Jenoptik AG (JEN) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen and a warm welcome to the Jenoptik conference call regarding the financial results 2024. [Operator Instructions] Let me now turn the floor over to your host, Dr. Stefan Traeger.

Yes. Thank you very much and very good morning from our end here in Jena. With me today as always is our CFO, Prisca Havranek-Kosicek and we're looking forward to discussing with you 2024 and giving a first sort of glimpse into what we expect for 2025. 2024, I'd say, has been characterized for Jenoptik by really a quite robust growth in revenue and earnings. We're fairly proud of the fact that we could grow the business once more, this time, single-digit sales growth is what we post. And probably even more importantly, we again expanded our profit margins to now an EBITDA of almost 20% of sales or just a tad below the 20% mark. But I'd say it's almost 20% of sales and we're really, really proud of that. On the other hand, of course, we have to report declining order intake. Order intake declined also by mid-single digit and that's predominantly in our -- in the former, I have to say, in the former NPC segment, basically driven by the turmoil in the automotive market and we'll get to that in more detail later in the presentation. Generally, I think it's fair to say that the market environment really has been -- has become much more difficult in recent months. Geopolitical tensions are rising and the discussions around tariffs that we see in certain parts of the world really doesn't help us and help, I believe, the whole economy and certainly not us as an export-oriented organization and we have to deal with that going forward. I think we're a strong business that can deal with that but it does have consequences, of course, for all of us. Internally, I think it's great to report that our further development of our organizational setup is shaping up. We have now set up the business such that our business units really do reflect the 4 markets we serve, the semiconductor manufacturing, health care and life sciences, Metrology & Production Solutions and our Smart Mobility Solutions, our traffic business. Those are basically the 4 markets in broad terms that we do serve and we have aligned our organization along that. For today, we're, for the last time, presenting figures and numbers and the whole setup of APS, SMS, and NPC. We do have in the presentation included a realignment to help you understand our business in the new segments going forward. And of course, next earnings call then when we do our Q1 earnings call, we will report in our new segments. Let me -- before I turn the floor over to Prisca and the mic over, let me just reiterate that we believe our long-term growth perspectives remain intact really. We have all the ingredients for continued growth despite the fact that for 2025, we're a bit more cautious and we'll come to the outlook for this year later in the presentation. We're a bit more cautious, maybe a bit on sort of the careful side here because there's so much uncertainty that it is really difficult to judge how the next weeks and months will unfold, let alone have a very clear picture of 2025 at this point already. That is why we are, later in the presentation, are sharing with you a fairly broad guidance and that again is due to this uncertainty this year. By and large, though and in the long run, we all are very convinced that the growth perspectives and the business model of Jenoptik is absolutely intact. We remain to be a growth engine and we're very committed to demonstrate that in the mid to long term. That said, let me turn the mic over to you, Prisca.

