact from Australia and negative impacts from U.K., Argentina, Turkey, Canada, and China. EBT reached EUR 62 million, more or less matching last year's level of EUR 61.8 million. Free cash flow also develops very positively with EUR 14.4 million in the reporting period compared to negative EUR 56.4 million last year. Net debt is again actually net cash amounting to EUR 6.7 million. So what do our half year 1 figures look like in detail? Let's start by taking a closer look at the sales development year-on-year. After the strong growth of nearly 10% in 2024 and 2025, we see only a minor increase in 2026, but the picture is diverse. So therefore, in the next step, I will present our sales performance in the dimensions regional segments, divisions and assortments. First, regions. So for clarification, these numbers relate to the sales by invoice recipient, not the sales by invoicing party. You can see the difference also in the segment reporting of our half year report. The difference basically are the FOB sales. So these are sales on a full container basis shipped directly from China to the customer's warehouse. Starting with the segment Western Europe, including DACH. Sales here increased by 1% to EUR 419 million. On the one hand, we see a weak development in Germany caused by the garden season. On the other hand, we have a very strong development in Italy, Spain, and U.K., all with 2-digit growth rates, supported both by delivery to a newly acquired international DIY chain, strong e-commerce sales and a minor impact from the garden season. In Eastern Europe, sales increased by 10% to EUR 82 million. We see a good development here overall, but especially in the most important markets of the region, Croatia, Turkey, and Poland, they contributed significantly to the growth. In the region overseas and Rest of World, sales decreased by 4%, amounting to EUR 135 million in the period. The most significant market here is Australia, representing 2/3 of sale. In total for the period, Einhell Australia sales decreased by 2.4%. This development is heavily influenced by the first quarter in which the most important customer changed its ordering behavior by implementing a new demand and replenishment tool. This resulted in a strong decline of sell-in, whereas sell-out was satisfactory with a growth of 5% to prior year. So we are already in a normalization here. Second, let's have a look at the divisions Garden and Tool. Sales related to garden make around 40% of total sales in the period and decreased by 4%. Here, we see the trend confirmed, which I mentioned before. The gardening season in Germany, our most important garden market, was disappointing caused for the most part by the heat wave and the dryness, as already explained. What makes us optimistic is a very positive development of major Western and Eastern European markets with double-digit growth as well as a strong margin in total here. Sales related to tool make up around 60% of total sales and increased by 4%. In particular, the product category of Power X-Change cleaning contributed strongly, but also the storage assortment with standardized e-cases and the mix and match system tool cases deliver remarkable growth. Third, assortments, especially the development of our professional assortment. As already communicated with our 2025 numbers, sales related to our professional assortment contributed already 11.5%, meaning EUR 133 million to our group sales for the full year 2025. In the first 6 months 2026, this share increased to 13.4% compared to 10.6% in the same period last year. Overall, these results underline that Einhell is very well positioned in its market, and our ambition is to continue strengthening and expanding our global presence as this is not only about expansion, but also about driving profitable growth. Let us now have a look on the costs and profits for the period. The gross margin increased from 41.3% in H1 '25 to 43.7% in H1 '26. This is driven once again by a very positive development in the product and sales portfolio. The Power X-Change share for the period was 56% compared to 53% the year before. In addition, the professional assortment with high-margin items contributes more and more, overcompensating negative impacts from raw materials, sea freight and FX. Now turning to the cost categories. In detail, personnel expenses increased by EUR 5.8 million and amount to EUR 81.5 million in the period. We increased workforce, but only in areas which support our strategic development, like a sales team for the traditional trade in Germany, which addresses the professional assortment or the newly established sales hub in Dubai, covering the markets from Northern Africa to Middle East. Other operating expenses increased by EUR 10.7 million and amount to EUR 125.7 million in the period. Here, the main drivers are expenses for marketing and brand building, freight costs and IT. We are aware of these increases and monitor them very closely. On the other hand, investments in marketing and brand building are essential for us to future-proof our business model. As our CEO, Andreas Kroiss, often emphasizes, an established brand is our insurance. Investments in IT systems help us to optimize processes, increase efficiency and consistently drive forward our digital transformation. The central cost ratio, including personnel expenses plus depreciation plus other operating expenses increased from 31.8% in 2025 to 34.2% in 2026, adding 2.4 percentage points. This is completely compensated by the increase in gross margin. Nevertheless, we keep costs closely under control and adjusted to the situation when necessary. So in total, EBT reached EUR 62 million, more or less matching