Kendrion N.V. (KENDR) Earnings Call Transcript & Summary

Good morning and good afternoon, and welcome to Kendrion's Capital Markets Day. Today, we will explain how Kendrion had transformed in a focused industrial motion and control specialist, why we have chosen the 4 specific secular growth markets, how Industrial Brakes and Industrial Actuators & Controls are positioned to benefit and how this translates into our financial ambition. The common threat is simple. Our customers need motion that is safe, precise and reliable and they needed markets where the demand for high-performance components is growing. Our strategy is to make full use of that opportunity, and we are keen to tell you the story. We will begin with an overview of Kendrion today and the strategic choices we have made. We will then discuss the market tailwinds and growth opportunities behind the 4 market segments of choice, Robotics & Automation, Healthcare & MedTech, Energy & Transmission Infrastructure and Integrated Industrial Safety Systems. Olaf and Robert will take you through Industrial Brakes and Industrial Actuators & Controls. They will discuss our products and the underlying technology and how this has translated into significant underlying -- sorry, significant customer traction. And finally, Arun will cover ESG and our financial targets for '27 to '30. Of course, we finish with Q&A. Before we begin, let me briefly introduce today's presenters. I'm Joep van Beurden, Chief Executive in my 11th year at Kendrion and we have Jeroen Hemmen in his 8 years as our Chief Financial Officer, and his 22nd year with the group. Olaf Detlef leads Industrial Brakes, Olaf has been Managing Director of Industrial Brakes since January '25, following senior roles, including President of [indiscernible] and of Kendrion U.S. and [indiscernible] China. Robert Lewin leads Industrial Actuators & Controls. He has been Managing Director of IAC since January 2013 when Kendrion bought [indiscernible], where he was in a similar role. One more point before we start, please note the following cautionary statement. Certain statements contained in this presentation constitute forward-looking statements. These forward-looking statements rely on several assumptions concerning future events and are subject to uncertainties and other factors, many of which are outside the company's control that could cause actual results to differ materially from such statements. Let us turn to Kendrion today. This is the starting point for the story we want to share today. Kendrion is a focused industrial motion and control specialist. The following slides explain what that means in practice where we play why our position is differentiated and why we believe we have selected attractive long-term growth markets. Let me describe the company we have become. Kendrion has transformed industrial company with a focused position in motion and control. We specialize in actuation, fluid control braking and control electronics for demanding industrial applications and we focus on 4 carefully selected secular growth markets, Robotics & Automation, Healthcare & MedTech, Energy & Transmission Infrastructure and Integrated Industrial Safety Systems. Our products are typically mission-critical. This means that the cost of failure of our product for the customer is high, while our component price represents only a small share of the overall system cost. That combination creates a strong basis for value-based pricing, long customer relationships and repeat business. Our position is supported by advanced intellectual property deep application know-how, high-quality products, long-cycle co-development with customers and demanding regulatory certification. In short, we are not simply supplying components. We are helping customers to make their complex machines safer, more precise and more reliable. And this focus is reflected in our revenue base. Industrial Brakes and Industrial Actuators & Controls are both profitable businesses with their own technologies, customers and growth opportunity. This slide is based on full year 2025 revenue. First, the 2 industrial businesses are roughly in balance when it comes to revenue. Second, excluding mobility, approximately 90% of industrial revenue is generated in our selected growth markets. The mobility activities are phasing out, but remain generating cash until the activity ends. Jeroen will cover this later when we talk financials. Third, Kendrion is Europe-centric from a revenue, customer and employee perspective. We have a strong presence in Germany and an important manufacturing and engineering base in CBU Romania. This gives us a capable and cost competitive platform from which to serve global customers. The result is a focused portfolio, 2 growing industrial businesses supported by a cash-generative mobility tail that is being managed down in a disciplined and profitable way. The portfolio reflects a strategic pivot that is now complete. I will now spend some time on our application segments of choice and the secular growth opportunities they represent. Our choice for these markets is built around long-term market needs rather than short-term cycles. Across all 4 segments, customers are asking for more precision, more safety, higher reliability and improved efficiency. Those requirements play directly to Kendrion's technology and engineering strength. Let us look at the 4 segments and the specific opportunities they create. We have aligned our product portfolio and our commercial focus around these 4 markets. Robotics & Automation is our largest selected segment at approximately EUR 120 million of 2025 revenue. Growth is driven by long-term trends we expect to persist digitalization and AI, labor shortages in combination with rising labor costs in Europe and the U.S. and the reshoring of supply chains, all points to the need for more industrial automation. Healthcare & MedTech contributed approximately EUR 20 million in 2025. Its structural drivers include an aging global population, shortages of healthcare professionals and the use of AI in personalized medicine and diagnostics. Energy & Transmission Infrastructure contributed approximately EUR 25 million. The global shift towards electrification is creating unprecedented demand for power, driven in part by data centers, AI compute and electrification of transport. This is increasing the need for high-performance components in generation, transmission and distribution. Integrated Industrial Safety Systems contributed approximately EUR 30 million in 2025. And as machines interact more closely with people, customers need reliable safety control electronics and high-precision components that meet increasingly strict regulatory requirements. These are not 4 unrelated markets. They share customers who demand mission-critical performance, predictable qualification and dependable engineering skills. I'll drill down on all 4, starting with Robotics & Automation. The robot market has evolved through several generations from the first automated guided vehicles in the 70s to industrial robots in the 2000s, cobots in the 10s, composite robots in 2020 and recently humanoid robots. More autonomy and closer interaction with people increase the need for fail-safe braking, precise positioning, embedded safety and reliable control. As we move across the spectrum, 3 things happen at the same time. One, the number of robots increases; two, the number of brakes and actuators per robot increases; and three, the performance requirements for each components rise. Three developments that are independent and they all point to growth. We see this in the form of many opportunities in our pipeline, and we expect that to continue for many years. Today, Kendrion supplies products into all the main robot categories shown here, and these include spring applied holding brakes, permanent magnet, high-torque line brakes, safety PLCs, bystable solenoids, magnet finger grippers and sensor-less control solutions. Longer term, humanoid robots present additional potential, particularly for safety brakes, actuators and joints and compact control electronics. This opportunity is supported by several independent long-term catalysts. Robotics & Automation are being driven by more than one cycle. Three structural forces are all moving in the same direction. First, digitalization and AI are transforming manufacturing. The long-term endpoint, intelligent machines that can sense decide and act in the physical world. Second, labor shortages and rising labor costs are making automation economically necessary. The working edge population is expected to decline by approximately 10% to 15% in many economies, while labor costs are expected to rise materially. And third, around 80% of Western companies are reshoring or considering reshoring activities as geopolitical uncertainty increases. And as you know, Kendrion is part of that trend. We've been moving towards local for local for the past 10 years. These drivers are independent. They are not simply different ways of describing the same cycle. And as a result, you can see a clear inflection point in the graph at the bottom of this slide. Global factory automation has grown with around 6% per year between 2019 and '24 and going forward, that growth is expected to double to around 12% per year. Product requirements are demanding. Our brakes and other components must deliver precision, safety, reliability and efficiency all areas in which we excel. These 3 structural growth trends drive concrete opportunities in server motors, warehouses and factories. This slide describes 4 distinct subcategories, subsegments of Robotics & Automation that are a concrete reflection of the growth opportunity in factory automation that we just discussed. First, Server Motors. A server motor, and there's actually a couple of examples over there, is an electric motor that uses feedback control to deliver precise, fast and repeatable movement in automated equipment. More automation, more server motors. It typically needs an integrated and compact break of high quality. So it's not a surprise that the global server market is expected to grow from around EUR 15 billion in '25 to EUR 21 billion in 2030 or around 7% annually. Kendrion supplies compact, high torque and high-precision permanent magnet brakes integrated into server motors. Next, Intralogistics. We're talking about AGVs, forklift trucks and pellet trucks. In many of these automated vehicles, the brake is a safety component. There is no driver to override a failure. Quality and reliability are therefore key. Intralogistics is expected to grow globally from around EUR 70 billion to EUR 110 billion or around 10% annually, supported by