Thank you, Stefan and good morning to all of you on the call. I would like to now cover our performance for the fiscal year 2024 in greater detail, as always, starting with order intake and order backlog on Page 6. So overall, in 2024, we have seen quite some volatility on order intake. Following very positive dynamics in the second quarter, we saw a greater level of overall market uncertainty, as Stefan has just mentioned, impacting order activity in the third but also in the fourth quarter. As a consequence, full year order intake came in at EUR 1.03 billion, down by some 6% year-over-year and with the main divisional trends being as follows. Demand from the semi equipment end market has been largely stable on a full year basis but was down year-over-year in Q4 broadly as we expected. Demand trends in our life science and medical business remains essentially unchanged compared to Q3, meaning subdued activity in our laser-based applications has continued. In fact, as Stefan mentioned before, our overall auto intake drag in the development in 2024 came from our NPCs, impacted by certain structural issues in both the German and the North American automotive industry as well as the recent discussions about import tariffs in the U.S. As a result, our book-to-bill ratio on group level has reduced to 0.92 -- sorry, to 0.92. As a consequence, our order backlog has reduced by about 10% year-over-year and we anticipate to convert approximately 80% of this backlog into revenue in this year 2025. Now moving to Page 7 for revenue and EBITDA. Now turning -- first of all, I think the execution in 2024 continued to be strong, as Stefan said before, considering notable growth in both revenues and earnings. Looking at the left graph, you can see that top line development remains robust and in line with the guidance we provided at the beginning of last year. Revenue was up by around 5% without any effects from portfolio changes in 2024. So this growth was purely organic. The main growth drivers in this period were once again our Advanced Photonic Solutions division as well as our NPC segment. Moving on to profitability on the right side of the slide. As you can see, our EBITDA was up a little ahead of our revenue growth. Thus, we realized further improvements in our margins. Stefan just mentioned it before. Again, it's important, in line with our expectations set out at the beginning of the year. As you know, we were anticipating some onetime costs relating to the move to our factory in Dresden of approximately 50 basis points. We've actually recognized about half of that in Q4 '24 and we expect the other half to occur in Q1 2025. From a divisional perspective, the main contributor in absolute terms was the APS division but also the Non-Photonic Portfolio Companies posted notably higher earnings. Moving on to Page 8. From a regional perspective, we saw strong growth in Germany in fiscal year 2024 and in our largest region, Europe, both up by around 17% and 5%, respectively. In Europe, including Germany, the APS segment was the main growth driver. In the Americas, we saw a positive development in the APS division as well as NPC, whereas the go-to-market transition of our SMS business still had a negative impact on top line. Most importantly, business with our top 7 customers continued to develop positively. These customers now account for approximately 48% of our total group revenues. And we regard this as a development of the proof of our successful strategy of growing the share of wallet with our top customers. Now moving on to Page 9. Here, I would like to give you a little bit more color on the drivers behind the evolution of our margins. In 2024, we saw gross margin approximately 150 -- 140 bps down year-over-year, which from a line item perspective was primarily influenced by higher depreciation and provision releases in the prior year. On the functional cost side, we continue to be very disciplined on spending. And despite some general labor cost inflation impact and our continuous investments into R&D, our functional costs were growing at a lower rate than revenue. Our other operating results improved year-over-year, primarily as we have recognized an impairment charge in the prior year relating to HOMMEL in the magnitude of EUR 12.7 million, as you know, we reported last year. In addition, we recognized lower FX losses in this year compared to the same period of last year. Now moving on to the EBIT line. You see a marked increase in both in absolute terms as well as margin-wise. Further down the line, our financial result was at minus EUR 16.2 million compared to minus EUR 15 million in the prior year, primarily due to net negative impact from exchange rates. Finally, our earnings per share reached EUR 1.62, up by almost 28% year-on-year and our ROCE improved notably 120 basis points to 10.8%. So overall, as mentioned before, strong execution in 2024 with a very solid set of revenue and earnings. Now turning to Page 10, looking at cash flow and balance sheet data. Starting with cash flow. As you can see, operating cash flow pretax was approximately at prior year levels, influenced by somewhat higher working capital and some moves regarding cash tax balances and others. Overall, our net working capital intensity remains unchanged year-over-year. Moving on to CapEx. We have continued to invest into our capacities as communicated before, with our new semi fab in Dresden being our most important project. As indicated in our last calls, we were expecting some catch-up of our cash CapEx in the second half and this is what you see now here at year-end. So overall, investing cash flow now up year-on-year, in line with our expectations. Please note that the prior year cash CapEx figure included some inflows relating to the sale of real estate assets of the Non-Photonic Portfolio Companies. Finally, our net debt position has somewhat improved despite our investment program. Our leverage was at 1.8x compared to 2x a year earlier. So overall, we believe our financial position and balance sheet remains very strong. And with this, let me turn back to Stefan to cover our divisions and our outlook.

