OC Oerlikon Corporation AG (OERL) Earnings Call Transcript & Summary

Good morning, everyone, and welcome on behalf of the entire Oerlikon team. It's a pleasure to have you here today, both in the room and also online. We appreciate your continued interest in our company and are very pleased to spend time with you today at this Capital Markets Day. During the day, you will hear directly from the leadership team insights in our end markets, technologies, positioning and financial ambition. Thank you again for being with us today. We look forward for an insightful session and live exchange during the Q&A session, the breakout and also at the booth later. Melinda Crane will moderate the day. Thank you. [Presentation]

Good morning, and a very warm welcome also from my side to Oerlikon's Capital Markets Day, its first as a pure-play surface solutions leader. I'm Melinda Crane, and it is a great honor to accompany you at what is a very special moment for this venerable technology powerhouse. Oerlikon has been flourishing for 150 years, not least to an extraordinary capacity to reinvent itself. And it demonstrated that once again in February of this year when it divested the Barmag Polymer Processing business. With that milestone, the company's commitment to excellence, innovation and pioneering materials science is stronger than ever. So today isn't just a numbers update. Today is the reintroduction of a sharper, more focused Oerlikon, a global player with local roots in key regions around the world. Over the next 4 hours, you will hear, as Aymeric told us, from the leadership team on strategy, technology and what it all adds up to financially and the businesses themselves will share how they are turning that strategy into growth. We've got a number of panels to dive deeper into all those areas you just saw now in the video, and we will take your questions after each major block. That means one time midmorning and then one time toward the end of the day. So let's get started. Please join me in welcoming Oerlikon's Executive Chairman, Michael Suess, who's been guiding the company's transformation since he took over as Chairman of the Management Board in 2015. Michael, it's great to work together. Again, the floor is yours.

Melinda, thank you so much. So good morning, ladies and gentlemen. A very warm welcome here in this historic train station of Zurich. And when you came from outside, maybe you have passed by Alfred Escher sculpture. He was a pioneer of Swiss industry born in 1819, and we've been founded in his period in 1876, 150 years. That's a while. In 150 years, there was a period of reinvention daily, weekly, monthly, yearly. And Oerlikon went through all that as the Swiss community went through. And now after 150 years, we are here together to see what Oerlikon stands for now for the next 20, 30 years. And I hope I will get old enough that in 25 years, I would be invited for the 175 years celebration, seeing that everything what we have done and said went fruitful further on and Oerlikon remains as a cornerstone of the Swiss economy and the Swiss society. As a leader in material science engineering, and it sounds a little strange material science engineering, but it expresses exactly what we're doing. We are great in material, we are great in science, and we are great in engineering and making adoptions and applications for our customers. We are driving the next generation of industries because without that, what we are doing, nothing will work. And you may have seen already or you will get a book with a little title the big impact because we do since 150 years, small things which have a very big impact, and you will see a lot of examples and you will realize that there is no day in life without Oerlikon. We will touch that. But first, I would like to share you a little bit the view on why Oerlikon has such a unique business model because first and above, whatever you buy from us, it's pretty -- I would not say cheap, but it's affordable. versus the value we create for your products. And we do that in a lot of products and almost all of them, we are mission-critical. Without that, what we provide, this product would not fulfill these requirements. And we do that long term and very reliable. And this is built on a toolbox where we have always the same tools. And we use these tools for 10 different industries. So that sounds complicated, but it's not as long as you understand your industries. And for sure, we have industries like cutting tools or automotive, where we are in for decades. And we have industries like semiconductor where we're in for 4 or 5 years only. So the intimacy with our customers is different. And this is where maybe the complexity comes from. But when you are then local and truly global on the one hand, but local on the other hand, as we are, as we're in all five big hemispheres, we're in Europe, in Germany. Now Germany is part of Europe, but it's too big to keep it within. We are in China and Asia Pacific. We are in the Americas. We're in all these hemispheres with these 10 industries and participating not by sending experts, but by local people, which are working for us there since decades as well. And then we take our integrated business model from coatings and components, which fits very good together, built on the knowledge to build the right equipment and to provide the right materials for that and have answers when there are new requirements show up and do that with a very high entrance barrier on innovation and technology. And it's sometimes difficult for you to compare because we are the wide unicorn in the forest. There is no other one. All our competitors are at least 3x smaller than we are. They are doing niches or some parts of that, but this integrated model where you interact with a customer and the customer has a demand and you can tell them it's PVD, physical vaporizing, thin film or it's a thermal spray solution or you need this, we can offer that. And we don't offer them a solution, we make it happen. And then we stay reliable with them like in aerospace, where you have to stay 30, 40 years in the program. We cannot disappear because they have to do the full reevaluation again. So with this leader in material, leader in application, leader in engineering, this is the entrance barrier which we have for all kind of competition. And where we come from and where we are today, I don't describe you now that that last 150 years, it would take a while, a very proud history, but that's why you will get the book. It's really interesting to read about. But in 2013, Oerlikon was built only on PVD. Yes, there was still a conglomerate, but that was today Oerlikon was only PVD. And we served 75% tooling industry, some automotive, a little bit energy. That's it. Within the last 10 to 12 years, we diversified the company from these industries into 10 industries, serving from airfoils to luxury goods, from car to tooling, from semiconductor to defense. This diversification was an effort, but it gives us a huge resilience because in the end, it's always the same toolbox again. What we develop, we roll it out in the different regions. And not in every region, we're working in 10 industries. It depends which industries like in India, where you have a more automotive focus or in the U.S. where you have a more aerospace and energy focus, but the 10 industries in total are a global scope. And if you see, we are still a European-centric company. 50% of our revenue is Europe. By the way, in this business, we tripled in all 3 big hemispheres. So here, there is in APAC, there is China in and in Europe, there is Germany in. But for the matter of easier handling, we have separated internally. But we have tripled our revenues in all the 3 hemispheres. We have not achieved yet a super dynamic that America and APAC getting closer to Europe. That's the reason why the Europeans are still doing very well despite the perception, but we have a good market in Europe, and we work on that. But overall, we are shifting our focus stronger into Americas and strong into Asia Pacific because there are growth areas and markets which we don't see and don't have today in Europe. If you do that, you need the right teams for that. And when I had the pleasure to join Oerlikon in 2015, there was still this impression about the company. It was super shaky. A lot of people have left it. We didn't have a very strong team inside. We had to build that. We had to hire from outside, and you will hear later on from Anna, what we have done on the HR level to have today not only that people you will see today, but a very strong base throughout the whole organization. But it's a pleasure for me not to make a Capital Market Day where the CEO and the CFO and the COO shows up, but that you see the whole you see here, that you see the Managing Board, that you see the people who run the businesses, who do the strategy, who do the communication, who is the CTO for the company, who stays for this innovation power. And you will see them in action. You can interact with them, you can talk. It makes the company for you more transparent because sometimes we realize that Oerlikon is very capable, but people do not understand what we do. Even people who have worked with us for 10, 15, 20 years when you invite them on site, then they say, "Oh, now I get what you're doing. And this was because of a conglomerate, it was difficult to tell the story. This powerful top management, a very lean group of 16 people makes all the decisions for 10,000 people in a very lean and dynamic way. And it has the right diversity and it has the right diversity on age, on gender, on experience and on nationality. And with that, as I said already, we are serving 10 industries. And there is not a single day without Oerlikon. Wherever you are, wherever you raise up the morning, where you go to bed, you have met Oerlikon in products, outside, inside, because all these products wouldn't work. it's power generation, defense, semicon, medical, aerospace will focus today very strong on electrification, on air traffic, on semiconductors and defense. But don't forget about, there's an oil and gas industry, there's a medical industry. There's luxury, there is tooling, which are still very strong and very good industries for us. And what's the benefit for us, and I mentioned already, the big impact, small effort, huge effect. You have a driller, you work with this driller 10x the driller scrap. You coat the driller, you work 20x, 50x, up to 160x depends on the coatings which are on. And you can imagine what that means not only for the cost of material or the cost of tooling, but as well for the operational stability, if you don't have to change all the time your tools. And we're not talking only about small little simple drillers. We're talking about very complex tooling systems, which work very efficient and you need them. If you think about defense, if you have armored steel, if you have composite materials, if you think about lightweight constructions with a carbon-based, how to cut carbon. You need diamond solutions. You need solutions which are not in the Walmart or in a