e-commerce distribution centers and dense high-rise warehousing. The market for forklift trucks is expected to grow even faster from approximately EUR 70 billion to EUR 130 billion or around 13% annually. Our products include brakes for pallet trucks, counterbalance forklifts and other high talk applications. And finally, Industrial Machinery. It's a broad and diverse market with opportunities for both industrial brakes and industrial actuators and controls. It is the largest market shown growing from approximately EUR 620 billion to EUR 850 billion or around 7% annually. And as in all of these markets, focus is key. We select customers and applications where our technology is critical. The qualification process matters, and our high performance is valued. We move to Healthcare & MedTech. Like Robotics & Automation, healthcare has powerful and structural tailwinds, an aging population, shortages of specialist medical labor and the increased interest in personalized medicine and advanced diagnostics enabled by AI. Within Healthcare & MedTech, we focus on 2 niches: medical fluid control on this slide and surgical robotics on the next. Medical fluid control includes dental, water and air supply units, our so-called power pinch files for kidney dialysis and biocompatible pressure regulators for anesthesia and other applications. These are mission-critical products. They must meet stringent quality and regulatory requirements and many are produced in biological clean room environments. The qualification and approval cycles are long. That will, of course, slow down the start of production, but it also reinforces the position of established suppliers that have earned the required approvals and customer trust. We are such an established supplier. The Fluid Management Systems market is expected to grow from approximately EUR 14 billion in '25 to EUR 23 billion, representing roughly 13% annual growth on a global scale. For valves, this is even faster at a CAGR of around 17%. Our second health care niche is surgical robotics. The global surgical robot market is expected to grow from approximately EUR 14 billion in '25 to EUR 24 billion in '29, representing around 15% annual growth. Robotic surgery systems are proliferating across orthopedics, neurosurgery, endovascular procedures and other specialist applications. These minimally invasive procedures can improve patient outcomes while better economics help extend the working life of surgeons. The requirements are demanding, the brake must hold exactly where the surgeon has positioned the instrument without drift, without backlash and must remain feel safe under all circumstances, including a power failure. Our products include classic permanent magnet brakes for secure holding and high torque permanent magnet brakes for precise surgical microscope positioning and in some case, also spring applied brakes. Wrong picture. Wrong picture. No. Is it? Hold on guys, I'm sorry. Where am I? This is -- All right. Here we go. I'm sorry, guys. Let me let me recoup this. Yes. All right. I'll start again. The global surgical robot market is expected to grow from approximately EUR 14 billion in '25 billion to EUR 24 billion in '29, representing approximately 15% annual growth. Robotic surgery systems are proliferating across orthopedics, neurosurgery, endovascular procedures and other specialist applications. These minimally invasive procedures can improve patient outcomes while better economics help extend the working life of surgeons. The requirements are demanding. The brake must hold exactly where the surgeon has positioned the instrument without drift or backlash and must remain feel safe under all circumstances, including a power failure. Our products include classical permanent magnet brakes for secure holding and high torque permanent magnet brakes for precise surgical microscope positioning and in some case, also spring applied brakes. The qualification cycle is a significant moat. We are involved during the design phase offer well before revenue starts. Once the product is qualified and embedded in a regulated system, a customer is unlikely to requalify a competing component. Next, Energy & Transmission Infrastructure. Modernizing the transmission grid and scaling nuclear, solar and wind power are essential to the global shift towards electrification. They are also critical to enable the growth of data centers, AI compute and electrical vehicles. The global transmission grid market is expected to grow at approximately 7% annually from around EUR 320 billion to EUR 580 billion between EUR '25 and '34. The drivers are clear: rapidly increasing electricity demand, aging grids, the integration of renewable generation, interconnection bottlenecks that are creating congestion and increasing the need for smart and resilient infrastructure. Kendrion's position is specific and important. We supply electromagnetic trip coils and release components for high-voltage circuit breakers. These components may remain idle for years, but when a fault occurs, they must open the circuit breaker in milliseconds. Failure can result in equipment damage, fire or a cascading outage. It's a long cycle market in which our component is a small part relative to the investment of the system but critical to its safe operation and subject to demanding qualification requirements. In other words, you heard it before, mission-critical. The same characteristics, long cycles, high consequence of failure and demand and qualification are visible in wind infrastructure. Wind is another key component in expanding the global energy infrastructure. Rising electricity demand increases the need for new power generation while policy and economics continue to support the expansion of wind. The graph shows global annual wind capacity additions growing at approximately 8% between '24 and '30. Excluding China, this number is approximately 13%. The regional growth rates shown are especially strong in EMEA with 14% and APAC, excluding China, with 20%. Kendrion supplies breaks for 3 key positions in a wind turbine, [indiscernible] drive that turns the turbine into the wind, the so-called pitch system that angles the blades, and breaks for the internal elevator to get to the nacelle, the engine room at the top of the turbine. Larger and more efficient turbines require higher torque and larger brakes. So like in robotics, that creates growth in more dimensions, more turbines and more content per turbine. Our technology is therefore exposed not only to the number of turbines installed, but also to the increasing performance requirements of each of them. The last selected market is Integrated Industrial Safety System which we view as the foundation for autonomous automation and robots. Safety is a primary catalyst for industrial automation and especially for automation that interacts with humans. The trend extends from heavy manufacturing and logistics to appliances and other equipment that increasingly operate with limited human intervention. The global industrial safety market is expected to grow at approximately 7% annually. The quality of that growth is particularly attractive because safety cannot be deferred. The machine builder cannot ship without meeting the applicable requirements. Regulation is therefore a growth driver, and that is moving forward as well. The EU Machinery Regulation 2023/1230 raises safety requirements, while cybersecurity is increasingly part of the safety obligations for network-controlled components such as logs. Kendrion addresses the market in 2 ways: electronically, we provide safety PLCs, safety IO modules and related control solutions; and physically, we provide locking mechanisms, solenoid door locks and other locking solenoids. These products serve applications, including commercial washing machines, parcel lockers fire protection systems automated guided vehicles and industrial robots. The common requirement is uncompromising reliability. Safety is not an optional feature added after the machine has been designed it is embedded in the architecture from the beginning. Let me summarize the opportunity before we move to the 2 business groups. As you will have gathered, Kendrion is not dependent on a single market or a single short-term cycle. We are focused on 4 segments, and each presents us with a solid growth opportunity for the next decade or even longer. Robotics & Automation has an estimated average growth rate of approximately 8%. Energy & Transmission Infrastructure is also around 8%. Healthcare & MedTech is the fastest-growing selected market at approximately 14%, while Integrated Industrial Safety is expected to grow at around 7%. More important than any individual forecast is the common quality of the forecasted growth. Customers need precision, safety, reliability and efficiency in applications where failure is costly and qualification matters. We are already supplying products into these markets with our high standards -- with these high standards and our opportunity is to deepen our position customer by customer, application by application and project by project. This is the foundation for the next part of the presentation, how industrial brakes and actuators and controls are positioned to capture these opportunities and convert them into profitable growth. Before we go to that, I want to preempt the question you may have looking at the summary slide. These are attractive growth numbers on the slides for the segments we're focused on, 7% for Safety, 8% for Robotics and Energy, 14% for MedTech. So why do we expect that growth for the coming years between 5% and 8%. Two points on this. First, the trends fueling the growth are relatively recent. We talked, for instance, about an inflection point in factory automation, where growth is expected to double over the coming years. This means that initially growth is visible in our project pipeline and in the forecast of our -- that our customers give us for the ramp of these projects. That's happening. To turn projects into revenue takes time. We're beginning to see shipping the early projects, but for everything, for instance, added over the past year, the revenue will follow a little bit later. The second point is that our guidance is not a top-down estimate based on the market opportunity. It is based on a detailed bottom-up analysis of all the projects in the pipeline today, where we assess the timing and the volumes of the production ramp. So it's grounded in our actual pipeline and our expectation when projects will ramp. Jeroen is also going to discuss this a little bit -- in a little bit more detail in the financial section. So let us turn to the business groups, starting with Industrial Brakes. Olaf?