Yes. Thank you, Prisca and if you'd follow me to Page #12, we'll start with the Advanced Photonic Solutions division. Admittedly, a bit of a mixed bag of our businesses and again, that is why we are going to report our business in the new structure going forward, providing more clarity. For now though, for 2024, it is still the Advanced Photonic Solutions business. And as Prisca already alluded to, in particular, the semicon order intake has been seeing a somewhat downward trend, in particular, in the second half and in Q4. Year-over-year, order intake is flat for the entire integrated -- across the entire division. And semi has been good year-over-year but the downward trend that we saw -- the decline that we saw in H2 and in particular in Q4 is worth mentioning because that basically caused us to push out our strategic targets to 2026 at the end of last year. We do expect that to carry over, in particular, into H1 2025 before we see -- expect to see ramp-up in order intake in H2 2025. So the decline in order intake in the semi part of our advanced solutions business that we have seen at the end of last year, we expect to also see at the beginning of this year. And in particular, in Q1, we expect a combination of certain inventory corrections and potential onetime effects which are going to, as far as we can tell thus far, are going to continue pressure on autos, in particular in the semi front. Overall, in 2024, again, order intake for the Advanced Photonic Solutions has been flat. Nevertheless, revenues have been growing, once again by 5.6% to now EUR 866.8 million for the whole of the division. And as a result of that, profitability is again up to an EBITDA level of now almost EUR 192 million and that does indicate strong business in our core APS division. If we turn the page over to the Page 13, the next page, Smart Mobility Solutions. Here, we have seen a nice growth in order intake, in particular, driven, of course, by our investments into the sales force in North America. We've discussed that throughout the last year in greater detail. We have changed our setup in North America in terms of how we go to market, in particular in the U.S. And we see more than just green sprouts here coming up. We do see first successes in order intake in North America, in particular at the end of last year and that carries over into this year 2025. We foresee for Smart Mobility Solutions a nice development in 2025 as much as we can tell thus far, in particular with, as I said earlier, the investment into the sales force in North America starting to pay off in terms of order intake. And second effect that we talked about as well as the whole of last year, an inflated R&D invest in this division, which is going to come to an end throughout the course of this year and that will release some additional margins. You can see on the page that the EBITDA margins have been suppressed. We have seen a slowdown, a marginal decline in margins. We anticipate an expansion of EBITDA margins again to more normal levels in 2025 for our smart mobility division. Let me, with that said, go to NPC. NPC, as you know, will be dissolved or has been dissolved by the end of last year. HOMMEL, together with TRIOPTICS and our automation business laser processing, is now forming part of our new MPS segment, which we are going to report in -- starting now. What you can see in non -- in the NPC companies is a combination of HOMMEL and Prodomax. Prodomax, in particular, has been in quite a lot of ups and downs lately. Prodomax has developed, from a sales and in particular EBITDA perspective, very nicely in 2024. [indiscernible] is very or Prodomax is very profitable. HOMMEL also has been posting better profit levels than in the past, which results to an EBITDA margin of 17.5% for the whole of the NPC companies versus 14.1% last year. Order intake, on the other hand, has seen a sharp decline. And that is particularly due to our business in Canada. Prodomax is suffering from the geopolitical tensions, in particular, from the tensions between the United States of America and Canada lately. The whole debate about tariffs really doesn't help a lot in terms of business development for, in particular, the automotive industry. There's so much uncertainty in that -- the broader Detroit-Toronto area at the moment. That order intake is very challenging for Prodomax, has been at the end of last year and continues to be this year. Nevertheless, if you look back into 2024, despite the fact of a sharp decline in order intake, revenues have been growing 4% for the combination of HOMMEL and Prodomax. And as I pointed out earlier, EBITDA has seen a significant improvement in 2024, despite, as I said earlier, the sharp decline in order intake. And I'll point that out once again because I'm fully anticipating questions around Prodomax in the Q&A session. Again, the whole debate about tariffs between United States and Canada doesn't really help in the business and in any particular process here. Nevertheless, what's -- we'll quickly go to Page 16. And here, we do show you our new reporting structure. I think you should be all aware of that by now. Going forward, we are going to report our business in the 4 divisions aligned with the 4 markets we are catering to. We're going to report in Semiconductor & Advanced Manufacturing, in Biophotonics, in Metrology & Production Solutions and in Smart Mobility Solutions, mirroring the markets we serve in terms of semiconductor, in terms of health care and life sciences, in terms of metrology and traffic and mobility solutions. We do believe that, that creates a better customer focus internally. So from a managerial perspective, quite frankly, that's helpful for us as sort of the leadership of the company here. We have a bit even more sort of focus within the organization. And we do hope and believe that for you, our investors, that also creates more clarity and it's helpful to better understand Jenoptik going forward. On Page 17, we have just prepared for you once again how that setup comes together but I think that's fairly clear by now. So APS, the former Advanced Photonic Solutions basically gets split in the 3 divisions along our markets, our business units, along our markets, semiconductor, Biophotonics and Metrology & Production Solutions. And from the former NPC segment, the HOMMEL piece goes also into the Metrology & Production Solutions and smart mobility basically stays as it is. And Prodomax gets reported separately under the group functions. Now what do we expect for 2025? Well, as I said at the beginning of the call, currently, 2025 is really a challenge. In terms of predictability, there's a lot of uncertainty in the marketplace. And of course, that makes it somewhat challenging to come up with a precise guidance at this point. We have always said that we see 2025 a bit as a transition year, basically and we stick to that. We do believe that revenues will be roughly along the line of 2024. So we see sort of a transition of 2024 into 2025, if that makes sense, within a corridor of plus/minus 5%. That's sort of the precision that we can give at this point. And we will certainly come back to you with better clarity as soon as we have more clarity. Of course, with such a fairly broad corridor on the sales line, a fairly broad corridor also on the margin line is sort of linked to that. We do believe that depending on our sales volumes, we will see EBITDA margins between 18% and 21%, essentially, as I said earlier, in line with 2024, depending on where we end in terms of volumes. Capital expenditures, I think, should be significantly lower than in 2024. We have spent a lot last year. And we see that declining to a more sort of normalizing to a more normal level in 2024. And yes, that's, I guess, what we expect when it comes to CapEx. And with that said, we'll park here and look forward to any questions, to a lot of questions you probably do have. Thank you very much. Before we break for questions, please do have a look into the appendix where you'll find detailed information about our new segments and how the business would be reported basically as if they would be in the new segments. Have a look into that. Hopefully, that helps you to build your models going forward. Thank you.

[Operator Instructions] So the first question is from Craig Abbott of Kepler Cheuvreux. So over to you, Craig.

Actually just got a quick -- couple of quick technical one. Looking at the quarterly figures you gave us for the new divisional structure. Thank you for that, first of all. Secondly though, the EBITDA margin in Q4 in semi and advanced manufacturing was considered lower than the other quarters, I realize business was already tailing off a little bit. And I realize you probably had a couple of million related to the moving costs, which you said have been split between Q4 last year and Q1 this year. But still, it looks like a pretty hefty decline. I just wonder, were there any special factors involved in that? Or -- because normally, we wouldn't see that kind of seasonal factor, I don't recall in Q4 or maybe there is. That would be really my main question there.