Home Depot where you can buy them. And that's where we are in. That's why we are an industry sometimes direct with the product and sometimes indirect by the tooling road. Or if you take jet engines and we take all of this example because maybe that doesn't sound too much that you have 0.1% of the cost of a jet engine and you save on a simple trip, you save 4,000 liters, no gallons of fuel. This is a huge amount. And when we talk about sustainability, Ana will mention that. What we save only by fuel in jet engines is the equivalent on a 30%, 40% of Switzerland for 1 year. This has an impact. It's not only carbon emissions, it's fuel you're saving, it's range you're getting. And that's why this company has this big impact. And this is structured in a unique integrated business model. I will not go through this whole wheel because we will see all of that, the different coating services, different components, what we're doing and the mature equipment story. That's why I'm jumping directly on the 3 segments, we made it a bit easier for you to bundle that in segments. By the way, it was a request from the market as well. You cannot report on on Oerlikon, you should bundle that. That's what we're doing, but it's still integrated. We work together. We are in the regions, the P&L sits in the regions, and we have the different tools in the different industries we are serving. But nevertheless, coating services can be considered as the backbone of the company. Coating services comes very strong out of cutting tools of mold coatings. But meanwhile, there's a lot of precision goods and components, which get coated, PVD coated as well. We have some thermal services as well, too. Focus is Europe, 50% Americas, Asia Pacific, 20%, 30%. Why? Because even today, Europe, especially in the tooling world is a very strong continent, and we are still very strong in this world. So almost 40% of group sales with a top-notch setup of technologies and don't forget about 110 sites globally. And I guess Dirk or someone will mention that, but virtual connected. So like one virtual coating center. This is why we have expanded -- not expanded, started into our digital world 2018 already because it takes you sometimes 3 or 4 years to get even your people on this trip until you really start to make benefit. But you will see the benefit in how we run 550 coders in PVD coatings, CVD coatings globally as one coder as it would sit here in Zurich altogether. Next story, components. Why we have components? Because in certain areas, it makes a lot of sense further -- either to market access to deeper intimacy with your customers or simply to have a vertical integration. And one of the component stories was AM and a lot of people have always said, "Oh, Mike, with this hobby and with this AM and what it cost it and so on. First, it didn't cost that what all of you have in your mind. I don't disclose the numbers. But meanwhile, we are growing 30% to 40%. We are profitable. And if I would have to buy this business, I would need the double amount of money, which we have invested. And invested, I mean cost for CapEx and OpEx. It was a story which took a while, but to shape a new industry, which fits perfectly to us with all these material competencies with all that where we're already in. To shape a new industry, it takes a while. And at the beginning already, Melinda was with us when we started to do this story, but we have a long relation even in Siemens and it was always great stories we had to share and we had to provide. But this AM story was something where you have to run for a while. And even if you have headwinds, you have to keep track. It's by the way, the same with digitalization. A lot of people in the beginning at the steel and materials company did never understood why we go more digital. Today, they understand. Today, they buy in. But to convince them, it's a 3, 4, 5 years track. And if you give up too early, and this is sometimes a problem of a public noted company, a lot of people know it better. A lot of people tell you, oh, next year, you have to have this and that, but you have to keep track. And this is what we did. And in the end, we deliver. And the facts here are that we have 30%, [ 40 million, 50 million ], there is some stories in like luxury. A lot of people may have not understood why we bought Luxury. And by the way, I have to say, timing-wise, it was not super smart because we bought it in '22, it was a super opportunity because typically, these assets is going only to private equities and the management team wanted to have a strategic player. And we wanted to get in the Luxury story with our colleagues. But unfortunately, the Luxury industry went to one of the major crisis in the last 4, 5 years. And if you buy something at the beginning of a crisis, that's not super smart. Nevertheless, we made our homework. We cleaned up. We brought profitability further up. It's not there where we want to have it. But we are a full credible player, and Catharina will give you more insight about in the luxury segment. There's a lot of metal coatings and there's a lot of electroplated coatings, which takes much, much more energy, much, much more materials and a really significant lower surface quality. And for high-end luxury goods, by the way, the market we target, there is 20 million customers globally, an average CHF 7,000 spending per year. So we're talking about CHF 140 billion market. Our metal part is much smaller. But now we have the credibility and not only in the areas where we work, but as well in other areas where we have a much deeper impact now in the watch industry and in other goods and luxury. And this is a field where PVD, especially PVD plays a role. And where we develop stuff and maybe some of my colleagues will share that with you, a new black, which was designed for luxury, but now you use it for defense, you use it for surgery instruments and for other stuff. So whatever you develop, you roll it out in the other industries. That's the smart part here. We will see about this, terminal isolated shields, how to make batteries safe. And we have one component business in here that's friction systems, which was contributing a lot in the past and gets more and more a little bit headache, but we still manage that because friction systems is manual gears linked. And there's not too much manual gear business growing in truck industry yet, but we have to handle that. So there is not all-time sunshine. There is some little shadows, but this is good to be handled in the component world. And last but not least, materials equipment, where we made a huge restructuring after we bought Metco because it was harvested and underinvested, and we had to do a lot to clean up. And Andrea will probably give us more insight about what they have done and where we are. Only one number, we came from more than -- I think, 2,500 different materials. Today, we have 1,000. We are highly profitable, and we are an undispensable partner for the energy industry, for the industrial gas turbines as for the aircraft industry and others, by the way, because the tooling world, they are not tooling. The semiconductor world as well needs that coatings. So the facts are here, we are almost 130, either fast growing, very good business, not too much competition. And in a business where you know that gas turbines, either for utilities or for aircraft are sold out for the next 10 years. And this industry has a lot of struggle to ramp it up, and we can help them to make that safe and to make that ramp-up safe. As I mentioned, more or less to refocus you, air travel increase drives our business. The center of electrification is not only AI, it's simply the overall industrialization of the world, the access to electricity. When I was Head of Siemens Energy, we talked about 1.5 billion people no access to electricity. Today, maybe it's still 800 million people, no access. So there's a sheer demand on electricity driven by a lot of different stuff. In the end, you have to answer that by nuclear, 15 years, and you have a lot of phase out. Coal, huge carbon impact. Renewables, no battery solution. The solution for the next 15, 20 years, not the only one, but one of the massive ones is gas turbines, high reliability, low carbon footprint, gas is available. So this industry drives this growth on air traffic anyway and semiconductors driven by electrification and AI, where we are in as well. And last but not least, a massive rebuild of defense. And these are public numbers. That's why I can mention that. But U.S. has 5,000 Tomahawkks, and they have used in the run-up to 1,200 already. We need a rebuild, but the capacity of the states are 80 a year. So you can imagine what that means if you think about future conflicts, how massive you have to ramp up industry. When Thyssenkrupp Marine makes 24 new submarines, this is a huge demand, but these businesses are not in the order books yet. They're on the negotiation level. The [ CHF 500 billion ] only Germany wants to spend in defense is not in the order books. And we participate in that business in three elements: indirect by tooling, indirect by all the parts for that engines and fighter engines, powders, equipment and then direct step-by-step in final applications where we do, for example, actual silencers and cool plates for fighters. Fighter is a flying data center, a lot of heat, much more efficient. The breakthrough for the cool plates was in our aerospace in the space world, where we made the RF antennas, and we took a huge amount of parts out and a huge amount of weight and optimize the parts by a 3D printed solution. And there is more and more applications you only can do with 3D printing. So either you're in or you're out or you buy you in yourself with a lot of m of money. So these are the four areas we focus more. But again, don't forget about 10 industries which we are serving. And by that, the Mission 2030 is pretty simple. And it's built on reality. It's not a wishful thinking. There's projects behind. There's clear not only plans, there's plans with execution behind. So we know where it will come from above [ CHF 2 billion ], and we have to do so because after all this cutting off, we are getting subcritical for a global company, you need a certain weight and a certain size, [ CHF 2 billion ], above 20% EBITDA margin and above 10% ROCE in all three areas, and Marco Freidl will give you more insight on that. We are very well on track. And then you make your own calculation. If you have [ CHF 400 million EBITDA out of CHF 2 billion ] revenue, you ask yourself which kind of multiple you will reflect our actual share price. And then if you make this mathematics, as I have done, you would invest. With that. And if you're not invested, you missed already the first 60%, but there is another 60% or 100% to come. So -- but that's on yield. We never forced someone, but we know what we are doing, and we're very self-confident that we will execute that in a proper way. That's from my side up to now. Now I hand back to Melinda. And later on, we have a chance to interact. But before you, you'll see a lot of incredible people.