Yes. Good afternoon. My name is Olaf Detlef and I run the Industrial Brakes business group. Let me start with a question. Does industry brakes wait for the market to tell us what to build or are we there first? For years, this business grew with its customers, strong customers serve well. That is a good business. And it's still a large part of what we do. But it means somebody else picks the direction. We changed the order. The application we go after now is our choice. The next 20 minutes, I will show you 4 products. All 4 of them were designed before a customer had written a requirement down. So about 430 people, 4 plants, Villingen [indiscernible] in Germany, Atlantic, United States and India, Pune. All 4 of them build brakes. We have no separate head office, and we have no pure sell sites. The people who sell it sit next to the people who builds it. Revenue this year is expected about EUR 100 million. The 2 German plants carry most of that revenue, and they carry out development. Atlanta and Pune are smaller, and they are because our customers build motors and robots on those continents, being closed matters for supply for qualification and support. One number on this page matters, 35 of those 430 people work in R&D and almost everything. I'm going to show you today came out of that group. [indiscernible] in 2026. The numbers for the first half of this year. Revenue, EUR 51.5 million, up 8%. Added value margin, 54.5 and 1.3 points better than the full year 2024. Active business opportunities, 224, 2 years ago, they were 96. The first 2 numbers are the results. The third one is the reason, and I will come to it back later. Now let me say why this matters. Every machine that moves has to stop a robot arm, surgical instruments, a vehicle in a warehouse and the more a machine decides for itself, the more it has to stop safely. Not in a normal case, in the worst case, when the power fails when the software fails. Software decides when to stop, the stopping itself is hardware. And that is our business. Growth no longer depends on key accounts alone. Serving the demand is not the same as shaping it. So let me start with what we changed. Three things and all 3 on purpose. The first one was a key account management. Our sales work was built around our largest customer. We looked after them. We grew with them when they grew. And when they slowed down, so did we. Key account management is a subscription to the market average. We canceled it. Today, we have 4 teams that cut across the company: sales, engineering, marketing and product management. Each of them spend 1/4 of their working time on this with one shared team day every week and a revenue every quarter. The second change was a target system. Sales and Engineering had a separate goal, separate funnels. Today, they have one. Marketing and sales developed the lead together. And there is no handover. Every lead has an honor from the first day. And the third change was a portfolio. We stopped areas that did not earn their keep, and we stopped giving flat discounts. Price now follows quantity, and we move the weight of our development towards application where the break has to do something special. Industry pipeline has more than doubled since end of 2024. And that's what came out of it. 2 years ago, we had 96 active opportunities. Today, we have 224, up about 130%. The same people and more than drive as many chances. An opportunity for us is not a hope. We know the application, we know who decides and we have a technical solution for it. 72% of them sit in Robotics & Automation, 16% in Energy & Transmission, 12% in Healthcare, Safety and everything else. Did we just count more loosely? No. The definition did not move. What moved is who is doing the looking. Now it is 4 mix teams hunting for application, including at companies that have never bought anything from us before. The funnel is graded, not counted. Qualified means 3 conditions at the same time. We know the whole buying group, not just one contact, so technical feasibility is settled, and we and the customer have a shared price expectation. Otherwise, it does not count as qualified. And it's not revenue and not a promise. It is the size of the field we are playing on. One more thing before you have asked for it, 72% in a single field is a concentration. And I would raise our name it myself. It is a bet on the field, not a bet on the project. It's spread over several motors, rubber joints that drive of warehouse vehicles and intralogistics, and no single project dominates. It's also the fastest-growing field we serve, not being concentrated there would be a decision that needs explaining. Why is the margin improved and why it holds? Now the margin because a move like this always raises the same doubt, was it the market? Or was it us? Our added value margin went from 53.2% in 2025 to 54.5% in the first half this year. Three things did it, and all 3 were counted before the margin moved pricing. Pricing. We adjusted prices and we passed on material surcharges. That sound simple, is not in a market where everybody expects last year's price. Purchasing. We relocated and localized components, and we improved our terms. Portfolio. We phased out products that no longer earned enough in several cases, the decision made itself. Sourcing parts for the older design have become harder every year. We replaced that revenue with new business at better margin. This was not the cycle. Each of 3 was a decision. Costs taken out by design, not by discount. That is what we changed. Now 4 pieces of evidence that we are early. The first one is a [indiscernible] brake. A [indiscernible] motor drivers is a machine access, a robot arm, a machine tool, a conveyor. And inside that motor sits a brake and hold the access when the power goes off. It is a large market and the hard one. Everybody builds one. And in a community business -- a commodity business like this, the pressure on price never [indiscernible]. The usual answer to that is discount. Our was a redesign. We built a new magnetic circuit and use the different kind of magnet. The result is a break that is 30% shorter and has 40% fewer parts. Fewer parts means lower cost, up to 20% lower with the same performance and the same safety standards. It fits 70% of the application we aim at, and it uses the same interface as our larger line. So a customer can change size without changing the design. For the customer, the brake cost 15% to 20% less. That sounds like we are giving something away. But it is the opposite. The break is about 20% to 30% what rotor -- what a [indiscernible] motor costs. So a cheaper break takes 5% to 7% of the price of the whole motor. In a market where motors compete on price, 5% to 7% decides who gets designed in. We took cost out by design, not by discount. And the pattern came through 6 months ahead of plan. [indiscernible] brakes for advanced [indiscernible] joints. The second one is brake break for the joint of a cobot, robots that works next to people rather than behind the fence. Those joints have a problem. The cables for power and for sensors run through the middle of the joints. So every part inside the joint needs an opening in the center. So it has to be flat because the space is tight. A standard brake is solid in the center, and it's not flat. So we built one that is both. The largest follow shaft we could achieve in the tiniest housing we could build. We built it before the requirement existed really on paper. There were signals from customers conversation, but nobody had written it down. It came out of our own advanced development. This market is young as the technical standards are still being said, arrive after they are said and you are building to someone else's drawing. And this one is developed that sell into 2 markets. This is a big advantage. The same design goes out into the [indiscernible] drive or warehouse vehicles. Different industry, different customers but the same product. We did not build a copper brake and then look for a second use. We built one product for the way these joints and these drives were actually designed and both markets needed. In neurosurgery, 0.5 degree is not a tolerance. So third one is medical. Think about an operation on the brain. The instruments held in place by a robot arm, and inside that arm is one of our brakes. If that brake allows 0.5 degree of rotation, via this holding the tip of the instrument moves, not much, but in that operation, not much, may be a serious issue. A permanent magnetic brake has 0 rotational play. On this slide are 5 requirements, a designer work through for the [indiscernible] like that. No movement when the brake holds. No force left over on the vertical axis when it opens and upholding force in the space, the size of a finger joints. Quite because it is an operating room, and stay for the whole life of the device, not only when it is new. And this is not a description of something we still have to build. Those requirements are met by a series that we already have in the market. And here is why I'm showing them to you. A list like that is not settled in the purchasing round. It is settled in engineering years before the first unit ships. Once it settled, the break is a part of the approval of the device, and this is a big advantage. We have been in serious production in the field for a wire with smaller projects. This year is the first one at the scale that matters. Three of the largest makers of these systems have signed us in and about 10 are in talks. IE5 is not just an efficiency class. It is a different motor. The fourth one is about change in the rules. Electric motors are the largest single consumer of electricity in industry. That is why the European Union keeps raising the minimum efficiency. IE3 became mandatory in 2021. IE4 in 2023. And in 2025, the highest class IE5 entered the international standard. IE5 is usually shown as one or more step on the letter, it is not. An IE5 motor is a different motor is a synchronous motor. Our proven standard brake does not fit it, not even as a variance. The housing is new, and they have it to mount -- the mounting situation is also new. We have finished the concept fast, and we are building prototypes. A pilot customer is testing the high torque version and the feedback is strong. Power density is up 30%. It is easier to mount and we took cost out of the design at the same time. Now the timing. The rule is in place. The installed base is not. In 2022, IE4 was still under 4% of the European motor sales. And now we speak about standard. The volume is in the front of us, not behind us. We are not ahead of the standards we are ahead of the volume. That is a difference, and this is a point of the whole presentation. The technology fields a new products by 2030. So where does that leave us against the competition? There are 2 ways to build an electromagnetic break, permanent magnets or spring applied. And there were 2 places to put on, inside the motor or along the drive chain. That looks like 4 fields. In practice, there are only 3. A permanent magnetic brake is always built into a motor. We are in all 3 fields with products in the markets. And in all 3, something new is coming. 8 new products by 2030. Most of those 8 are not in the market yet, and I will not pretend otherwise. The first 3 sizes of the new [indiscernible] brake, what I spoke before, are selling today. The rest are in development and nothing counts for us until its business case is approved. The business does not rest on those 8 [indiscernible]. 224 active opportunities are mainly served with the products that we have today. Now the structure of the competition, and I will not name anyone from this stage. The largest supplier by volume carries no permanent magnet brake at all. That comes from our own study of 40 manufacturers that we made in June. What this means for our customer is simple. They can change the brake technology without changing the window. We see ourselves as a leading brake manufacturer with a broadest product range in the field. Strategic summary. Let me put a whole thing in one place. Software decides went to stop, the stopping itself is hardware, and that is our business. Four market drivers, robots and cobots, surgical robotics, a new generation of efficient motors and warehouse automation. In all 4, the position is won in the design [indiscernible] not in the price list, usually before the customer has written the requirement down. We will grow faster than our markets by choosing our segments ourselves instead of following our largest customers. The improvement in profitability was decided, not cyclical. I started with a question. Does industrial breaks wait for the market or are we there first? We have seen 4 answers. A [indiscernible] brake was redesigned instead of discounted. A copper brake built before the requirement existed. A medical brake was settled in engineering years before the first unit shipped and a brake for a motor generation that has not ramped up yet. None of this won on price. It was on early. Thank you.