Yes, you pointed out the factors already, Craig. I think you're pretty much spot on. Q4 has been impacted by slower business overall from a sort of -- yes, at this point and also by the first part of the costs to -- of the move into the new factory. There is always also a mix impact if you sort of try to dissect it between the classical optic and the microstructured optics and so on and so forth. But by and large, it is due to business sort of tailing off in Q4 and the onetime effects. And just to sort of answer that potential question right up front, that's certainly also an effect that we expect for Q1 in 2025.

Yes, that was going to be my follow-up. It sounds like we should expect sort of kind like that and then we'll start with -- in Q1 and then move from there. Yes, just 2 more follow-ups from my side and then I'll turn it -- I'll get back in the queue. Just talk about -- I -- just to make sure I understood that correctly, it sounded like in the semi business that you expect like the -- you said culmination, I think, sort of like the worst of the inventory adjustments on the side of your customers, therefore impacting your order inflow most significantly in Q1. And that from there, we should see as a new order patterning sort of starting to emerge hopefully over the following quarters as your customers also hopefully start to see their end markets picking up. Did I understand that timing sequence correctly?

Yes. Q2 is a bit sort of early to sort of say in particular but in principle, exactly as you pointed out. Whether it's Q2 or Q3, we'll have to see but the inflection point. But in principle, exactly as you pointed out.

Also, may I just add 1 quick 1 on that before I move to my last question? I mean is there -- is your main customers, is there sort of -- I mean, when I look at consensus forecast for their business over the next couple of years, nothing has really dramatically changed again other than the original tone down in fall of last year. So their call-up plans, what they're indicating to you for '26, '27,whatever has not fundamentally changed, is that correct?

'26, '27, you're saying the...

Yes, yes. Longer term there, longer term it's going to be...

Yes. Yes, correct.

Okay. My last question is just -- I know you've told us in the past conference call, you don't want to give us precise answers on this. But obviously, you were very clear about how Prodomax's current operations obviously are feeling the impact of the geopolitical situation and so forth. So just conceptually, should we interpret that to suggest, look, this is probably not maybe the appropriate time to try to push ahead with the sale of Prodomax? Or anything that you can shed light on there?

I'll use my words very carefully here. The situation between the United States and Canada doesn't make it any easier at the moment. And it makes it harder to be precise and harder to predict what's going to happen in the next few weeks and months. Nobody can even tell me what's going to happen on April 2, whether or not we do get tariffs. And therefore, at this very moment, really do understand that the only thing I can say is, the uncertainty is really very high and that the sort of the -- we don't know, I think it's the real answer, as hard as it, as stupid as it sounds. But whatever I tell you, it can be completely the opposite by an hour from now. So I really don't know.

The next question is from Olivier Calvet of UBS.

Hope you can hear me. Thanks a lot for the new segment structure. I had a few questions. So first to come back on the new segments. Maybe starting out with, I guess, the acronym is SAM. So just to double check, it was mostly covered by Craig but is there any seasonality to call out in that business besides the sort of order pattern that we see this year? Second one also on biophotonics. So I can see a strong margin in H2 and especially in Q4. What's the right way to think about this piece in terms of margins? And then on MPS, very low EBITDA margin in Q1 last year. Was there anything to call out there? That would be the first bit and maybe I take the next one later.

Olivier, thank you for your questions. On semicon, yes, there's always seasonality. That is the case. You're right there. It's a typical semi pattern. Not as pronounced as it used to be in the past but still structurally there is seasonality. On the other businesses, I wouldn't read too much into quarterly figures here. I mean, in particular, in the bio business where we also have, yes, modules and components, large contracts often, it really is -- you have -- sometimes you have a quarter with higher order intake and higher revenues and sometimes, you have a lower quarter. So again, I would not read too much into the seasonality of the other businesses quarter-over-quarter. Yes, [indiscernible] stuff, I think that's what I can say. I'm not aware of any specifics. I'm looking to Prisca here but...

No, maybe following up on your question on the margin on bio. In the first half, we had, let's say, weaker margins because of the mix of project phasing and also some quality issues that have been resolved. And I would say to the opposite, we had very strong margins in the second half of the year. But as Stefan said, don't read too much into a quarter-by-quarter margin development. Maybe we also have to say that with the new disclosure, we will have some volatility in some of those segments as they are driven by projects and mix effects.

Fair enough. And in Metrology & Product Solutions, was there anything to call out in the first quarter last year? I know quarterly Q-o-Q changes but still.

Maybe on an overall stage, as Stefan has also -- as we said in our last calls, as you know, we've also done some cash cost reduction measures there because we had underutilization in the -- on the back of, let's say, the lag or the delay of the AR/VR orders that we have been expecting. And we have taken some cost out measures within the year. And you will also see impact of that, of course, in individual quarters in the margin.

Okay. Okay, that's helpful. Then the second question was just on the EBITDA margin guide. So just to clarify, I believe you said that the guidance includes some ramp-up headwinds from Dresden in Q1, at least. But how much room is there to reduce the functional cost ratio further this year to offset the possible lack of operating leverage? Is it fair to say it could be around 50 basis points, which is to me the difference between the 2024 EBITDA margin and the midpoint of your 2025 guidance?