Many thanks, Michael. And we'll come back to those numbers a little bit later on in the morning. But first, we want to talk about how that strategy we've been hearing about translates into action. Dirk Linzmeier joined Oerlikon as Chief Operating Officer in April 2025, bringing with him a really unique combination of experience across traditional industry operations and technology and including senior roles at Mercedes-Benz at Bosch and a highly successful stint as CEO of TT Tech Auto, a fast-growing automotive software company that you repositioned, scaled and then successfully sold off. So please join me in welcoming Dirk Linzmeier to talk about operations.

Good morning, ladies and gentlemen. Also from my side, a very warm welcome. Michael has just outlined Oerlikon's Mission 2030, above CHF 2 billion in sales and a sustainable operational EBITDA margin of above 20% by 2030. And my objective today is to show you exactly how we get there and why we are confident in that path. So now let me start. The new Oerlikon is diversified across markets and segments, and we benefit from powerful structural growth trends. So it's aerospace, it's semiconductor, it's electrification and it's defense. And as Michael already said, it's only 4 out of our 10 industries. And across all these segments, that's a great thing. We benefit from a balanced exposure to OEM and aftermarket demand. So together, we expect these trends to strengthen our overall business and to add approximately CHF 300 million sales by 2030. So now let's start with air travel. You all know air travel has increased significantly over the last years. We are above pre-COVID times. More than 5 billion passengers flew in 2025, and that's an all-time high. But at the same time, aircraft cannot be built fast enough. There is quite a big backlog. There is engine shortages and other components, which are critical. And the fact that not enough aircraft are available right now due to supply shortages leads to the fact that airline keeps flying longer and longer aircraft life means more maintenance and more maintenance means more Oerlikon. So both are growing, new aircraft and maintenance, leading to a 6% annual growth in global engine MRO. And Oerlikon is mission-critical in the aircraft, in these engines. No aircraft takes off without Oerlikon. There is roughly 13 different coated engine parts in an aero engine. And we supply 100% of all major aero engine OEMs. And the great thing is once qualified, we typically remain on that program for the entire life cycle, creating highly recurring revenues. So our average content of approximately 10,000 is only a fraction of the aero engine cost. Michael has already outlined that. So it's less than 0.1%, but plays a key role in improving the engine's efficiency. Another trend already mentioned is semiconductor, where we can play our technology. And here also, I mean, coming out of the world, I think it personally really fascinating. It took 40 years to get to a CHF 600 billion semiconductor market. And now it takes only 3 years to hit the CHF 1 trillion, and it's further accelerating and growing. That is massive. And to manufacture semiconductors, of course, you need highly specialized production equipment. So wafer fab equipment. And this market is around CHF 100 billion. And for Oerlikon, this translates into an addressable market of approximately CHF 1 billion. And driven by around 7% annual growth in wafer fab equipment spending, our addressable market will reach roughly CHF 1.3 billion by 2030. And also here, the great thing is the fab equipment is refurbished roughly every 18 months to ensure consistency and quality and also that is creating recurring revenues. Where are our Oerlikon technologies in semiconductor? So semiconductors are produced basically in four steps. You have deposition, you add the material. You have lithography, you define the pattern. You're etching, removing material and then doping, changing the electrical properties. And we are with our wafer carriers in this whole chain and in also other several steps of this, improving the yield at lifetime through precision, wear resistance and contamination control. But not only our coatings play in semiconductors as a role. You have already mentioned it, Michael, with additive manufacturing. Also here, known as 3D printing, we have high-performance components such as volume reducers for atomic layer deposition. So also with additive manufacturing, we are playing a role in semiconductors. And we are a trusted partner of the five leading OEMs in this domain. And this AI-driven semiconductor boom is also accelerating another major trend, and that's where I'm coming next to. That is electrification or also we say technologies powered by electricity. And also here, AI needs data centers. Data centers need chips and chips need electricity. And a 50-megawatt data center consumes as much electricity as roughly 100,000 to 150,000 households. That's equivalent to cities like Bern or Lausanne. And data centers need just not any electricity, they need stable electricity sources such as gas turbines. And gas turbines, again, need Oerlikon. So there's a 20% more electricity expected to be consumed by 2030. And that means roughly 10,000 additional industrial gas turbines. And again, Oerlikon plays here mission-critical roles. So our thermal spray coatings, they protect the turbine blades and veins against this really high temperature of up to 1,150 degrees, improving efficiency and the lifetime. And also here, I mean, you can read this 1% improvement. First, I thought that's not too much 1% improvement. But just imagine, you increase the efficiency of a turbine from 40% to 41%. This results for 100-megawatt gas turbine in a yearly saving of CHF 2 million already in natural gas. So if you now have a 1 gigawatt installed base, this is already CHF 20 million. So this 1% is a significant saving. And for a typical 100-megawatt gas turbine, we have approximatelyn CHF 100,000 worth of earlyonating materials in this gas turbine. And again, this is only a small fraction of the overall cost of a gas turbine. The next market I would like to highlight is defense. And as already mentioned, defense is growing massively and defense is also a good example how we can replicate, how we can copy our existing technologies and solutions across different markets and applications. So the defense demand and market is supported by basically 2 major streams. On the one hand side, there's a lot of investment like the CHF 700 billion Rearm Europe, which goes into scaling existing production. So what's already available, just scale, make more of it. And on the other side, we have then venture capital. For example, here, CHF 2 billion also already went into venture capital. And here, we are accelerating innovation. So completely new things, robots, automation, where we have the chance to get in with new applications. And then on top, there's a trend in the defense industry to accelerate additive manufacturing because you need to have these additive manufacturing parts. They are lighter. There are certain structures you can't do with any other technology. And so it's even forced by the U.S. defense to have this manufacturing capability. And Oerlikon contributes in all the 3 segments. That means higher volumes lead to a higher demand. New systems are designed and get more complex. Here, it's where advanced manufacturing plays a critical role, heat exchangers, for example, cooling plate structures. And then scaling production leads to a higher consumption of our materials and thermal spray equipment. So the mega -- the megatrends create the demand. And now I switch into the segment view, how we capture that demand. Let me start with coating services. our also known PVD business. We are the global #1 in PVD or those of you who don't know PVD in thin film coating. And we operate the largest coating network worldwide, and I come to that virtual coating for on the next slide. So growth in coating service is basically putting more volumes through our existing pipes sites, largely by filling capacity with limited incremental CapEx. And we expect our business to deliver 4% to 6% annual growth until 2030. And growth opportunities are moving in 2 directions. Coated tools become more critical as customers scale production. So there's more coated tools in aerospace, in defense and in other industries where formerly have no coated tools being. And then there's new coated applications, for example, in semiconductor and in the medical industry. So our strategy is clear, technology replication across industries, coating the uncoated, once a customer is qualified, we typically stay for the entire life cycle, generating recurring revenues. And last but not least, leveraging our existing global network. And here, a little deep dive into digitalization because Oerlikon has invested a lot since 2018 in digitalization. And now we see the benefits out of these investments. So we have established, and we call this virtual coding center. And basically, no matter where this 550 coders in the 110 sites globally are, I can look at my dashboard, I can look at it as one big global connected factory. And we also -- we not only look at our own sites in the factory, we also look at the complete customer journey. So already, it starts from the pickup of the tools until back delivering. So we have, for example, introduced the pickup app where we can see exactly where our tools is. We can optimize the routing. We can optimize the behavior of the picking up. We have a better transparency with the customer. And this is only -- I only picked 2 out of 10 examples or more we already have. I don't have the time to present all these great examples. So the pickup app is one. The other one I also find fascinating is in the meantime, when I summarize everything, we basically have 31 billion data points a day. That's massive. And now with the compute capability and AI, we can identify pattern in this data. So what -- a good example, we had an issue at some site. And basically, we couldn't find it out in the first place with the technician. Then someone looked at the data, compared this coder data with a good coder data, and we found out that there is a certain sensor is not working properly. We told the technicians, they could fix it within minutes. So that is the power of data once we use it in our facilities. And there is many more examples. And this, of course, reduces throughput by 10%, increases utilization by 30% and reduces maintenance by 15%. And on top, we can even create additional revenue streams. Another example are the components. And components is where our integrated business model really comes to life. We manufacture critical components and enhance their performance with our coating solutions. So we don't just protect the customers' turbine blade, actually, we also make it. And that is a really fascinating part. There is a state of wane. So there's a lot of technology in that. There's only a few companies in the world who can produce such a state of wane. We are currently ramping up. You need to imagine that's a ring at the end. We are ramping up that with one of the major aero engine OEMs. And yes, I think it's fascinating. And we don't just coat luxury components, we manufacture it as well. And we expect this business to grow by 5% to 6% annually through 2030. So growth opportunities are in aerospace, what I just showed this one here with the state wins. But we also have in semiconductor and defense, especially with additive manufacturing, new opportunities, 25,000 3D printed parts are already delivered by today. We have then in luxury, only also the technology shift into PVD. Michael mentioned it already from electrobladating to PVD, already 15% is PVD technology, and there's also new customers coming. And then in automotive, so we should not forget automotive. So my home base is automotive. I come from automotive, and this is still a great industry. So it just transitions and there's also new opportunities for us. So for example, and you can see that later in the showroom, there's the thermal insulation system protecting batteries, but also with HRS Flow, new opportunities in hot runner systems with the latest technology. And also here in these businesses, we are diversifying out of automotive, for example, in packaging and medical. So our strategy is focused on high-value components where the integrated Oerlikon solution creates a real competitive advantage. And then last but not least, our really strong business right now, the Materials and Equipment business. And here, every machine we install is not just a sale, it creates recurring demand for our materials and services for many years. So roughly 50% of our sales is already coming from aftermarket business, materials, spare parts and upgrades. And here, we expect even 6% to 7% annual growth through 2030. And more than 2,500 thermal spray systems are already installed out there. And this is also, to my knowledge, the largest fleet in the world. And more than CHF 800 million worth of materials are sprayed annually through this installed base. So we have on top of that secured, and we come to that later in the panels, critical minerals. That was a hot topic in the last 12 months. And I think we did really well, and you will later see from the team what they did to secure such minerals like Etium and tungsten. And this is creating now for us new opportunities because we are able to deliver where others are currently not able to deliver. And we are also launching new applications like, for example, brake this. And that's -- I mean, you can see that later, that's such a powder. You can't see it from here. It's very thin. It's very fascinating. And this is adding additional sales then even on top. So also here, strategy is clear, capture the super cycle growth with new equipment and material sales and leveraging our installed base and recurring revenues over the next years. Let me pull that together in summary. All three segments contribute to Mission 2030. CHF 2 billion, above CHF 2 billion in sales with 6% organic annual growth. And it's the sum of concrete identified growth initiatives. gaining market share, coating the uncoated, scaling new applications and ramping up aerospace components, additive manufacturing and thermal insulation systems. And together, these four structural growth trends at roughly CHF 300 million by 2030. And don't forget only these four adding the CHF 300 million. There is other 6 industries we have in our business. Again, the new Oerlikon is more diversified, more resilient and less dependent on any single market. And we stay close to our customers locally while using our global expertise, knowledge and competence. And most importantly, none of this would be possible without that outstanding team behind Oerlikon, many of whom you will meet today. Thank you very much.

Thank you very much, Dirk. I'm sure it hasn't escaped your attention that cutting-edge technology is the powerful engine that is driving the strong growth that both Dirk and Michael have taken us through. So let's turn now to the company's Chief Technology Officer and hear more about what's driving the engine today and how strong customer partnerships are helping to keep Oerlikon at the forefront of value creation in the future. Who could be better positioned to deliver customer focus than a CTO who has worked for or provided services to all of the key industries that Michel referred to earlier. Brett Rosenthal started his career as a mechanical engineer at Raytheon. He then became a customer of Oerlikon as a manufacturing engineer at both Apple and Tesla, and he subsequently served as CTO of an equipment business working with the semiconductor, defense and industrial gas turbine industries. So pretty much covering the whole spectrum there. Brett Rosenthal, you have the floor.