Good afternoon. My name is Robert Levin. I have the pleasure to guide you through Industrial Actuators & Controls, in brief IAC. In recent years, IAC was consolidating invest costs and efforts to improve competitiveness and profitability. But concurrently, we developed several business strategies to increase growth potential and interesting markets. Interesting, in our sense, our markets were higher average profitability and increasing demand and higher economic resilience might be assumed. Although this picture looks quite German-centered, you need to take into account that 90% of our deliveries ending up outside of Germany, directly via export or indirectly via our exporting customers. We serve approximately 12,000 customers. It starts with product from EUR 10, and it might go up to almost EUR 10 million per revenue -- per year per customer. In the U.S., we were able to double our revenues in the past 5 years. Since 2 years, we are targeting 3 larger markets in Asia, which is Korea, Japan and India. And first projects and revenues have already been generated. In the first half year of '26, we needed to adjust production capacity in our German and Romanian facilities due to higher demand. That takes us usually 3 to 6 months because of supplier dependencies. Concurrently, one of our major customers was undergoing a major restructuring resulting in a decline of order inflow to us. This is the only reason why we cannot show 8% in the half -- in the first half year in the numbers. IAC's specific go-to-market model is worth some explanation. Since several years, we are -- since several years, we transformed this company part from standard solenoid and controls manufacturer into a very specific product application-oriented company. All product strategies are based on through internal market research, discussed and validated by cross-functional teams from sales, R&D, management and marketing and executed in campaigns by our marketing and sales support team. With the right business case proposal, we can apply for feasibility studies, investment sharing. And of course, we can ask our customers for attractive pricing. Yes, we did improve the number of opportunities. But more important is the quality of our opportunities. In other words, high probability to win these opportunities at attractive pricing. Therefore, we focus on growing markets where investments are available and more dynamic developments are visible to improve the business situation. The markets are relatively conservative and a supplier will not be changed without a reason. We need to provide significant improvements in quality, service or costs to be interesting. The following slides will show you our main market activities and explain our application and products. Also here, the first market is Robotics & Automation, where beside the classical machinery automation more applications for our products came up, such as automatic guided vehicles, robots, automatic warehouses where our products are in need. We are addressing the demand for lower power consumption, reacting on new regulations and provide possibilities to remove air-powered actuators. The first example I brought along is the shuttle [indiscernible] solenoid where we are actually replacing existing motor-based solutions in warehouses. Why? Our total cost of ownership is lower than the competitive solution. Less power consumption and lower costs for electronic drives enabled the business. In the meantime, the patented product is sold to several European countries and the U.S. and Korea. The second example is our new motion controller where we explicitly addressed the transformation to more battery-powered tools, machines and vehicles. The robust design allows operation in rough environment and the controlled software allows longer battery running cycles and manages alternative load requirements. In Healthcare & MedTech, the high number of pipeline opportunities is showing a high market dynamic, which is mainly caused by the new medical device regulations in Europe. Similar to the FDA in the U.S., the European Union is building up its own regulatory framework where all suppliers need to integrate this. This means medical graded material, clean room production, traceability and documentation requirements where most probably not all of current competition will follow, especially in applications interacting with human body like dialysis or respiration, the requirements are more demanding. This is the power pinch valve, which is designed for high force, high safety applications and often in little space to be integrated. Deep application know-how allowed us to develop the product specifically to customer needs, but also standardized with a certain degree of customization when necessary. Energy transition is especially in Europe, a more and more important topic. Since we not only transform to use electrical machines and vehicles, we also need to react faster on geopolitical changes, which are making energy in Europe more expensive. There are several possibilities to react on this. But certainly, a recommended one is to consume less energy by using more energy-efficient solutions. Our inductive heating solution with up to 97% efficiency is definitely a way to save larger amounts of power in comparison to still use steam or oil-heated solutions. To translate that into safeties we can save an average 50% of the energy, sometimes even more. We support our customers to achieve their transition to lower operating costs with a high range of inductors, the heating element, which can be adopted in size and form to address the current machinery shape. The power of our modular generators and systems range from one kilowatt up to several megawatts. With that, we can address a broader market from laundry, industrial dryers to automated cooking and other food processing applications. The last of the market segments is safety equipment. For years, we are serving holding magnets for fire protection doors, mainly in the DACH region, where higher quality standards are required to meet the VDS regulation standards. Other countries can actually live well with lower requirements, which is resulting in lower costs and more competition. Our new solution is developed in the U.S. and will especially address the U.S. market but it can also address other interesting European markets like Scandinavia and the Netherlands. The complete new design will allow lower costs and easy to implement functionality. However, also in this case, FM, global regulations need to be addressed in order to be successful with the product. Let me briefly summarize what we are doing. At IAC, it's always crucial to find the right product market mix that needs through internal market investigations. We are doing that quite professionally. We can compensate our cost increases with higher pricing. So in the current inflationary environment, we are doing quite well. And the growth potential we are creating step-by-step more and more in the dedicated market, which we are following with discipline. And yes, I would say we have quite an advanced marketing and sales process, which runs very efficiently with new products in new markets. So that's our strength that we can explore that quite quickly and successful. Thank you for your attention.