last year's level of EUR 61.8 million. Profitability is so close to 10%. Let's now take a look at the cash flow statement. Cash flow development for the first half of 2026 improved significantly compared to the prior year period. Operating cash flow amounted to EUR 23.6 million compared to an outflow of EUR 48.2 million in the first half of 2025. The improvement was mainly driven by a stronger operating result before working capital changes, a significant inventory reduction and a much lower cash outflow from trade payables compared with the prior year period despite the seasonal increase in trade receivable, which is normal. Capital expenditure remained at a controlled level of EUR 9.2 million, broadly in line with our ongoing investments in operational infrastructure and business development. Consequently, we generated a positive free cash flow of EUR 14.4 million compared to a negative free cash flow of EUR 56.4 million in the prior year period, representing an improvement of more than EUR 70 million. Despite repayments of financial and lease liabilities, we further strengthened our liquidity position during the first half of the year. Cash and cash equivalents increased to EUR 97.9 million as of June '26, up from EUR 58 million a year earlier. Overall, the cash flow performance for the period reflects significantly improved cash generation, our return to positive free cash flow and the continued strength of our balance sheet and liquidity position. So on the balance sheet, I just want to point out 3 highlights. Inventories decreased significantly by EUR 65 million compared to year-end and amount to EUR 386 million as of June 2026. This is even lower than prior year's value of EUR 405 million. On the one hand, this is based on sales, but even more, we took more emphasis on reasonable inventory planning and material management. Accounts receivable increased by EUR 82 million compared to year-end. This is completely in line with the extent of the seasonality of our business. Nevertheless, accounts receivable are also EUR 80 million higher compared to the same time last year. This is mainly based on 3 facts. We have agreed on extended payment terms with one major customer. We had higher FOB sales in May and June with a major e-commerce customer and the sales in general in June were higher than the year before. Trade payables amount to EUR 172.5 million, slightly lower than the year before. This is in line and caused by the reduction of inventories and more prudent material planning, as explained before. So this brings me to the guidance of the current fiscal year. We expect sales to increase from approximately EUR 1.16 billion in 2025 to around EUR 1.2 billion in 2026, representing a growth of about 3.7%. This growth is expected to be organic for the most part and supported by new listings with international DIY retailers, assortment expansion and continued momentum in our professional and recreation categories. For earnings, we continue to target an EBT margin of slightly above 9%. Key drivers will be maintaining the gross margin through our Power X-Change platform and product mix while implementing strict cost discipline and mitigating external impacts such as raw material prices, exchange rates and freight costs. At the same time, we remain mindful of the current geopolitical uncertainties and the overall consumer environment. Our guidance assumes more or less stable consumer sentiment and purchasing power. Let me now go into some details here and explain why we remain optimistic about the second half of the year. So over the past years, Einhell has consistently delivered strong growth. After growing by 14.2% in 2024, we continued this momentum with 9.4% growth in the first year (sic) [ half ] of 2025. However, demand weakened in the second half of 2025, resulting in a full year growth of 4.3%. We also entered 2026 with a challenging starting position. Our customers were carrying elevated inventory levels, and our order backlog was EUR 57.6 million below prior year's level. Despite these headwinds, we were able to improve month by month and maintain sales at the level of the previous year. This demonstrates the strong underlying demand for Einhell products and more important, healthy sellout at our retail partners, like already explained for Australia. As inventories normalize and demand remains solid, we are confident that the second half of the year will show a stronger performance and support our full year targets. In addition, there are several reasons why we are confident about a stronger second half of the year. First, our order backlog has improved significantly and as of July 1 was EUR 15.7 million above the prior year level. Second, we are launching Einhell PROFESSIONAL at Bunnings, our largest international customer with a rollout across more than 300 stores in Australia starting at the end of September. This represents an important growth opportunity in a key market. In France, we have signed a strategic partnership with the #2 player in the market, where we expect the first meaningful sales contributions from the third quarter onwards. Finally, our newly established sales hubs in Latin America and the Middle East are expected to generate positive revenue additions during the second half of the year. So taken together, these initiatives give us confidence that we can achieve sales of more than EUR 1.2 billion in 2026. So that's it basically from my side. If you would like to have more details on our strategic pillars and background, have a look at our General Investor Relations presentation available on our website or we are happy to meet you during the following capital market conferences. Thank you.