Thank you, Melinda. I'd like to walk you through our value creation process, how we're customer focused and how we translate this into some of the key metrics that Michael and Dirk talked about earlier. So first, we invest in our customers' unmet needs. How do we do this? We take 4.5% of revenue. We allocate it to our R&D budget. We roughly break it up 1/3 to revolutionary topics and 2/3 to evolutionary topics. And how do we sort of think about these? These are really customers' short-term needs versus their long-term needs because a lot of times, you're advancing from Alcrona Pro to Alcrona EVO, but the customers also have demands when they shift materials from stainless steels to these carbon fiber composites that Dirk and Michael have discussed earlier. So that's split between 1/3 and 2/3. Then we have a risk framework where we evaluate each project on 4 key value frameworks. First, the value proposition. We have to be able to deliver at a price the customer is willing to pay. Second, market acceptance. Who is the customer? Who is the user? Who is the decision-maker in this? How are each of these stakeholders sized? Resource maturity. Do we have the suppliers in place? Do we have the equipment in place? Are our team members capable of delivering what they need to do? And finally, do we have the license to operate? You're going to hear more today about defense topics and others, and we need to be able to make sure that we meet regulatory, safety and geopolitical topics. I'll come back to this later. Once we identify a risk, we work with the team to address immediately, usually in the terms of a proof of concept. Why this is really important? We don't want just the best technology. We want to be working on technology that customers adopt. And the way to do that is to derisk the highest risk topics and if we can't, shift our resources to other more promising solutions. This helps us reallocate our resources and always be working on the latest generation of topics customers need. A lot of people say that they're close to their customers, and I'd like to show you how close we are with ours. First, we have 6 global hubs placed around the world. These are co-located with very critical ecosystems in our customers' own businesses. Then we have 120 customer solution centers. What is the customer solution center? It's simply an application specialist. They take a global solution and they translate it into local needs. Additionally, with all this data and virtual coding center topics that have been addressed, they take all these local learnings and bring that back to global business. This really helps us arm our 900 sales engineers that are really knowledgeable in the industry trends with the latest technology and help address unmet customer needs around the world. This structure allows us to have three things: First, a short time to market; second, it helps us protect our existing markets. And finally, it helps us expand into new markets. And now I'll walk you through an example of each. Our first example is about a short time to market in our materials business. We acquired Scoperta back in 2017, and this is a company that helps us simulate millions of different alloys. And you're going to hear a lot about different AI use cases around the world. But what separates Oerlikon is what's next. We take these million different materials that we simulated. We bring 100 to the lab to validate. We bring three into production, and we give these powders to our customers to test and validate. This used to take months for Oerlikon, it takes days. Now how does this actually generate value for the customer? First, we'll talk about supply chain resilience. When China imposed export restrictions on rare earth materials, including nitrium, Oerlikon was able to support its customers in three ways. The first way, only a company of Oerlikon's size and later you'll hear from Andrea and capability could work with existing suppliers, existing vendors to secure licenses to continue to ship these rare earth materials where they need to be. Second, and now we get into some unique things in the technology space, Oerlikon was able to identify new suppliers. But when you bring in new suppliers, you bring in new supplier qualification risk. And with our simulation capability, we could quickly simulate these differences between the current and the new supplier, and we can help validate it for our customer quicker than our competition. And finally, we were able to develop new rare earth-free and rare earth-reduced materials for our customers. This is truly unique and something that when people talk about AI and big data and other things, I like to talk about customer-focused value creation, and this is really a key part of that. Our second example is about defending existing industries in our equipment business. Traditionally, the thermal spray business is an engineer-to-order kind of business. And what that means is a customer sends us a purchase order -- or sorry, a request for quotation. We provide them a response to their quotation. There's an iterative process where we work on defining the specification. Then we get a purchase order from the customer. We purchase our equipment, we assemble, we do a factory acceptance test, a site acceptance test. You can imagine, I'm just going on and on and on. This is quite a long process. Now with our modular systems, we've moved from this traditional engineered-to-order to configure-to-order. This really helps our customers move beyond an iterative open-ended process into a more defined process. In the thermal spray industry, there's a saying that goes spray and pray. Now our customers can spray with confidence. And more and more customers are moving to these configured systems, and we have customers that are now ordering these machines by the dozen where in the past, they used to be ordering one machine every few years. Our final example is about expanding our addressable in industries in the advanced manufacturing or components segment. When Oerlikon has been providing thermal barrier solutions to the industries for decades, we've expanded our offering with cooling solutions. Additively manufactured parts are no longer prototypes, but critical pieces of complex assemblies where customers require maximum performance to function. Imagine you're an aerospace engineer and you're tasked with designing the next-generation aircraft fighter or drone. One of the key features you have to think about is the flying data centers that was referenced earlier. We're adding more power electronics to a system and you have to cool these power electronics. What is your cooling medium of choice? It's your fuel. So we have this traditional trade-off of there's a limited amount of fuel in the aircraft, but we have increasing power demands. So how do we solve this debacle. With additively manufactured parts, we can increase the cooling efficiency by 10x. So now the customers no longer have to have this trade-off of cooling efficiency and range, in addition to all the topics that were addressed earlier from part consolidation to weight savings to conformal designs. And what is really unique about Oerlikon is, okay, other people you've heard from have additive manufacturing capabilities, designing this in a way that it's actually manufacturable, industrializable that you can take these powders out of the component after you print it because you can imagine if you have AM powder in your fuel lines, you have a big problem. This is really unique capabilities inside the Oerlikon business. As you can see from these examples, we deliver an immense amount of value to our customers. And as Michael talked about and Dirk talked about earlier, this is at a relatively low cost. And I think this is really unique about Oerlikon. We don't just look for the best technology. We don't just look for the most exciting industries. We say, how can we have a reoccurring business model that generates value for our customers and a low base, so we have these really attractive niches that we get to take advantage of. Thank you for your time. I hand back to Melinda.

Brett, thank you so much. Really fascinating, and you can get ready to come right back up here in front because we want to move seamlessly now into our first panel that will drill deeper on Oerlikon's solutions to serve growing industries and provide a host more examples of the kind of technologies that Brett was just taking us through. How is this company positioning itself to capture growth in key markets and industries and what distinguishes it from competitors. We'll hear more about that now from 4 leaders with expertise that spans technology, hands-on strategic oversight and growth industries in key regions. And they are, respectively, Guilherme Rocha is Senior Vice President for Strategy, Business Development and Commercial Excellence, driving revenue growth initiatives across the company. Jane Cao is Country President, China at Oerlikon Surface Solutions. Stephen Skrenta is designated Regional President, Americas; and Brett joins us as well. So I'm going to go over here.

And Brett, let's start basically where we left off with you. And you've shared some key examples. Now drill down a little deeper, if you would, on what solutions for growing industries look like in practice and in particular, how you work closely with your customers. Many of you this morning have talked about deep customer partnerships. Maybe you can give us a few more examples of those.

Absolutely. We generally have 2 bundles. Customers, they have demand, the sort of customer pull model, and we also have some technology push that we'll get into as well. So on the customer pull side, I mentioned the 120 customer solution center employees around the world, and they're really working with the customers directly. They have an immediate need. They need to address it. They are taking global solutions and adapting them to the local market requirement. And this is daily business for Oerlikon. We also want to be able to find these technology pushes. We want to be able to look a little bit beyond what the customers' immediate needs are and see where the industry trends are going so we could be ready for solutions when they need to be. And we have to derisk these solutions really with proofs of concept. And later, you'll hear from Jane and Stephen on this, that this is a regular topic for us where we find a way to bring a machine or a process or a technology directly into the region so that we could get immediate customer feedback. One example here is we have a thermal spray customer in the U.S. on the Defense and Aerospace industry that was looking to manage their, I would say, variable demand. And we had, of course, immediate solutions available for them, improving efficiency, reducing costs and providing availability of materials. But we also said, what if we brought in one of our standard PVD coaters, a machine called the INNOVENTA kila and co-located it very close to you in our Westbury, New York facility. And this ultimately led them to realize we could do coating service for them. We could sell them equipment. We could do a range of different outcomes. They ended up purchasing a machine. So now we have the machine sale, but we also have the reoccurring materials business out of this because we're not just providing them the equipment, we're providing them the materials. So I think this is one way where we also show between the technology -- or sorry, between the customer pull and the technology push that we meet our customers' most immediate needs and then we show them solutions that will be beneficial for them.

That's a great example of that customer intimacy that has been mentioned several times. Apply that concept now of being so close to the customer in connection with this new demand for supply chain security and also particularly on rare earths and critical minerals. As we know, this is a very, very key challenge facing all industries essentially at the moment or all tech industries.

Absolutely. Thank you, Melinda. We discussed a bit about the Scoperta model, but also it really integrates the business. We don't just develop new materials for people to test. We find ways to source and secure supplies that they're already used to. And I think I like to consider Oerlikon an anti-fragile company. I don't know how many of you read Nassim Taleb's book on the concept, but as the industry is changing, as geopolitics are changing, as critical minerals are becoming a key feature of our supply chains, Oerlikon is uniquely able to not just handle these changes, but to grow stronger for them and grow closer to our customers with them. So customer in particular, came to us and said, I really need a rare earth-free -- or sorry, a China-free solution for my topics. And we were able to show them sources outside of China, but we were also able to show them technologies that just eliminated the need for these critical minerals. And I think this is really in that anti-fragile spirit that we read about.

Thank you. Anti-fragility is definitely a good place to be at the current moment in time. Guilherme, the leadership team spoke earlier about current megatrends creating lasting positive momentum in these key industries, Aerospace, Defense, Electrification, AI-related industries. In all of these, Oerlikon does have a strong presence. Can you elaborate on the related growth potential and share, again, concrete examples of that?

Absolutely, Melinda. Aerospace, power generation, semiconductors, automotive, understanding the trends and the growth opportunities and actually the challenges of our customers is the job that myself and my team, we do like every day. And I want to give you a couple of examples that Melinda requested in some industries we mentioned before. Let's take aerospace. We learned that there's a strong backlog for new builds. There is a strong demand for MRO, and we are there on the engines right supporting with the efficiency. But there's another perspective into it. So we see in the modern aircraft, the use of more and more advanced materials. What they're looking for is efficiency on the fuel savings and the fuel consumption. So we see more adoption of carbon fiber, reinforced polymers, ceramic matrix composites that provides them with this lightweight at the same time with the strength that they need. The challenge here, those materials are quite hard to machine, right? So when it comes to the normal production site using normal using cutting tools, they might bring some quality issues, the lamination in the profiles and at the same time, productivity issues because you need to replace those tools quite often. So this is where we come. So Oerlikon has developed a very thin and a very precise coating solution to the cutting tools that are used in the industry, diamond-based coatings. And this is enabling our customers to produce with the quality they need, with the speed and the ramp-up that they need. And we are able to provide them with those solutions in the markets where it matters. So those industries are growing in Europe. We have sites that can offer that specialized coatings. We have sites in U.S. where also this demand is growing. So every time you look out right in the window in the plane where you're flying, you see in the fuselage some carbon fiber elements. You would know that very, very likely these parts were cut using coating tools right from Oerlikon.

Thanks a lot. So aerospace is an established industry as we know, it is going through a transition. But let's talk a little bit about emerging industries where the ultimate direction is perhaps not entirely clear yet. Does an industry have to be fully ripe for Oerlikon to find a niche?

Very interesting point, Melinda. As I mentioned before, we watch growth trends, right, across different markets and across different regions. We spoke about AI here. I want to take a different perspective. With advance of AI, we all learn that now we are coming to a point where the models or the software is so advanced that are enabling new use cases on the robotics side, what the industry is calling physical AI. So we are seeing now an increase of a new industry emerging of human noise, of robotics, where basically you're translating that knowledge on the software side into the mechanics. So imagine yourself that's not only enough, right, to have the right software power, but you need also to have the smoothness on the hardware side because you need to move smooth. You need actually to make it reliable, you need to make it durable. And that is where our solutions come in. We talked about the replication. So replicating the knowledge we have [indiscernible] and friction into that market as well. Think about safety. Those human noise, they carry a battery. So what happens when they have some issues with thermal insulation, there are our solutions, the thermal insulation systems that can also provide safety there. So I could go on and on, Melinda, with some examples. But for me, it's important, the message is we are not a company, right, with one single product, one single market to one single region, right? We are, at the end of the day, a company with a technology platform, a toolbox, which is proven and enables our customers to solve one of the most challenging business problems; productivity, efficiency, durability, safety, sustainability. So we say we are present in every daily life, as you see. But I would argue that actually, we are enabling the future of the industries with Oerlikon solution.