So good afternoon, everyone. My name is Jeroen Hemmen. I will take you through our ESG program and the financial framework. So let me first summarize the main elements of our current ESG program. Our focus is on 3 areas: further reducing our environmental footprint, strengthening diversity and employment -- employee engagement and embedding ESG more deeply into how we manage our business and supply chain. The key message here is that we've made solid progress, particularly on emission and reporting and at the same time, strengthening diversity and the remaining emission reductions require continued attention. On the emission side, we have already achieved substantial reduction in carbon emissions. There we go. Around 60% of the reduction was realized before the start of the current program in 2024. The target has been further accelerated by the device divestments of automotive in China. And as a result, the remaining reduction target has been recalibrated to 12%, which is a more challenging final step as most opportunities have been captured already over the past 10 years. By now, 92% of our electricity comes from renewable sources. On the social agenda, progress on gender and diversity has been slower than intended. We have, therefore, established an action plan to accelerate our ambitions and strengthen our diversity and inclusion initiatives. Employee engagement is an important part of this. The 2025 employee survey showed positive results, and we have implemented follow-up actions based on the feedback. From a governance perspective, ESG has become part of our normal business practices. We have introduced an ESG supplier questionnaire and secured formal commitments to our supplier code of conduct, and this has helped us to address sustainability not only within our own operations, but also across our supply chain. We also have further improved our Ecovadis and CDP ratings. And looking ahead, our priorities are clear. Environmentally, we will continue to pursue the remaining carbon reductions. Socially, we will focus on accelerating diversity and inclusion and maintaining an active employee dialogue. And from a governance perspective, we aim to cover 80% of our annual purchasing volume through the supplier code of conduct while maintaining our current sustainability ratings. Overall, ESG continues to be embedded in how we operate, manage risk and create long-term value. Then to the financial framework. In this section, I will focus on the financial framework and how we intend to create value over the next phase of Kendrion's development. I will make 4 points. The first point is we are on track to deliver the financial commitments made in the 2024 Capital Markets Day ahead of schedule. Two, the financial quality of the business is improving, profitability and returns have moved higher. Three, industrial growth is becoming the primary value driver, which gives us the confidence that future growth can translate into expanding margins. Four, we will combine growth with financial discipline. The mobility ramp down remains cash generative. M&A is an optional upside and excess capital will be returned when investment needs and our leverage ratio allow. And our destination is clear, achieving between 5% and 8% industrial growth, an EBITDA margin between 17% and 20% and at least 100% cash conversion of net profit over the 2027 and 2030 target period. So at the 2024 Capital Markets Day, we set out clear financial targets. We expected annual growth between 5% and 8% and EBITDA margin between 15% and 18% as from 2025, and the return on invested capital, excluding goodwill, between 23% and 27% as from '27. We also committed to return at least 50% of normalized net profit to our shareholders as dividend. And the performance indicators over the past 12 months demonstrate that we are progressing well. The recovery in growth is picking up with the last 12 months growth at approximately 4%. This is not yet between the 5% and 8% expectation, but the underlying direction is positive as end markets recover and the industrial pipeline converts into revenue. Profitability is already well within the previous target range with an EBITDA margin of 16.4% when measured over the last 12 months. Return on invested capital, excluding goodwill, is 26.3%, which is at the upper end of the range and ahead of our 2027 timing. And we have also maintained our commitment to shareholder returns. In 2026, for example, 59% of net profit was paid out. These results provide a strong starting point for the next phase. We are now setting our next target framework between 5% and 8% industrial growth, a 17% to 20% group EBITDA margin and at least 100% cash conversion of net profit. And the key point is that this reflects the next step in our ambitions built on a stronger profitability. So this slide shows the progression from 2024 through the last 12 months. Revenue has slightly increased from EUR 245 million in 2024 to almost EUR 251 million on the last 12 months basis. But more importantly, the quality of this revenue is improving. The EBITDA margin has increased from 13.4% and to 15.5% and then to 16.4%. That is a 3 percentage point improvement in a relatively short period in what can be considered quite difficult market circumstances. Return on invested capital, excluding goodwill, has risen from 12%, via 24.6% and then to 26.3%. This reflects the improvement in earnings, the disciplined use of capital and, of course, the automotive and China divestments. The conclusion is important. We are not simply growing revenue we are building a business that converts growth into higher profitability and stronger returns. The next question is how we will sustain that quality of growth? The answer is a disciplined approach to where we invest and which projects we pursue. Our growth strategy is selective. We are focusing on 3 elements. First, we are targeting attractive growth markets. These markets benefit from structural trends that are likely to persist, labor scarcity, reshoring, the adoption of AI and aging population, increasing safety requirements, electrification and grid renewal. Second, we focus on mission-critical products. The product needs to be critical to the customers' application, differentiated through IP or know-how and positions where failure has a high cost for the customer. And third, we apply financial discipline to each and every new project. The project must meet clear hurdles, including a fully cautious EBITDA margin of at least 20% and lifetime return on invested capital of at least 25% and growth potential of at least 10%. And in addition, we demand meaningful customer commitments through co-investments or risk sharing. And this discipline is particularly relevant when we look at the changing mix between industrial and mobility. Industrial revenue growth will drive disproportionate EBITDA growth. We are targeting 5% to 8% annual industrial growth with opportunities across Robotics & Automation, Energy, MedTech and Integrated Safety. The growth range is shown on the slide reflect our pipeline, approximately 5% to 8% in Robotics & automation, 5% to 8% in Energy, 3% to 5% in Integrated Safety and 10% to 12% in MedTech. And this is all based on our bottom-up financial plan, as we've explained. At the same time, mobility is expected to run off by approximately EUR 25 million of revenue over around 5 years. So roughly EUR 5 million per year. Industrial growth is expected to run well ahead of cost growth, and the new industrial project mix carries higher margins. That creates strong operating leverage and support expansion of the industrial EBITDA margin. At the same time, mobility will remain a profitable part of the financial story during the