So thank you very much for the presentation. [Operator Instructions] So [ Miro Zuzak ], you should be able to unmute yourself and ask questions.

Can you hear me? Okay. The first one is on the Q2 development versus Q1, basically the seasonality question. You elaborated now on some effects which you have in the second half with Bunnings and the French customer, you also elaborated a bit on the inventory decrease with your clients. But still, if you look at Q1 performance, EUR 311 million roughly, was 3% after the -- higher than the previous year, which was very strong. So the previous year was plus 12%. Now the second quarter was negative minus, right? And against the plus 11% -- plus 7%, sorry, in Q2, which was plus 7% was much less than the plus 12% of the first quarter. So Q2, given the strong base in Q1 last year and the easier comps in Q2 last year was quite weak. And I can see that especially production and sourcing was weak, but also basically the German-speaking and Western Europe area. Can you please again describe why going forward now, this effect will reverse? So I acknowledge that the base is easier, right? But to reach EUR 1.2 million -- EUR 1.2 billion, you really need to accelerate now sharply versus Q3 and especially Q4 last year. Can you explain again why you're confident that this is actually going to happen?

Yes. So Q2 was weak. As mentioned, that's true for sure, heavily influenced by the garden season in the main market. Weather was a topic for sure, especially in Germany. You mentioned the Production and Sourcing segment. You have to see here, these are the FOB sales. And in the numbers in the presentation, I included them in the sales per invoice recipient. So here, you already see for the total half year, the amount including this. So these are FOB sales, mainly bigger e-commerce customer supporting this region. And in this case, inventory levels higher and garden season weak. So this contributed to the weaker second quarter. While we are optimistic about the second half is, as mentioned, already lower base than the year -- compared to the year before. And for sure, some additional effects we plan like the professional assortment in Australia, some new gains of customers, international, big international chains, which we see already in Western European countries. And yes, this gives us confidence for a stronger Q2 even with a weak -- confidence about the stronger half year 2, even with a weaker second quarter. Daniel, anything to add from your side at this point or?

No, no. I think you explained it quite well so far and was already in your presentation. And yes, that's basically it.

Maybe one more question, if I may. If I look at the Power X-Change revenues, which I don't know exactly, but I calculate with your percentage of sales data that you give us, you can also see that Q2 was down versus -- the growth rate was down versus Q1 quite significantly despite like the general success of Power X-Change. Can you basically also elaborate on the seasonality perspective in H2, do you expect Power X-Change to also accelerate again?

Sure. This is expected, and I do not see so weak, so extraordinary weak Power X-Change sales in the first half of the year as we see some special assortments like Power X-Change cleaning with strong growth rates. We see also the whole category of Power X-Change tools and also batteries and chargers very positively. We have also launched some new products here, which are very successful, like the cooling box, which gives us EUR 1 million sales revenue contribution, which we didn't expect. So apart from the classical seasonal tools where we suffered a bit like from lawnmowers, we have additional product new launches to support the trend. And yes, you know the general slide we have on the Power X-Change development, and this continues to grow, and we are on the way here to realize, again, as part of our strategy, the Power X-Change growth for the total year.

And maybe to add on, to maybe also to strengthen that a bit and to understand it better. That's what I also said a bit in my introduction. So we come from being a classical manufacturer of garden and power tools, but our battery platform, our lifestyle power platform, Power X-Change is much more broader at the moment, and we are extending and extending and it's definitely the driver for the future. So we are really the pioneer in this sector. And we are coming from, as I said, garden and power tools more to in total 5-product -- focused product categories that's like Michael already mentioned cleaning, very important. So all around household stick works, vacuum cleaners, window cleaners and so on, but also watering pumps and this leisure sector like this outdoor trend, Michael already mentioned the cooling box, but there are ventilators, there are coffee machines and so on. So there are a lot of tools that are not actually original traditional tools, power tools or garden tools. So we are broadening the battery platform, and that's the complete driver for the future. So definitely, this will accelerate definitely every year.

Okay. I have 2 more, if I may, and then I go back into the queue. The first one is on the gross margin or, let's say, the material expense. So material expense was much less in terms of revenues by 3 percentage points in Q2. I mean that's super strong, excellent performance. Why is that? Is that a mix effect? Or is it more like a pricing power effect that you're able to push higher prices into the market?

It's a mixture. I think even more or the more dominating effect is the product and sales portfolio. So the switch from Power X-Change from corded items growing less and less significant and more dominating professional assortment. So this is the dominating effect on the gross margin. We are happy with this, but it's also difficult to make this towards customers. That's a challenge. And on the other hand, for sure, we have this effect on the like raw materials, sea freight, FX, it's a challenge to maintain the margin. But with the portfolio, we had a good development in the last years and quarters. And yes, it's the challenge for the sales team to maintain this level.