Thanks so much. Within both established and also emerging industries, it's pretty clear that 2 industrial superpowers are definitely going to retain a commanding position. And I'm referring, of course, to both China and Americas, which is why we seeded them at the center of this first -- and one Exactly. This is a collaborative and complementary work that we have here. So Jane, say more, if you would, about how Oerlikon is positioning itself to participate in China, which is clearly pioneering more and more advanced technologies, including but not limited to the robotics that Guilherme just mentioned.

I'm very happy that Guilherme mentioned the robotics. But before I dive into that, China, with all the 20 years economic development has become a very dynamic and competitive market. As a Chinese, I relocated back to China 2024. And even me, I was shocked sometimes how industry, a market application had developed in China. Look at the EV 5, 6 years ago, I would not be imagined that nowadays, one of the 2 cars sold in China is an EV car. And the top 3 OEMs, they are now BYDs and Great [indiscernible], and they have changed the landscape of the automotive industry in China. We now also pick up similar trends in the robotic and human area. With AI development, with government subsidies fundings with public and local investment, and there are signs this could be still immature, but it could be very exciting growth opportunity for China. Let me ask you a question. Would you guess how many small components like the shafts it takes for robotic hands to mimic a human movement? Just take a guess.

Call out the answer, if you think you know.

50. So our engineer told me, to my surprise, it's more than 200. So it looks very simple from the outside, but there are hundreds of small components which need to work continuously precisely, repetitively to even do simple move like push a button or hold a glass. And when these components need to move millions of times, friction and wear become a problem that's where Oerlikon comes to a play. We are already working with some leading players in that field, and they are using a carbon-based coating solution from Oerlikon. With the carbon, there's 2 formats of carbon; diamond and graphite. So from one hand, with diamond structure, it creates wear resistance. With graphite, -- and I mean I'm not an engineer, so we're very -- like fascinating for me to provide friction reduction at the same time with the same material. And with this, we could increase the lifetime of such component easily by 30% to 50%.

So make it even more concrete for us, if you would. What exactly are these robotic hands doing? You said hold a glass, but clearly, that's not their key function.

Exactly. So we are -- the team are really excited about this. So we are supporting one of our customers which are going to deploy hundreds of those humanoids in ice cream chain shops. I also see on a video, they promoted this robotic moves so fast, my eyes cannot really catch up, and then there was like in a minute, like kids for Flizert and for milkshakes. I literally feel like I mean a Star War movie, but accelerated.

And in a country as hot and muggy as China in the summer, that could be a very key innovation.

There is already one in Shanghai store. So I'm very curious to visit myself.

Thank you very much. So that's the hand. But robots clearly have numerous other highly complex parts that are also subject to wear and tear and repetitive action of the type you described. And I'm thinking for starters about those jointed arms that we now see in so many videos from the high-tech factories. So tell us a little bit about what that could mean for Oerlikon going forward?

Indeed, like I mean it's not in hands, but although hands is most expensive component of our humanoid, it's more than $50,000, can be even more. But there, as Melinda rightfully said, humanoid contains also bigger component like the joints of the arms, the shoulders and the legs. Those are much bigger components. And also different a little bit from the hand, they often need to work with loads like holding stuff or accelerating or make a stop or pushing, right? And there, the condition even get more challenging. And we are now in the frontiers with our customers developing the next-generation solution. And some colleagues mentioned material science with the lightweight application, we're even looking to put in coatings, some polymer, high-strength polymer materials such as PEEK. And this could -- why customers need coating, brings a longer lifetime, bring the cost of the product lower, then it can enable more applications and working scenario of humanoids because we don't want to have the human just there for entertainment dancing, which they can do, obviously, but we want them to work in extreme situations where the humans might not be suitable to do so.

So based on that EV example that you started with, it sounds like you're saying to me, this may all seem pretty far away to us right now, but 5 years from now?

Exactly. I think now nobody can say 100% certain that how big the humanoid industry can be. But we are on top of it. I mean if EV, it's everything about electrification, mobility, I think robotics, smart robotics, humanoids is everything about intelligent motion. And when there is a motion, they are wear, they are fiction and Oerlikon has an important role to play there.

No motion without Oerlikon. Thank you so much, Jane, for sharing your optimism. And Stephen, let me ask if the outlook is, in fact, equally promising when it comes to participating in these megatrends also in the Americas.

Definitely so. And in particular, across aerospace and defense, energy, power generation and semiconductor. And maybe just start with aerospace and defense for a minute. In the U.S., we're seeing tremendous growth in that industry. It was discussed a few times already today. But if you look at the backlogs across both commercial as well as defense, the backlogs are huge. The latest reported numbers that I saw on the commercial side, driven by passenger miles is today, backlog is over $1 trillion, which is staggering. Equally sizable on the defense side, driven by modernization of the U.S. defense complex restocking due to the geopolitical activities that the U.S. is involved in currently around the world. Our business model, our 3 segments are leveraged perfectly against the aerospace and defense growth in the U.S. currently. So when I talk about segments, we're talking about coating services, materials and equipment and components. Our customers in aerospace and defense in the U.S. are some of the biggest names in the space, but also dozens, if not hundreds of Tier 1, 2 and 3 suppliers. Those suppliers we're serving through our vast coating services network. We have the largest coating services network. We're talking about PVD coating services across the United States. What does that mean practically? We have coating facilities where we need them and certainly where we want them, and it's typically up against clusters of industry participants and aerospace and defense is no exception there. We're doing a lot of coating work at those centers, mainly on the tooling side for our aerospace and defense customers. Within materials and equipment, I'll start with equipment. We're selling both thermal spray as well as PVD equipment under the Metco and Balters brands, respectively, into aerospace and defense. We are increasingly being the go-to equipment provider, largely because of our global capabilities, our size and our customers on the aerospace and defense side want to work with very well known and and established equipment providers such as Oerlikon. On the materials side, we're very active. Here in aerospace and defense because it's a strategic industry, more and more so almost uniformly. We're being required to produce materials locally in the U.S. And so we do that in our Westbury, New York facility as well as our 2 facilities in Plymouth -- sorry, in Plymouth and Troy, Michigan. On the component side, it's been touched on. We're probably most active on the component side within aerospace and defense in our additive manufacturing business. That is work getting done in our Huntersville, North Carolina facility in the Southeast. The cooling plates have been discussed. I'll spend a brief second on the suppressors or silencers as they're called, that we are in serial production on the additive side in Huntersville, which is great for us and supporting that business model and driving a lot of growth.

Thank you so much. So what I'm hearing from you is that those backlogs and this massive structural transformation in the industry that are often depicted as challenges in the big picture, actually, that's a multiyear runway, excuse, the intended pun, for Oerlikon, it seems. Let me ask you now about another massive growth sector in the U.S., namely AI and the associated infrastructure build-out. Talk to us a little bit about how the enormous investment in that area is also creating new opportunities for Oerlikon?

Yes. I mean the AI build-out, it would be an understatement to say it's tremendous in the United States. I mean we all read about it all day, every day. The sheer amount of capital that's flowing in to support the infrastructure build-out to support AI data center build-out is tremendous. When you think about energy infrastructure in the U.S., you think about power, power generation, when you think about power generation, you think about industrial gas turbines. So industrial gas turbines for us, very similar to aerospace and defense, massive backlogs, huge, huge demand. We are playing in that space with some of the -- well, all of the largest OEMs. And we have both our equipment, mainly Metco, [indiscernible] as well as our materials. going into the most demanding parts of those turbines. So it's a great business for us and a long-term growth trend that we would expect for years to come. Equally, I would say, interesting for us is and driven by the AI investments that are getting done and the insatiable demand that this build-out has for compute power, dust chips, dust fabs and equipment that goes into those fabs is our coating services within semiconductors. We do that work largely in upstate New York at our Amyris facility, where we have our coatings going into that end market. It's been a growth market for us over the last few years, and we would expect that to continue. Equally exciting as well on the component side for us is some of the additive parts that we're producing in North Carolina that's also going into semi, which is helping diversify the additive manufacturing business for us, which is excellent. And so if you think across -- if you think about the U.S. across aerospace and defense, energy, power generation, that is, and then semiconductors, these are long-term trends that we are participating in currently expected to continue. The last thing I would say about each of those 3 is that it's interesting for us because not only is the growth quite healthy, but the margin structures in each of those segments are equally attractive. And we are participating across both the consumable cycle at our customers as well as the CapEx cycle will help -- which helps further diversify our own earnings streams.

Steve, a very quick word, if you would, please, on localization and critical minerals because this, of course, is an area that's been mentioned several times of enormous concern also to many major U.S. companies. So maybe you can talk about that a little bit in terms of the opportunities that also offers for you.

It's a big opportunity if you operate locally, which we do across all 3 of our segments, and that's excellent for us. I mean it's not just aerospace and defense. Aerospace and defense is a good example, but it's other industries. Technology, for instance, is a critical industry in the U.S. And so more and more, we're seeing the benefits of our localization strategies, in particular, a good example would be our materials business where we're producing powders in New York as well as Michigan and meeting the requirements increasingly so by these critical technology customers that we have.

Thank you very much to all of you for sharing your fascinating insights and also your very convincing proof points about how Oerlikon is positioned to support and profit from dynamic growth industries in these key regions and from these megatrends that put a premium on those local routes that you have very convincingly described for us, all those place names that Stephen just took us through, those are all local companies in the eyes of the customers that you work with. And that's why it's also possible to have both China and Americas sitting here side by side in harmony on this panel because this is a global company with local roots, and that offers enormous advantages at a time when anti-fragility, as Brett called it, is at a premium. So let's give them a warm round of applause, if you would.

Strategy, execution, technology, market reach, we have covered a lot of ground. Now we're going to talk about the numbers. What does it all add up to when it comes to financial impact and value creation. For more, we hear now from Chief Financial Officer, Marco Freidl. He's formerly at UBS in equity capital markets and M&A advisory and brought from there strong financial expertise with a strategic mindset. He's now been with Oerlikon for nearly 9 years. He played a key role in executing the pure-play strategy and leading the carve-out and sale of the Polymer Processing business. And he's also helping guide Oerlikon's Vision 2030. Marco, the floor is yours.