ramp down and targeted to remain well above the 15% EBITDA margin. Our cooperation with Knorr-Bremse supports sustainable margins and positive cash flow. Therefore, the group EBITDA margin can expand even as mobility revenue decreases. The industrial mix more than offset the runoff over time, while the cash profile of mobility remains supportive during the transition. Let me explain in a little bit more detail why the mobility runoff does not create a cash flow cliff. The mobility revenue decrease is by our strategic choice. It reflects the planned ramp down of the activity and the cooperation with Knorr-Bremsen. The important point here is that revenue runoff is not the same as cash flow runoff. First, the activity remains profitable throughout the ramp down. And second, the variable cost structure preserves cash flow as revenue declines. The cost base adjusts with the activity, which supports EBITDA resilience. Third, investment needs are very limited as the activity winds down, supporting EBITDA to cash conversion. Taken together, these factors means that the cash contribution remains positive throughout the illustrated period. The mobility business, therefore, helps to fund the business while industrial is the larger long-term growth contributor. With organic growth as the base, we also have the option to accelerate our strategy through targeted M&A. Organic growth is the foundation of our strategy. M&A is an opportunity to add upside but not a requirement for our strategy to work. We have a scalable industrial platform, a healthy balance sheet and a target view for bolt-on acquisitions. We are looking for businesses that are mission-critical and differentiated in motion control where the product has a high cost of failure, but represents a small -- relatively small share of the customer system cost. Our acquisition criteria are equally clear. We want innovation capability and technology that complements Kendrion's existing portfolio. We need clear and credible synergies that support the purchase price, and we look for strong management teams and a good cultural fit. Any transaction must offer returns above the available alternatives. And this means that organic investments or shareholder returns remain a valid use of capital if an acquisition does not meet these hurdles. The next slide shows the margin development, both from the perspective of the historical proof points and the directional bridge towards 2030. Historically, the EBITDA margin increased from 13.4% in '24 to 16.4% on a last 12 months basis. And that is a net expansion from -- of 3 percentage points. The forward bridge indicates further expansion potential. The main positive contributor is expected to be industrial operating leverage. As industrial revenue grows faster than the associated cost base, the incremental margin improves. The second positive contributor is the sales mix a larger share of higher-margin industrial activities increases the group added value margin. There is also an offset from some operating deleverage associated with the mobility runoff. However, this effect is expected to be more than offset by the industrial leverage and positive mix shift. The resulting direction is a group EBITDA margin improving towards the higher end of the target range by 2030. And this is the core financial logic of the strategy. Revenue growth ahead of incremental cost growth, combined with a higher value mix. We translate that logic into a transparent financial model on the next slide. So the financial model provides the building blocks behind the margin ambition. On a last 12-month basis, revenue and other operating income were EUR 256 million. By 2030, the organic target range is between EUR 278 million and EUR 310 million. The added value margin is expected to increase from 58.8% to approximately 60%. This reflects the positive industrial mix and the focus on higher value applications. Direct staff costs are expected to remain broadly stable at approximately 12% of revenue, while the indirect staff costs will reduce from 21.3% towards a range between 19% and 21%. Other operating expenses are expected to improve to approximately 7.5% to 8.5% of revenue. Capital investments are expected to remain disciplined at around 4% of revenue and therefore, below the level of depreciation in the model. This supports cash conversion. So the key drivers are clear. Industrial growth of 5% to 8% compounds over time and progressively compensates for the mobility runoff. Growth ahead of incremental cost growth creates operating leverage and the positive mix increases the added value margin and disciplined CapEx supports cash generation. Strong cash generation gives us the flexibility, but we will remain disciplined on how we deploy that cash. Our capital allocation principle is simple. High-return growth comes first, financial resilience and shareholder returns follow. We will reinvest in organic growth where the expected return is attractive. The internal hurdle for CapEx is at least 25%, and we target at least 14% return on invested capital through the cycle when including goodwill, so M&A. We intend to maintain balance sheet flexibility with a target EBITDA leverage range between 1 and 2x EBITDA. This provides resilience through the cycle while preserving the ability to act when an M&A opportunity arises. An active strategy lever is temporary leverage above 2x EBITDA for value-creating M&A, provided that the transaction is compelling and that the path back to our target leverage is clear. At the same time, capital will be returned to shareholders when investment needs and leverage allows. This can be through dividends and where appropriate, share buybacks. So the framework balances 3 objectives: fund organic growth, retain strategic flexibility for targeted M&A and return excess cash to shareholders. Let me now turn to the mechanism for returning capital. Our dividend framework provides a clear baseline for shareholder returns. We target a minimum payout of 50% of normalized net profit before amortization. This establishes a dependable cash return while preserving the capacity to invest in the business and remain -- maintain balance sheet flexibility. Share buybacks are also part of the capital allocation agenda. They will be considered when investment needs are covered and leverage remains at the lower end of the range. The principle is, therefore, consistent. Dividends provide the the core and recurring return, while buybacks provide additional flexibility when the balance sheet and investment profile allow. The objective is to deliver sustainable value creation and attractive total shareholder returns through the cycle. And I will close by summarizing the financial targets that brings the strategy together. Our financial target framework for 2027-2030 links growth, operating leverage and disciplined cash conversion. The first target is 5% to 8% annual industrial growth. The second target is 17% to 20% group EBITDA margin. And the third target is 100% cash conversion of net profit. And these targets are interdependent. Industrial growth expands the higher value part of the portfolio and growth ahead of incremental cost growth creates the operational leverage -- the operating leverage. The positive mix improves the added value margin and disciplined CapEx and working capital management supports cash conversion and strong cash generation enable both reinvestment and shareholder returns. We believe that the progress already delivered demonstrates that our model is working. And the next phase is about scaling it with discipline. So that concludes the financial framework. We are now happy to take your questions, and I will hand back to the master of ceremony.