Okay. And the last one is an easy one. What's the number of employees that you expect to employ at the end of the year?

Number of employees expected at the end of the year. So I think we now have the numbers, 2,682 as -- 2,647 as communicated. We are cautious about hiring new employees for sure, we only add employees in areas which make strategically sense. So growth will be small in this number. And we plan only small increases for the next year.

And we move on to the next participant who has raised his hand. [ Mr. Afke Yotam ], that is not a clear audio signal that you have got very unfortunately. Please try again, and we move on to a question which reached us in our chat. I'll read it out for you. How has advertising and marketing costs developed in the first half 2026 of the year compared with the previous year? Could you provide some specific figures?

Yes, marketing and advertising is completely in line with our budget, basically. That's a very, very strict one, very detailed one we give us for the group and also for the single subsidiaries. There are certain initiatives like the biggest part, TV commercials, advertising TV. For sure, we have our sponsorships, which we deliver 360 degree. We cannot provide here specific figures in this area, but I can assure you it's very controlled. It's a very strict budget. And from our side, it's completely in line with our strategic planning. Maybe, Daniel, you could add some words because it's your specific area, if you have to -- can add something.

I think nothing really to add. As you mentioned, I think we are completely aligned with the budget. There's not a significant increase of budget in comparison, I think, to last year. So as you mentioned, we are really trying to get most and maximum out of our budget within our partnerships, main communication driver with FC Bayern Munich and the Mercedes-AMG PETRONAS Formula One Team. And as you said, it depends on the market, but in best case, 360-degree campaigns in all countries. But of course, it depends on the local circumstances. But budget-wise, as you said, quite strict and controlled and everything aligned with the budget.

I think we should add that in our marketing costs, not only the cost, for example, for Mercedes and FC Bayern included a very big part of these costs are the advertising contributions, which we give to our customers directly, for example, campaigns, leaflets and so.

And I'll move to a participant who was not able to unmute himself, [ Mr. Afke Yotam ], and he has written some questions in our chat box. I'll read it out because we have some participants on the telephone line. After revenue growth slowed since 2025 Q2, what rate of revenue growth do you believe is achievable over the next few years? And how would you split that growth between market growth, market share gains, new geographies and new products?

Yes. So we have defined mid- or long-term goals to realize EUR 2 billion of sales basically. So the timing is a challenge to achieve this value. But nevertheless, we are very aware or we take this challenge to achieve this and specific plans for subsidiaries and markets, which we do not publish in detail, but these are supported quite good by numbers of the markets and the sales subsidiaries working in these markets. So for next year and the years following, I expect largely depending, as explained on customer sentiment and consumer purchasing power in Germany, but also in other Western European markets remaining stable or maybe in Germany, even returning to significant growth. So we expect a growth of around 5%, between 5% and 10% that should be our long-term goal, supported both organically by the assortment and also by M&A projects. I think we will talk about this. I also saw them in the questions following. And yes, that's the combination of the sales growth the following years.

Okay. And there are 2 questions, one from [ Mr. Yotam one from Mr. Klapdor ] concerning the entering of the U.S. market. You have discussed entering the U.S. market on and off for several years. What have been the main obstacles that have prevented you from entering so far? And what would need to change for you to make a serious entry?

Yes. So the main obstacle actually for the last years before entering the U.S. market is and was basically finding the right partner with whom we can set up this market and where we have the best strategic fit. And now we -- as already mentioned during our Annual General Meeting at the beginning of July by Andreas Kroiss, we are now in specific talks with the company. So it's an M&A process. We cannot publish anything specific or more details on the progress here. But yes, the information is on the market. We are in serious talks with a company in the U.S., a garden importer, which we know for long now and which has made a good development. And now we are very serious about that's the right decision to enter the market. And nothing new to tell here from the last update at the beginning of July. So we're in the process and -- but we are very, very happy with the process. And yes, let's see what the following months will bring.

And from [ Mr. Yotam ] there was one question concerning the overall political situation. What is the direct and indirect impact of the wars in Iran and Ukraine on Einhell's business, for example, through demand, supply chains, energy costs or consumer sentiments?