Thank you, Melinda, and good morning, ladies and gentlemen, also from my side. This session is about how we convert the strategic progress that we've heard a lot about into measurable financial impact and shareholder value. The underlying principle here is to maximize value creation by capturing profitable growth, while at the same time, remaining diligent on cost, capital and cash allocation. Let me quickly recap our 3 headline targets that you've already seen. Our 2030 mission is to organically achieve more than CHF 2 billion of sales, higher than 20% EBITDA margin and more than 10% return on capital employed. The combination of EBITDA and return on capital employed here is the essential proof point for the quality of growth and earnings. These 3 metrics are naturally interlinked. And in our execution, we will focus on striking the right balance within this financial triangle. What do I mean by this? We will not optimize an individual KPI in isolation, but balance achieving increased percentage margin while creating value-accretive growth. And here again, ROCE ensures that we execute in this triangle with the right balance. In all that, we keep a focus on diligent cash flow generation allocation and balance sheet strengthening. This slide here is the anchor for my presentation. And over the next couple of minutes, I will provide you with substance and examples how we will achieve these targets. Let's start with profitability. And here, the baseline is 17.3% EBITDA margin as of '25. And our 2030 mission is to achieve more than 20% EBITDA margin. On the following pages, I will elaborate on the bridge from the baseline to the target, and I will base that based on 3 levers. First, it is volume and mix impact. Second, it is cost of goods sold optimization. And third, it is reduced SG&A intensity. The logic will be built on showing you examples of already successfully implemented measures and in addition to that, initiatives that will provide further upside potential. This will show that the path to 2030 is indeed built on a well-diversified set of initiatives and not based on single high-risk measures. Overall, I think about these 3 levers in the following way: volume and mix is the commercial quality lever. This means we must grow in profit and value-accretive areas. Cost of goods sold optimization is the industrial discipline lever, means efficiency, means footprint optimization and means complexity reduction. And last but not least, SG&A is the focus to create further operational and functional leverage and remain diligent on cost. The next 3 pages will unpack the details behind each of these 3 levers. First, on improving revenue quality, so not just volume. Here, a successfully implemented example I would like to mention is portfolio optimization towards higher-margin solutions. And the great success story here is our strong growing materials business, in which we have increased profitability over the last 5 years by more than 30%. One key enabler here was the reduction of the product portfolio, getting rid of dilutive and subscale products to strengthen the margin. So here, we have reduced the number of product references from around 3,000 to around 1,000. Another example is, and you heard about that from Brett, is innovation as a driver for differentiation and pricing power. And here, we have launched over the last 5 years, more than 200 materials in that segment to support that target. Now looking ahead, very important for us will be that we improve the mix of our businesses. And you have seen which industries benefit currently from strong growth trends. We expect that the share of these industries is above average margins will increase by 15% to 2030. This is driven, for example, by aviation, energy and semicon that benefit from these sustainable strong trends. In terms of scaling, also components will play an important role as outlined by Dirk. A second upside I would like to mention is high-value innovation and low marginal cost of growth. An example, we expect higher than 30x sales to innovation cost ratio for recently launched products. And just to give you an example what I mean. As we innovate a coating, this happens to a very large extent in the process innovation. So it's not about putting a new equipment into the field every time we innovate. So this supports our growth journey quite a lot. The second one is low marginal cost of growth. And here, you've seen it before, we operate based on 110 coating centers globally, and we have material sites in all 3 regions. So this allows us to scale very efficiently, and I strongly believe that this is a key differentiator for Oerlikon. Bottom line, this bridge element combines portfolio and mix strategy, pricing focus and efficient scaling. Let's move to cost of goods sold as the industrial discipline lever in the bridge. And here, we have, over the last 2 years, closed or combined 17 sites globally to support that target. And already this year, we see that this contributes to the financials in the way that we expected. Another example is productivity related using digitalization. We are using and have introduced a technical design software that saves us more than 50,000 hours a year. This means a reduction of manual work and allocation of resources to areas that really create growth and value going forward. Looking ahead, efficiency potential remains a key driver within the cost of goods sold lever. And here, I would like to highlight the utilization of our coaters as our most important asset in the base. We expect that we can increase the utilization by more than 30% going forward. This will be achieved by reallocating coaters within the global landscape and by optimizing the use of the equipment. And here, again, I refer to what Dirk was saying, digitalization supports because knowing how these coaters perform and being able where they can identify where they can fill a gap is very essential, and we already see the very positive dynamics which were triggered by these developments. A second example is complexity reduction, for example, by modularization in our equipment business. And here, we expect that the reduced variation of parts will enable efficiency and support the cost of goods sold ratio by 20 basis points. An example here is, for example, the spray guns, controllers and powder feeders. And here, we are on track to reduce the variation by 60% to 90% until '28 if we compare to what we had in 2020. So that's a significant step and an important example for a driver as well. So bottom line, cost of goods sold naturally is key to achieving our target on the margin, but also to strengthen resilience of our business. Now to the third lever. It's about SG&A as the functional and operating leverage lever, means as the business scales, SG&A intensity has reduced. Last year, we rolled out Salesforce as a CRM tool to 1,400 users within only 12 months. What does that mean? It means standardization and providing one platform to our sales force to drive growth. In terms of central functions, we reduced the G&A cost over the last 3 years by CHF 15 million. This shows that we kept a very strict focus on cost after the sale of Barmag to compensate for, but even beyond the required savings from the sale. Also looking ahead, sales cost will remain an important driver. We expect that the cost of sales will grow at a pace of below 50% compared to sales growth. And here, digitalization will also support sales effectiveness, for example, reducing the back office work by 10% to 15%. On the functional side, we have identified more than 200 basis points of G&A ratio improvement potential. And here, AI and digitalization also play a key role to optimize organizational structure and processes. And to not to leave it just with the buzzwords on AI and digitalization, we are already using a digitalized payables management system. We use bots in treasury, in reporting, we use agents for our IT help desk or also for trade control screening. And looking ahead, the implementation of SAP S/4HANA will further strengthen process standardization and optimization. So with here with this slide, I close the EBITDA margin bridge. And all the elements matter to achieving the 2030 targets. And if you look at our H1 '26 results, you see that we are very well on track. Now ladies and gentlemen, let's move from profitability to capital return. We introduced return on capital employed as an additional target because EBITDA margin alone is not sufficient if capital intensity is not well managed. The importance of ROCE for Oerlikon is also underpinned by the fact that this KPI is used as part of our long-term management incentive plan. Now how do we work on ROCE operationally? We use our capital allocation framework, which simply means as we identify the right areas to invest in, we make sure that these areas are margin and value accretive and that they create above-average growth. Naturally, we will focus as well on allocating capital to the strategically important areas highlighted before. Now where do we stand? And what are the drivers that will bring us to the target of more than 10% ROCE. If you look at H1, we achieved 6.2% return on capital employed. So we are on track towards the target already. And in addition to allocate capital to the right industries, what I would like to highlight here is allocating capital to businesses with lower-than-average capital intensity. So looking at our segments, the strongly growing Materials and Equipment and Components segment have a significantly lower capital intensity compared to coating services. So also basing our capital allocation on that fact will be key. In addition to that, footprint optimization, asset utilization as discussed earlier, will improve capital efficiency. This will help us to reduce the gap between EBITDA and EBIT and drive the EBIT margin towards the low teens area. Capital allocation for us is a key steering element in achieving the targets 2030. And for us, at Oerlikon, it has become deeply rooted in our governance. So it's much more than just a budgeting exercise. A key element for improving capital return is CapEx. And here, this is about supporting capacity, but also capability to support the path to 2030. We expect a CapEx envelope of around CHF 110 million per year, which corresponds to 4% to 6% of sales. I would like to highlight 3 examples which I consider as very important to support the path to 2030. Number one, in '24, we invested in India into a combined coating center. By combined, I mean integrating our thin film capabilities and thermal spray capabilities. We did that close to the technology hub, Bangalore. So this will help us to benefit and capitalize on the strong trends in aviation and semicon. Looking at the states in '25, we invested to combine 2 material sites in the state of Michigan to improve capacity and efficiency. And also here, the strategic industries are in the focus. It's a lot about driving growth in aviation and in energy. And last but not least, this year, in Switzerland, we are investing in what we call Campus Reichhold. It is a combination of 3 sites to build a thermal spray hub, integrating engineering, production and services. So bottom line is our CapEx envelope is disciplined, but supports the right priorities towards our 2030 targets. Let's continue with the balance sheet. And here, the commitment of Oerlikon remains clear that this is a focus for us. And when you look at the pattern here, end of '25, we stood at 3.4x net debt EBITDA, including Barmag. And we communicated with our full year results '25 that our target at the end of '26 is to be at below 2.5x. And as you've seen in our H1 results, we achieved that target already half a year earlier. This was supported on one side by using 2/3 of the Barmag proceeds for deleveraging, but as well by the very strong H1 results that we were able to report. Leverage management clearly builds on achieving the targets as outlined before. Another KPI that is important when we talk about balance sheet strength is our equity ratio. And also here, we are very glad that we were able to show an improvement to 41% in our H1 results. And the combination of the deleveraging path and the strengthening of the equity ratio also supported the reconfirmation of all of our 3 investment-grade ratings in spring this year. In summary, we see balance sheet strengthening as protecting financial and strategic flexibility, but also support shareholder returns. Now over to our final element, which is the cash allocation strategy. And basis for this is that we expect that profitable growth and tight net working capital management will support the cash conversion ratio of 80% to 90%. We expect to allocate around 35% of cash flow to CapEx as our main reinvestment priority. Around 25% will be allocated to dividends based on an unchanged dividend policy. And the remaining 40% are allocated to financing, balance sheet strengthening and creating strategic optionality. The target of our cash deployment strategy is to strike the right balance to reinvest enough to grow, return cash reliably and enable balance sheet strengthening and strategic flexibility. Ladies and gentlemen, let me close this part of the presentation with summarizing our financial strategy. Number one, we have a clear path to achieve more than CHF 2 billion of sales and more than 20% EBITDA margin by 2030. Second, on this path, we act on a strengthened focus on capital allocation and return, which will help us to achieve the ROCE target of more than 10%. And in all that, as I described initially, we will act in the financial triangle, striking the right balance and making sure that overstretching one KPI will not cannibalize another. Third, in all that, we will act with a clear strategy on balance sheet strengthening and cash flow generation and allocation. Ladies and gentlemen, we are convinced that the diligent execution of this financial strategy will improve the quality of growth and earnings, capital return, strengthen our resilience, and with all that, be the basis for sustainable shareholder value creation. I thank you for your attention.