Yes, let me maybe cover that one. I think you may have seen we have already, in 2024, being quite cautious on adding head count. We basically ended the year with flat head count compared to the end of 2023, although we grow by 5%. So we have been, throughout the year, to anticipate the challenges being very restrictive on hiring. We continue to do that. We have a very, let's say, top level process involved in order to -- for hiring right now. And we will continue to do that. Other than that, we will, of course, manage our costs as much as we can. But we also recognize that a lot of our costs are fixed and therefore, not very flexible. We do not have a lot of [ temp ] in Germany, in particular, that we can flex. So we are somewhat, let's say, constrained there. But cost measurement is a key focus area for 2025.

Okay, great. And then just 2 left, so 1 on tariffs. You mentioned in SMS, you've invested in the sales force. Could you clarify whether your expectation of single-digit growth in that segment and significantly faster EBITDA, is assuming no tariffs? And maybe if you could talk a little bit about the risk in SMS specifically?

We have not dialed into our models, for SMS, huge tariff impacts at this point. We do, do our business in North America with a U.S. entity. We have business based in the U.S. here. Of course, if there are sort of tariffs on the hardware that we ship from Europe to North America, that might have an impact. Too early to say because nobody really knows. A lot of our business in North America is what we call TSP, though, so traffic service provisions where we install traffic cameras and speed cameras and the like and then have a lot of service revenue. And again, that is North American revenue anyways. It's carried out in North America from a U.S.-based entity. That is for the United States of America. What that means from Canada, we have to see at the moment. That's still open because we currently serve Canada also from an entity from the United States. Also we have to see how Canada develops. But overall, I'd say for SMS, as far as we can tell thus far and again, I'll phrase my words very carefully because we really don't know. But from what we can tell thus far, the impact of potential tariffs, I don't think, will be that big. And it's a lot of ifs and buts in my answer here.

Okay. And then just a very small one, just to confirm, given your added disclosures on defense business. I think your predecessors sold the [indiscernible] defense business in 2014. But I just wanted to ask if you had a sense of any remaining defense exposure in the portfolio and the magnitude of that, please and perhaps in that new segment portfolio that you give us?

Yes, we do. We do have remaining defense activities, more at the optic side. Let me remind everyone that VINCORION has not been an optics business. We have sold VINCORION predominantly for strategic reasons, i.e. we wanted to focus this business more on optics and photonics. And VINCORION has been a pure electromechanics business, power generators and the like. In our optics and photonics business, we have defense activities. They are currently below 3% of total group sales.

The next question is from Martin Jungfleisch of BNP Paribas.

Yes. I have 2 questions, please. The first one is a bit of a follow-on your guidance. I mean, this year, you've given a bit of a wider range in both sales and EBITDA margin. Can you just run through the assumptions what will need to happen to reach the upper and the lower bound of this range? And do you have more visibility on the revenue contribution of your top 7 customers? And is the uncertainty more on the customers outside of top 7 or maybe vice versa? And then also, what sort of order level would you require in H1 this year to get more towards the upper end of this guidance? And you've already flagged a subdued start to the year. So maybe the higher end of the guidance is even harder to achieve now? That's the first question, please.

Yes. It's essentially, again, a combination of mix and volume. And that is, to a large extent, part of the semi discussion that we had earlier already, big contributor to mix. If there's more semi in the mix, then we have a richer margin mix basically. And then the follow-on, of course, is, as I say, volume. If we have more volume, then we have a better fixed cost coverage. But I would say it's the, it's predominantly that mix effect that we see, albeit within Jenoptik. So if semi business grows more and faster than we see currently and the orders come in earlier and the sales can be recognized earlier, then we get more to the higher end of both sales and margin and vice versa.

Maybe 1 addition from my side to the customer mix. While obviously, we cannot disclose any particular customers, I think what we can say in the semi is that our inspection business is more -- has less volatility at the moment that we see in our lithography business.

Okay, interesting. But maybe since you're flagging a subdued start already, do you still have confidence in potentially even reaching the high end of the guidance? Or is this now extremely difficult and it's more -- the midpoint is more achievable, at this stage?

Look, I mean, we do communicate a fairly broad corridor because we don't have that much visibility at the moment and the uncertainties are really high. So that's why we communicate a fairly broad corridor and we would rather stick to that.

Okay. And then a follow-up is on silicon photonics. So last week, we had the NVIDIA's GTC conference and there was a number of new photonics innovations in networks and high-performance computing announced. To what extent are you exposed to these kind of products for customers? And also what kind of R&D are you doing in this area? So is this something you could focus on more in the future?