Thank you, Jeroen, and Olaf and Robert too. So our goal was to illustrate how we transformed into a focused industrial motion and control specialists, why we have chosen the 4 markets that we've chosen, how IB and IAC are positioned to benefit and of course, how it translates into our financial ambition. So I hope we achieved that goal. And with that, happy to take your questions. Martijn?

Martijn den Drijver with ABN AMRO. My first question, Joep, for you. I'll do them one by one, please. So in Q2, you did 18% normalized EBITDA margin. You have a target for new projects of 20% EBITDA margin. You have a goal for industrial growth CAGR of 5% to 8%. Let's say, that the majority of that [indiscernible] volume. Normal companies in your sector would have a drop-through rate of at least 20% to 25%. So can you run us through how you came to that 17% to 20% range for your EBITDA?

Yes, with pleasure. So the first 3 mark is this is a target for the coming 3.5, 4 years, right? So it's set in time. And as I also tried to indicate, the growth that we are laid out with 5% to 8% is not a growth related to a top-down view of what the markets will support but is grounded in the reality of the pipeline that we have today. And one of the things -- I mean that I think Olaf and Robert indicated is that pipeline has expanded specifically in IB quite rapidly over the past say, 1.5 years, 2 years since Olaf has taken over. So it will simply take some time to basically translate, but the expectation is if you were to say, okay, let's look at a slightly longer time frame, let's take 6 years, that would be a lot more confident that we are going to hit that growth rate that is supported by the market segments that we've shown. So it is almost a timing effect. The second part of your question was how we then drop through. But of course, that growth then translates into EBITDA margins, and that's what we -- they hang together. So that's also related to the EBITDA.

So just to follow up, basically what you're saying, these targets are really very much back-end loaded and not linear?

Yes. They are grounded in the reality of the current pipeline today. And that's -- sort of, it's a bottom-up assessment. Now, of course, you can know there's always end the cycle, the economy, of course, has a big impact on that. But all other things being equal, we expect that over the coming years, this pipeline that we have seeded over the past couple of years is going to deliver substantial growth.

Understood. And then my second question. Even though, Jeroen, you talked about the ROI on one of your final slides the at least 14%. It is not any more part of your strategic targets. Can you elaborate on why that is?

Yes, I can. So basically, if you look at -- so we're now at EUR 26.3 million. If you look at the definition that we have, excluding goodwill, which made sense at the time, I think, then that ROI is, at one point, will approach 35%, 40% even. So it's not really a discriminator anymore for strategy or for action. So in our sense, it does not make, yes, real sense to maintain that as a financial target. So we did include it now in the capital allocation framework, but then more importantly, for example, if you do M&A. And so obviously, the M&A needs to add value with both your cost of capital. And we think that by targeting the 14%, that hurdle is -- we can make that hurdle.

I got it. Two more, please. These are for Robert and Olaf. Can you talk about if you achieve these growth rates, how are you going to accommodate that from a capacity perspective? I visited 2 plants. Some are quite full. Obviously, you can add shifts, which has been suggested. But run us through what type of capacity constraints there are and how are you going to solve them for each division, please?

Yes, Robert?

Okay. Then I will start. Yes. Actually, let's say, you run the factories according to the demand. But in our Romanian facilities or still room for expansion. And out of experience, we can more or less quick get new personnel on the market. We are known as a reliable and good employer there. We have a good name. We are also able to rather efficiently transfer production parts from Germany to Romania, if that makes sense. So all these activities, we are continuously executing more or less. So that's why no issue with capacity increase.

For the IB, we have a similar situation. So there is no plan with 3 shifts so far. So it means there is an all 4 plants capacity left. And also for the plants in Germany, especially one in the North, we started with more automation to get more capacity in. So therefore, if we see all the pipeline, so we don't see an issue with the capacity so far.

Maybe one additional remark to make also compared -- certainly compared to the automotive world. The business of Robert and Olaf is not very capital intensive. So in a way, it's also easier to add capacity than it used to be from both practically but also financially. Having said that, if you look at, again, at the period we're talking about and probably a little bit beyond. If we hit the growth rates that we think we're going to hit, then we are fine according to capacity. Of course, at some point, this will stop. But then the capital needed to accommodate that is not very, very large.

Okay. Understood. And then my final question is something about subjects that I missed. And the H1 2026 Results Presentation Analyst Meeting, you talked about or you even mentioned rare earth free permanent magnets. I don't I haven't heard anything about that would seem like a good idea. And the other one that is missing, so to speak, defense, there must be applications where your mission-critical solutions can find its way. Can you please elaborate on both?

So Olaf, why don't you start with the heavy rare earth free brake and then maybe Robert you take the defense part.

Yes. So it's still a topic also for us, but I didn't bring that to the presentation today because there's a reason we increased our stock level up to one year now for the magnets, so that we can follow our customers. Of course, maybe there's a question, do we need 2 years, but then our customers will also run out of magnets. So therefore, we came up with them and they confirmed that we shall have a stock level of roughly one year what we do have now. And as we also talked about the heavy rare, yes. So that's for the new solution that we said, okay, what we can do better. So therefore or we reduce the heavy earth and a new design that -- and also the magnet that sells this helps us also for the future.

It's not something that's going to make an impact in this current strategic period? Or is that still a possibility?

What do you mean with that?

Could it be that you're now in some sort of R&D or thinking about it phase, eventually, you might move to an R&D prototyping to phase and then there's probably acceptance. So could it be that eventually in '28, '29 this actually could lead to revenue, even though you haven't presented it yet today?

Yes. So for the new design, they're already in the markets we sizes, so we will [indiscernible] end of this year. So we already have pilot customers of that, but I didn't spoke about that about because we have NDAs with them. So -- but there's a product they are highly interested in because they also see the advantage that we take out , especially [indiscernible]. So that's not in a new break anymore.

Yes. I shall answer the defense question. Yes, we do have defense business. And in the past, it was rather running under the radar because of low quantities and low numbers. And yes, of course, it's now more interesting and it's also one of the reason why we had to increase capacity in the German plants. But -- so one more -- also one more remark, if I may. There's other areas where we haven't talked about, one -- very obvious one is humanoids. And this is purely related to the fact that we wanted to focus it. I mean our pipeline has expanded so much. And there are so many examples of products that are going to be relevant for that coming 4, 5 years. Defense is probably -- is going to be relevant for sure. We're looking at it. It's a bit longer. Humanoids, who knows, but it's still -- it's something we're looking at very actively to say, okay, because this is going to be packed with mission-critical stuff. Think about a humanoid of 80 kilos running around serving your drinks. Now when that happens, and if that happens, I'm not going to talk about, but we decided, let's not include that because it's going to be, for sure, in the 30s in our view. So there is more like that.