Thank you so much, Marco, for that very detailed and very informative presentation. There's a lot to talk about now after all we've heard. So we're going to open the floor for questions.

Let me ask Brett, Dirk, Marco and Michael to please return to the front. And we will now take your questions. Please raise your hand if you want to pose a question and do tell us your media outlet and your name. So let's go here to the third row.

Laura [indiscernible] with Octavian. I would like to ask a question. I mean just from the presentation today, I mean, you're mentioning EUR 300 million incremental revenue, right? And then you go to the EBITDA slide where you show the 3 levers. If I look there, I mean, basically, it leaves 50 bps of margin potential to increase based on volume, so i.e., operating leverage, right? Maybe I'm wrong, but for me, that doesn't seem a lot of operating leverage there on the CHF 300 million incremental revenue. So first, I'd like you to comment on that. Maybe I'm seeing things in the wrong way. And second, if you could give some light into utilization rates and all the other 6 markets that were not mentioned today. I mean, do you need a significant pickup there so that we would really see the operating leverage starting to kick in or...

So thanks for the question. I mean what we outlined is in the bridge of the EBITDA individual elements and examples that will contribute. And as you've seen, for example, looking at the G&A ratio improvement alone, and if you look where we stood at H1, this is supporting a target of above 20%. We are not aiming to 20%, but this is about showing that there is a well-diversified set of initiatives that will support achieving these targets, which are beyond what you showed. So there is definitely operating leverage in all these areas and the CHF 300 million will support that. Dirk, do you want to add anything? do you want to...

Yes. I can say. So utilization rates, so we have to differentiate between our coating service and our material equipment production. So material and equipment, we are fully utilized and in coating service depends on the industry. So we have automotive industry where we have a utilization of 70% plus between 70% and 80%. And then we have other industries where we are around 50%.

Maybe to add the utilization then to finalize your question on other industries. First, what you have seen out of the past, we're optimizing the real to the ideal. The real was coming from a time 20, 30 years ago, you had to be very close to customers. Now we're bundling. We're making bigger centers. We optimize that because of -- by using more -- sorry, more modern logistics setups. And we can move. It's not like to move big equipment. We can move coaters very fast from one site to another one. The only what you have to consider is if you go from 60 hertz to 50 hertz that you have to do something on the controls. Otherwise, you can move these equipment very fast around. And to have the overview, that's why we're working on the virtual coating center, it's like one center. It's only distributed globally, but it's like one center. So coming to the other 6 industries, and I think the secret is above. We're talking about CHF 2 billion. Dirk was mentioning CHF 300 million out of these 4 segments, which we have shown. And even if you take CHF 100 million or CHF 150 million, we are above CHF 2 billion. So we're not targeting exactly for CHF 100 million. But today, what we see is the super dynamics we have in industries. Oil and gas for us for the moment has not a huge dynamic because they don't drill too much. When they start drilling again, we are in the coating with the drill heads. Automotive have a different dynamic. In some areas, it works very well. In other areas, it's stalling a little bit. General industry is a wide range. Medical is growing nicely. Here, we are in robotics and surgery elements in dental. We are not in this, how you name it. Class 3 level, where we -- Medco before we acquired had one big issue, and we say we don't do that. So the other industries are contributing. But for today, it was really to highlight the super obvious ones. If you have a 10 years dynamic, and I think Stephan mentioning that very well on the U.S. defense will invest in the next 10 years like health. utility for IGTs, industrial gas turbines. That's the only way it was 10 years in that industry. The only way is can you shift a little bit your head?

Yes, perfect.

The only way is to fill that gap with gas turbines. A nuclear site from start 15 years. And by the way, we have 450 big nuclear power plants on this planet and 150 are phasing out in the next 10 years. So even to keep that level, you need a lot of that one which are in the pipeline. So the real answer to feed the power demand is gas turbines. The same answer is that engines. The same answer is if it's rockets or drones, you need the engines for that. So that's why we highlighted that, that these are trends which are not for 1 or 2 years. This is a 10 years, 15-year story. And we are in and we are indispensable there. But the combination is more than the CHF 300 million.

Let's take some more with the hands, please. There's one in the third row.

Christian Arnold from ODDO BHF. On your deleveraging path, I mean, you are below 2.5x in '26. You aim for around 2x in '27. And then until 2030, you only go for 1.5 to 2x. If I look at your CapEx spending, if you look at your growth, I would expect actually to go this ratio much further down to more like 1x or even below 1x. So what I'm missing here? Are you planning M&A? And do we have some extraordinary CapEx we have to think about in that area? Actually, not according to your slide you mentioned. So what I'm missing here?

It gives us simply more flexibility as he was mentioning there.

Next to that gentleman, and then we'll go to the back.

Jon, Kepler Cheuvreux. Actually, I have a question and a request. The question would be, I appreciate very much that you give us group targets for growth and margins. Now you've introduced these segments. And could you give us a little bit of a feel for the segment dynamics, the margins that you have in mind for these, specifically given that components currently has a negative EBIT? And then a request that I would like to chip in, is there a chance to receive a longer-term track record of these segments' performances?

You want to start with...

I can start, yes. So what we -- thanks for the question. We introduced the segment reporting first time in H1, right? And what we provide is the guidance on the group level, and we do not intend to give a guidance on further below revenue on the segments. I mean revenue outlook, you saw we gave CAGR ranges for the individual segments. This is certainly something that we do provide. On the components performance, this is clearly not there where it has to be. So we outlined that this segment, and this is important for me to highlight, but I'll let Michael and Dirk add, it has a lot of growth opportunity in there, which is benefiting from strategic industry dynamics. I mean this is the components business in aviation, for example. So as that segment scales, this will contribute to improving margin. And secondly, we have taken restructuring measures also in that segment. In Luxury, we closed 2 sites last year in Italy. And here, we manage the profitability side also on the cost. So no, we don't give targets below revenue for the segments, but the measures are in place, one to drive growth. And secondly, we are very diligent on the cost side as well. In terms of giving more history on the segments, we have to look into that. At the moment, that's not planned.

If I can comment on -- I don't look too much backwards, if not necessary. So instead of doing all the work to clear up and how could this track record look like, anyway, you should look more forward and backwards and about that dynamics because history, sometimes people saying you made 22% margin in 2016. Oerlikon was a different, the role was a different, the setup, the mix, everything. It's not comparable. If you would say 2016 and say what is 2026, you all would have been wrong. So the forward-looking and the quality of that on which our forward outlook is built on, that's I would like to discuss with you more and go deeper in. And for example, when we talk about components, and I go a little bit deeper and go a little bit beyond there. The friction systems story is a story which is facing slightly out, and this is the components. Still makes a good business in Asia, but not to make too much business in Europe. This is something which depends on how finally e-mobility is ramping up and how China will look on this battery security because today, the government has ordered the system for their cars, but for the mass cars, it's not. In Europe, it's different. So there's different dynamics where we are positioned, but we are not always in a driver's seat to have an impact on these dynamics. In Elden, we have a big order since a while from our customers and the transition took longer than expected, but now it takes space. And this is what Dirk was showing you. So that this component will contribute significantly in the future and will make the component story better as additive manufacturing is on a growth pattern, profitable now. And as I said, growing by 30%, sometimes 40%. Still from a base, you could say you want to start deep enough, but we expect a significant contribution by 2030. So within the component world, there's a lot of interesting parts in. But there is as well, does luxury come back and when? We don't know, but we know what we're doing in luxury with the PVD story, and we have achieved already 15% of our revenue today in PVD, and we would never have been there without being a player of the crowd. If you're not in this industry, they don't take you serious. We had in the past before my time, some projects with Xero and Fadropsky that never really worked out because I said you don't have the smell of us. You don't understand what we're doing. And this is the secret of Oerlikon now that in the 10 industries, we are perceived and accepted and realized as a real player of these industries. And that's the industries we are working through now. And now we have a dynamic in Materials Equipment, fantastic dynamic, which will last very long because of the underlying effect. We have a very good dynamic in coating services, which could be even better, but we're gaining market share even in the industrial gas turbines -- not industrial gas turbines, sorry, the ICEs. We're gaining market share against market. But it's a matter of fact that 90 million cars have 15 million electric cars, and it's not the amount of 90 million combustion chambers anymore like in 2018. But there are other elements as it was told us in defense, in aero, where they do the coatings. There's a very good dynamic here. And as I mentioned already, in the component world itself, we have these different chapters to solve and to follow.

And just one more add-on in the showroom, you see our components. I think it's really worth to look at the showroom later there we have explained and also then you see how we grow there.

And by the way, we will also hear more from the components and the other segment after we take a quick break. But the break isn't yet.

Don't miss the other panels. don't miss them. They're really good.

We have a couple more questions in the back, and I see one here, too. Let's go to the back first. They've been waiting and then we'll come to you.

Yes, Sebastian Kuenne from RBC. I have 2 questions, one on the sourcing side and one on the windfall gains that you might see or have seen this year. On sourcing, we have a very extreme situation now for the rare earths and for Tungsten. China closed down its U.S. clients in April and closed down EU clients in June. That makes Oerlikon last man standing now. How long do you think the situation will last? Can you still source in China for how long can you source in China? Why are you different to others? And if that situation continues, what does that mean for market share? And the second question on the windfalls. I mean, the way you presented your first half was a bit like, yes, everything is done operationally and it's out of your own power. But at the same time, we had like a 20, 30, 50-fold increase in some rare earth prices in the last year. and you pass it on to clients. So to what extent was your margin performance driven by windfalls or by one-offs basically?

I'll take the first question and Michael adds and then Marco can elaborate also on the second one. So first of all, I think what was really -- when we realized the shortage of materials, I think we were one of the first really -- and the team has done, in my opinion, a really great job of diversifying, building up a second source in that case, somewhere else outside of China, we build it up a second source. And we ramped it up over the last 12 months. And this enables us now that we have now, as already presented, different sources, and we can even say, okay, we can provide for our American customers, for example, e-trium without Chinese Etrium and for our other customers with Chinese Etrium. So I think that is one of the things we have done very fast and good to build up the second source, which now is actually supplying us, and we are now secured with Etrium also for our growth in the next years. A second thing, I think that is also very important to mention, what I realized, our materials in the past were commodity. So we were basically -- Oerlikon was at the team leader level of the procurement organization of the bigger OEMs. Now we are in touch with all VPs, SVPs or Board members of procurement, and we became a strategic element. And by that, we could secure long-term agreements over the next years for our materials, which is a huge benefit. So I just have been to the Farnborough Air Show, have meetings with all major aero engine OEMs on the highest level. And this brought us so much closer. And really, that's, I think we can also build on for additional business. So that is one of the things there. Michael?