That's a very specific question, I have to say. An interesting one. Silicon photonics is a very interesting game. We're certainly part of that. Maybe you have seen that not too long ago, we have launched new product called UFO Probe that goes into that emerging market. I'm more than -- as a physicist and as the geek here, I'm more than happy to discuss way more details about silicon photonics. But let me just say, it is an interesting area. And we are certainly part of that game. We're playing there. Just launched a product where we won some innovation award for that product and we are playing that game as well. I hope that answers the question.

Okay. But in terms of revenue contribution, you probably have, probably a fair understanding...

That's not very big at the moment. Fairly small at the moment. But I think there is a big future there potentially.

[Operator Instructions] And we are moving on to the next question from Michael Kuhn of Deutsche Bank. Over to you, Michael.

Firstly, a follow-up on Prodomax. Although I recognize it's difficult to answer, let's say with the lead time that a disposal would need, by when would we have to have clarity on a future tariff setup and, let's say, on the overall trade environment to make a deal still feasible this year? And let's say, is it still a realistic scenario from your point of view?

As you said, it's very hard to answer the question at the moment. Obviously, we are always in discussions but everybody that we talk to at the moment is pointing to the uncertainty. And therefore, to give you a precise date and precise prediction is very challenging. The -- yes, full stop. It is -- it's just almost impossible. We'll have to see. If the 2nd of April comes along and everything sort of goes smoothly, then maybe the markets become more stable and then it's easier to answer the question. But at the very moment with almost like hourly changing, are we or are we not going to get tariffs between the United States and Canada? Are there retaliatory tariffs from Canada? And it's like, yes, it's reading the tea leaves here, really it is. And therefore, I'd rather please -- say please do understand, I just cannot give you any more details because I don't know. I really don't know.

Okay, fair enough. And another one, let's say, also in the context of U.S. uncertainties, a different aspect. We've heard from other companies that there is a significant slowdown on the side of U.S. administrative bodies right now because of the, let's say, shock waves that the savings efforts are sending through those public [indiscernible] bodies. Do you experience that as well? And could it potentially slow down business of smart mobility in the U.S.?

We have not experienced a big slowdown here in terms of approvals or anything in the U.S. at this point. But that might be due to the fact that we didn't offer any particular approvals at the moment. So we haven't been exposed to that development. There is a -- that's public. There are certain large tenders currently out in North America, in particular, in the state of New York and the City of New York, where there had been a start and then stop and now start again of activities. And we're participating on that. But we haven't seen significant slowdown in governmental activities on our end. And again, that might be just simply due to the fact that we're not exposed to that. Again, smart mobility, in particular, as you pointed out, is the area that could be affected. And yes, as I said, we are participating in this 1 large tender that we talked about and we have to see where -- what that means. It still seems to be going on as far as we can tell from our end here.

That sounds good. And then one more on CapEx. You talked about the significant reduction this year, which is not a surprise. Could you roughly quantify that reduction and maybe also give us a hint on what you expect for annual CapEx for the next 3 or 4 years?

I think we said below this year, right, or last year.

Yes. I think we -- as I said before, our aim is to get close to our maintenance CapEx, which we estimate at 5% to 6% for the company step by step. Now there will always be some growth CapEx, for example, in the semiconductor as we anticipate the long-term picture to be intact and robust and growing. And for this year, significant -- we had a 3 -- roughly EUR 100 million, I would say, double-digit would definitely be what I would expect. But I cannot quantify this -- specify this any further. Bear in mind that there will be -- there are some investments, particularly in Q1 spilling over for the Dresden fab, I would say, in the first half of the year into this year. So that is an impact. But overall, we are committed to reducing our CapEx this year.

Next question is from Malte Schaumann from Warburg Research.

First question is also on Prodomax. I mean, orders have been developing quite [indiscernible] throughout the year '24 and that division probably. So what's your take on -- I mean, it developed already a week before the tariff discussion came up. So what's your take on -- are you losing orders to competition? Are customers pushing out the projects month-by-month, quarter-by-quarter? Or are these projects pushed out by longer term? Are we talking years here before -- so what's your view on the pipeline? I mean, once we get some visibility on the tariff situation, do you then expect orders to recover quite quickly? Or how do you assess the order situation at Prodomax?

Yes. Thanks, Malte. To the first part of the question, I think I have to, if I may, correct you to some extent, the discussions about tariffs have been raised by the now President of the United States of America during his campaign already. And so therefore, the uncertainty has been with the business since a longer time frame, essentially since the -- almost like the start of the campaign of the now President of the United States. And since then, we have this situation, not just since the inauguration of the President but since -- even before the election, to be honest, even before the election. Do we expect that to unlock? I think that's the best way of saying it. Well, hopefully, because what we still see is a fairly large funnel. There is still an order funnel there. Maybe not as big as it used to be but still fairly large but no movement in the funnel. I think that's the way to discuss it. It seems as if there is no movement in the funnel, which does also indicate that others haven't won anything either. I don't think we've lost a lot of business. It's just that nothing moves at the moment because nobody knows what to expect, I guess.

Okay, okay. So there could be plans once clarity is there then, that some projects move forward but, yes, difficult to say...