Tijs Hollestelle, ING. I also want to talk a little bit about the end markets. I think we had the conversation on Capital Markets Day. So if I take, let's say, Slide 12, you're basically providing some info about the server motor market, USD 21 billion. And then I'm always wondering Kendrion is a small company, but relatively big in this field. I think later on in the presentation, there was some additional information that about 25% to 30% of the server motor concern Kendrion products. So that brings down the addressable market to EUR 5 billion, EUR 6 billion. Is that the right way to look at the market opportunity?

No, that's -- it's very clever. But it's -- that's not. So just a practical point. The most difficult part of -- for us in communicating the size of the opportunities to actually gauge what the size of the end markets we're in. Now I'm -- so you're right, the server motor market, if you take it generically, and that's, of course, done from a public source is, first of all, it's global, and it is probably including all sorts of applications that are not relevant for our break. That's my guess. So -- and then to say, okay, well, why don't you then present the market that is relevant because that's simply not available and it's extremely hard. So it's sort of -- the way we think about all these markets is not so much the absolute number of how large it is, but what is the growth. And then it is the underlying assumption, they say, okay, if the server market is going to grow at 7% -- to 7%, I think it says on that slide. Then our part, to be honest, it's potentially even faster because it's so relevant for these high-end robots. But let's use the 7% as a proxy to -- also for us to gauge how significant it can be and how much money we're going to invest in this.

Yes. Okay. That's clear. I mean directional is helpful. And indeed, if I make a jump to the medical market because I'm also trying to get more feel for the potential high-growth scenarios. Let me see, on the medical market, I think there was a slide which I was mentioning that you are having the 3 out of 5 of the large medical equipment suppliers, OEMs as your customer. So that's quite impressive. But then that raises the question from my side. On the full product line of these companies because then these customers should be really big in your sales concentration because it was not that big? Or is it for 1 of the 20 machines they're making that can only expect in [indiscernible]?

Yes. We are talking about one special application here. where we serve, let's say, most of the Western machinery. And then, of course, you have the different product lines at those customers and we are not in every product line. We have also competition.

Yes. So specific for the surgical robots. So we are designed in at 3 of the biggest 5. We're actually shipping to one and it's indeed not 100%. So you have a share of the revenue with a competitor. But of course -- so the one is sizable, has been growing rapidly. It's about EUR 1 million. So if the other 2 come on top, plus part of the tenant that are in the offer, but Olaf talks about, then it can be a nice good market for us, and then we will definitely speak about it more.

And that's why you're talking about with quite a lot of confidence about the pipeline. It's not there, but you already are seeing it and preparing it. So then -- and basically and add all of that and I'm on the sell side, so I look at champagne scenarios. But if you, let's say, then get all 5 of them, then you certainly have in that specific area, 66% growth in 2 years. It's not impossible?

Yes. But -- so last year, we had 400% growth in that area because I like that. But don't map that to the future. Yes, well, you can open the champagne if you do, but -- so yes, the growth can be much higher than the 15% because, yes, it is really ramping up. At the same time, it will not be like EUR 100 million market or something for us.

But my view is that this is now happening more at Kendrion? The organization is more hunting for these kind of opportunities [indiscernible] 2, 3, 5 years ago.

Yes. And it's also -- so both from a revenue perspective, it's interesting because this is really taking off -- but also from a margin perspective, you can imagine that it's much higher than [indiscernible] brakes for motors.

Yes. Okay. Maybe one more remark on this, it would be helpful also. So we've now talked about, if you look at our current revenue, 50% is in Robotics & Automation, and then you have all these numbers. So you can see now that's currently the lay of the land. If you look at the slide that Jeroen presented, I think it's Slide #56, with the bottom-up growth forecast per segment, you see that they are in medical, which is a relatively small part still of the overall group, is going to grow faster than the others. I think it was 14% or something like that. So that's another way of trying to get a feeling for how this is going to translate ultimately in our top line.

I'd like to add some more sentence, maybe to make clear. This is really a long cycle sale. So when we speak about these 3 or 5, so this can take years. So to -- is on one hand, it's a development time. This takes 2 or 3 years, but then you have to wait for the FDA approval also. So the advantage is, if you are in you're in, together with the entire advice. But the disadvantages have to wait a long time and it's a long development time. So therefore, we must be serious with that. And we cannot open a campaign and said, oh, yes, we get to turn over the next year for that.

Frank Claassen with Degroof Petercam. On your revenue growth target of 5% to 8%, could you roughly elaborate how much you think will be pricing and how much will be volume? Anything to say on this? .

Yes. So price will be between 1%, 1.5%. In that, the underlying assumption in our bottom plan is moderate inflationary environment. If that is not the case, as it's currently not then the another underlying assumption is that we will be able to pass on additional inflation in the prices as we have done in the past. And it's also, in many cases, we are contractually allowed to do so. So yes, I think that answers.

Yes. And you gave some number on the active business opportunities on the pipeline, so to say. Can you say anything about, let's say, the average project size? Or maybe is there a minimum project size? Is there anything to give more on that?

Yes. I mean it's good and difficult question. So Robert and Olaf both?

We actually -- we start to count it -- starting at EUR 20,000 per year, goes up to EUR 5 million.

We start a little bit higher, I think, we are not so [indiscernible]. It's roughly EUR 80,000, EUR 90,000 because otherwise, we shift this kind of business to our distributors when its too small. And the smaller projects, we call that [indiscernible] project, but this is maybe some adjustments. It's not so much to do, but it goes also where a project is and a couple of hundred thousand also goes to the [indiscernible].

And also, Frank here, the law of the large numbers prevails too. So Olaf went from 100 to 200 plus. You can safely assume that the underlying average size of these projects hasn't really materially changed. So which also means if you double the number of projects, you expect that the growth will accelerate. Robert, similarly, and now he's already -- he also has a larger number of projects normally. So that's also -- the growth of the pipeline is a proxy for what you can then expect down the line. So it's a leading indicator for future growth.

Okay. And then on the R&D expenses, yes, how much is that roughly? And does it grow? Or do you get more paid by the customers? What is to say on this?

Yes. So it's slightly over 6% for IAC, around 4% in IB. And we expect that, that will increase with revenue in line with revenue because, obviously, also the likes of AI can support existing R&D employees to be more effective. So we think we can keep it stable as a percentage of revenue, which is also in the plan.

And do you see that customers are paying more than they used to for the R&D expenses? Or is it the same or...

It's relatively stable. Any more questions?

Good afternoon, gentlemen. My name is [indiscernible], long-term shareholder. We have a few questions. First of all, thank you for your clear presentations. Your dependency on Germany, it's more than 50% of your revenue in total. What do you expect for the coming years to come to 2030? The second question is about your content value per robot is increasing. The last few years, you expect more robots to come? What do you expect about the value content per robot the coming years? And financial question for Jeroen. What do you think of what is your definition for excess cash? Maybe you can clear it up.