Maybe if I'm allowed to add, the situation will not ease out completely in the next 5 to 10 years simply because China will keep themselves in the game because it will be stupid to force everybody to build up other resources. So they play a balance. We are ready, and we have shown them that we can deal with this balance better than even our big -- much bigger customers. So there have been 20 metric tons released without any limitations where we can use to each and everybody from Chinese administration because there is a certain trust level you have to maintain. And they have fully understood. if they don't supply, we will find a way to supply. And as we said, we have 3 elements there. That's the strategic one. We have a non-Chinese source. For the customers who want, they have a non-Chinese source. We have a Chinese source where China as well starts to cooperate despite the fact that they put things on export control. This is as well a geopolitical signal how strong or weak they are. And third, we have technology solutions. This Satrium-based answer for Atrium is a real technology solution and where our customers are testing them and then they have the opportunity either to use the one or the other. Coming back to before Marco may add something to your windfall profits, they're not windfall profits. I don't like this word because it's a market position. If you are strong and good, sometimes you have headwinds, which we had and never was accepting that we have headwinds and sometimes you have tailwinds. And the market situation actually is in favor for us, and we use them. We use the pricing power, use the power that we are -- that we can supply and others cannot supply. Is it always easy? No, it's not. Is it always that way that we have? I think we not even can rework all the backlogs we have out there because there is significant demand. But as a windfall, I wouldn't consider that. It's simply a position where Oerlikon has positioned themselves and takes benefit out of different sources. Marco, maybe you may give a more qualified answer to that, but...

No, I wouldn't call it more qualified. But it's a mix of the effects. I guess you listen to the H1 results. At the same time, you see that our updated margin comments on what we assume in terms of prices and what it could mean in the range to that effect. So I think, yes, it is a balance of effect. It is the restructuring we did in the last 2 years that I highlighted, which contributes. It's the right positioning, which allows us to push prices in the right areas. And there is some elements that we benefited from, but you need to be at the right spot to benefit from that.

And we do powder in China, in Europe and the U.S. So we have invested years ago in a situation where we have now this flexibility that we can play it.

And we're going to hear more about that as well later on in our second panel. But let me now go to the lady in the middle for one last question. That's you. Can you raise your hand? Yes.

Leonie from UBS. I have 3, so I make them quick. So regarding the incremental revenue that you mentioned like those CHF 300 million, CHF 400 million, can you just give us a bit of an understanding in regards of the aerospace? I understand that this probably is one of the biggest chunks that will add to those CHF 300 million. You mentioned around 6% growth that you expect from MRO. Do you expect a similar growth number as well from the new engines? Or like how should we think about the split within aerospace? Is that more or less balanced? And then also, is aerospace likely going to make up half of the additional revenues or probably between like 30% or 40%? Can you just give us some broad numbers. And then I'll have some details on the ROCE.

I wouldn't go that deep in, but I give you some mathematic to calculate. Airbus and Boeing are ramping up in narrow-bodies by 75 aircraft a month, which is 750, 900 a year from both. So it's 1,800 times 2, it's 3,600 engines, which you need per year. And you see already the dynamic behind there, but that's new build. And then you have, if you go for services, you have in the jet engine industry, 3 services over a lifetime over 20 years. And each service almost contributes a completely setup of our coatings. So you need to strip the blades and veins and everything and you get a new coating 3x. There are some more parts in the second, which is the most and the biggest service effort. Something similar is in gas turbines utility. The real driver for us is gas turbines. And I would not fix it only to aerospace, the industrial gas turbines has a comparable dynamic and the fleet is behind. And because of the installed base, and I think it was mentioned several times, 2,500 so space systems globally out of 3,500 in this segment, so in aerospace and energy, there are 3,500 systems and 2,500 of us, 2/3 is us. This business comes to us wherever it comes, new and recurring maintenance. And to differentiate here too much, it's is a theoretical exercise, which doesn't brings us too much forward because it's the same customers. They very often do not even differentiate. You get an aircraft in, they take the engine off the wing, they put a new one on, and then it goes further on. For us, it's important that each engine, which comes into service is contributing the same as a new build.

And maybe just to add on this. So aerospace business is what Michael just said, materials for both new builds and MRO, then we sell the equipment. And then we sell also the SAO wanes, also that is growing and is significantly contributing to that. And on top, even the PVD business, so the coating service, we have an increasing PVD business in the aerospace, not only on the engine itself, but also on the coated cutting tools, which are taking a higher and higher share.

Can I -- one last...

Super short, if you will.

ROCE above 10%, do you include goodwill or not?

Goodwill is in the denominator, yes.

Great. Thank you very much. I'm afraid we'll have to leave it there, but we'll have a second question period after our next panel. So -- or you catch up with REC during the break. But we will now go to a break, and please keep your eyes open when we reconvene because we're running a bit late, but I assume we're going for about a 15-minute break, right? o see you back here for a multipart panel that will feature those segments that you all want to know more about. So look forward to seeing you in a minute. [Break]

Welcome back, everyone. And let me just say also welcome back to our online audience. We're very glad to have you with us as well as all of those who have joined us here live in Zurich. And I hope everybody had a good break. Our second panel is entitled Oerlikon Solutions to serve growing markets. And this is not one panel actually, but 3. We are going to go with the different business segments, Coating Services, Materials and Equipment and Components and hear their respective outlooks on performance across regions and markets. And we start out with Coating Services and ask the key question, how much further can an already leading position be expanded and where? Here to answer that question are Floriano Rosera, -- he's Head of Product Management in Coating Services. Then we have Sumit Gupta with us sitting in the middle, also sits on the Management Board and serves as President for the APAC region. and Martin Bart is Country President, Germany and a member of Oerlikon's Managing Board. So welcome to all of you. And Florian, let's start out with you. And of course, this is Oerlikon's most established high-margin business. So share with us, if you would, a few more examples that show us how the company is positioning itself and the coating services solutions to capture the potential of the growth markets and industries that we've been talking about so far. And maybe you can also say a word about what sets Oerlikon apart from its competitors.

Thank you. Good morning, everyone, or almost noon time. I will start with stating or emphasizing that Oerlikon is today the undisputed leader for wear-resistant coatings in cutting tools and forming tools. We have helped our customers with a global network of 110 coating centers today to improve their productivity, to improve quality and ultimately to save cost for decades. So this is a very strong foundation. And even here in this legacy business, we continue to innovate and grow. We've heard a couple of examples before the market is throwing new challenges at us, difficult-to-machine materials, Think about modern aircraft engines or aircraft in general. We have heard about humanoid robots, but also about defense, where materials by design are kind of difficult to deform or difficult to machine. And here, we work with our R&D teams to bring new solutions almost every year to stay at the cutting edge of cutting industry, if you will. What truly sets us apart, however, I would say, is our ability to bring these advanced coating solutions into -- beyond tooling into all the different components applications across all the industries that we touch. And I'll give you a couple of examples. We have heard about technical toolbox. We've heard about diverse properties. Jane mentioned before, friction reduction. So let's start with this, diamond-like carbon coatings. As such, an impossible material, you could say, you combine the hardness of a diamond with the low friction coefficient of graphite in one material. That's actually not possible. We made it possible in our coating machines. So you can put such coatings on, let's say, transmission components, let's say, an electric car. I guess everyone has driven one these days. You probably enjoy the acceleration, the immediate torque. I can assure you that the gears do not enjoy that at all. So there, you actually put carbonlased coatings on these gears to improve the load bearing capacity to actually make the trip to your next service a little bit longer. It also can reduce the noise, by the way, and even can contribute to extending the range of your electric car. You can also put such coatings on large roller bearings in wind turbines or in huge mining trucks, where this very thin layer on a roller component can actually extend the lifetime of these huge machines many fold. Or it can also put -- last example, we can also put these friction reduction coatings on a critical valve component in, let's say, a subsea oil and gas production facility or the coating ensures that the valve opens or closes when it matters, prevent an oil spill.

So I was just thinking this is interesting because it takes us back to what Michael talked about when he was talking about the streamlining, essentially the versatile toolbox where you can take one tool, one process and that has a potential to cover a broad range of different applications, as I understand it.

You're absolutely right, right? And I can give you a different example. You can -- as our coatings are also very hard and wear systems up to elevated temperatures, you can put them in an aircraft engine, right, where They, for instance, help to prevent erosion on airfoils or turbine blades and will ensure that the engines function as designed over the lifetime and save fuel, save cost for the operators, reduce carbon dioxide footprint. And if you then put wear resistance and friction reduction together, you get a reduction in particle generation, which is very important actually in semiconductor manufacturing that we heard before. particles are the enemy of the microchip. And here, basically, our coating solutions on wafer fab equipment can help to keep the yield in modern microchip manufacturing up and keep the cost of microchips down.

So I asked you what sets you apart from competitors? And we heard from Michel, there is no one competitor who spans all these different businesses. But in coating services itself, what would you say makes Oerlikon unique? And how do you play with that global footprint, local presence in that context?

It, of course, helps with 110 coating centers and the sales teams around it. You have your eyes and ears close to the marketplace, so we can actually recognize market requirements in all those industries early and address them. And one thing we have heard it earlier that I would see as a key differentiator is our customer solution centers. Brett mentioned that. which is basically interdisciplinary teams, if you will, experts in the countries that closely work together with our sales and operations teams to -- and also combine deep coding technology knowledge with application knowledge and then work together with our customers to bring something from an idea, if you will, from a feasibility study into stable production. We increasingly also use digitalization and artificial intelligence here with this. So you could consider it, let's say, a global application brain -- so all those different neurons in the different countries. We connect that also with digital tools and AI tools so that in all the data that is generated in the countries locally together with customers. We also make sure that we find it later, we find it quickly and make this application b, if you will, smarter and faster every day.

Thank you very much. Let me jump over to Martin now. And Europe is the largest coating services market for Oerlikon. At the same time, this sector is highly competitive here in Europe. So is there still room for growth? And where would you see that growth particularly?