Yes, I would think so. I would think so because you would think that at some point that funnel has to move again, to become liquid again. Now of course, there is also the whole situation, which is going on since quite a while with the -- the EVs versus ICE business, the internal combustion engines versus electromobility. In Detroit, there has been a lot of investment into electromobility and that's now postponed and all the rest of it. But I would think that at some point, if the markets calm down again and the projects need to move forward.

Okay. And how do you deal with that situation at Prodomax? I mean, order backlog has probably declined quite significantly at year-end. So I'm not so sure how much of the planned revenue or revenues are likely to decline quite substantially this year. So any chance for cost savings or...

Yes, I think -- but specifics of Prodomax is almost a bit too early to tell because up until the end of 2024, we have been producing as much as we possibly can. And it's been very, very successful. Good sales growth, good margin expansion and so on and so forth. Now at some point, we are going to run out of work in Canada if the situation with the autos doesn't change. And then we have to obviously adjust our cost base there and see what other support we can get maybe from the government in Ontario. There are signals that the government would maybe support. But that's, I think, way too early to tell. At the moment, the situation is so uncertain that I would anticipate if then auto situation doesn't change, then we have to adjust the cost base.

Yes. Okay, I think that's fair enough. And then I was hoping to get more granularity in the, let me say, old segment APS. I mean, if you transfer that to the new segments, then semiconductor business is probably troughing in the first quarter of this year. Maybe you can confirm that? And then are you expecting growth in biophotonics and life science? So what are the better areas you see probably developing somewhat better or more positively here? And then maybe then thirdly on what is now in the manufacturing area, TRIOPTICS, how do you assess the situation? I mean, we have talked a couple of times about AR/VR. What's your current take on the environment for TRIOPTICS?

Yes. Let's start with AR/VR. I think AR/VR, from what we can tell, is still there. It's not gone but it's later than originally anticipated. We have seen activities by all the big clients in those goggles and the like. But the big commercialization, in particular on the consumer front is, I would say, later than originally anticipated. I don't think that's going to happen this year. What we do see at development for TRIOPTICS is still a stable business in the traditional TRIOPTICS application segments. So I think it's -- it will be -- we don't see a lot -- a big decline in TRIOPTICS or anything like that. It's a stable business but the big growth factor with AR/VR is hopefully going to come later. And I'm still confident that it will. I mean, even if you talk about the industrial metaverse and things like that, it is still in discussion and people are investing into that. But the uptick on the consumer mass production level is now probably later than originally anticipated. When it comes to the other part of the business, in particular biophotonics, there, we do see nice growth patterns this year. There are certain applications in the medical and in industrial areas where we believe that we will see nice growth in 2025. And I think that was the question, wasn't it? Did I miss a part?

Yes. Maybe more -- can you -- the growing area in medical -- biophotonics applications, are these new projects, new customers? Or is this just growth in existing applications?

I would say existing product or existing customers, existing applications. And let me point out again in 2 parts, in life science and health care. And what we call industry, there is -- part of that is classic and industrial applications and part of that is more defense-related activities.

Okay. Okay, good. And finally, a quick one on silicon photonics. What's your take on the potential time frame once that kind of application might become relevant for you guys?

Why is everybody talking about silicon photonics all of a sudden? Anything happened that we missed? Well, I guess I can only say it's an interesting application. We're participating in that. But I am not aware of any particular development. Maybe I missed something. Has there been any sort of particular development in that area lately? I'm not aware of anything. We're very excited about it. We always have been -- as I said, we launched a product and -- but it's not a triple-digit million business for us at this point.

The next question is from Peter Rothenaicher of Baader Bank.

I have an additional question on the Prodomax issue because in your guidance, you had for the business unit, Metrology & Production Solutions, the expectation of stable sales and EBITDA, which would be really a positive surprise for me, given all these problems at Prodomax. What makes you here so relatively confident?

Prodomax is not part of MPS. I think that's what makes us confident. Prodomax, maybe if you can look at the page, it's in the appendix, some place. You can see that MPS, the Metrology & Production Solutions business comprises TRIOPTICS, our laser processing business and HOMMEL. As HOMMEL goes into MPS or Metrology & Production Solutions and Prodomax will be stand-alone reported as [indiscernible] function. It's on Page 17 of the presentation deck. Otherwise, I would have understood your question. Now that's really is the rationale here.

Okay. So you did not provide then a guidance for Prodomax, so is it correct?

No, we did not.

Okay, yes, that makes sense. Then the second point, more housekeeping area. So financial result was, last year, much worse. What is your expectation here for the current year? To what extent are you able to bring down financial expenses?

So I'll take that question. Of course, we are repaying our debt as we -- particularly the debenture bonds as we see fit. So with our, let's say, with that and the lower leverage that you've seen, that is an impact. Overall, I would take the -- it's always hard to predict FX movement so I would take this year broadly, so '24 broadly, maybe will be a tad better but only a tad as a proxy for your assumption for this year. That won't be moving much in this time.

And perhaps 1 point, could you give us any information what the PPA charges in 2024 were? So I had not the opportunity to look through the annual report in detail, but PPA, how much was it?