The impact is more or less indirect of the Iran war or the Hormuz Strait blockade. It's no main supply chain route for us. It's even more is the consumer sentiment and the increasing prices for fuels and gas. This is the indirect effect on the economy in Germany actually, on the Western European economy, it's an indirect effect. In Ukraine, we are present in Ukraine with the sales subsidiary, which makes under these conditions, a good development. But nevertheless, these things weigh for sure on the customer demand all over Europe or the world. It's an indirect one.

Okay. Thank you very much. And there is a state of, [ Mr. Yotam ], Einhell was an early pioneer of the cordless tool space. Do you still believe you have a meaningful technological and competitive lead in cordless or have competitors largely caught up? And this concerning another question of [ Mr. Reed ]. Do you know that percentage of the end market in the DACH region is battery tools versus corded and petrol? And do you think the market will ever become a 100% battery-powered tools?

I can take this one. No problem. Yes, definitely, we do. We really proudly and confidently can say that we definitely are a pioneer in this sector, and we still are, of course, because we proudly can say that we really, in comparison to our competitors, have a real battery platform. That's not true for all the competitors. We know that they are communicating that. But if you have a closer look in detail, it's not always the case because then they change sometimes for bigger tools to a bigger battery or to a different charger and so on. We always operate with only one battery for all the tools. So if we need more power, we put in 2 batteries from the same type, and it works up until 3 or 4 batteries for really bigger tools already. And the thing is our battery technology is completely done, invent and developed in-house. So our CTO, Dr. Markus Thannhuber, the son of our founder, is our brain, so to say, our technical brain behind the battery platform. So we are very, very, very good at that and also very fast in developing. So just to name a few things we throw into the market as the first ones in the sector like our -- you can see it here on the screen with the blue stripes. This is our latest technology from last year, the SEALED battery. So they are water and dustproof. And we have now also our COMPACT SERIES in terms of tools. We will soon get the tabless battery. So we are really state-of-the-art in this sector, and we are developing that further and further, and we are very confident because we also see that we are very -- we come out among tests very well, always like a test winner in this area, and we are investing a lot in that. And that's why we definitely can say that we still are a pioneer and we are still developing that further and always setting the benchmarks even further. So that's the first one. And for sure, we see in terms of the question to the market situation that cordless is getting more and more important. And that's what we are benefiting the last couple of years and also in the future because we were the first who saw this trend, and it continues. Definitely. You can see it that in almost all product categories, it's moving more from the petrol and cable-driven tools more to the corded tools. Of course, we cannot name specific numbers, but there's definitely the trend for several years now already, and it's for sure holding on in the future.

Okay. And we have one more question from [ Mr. Klapdor. ] The other operating expenses in the first half of 2026 rose to EUR 125.7 million versus EUR 115.2 million. Therefore, we are around EUR 10.5 million higher than in the first half of 2025. Could you please specify the items with the largest increase in costs?

Yes. So I can specify the most important shares in this other operating expenses and what it consists of. On the one hand, here, we have costs for external warehousing, which is a significant part for us. We have here the costs for freight out costs, so from our warehouse to the customers' warehouse. We have here also the expense for the advertising and brand building costs, as explained before. And this -- apart from all the other smaller cost categories, these are the main topics here. So we see, for sure, general inflation in the topics of freight out costs. We see cost increases for the warehouses. So we are monitoring this very closely and our supply chain team also takes actions to reduce this, so to switch from external warehousing to own warehouses where it makes sense. So we have a leverage here to lower this cost at this end. Yes, we were talking about advertising costs in this section already in the Q&A section. So we are here in budget. That's an investment to the brand and also to the customers. As Helmut mentioned before, it's not only about brand building, but also about investing in leaflets and commercial at customers, so all in combination here. So this is how this other expenses combine actually.

Thank you. And there is [ Mr. Zuzak ] here with a follow-up question on the telephone line.

Can you hear me? Great. I have a question again regarding your gross profit margin or the material cost. If I compare your very strong margin to the margins of some of your competitors like TTI, Makita, CHERVON, then I can see that this is actually quite a strong margin, the 43% compared to the others who are between, let's say, 31% and 41%. It's not one-to-one comparable. I know because of its COGS versus material expense. But as you don't have production, it's probably not that far away from each other. And you were able to expand this margin in the last 10 years from 32% to 43% now, almost 44%. My understanding is that this is mostly due to the mix effect with Power X-Change. And you don't disclose the margin from Power X-Change and the rest, right? I understand that. But from your perspective, will this expansion of the gross profit margin due to the mix, will this continue going forward if you achieve your target with the 70% Power X-Change portion of sales?