Top of my head, I think it was around EUR 20 million but we will confirm that with Investor Relations.

The next question is from Lasse Stueben of Berenberg.

Just 1 follow-up on the new Biophotonics division. Just going back a bit, I think I remember when you acquired the businesses from Berliner Glas, I think it was 2021. I think those businesses, at the time, you said were generating a healthy margin, which I took to me in, rough, I don't know, high teens, mid-teens. I think in '24, the EBITDA margin was around 13% for this new division, let's say. Would you say that this is kind of the run rate you're expecting? I understand there's mix effects going on with some areas doing better than others. But in a steady state, what do you expect that division to make? And what's, I guess, changed since 2021?

Yes. First of all -- thanks, Lasse. First of all, let me point out that we acquired a combination of Berliner Glas and SwissOptic. And SwissOptic is part of our semi business now. So let's be -- just to be precise. But you are right, the margins in the health care and life science business have been higher in the past. There are certain effects in there from the industry business and the laser business that are mixed into it or tucked under it, if you want. The laser business that we discussed and where we have margin issues, shall we say, is in that -- in the mix of that business unit, pulling down margins for the unit. That makes sense, I think.

Maybe let me add to that. If you keep in mind, this is a revenue of around [ EUR 220 million ] now, right, in this thing. So this -- the dental business is part of it but of course, not all of it. And as we have also pointed out over the last calls and in our -- on our road shows, I think we have to improve the portfolio, the product portfolio in this area overall. That will not grow overnight but we are definitely working on that. And with that, I would expect also some expansion of the margin over time.

And we did do restructuring in that business already in 2024. There has been a restructuring in one of the factories of this business in 2024.

And next, a follow-up from Craig Abbott, Kepler Cheuvreux.

Two follow-ups, please, from my side. The one is, now that you've undergone the reshuffling of your divisional structures. And for instance, you've had TRIOPTICS shifting over to MPS, I just wonder if you could give us a feel for how much headroom you still have in terms of on your goodwill positions on some of these acquisitions you've done in recent years. And I'm thinking, in particular, obviously, about TRIOPTICS. I mean, if you still feel real comfortable with the headwind you have there because obviously it's now been carved out of the APS cash-generating unit. That would be the first question. And I have a quick follow-up on the medical business.

Yes, Craig. And of course, I'll take that question. So yes, we have sufficient headroom. Of course, we tested our headroom in the old structure. We also took a look at the new structure. And in all of that, we have sufficient headroom for all this, for the old segments but also for the new -- the reporting structure. So there are no concerns from our side on that one.

No concerns, okay. Yes. And the second follow-up, please, is on -- getting back to the medical business. I just wondered and I know you wouldn't be able to tell the specifics before something might be launched or anything like that. But I know the -- you've had a lot of success with the optics components you supply for the 3D oral scanners. I just wondered if you have any other OEM customers that would also be -- that you will be supplying for this type of application with that we might start seeing pull through the P&L in the next couple of years? Or any other new apps there that we should be -- can and should be aware of at this stage to give us a little bit of a better feel about the growth dynamics there over the next couple of years?

Not with this particular application, Craig. And let me remind you that our strategy overall is to try to work with industry-leading customers in the individual segments, which does indicate that most of the time, not always but most of the time, in a particular segment, we have a particular customer. And whether that's DNA sequencing or live cell imaging or indeed the dental application, we typically work together with what we believe are the market leaders in these segments. And of course, that comes with the fact that we sort of depend on their success but we enable their success, whichever way you look at it. We are working on other segments. We're not particularly -- that are not particularly contributing to sales at this point in time, particularly like robotic-adjusted (sic)[ robotic-assisted ] surgery and other ophthalmological applications. But we'd rather communicate that if and when we can communicate sort of marketing, I should say, or commercialization rather than just R&D efforts. But particularly with robotic-assisted surgery and other applications like that, we are always trying to get into new and interesting applications and work together with, as I said earlier, the industry -- the market leaders in those particular application segments.

As there are no more questions in the queue, I'm handing the floor back over to the hosts.

Okay. Well, thank you very much for all your questions. Great to see the interest in our business. Again, I would say that 2024 has been, in many ways, another record-breaking year for us when it comes to sales and profitability. We're proud of what the organization has been achieved in 2024. Now we're looking into 2025. And we all have discussed the uncertainties that we see, not just us but the whole market -- the whole industry, the whole economy really, given all the geopolitical tensions and problems and issues that we see. There are ups and downs. There are highlights and lowlights. There are uncertainties. But just for the matter, I think is, the business, Jenoptik that has a strong technology background, a good set of people and we're well prepared, I think, to manage through the uncertainties that we see at the moment and to continue our growth pattern into the future. I'm very convinced that Jenoptik has even more potential for growth and margin expansion next year and the year after. Thank you very much for you being with us today and we're looking forward to discussing with all of you on our road shows and individual meetings, the development in the next days and weeks. Thank you very much.