Rieter Holding AG (RIEN) Earnings Call Transcript & Summary

Thank you, and good morning, ladies and gentlemen. A warm welcome also from my side. This is the agenda. We will briefly look at the key messages, deep dive into the current trading results, review the status of the planned Barmag acquisition and provide an update on our strategy execution and close with the outlook. Before we look into the details, let me say a word about the current environment. The market situation continues to be characterized by investment restraint due to trade policy uncertainty in key markets. Although Rieter registered growing interest for new machine projects, many requests did not yet lead to binding orders intake as customers postponed their investment decisions until the 2026 financial year. Lower volumes in the machinery business and the associated weak demand for installation services, along with cost-saving measures by customers, are delaying the conversion of orders into sales, and they are also waiting on the earnings of the aftersales and component divisions. So now to the key messages on Slide #4. Let's start with the green boxes on the left. Order intake at CHF 559 million was only 11% lower than the prior year period. However, if we exclude the exceptionally high purchase order of our Chinese customer, DIW, in the financial year 2024, order intake in the first 9 months of 2025 was 11% higher than previous year. The improvement was driven by a strong third quarter in 2025. Sales at CHF 458 million were 22% below the prior year period. Maybe a word on orders above sales. Longer book-to-bill cycles can be observed in the aftersales business in particular. And on the blue boxes, as mentioned, the market outlook remains challenging. This is also why we continue to relentlessly push performance improvements across the group to reduce costs significantly. At the upcoming ITMA Asia exhibition taking place in Singapore next week, so end of October 2025, we will be presenting novel automation solutions that pave the way towards fully automated production. And last but not least, the gray boxes. The Barmag acquisition is on track. The capital increase has strengthened our balance sheet and the necessary financing for the acquisition has been secured. And now to the market. Slide #6 shows the market situation at a glance. After a promising first quarter 2025, macroeconomic turbulences strongly impacted market sentiment. Let's start with the rest of the world, which you can see on the left side. There, the overall market development in Europe and Turkey remained flat. However, we are seeing positive signals in some Asian countries as well as in the Americas. Particularly in the Americas, Rieter was able to record new orders. In addition, additional promising opportunities for new machines are arising in Latin America. This is the result of the reshaping of supply chains and nearshoring. The demand for automation solutions is on the rise, which validates our strategic approach and the efforts we are making to realize a fully automated mill. Let's go to India. If we look at the overall Indian market, which is dealing with the fallout from the tariff dispute, we see that mills in general continue to struggle with low margins, especially smaller ones in the southern part of India. Given the significant role the textile industry plays in the India's economy, the government is stepping up its support for this vital sector. We are seeing strong mill utilization among Rieter customers and have signed now several large contracts. And what is also important, automation solutions are more and more in high demand. Last but not least, China. China remains the strongest market. The investment sentiment is particularly positive for the domestic market, and the government is providing targeted support for the Western territories. So let's move to order intake. Slide #7 shows our quarterly performance since 2023, excluding the mentioned big, big order from the Chinese customer, DIW, which we recorded last year. If you see on this -- if you look at this chart, you see that without the DIW purchase, we see here that order intake has steadily risen by 11% during the first 9 months of 2025. If this trend persists, we would expect this year's fourth quarter to also exceed last year's final quarter. This concludes my part of the presentation, and I will hand over now to Oliver.

Thank you, Thomas. Good morning, all. Let's look at order intake on Slide #8. Order intake stood at CHF 559.3 million in the first 9 months of 2025, which equals an 11% drop to the prior year period. As we saw on the previous slide, the year-to-date order intake level is clearly unsatisfying and below expectations, but we saw an accelerating trend in the third quarter 2025 with a run rate which is much closer to a normal market than we have seen in a long time. A month does not make a quarter and a quarter does not make a year, but we take this as a positive for the time being. Now to the divisional details based on year-on-year performance. The Machines & Systems division recorded a particularly large decline of CHF 49.1 million because, as mentioned, some commitments did not materialize or customers postponed their investment decision to 2026. The Components division's order intake fell by CHF 19.6 million, mainly as a result of the soft machines business. The After Sales division, by contrast, continues to deliver a solid performance with an increase of CHF 16.8 million in order intake. This positive development once again confirms the strategic growth initiatives that we initiated. The decline in order intake was further accentuated by some foreign exchange translation effects in the amount of CHF 18.6 million, which takes me to Slide #9 on sales. The realization of sales remains challenging as a result of the geopolitical uncertainties. Many customers are reluctant to adhere to previously fixed schedules and push out their investments by changing the delivery dates. Sales, therefore, were CHF 457.7 million in the first 9 months of 2025, which represents a 22% drop compared to the prior year period. Sales in the Machines & Systems division fell by CHF 76.5 million (sic) [ CHF 67.5 million ] and the Components division by CHF 27.7 million and in the After Sales division by CHF 19.8 million. Similar to last year, we expect a significantly stronger fourth quarter this year when it comes to sales generation. The negative FX translation impact amounted to CHF 11.6 million. Let's turn to the planned Barmag acquisition. The planned acquisition of Barmag makes us a globally leading system provider for natural and man-made fiber. We are confident that all required regulatory approvals for the completion of the acquisition will be obtained in the fourth quarter of 2025. This step represents an important milestone in the implementation of the company strategy which was announced in October 2024. The last weeks were extremely eventful as we successfully secured the long-term financing of this landmark transaction under challenging conditions. We are grateful for the strong investor support and the commitments of our financing partners. Without those 2 success factors, this historic transaction, and I will come to that, would not have been possible. We, as a team, are convinced that Barmag will unlock significant value for our shareholders and other stakeholders in the coming years. I would like to share a couple of facts and highlights. Ladies and gentlemen, this was the largest public equity raise relative to market cap in Switzerland ever successfully completed. The numbers say it all. The deal earned 79% -- sorry, a 79% (sic) [ 97% ] approval rate at the Extraordinary General Meeting in September 2025, with a 99% take-up for the rights issue. This is truly extraordinary, and I can't thank our shareholders enough for this amazing endorsement. The rights issue enables the diversification of the shareholder base, which will also support the next chapter of our equity story. And on the debt side, we were able to sign a CHF 750 million syndicated credit facilities with a group of Swiss and international lenders. To conclude with, all the temporary bridge facilities have been successfully refinanced, and that well before the closing of the transaction. In short, funds are ready. On the right-hand side, you can see the status of the regulatory approvals. All filings and approvals are according to schedule, and clearing is still depending on some competition authorities, especially China, Egypt and Turkey, whereas approvals have already been obtained in India and Portugal. Consequently, we expect the transaction to be approved in the coming months, which will then trigger the closing of the deal. That's it from my side. Back to you, Thomas.

Thank you, Oliver. So let's talk about strategy, and this takes me to the update on Slide #12 and 13 and onwards. This is our strategy house, which we unveiled at last year's Capital Markets Day, and it still relates to the actual Rieter company. After a successful closing of the Barmag acquisition, we will have to refine the strategy to make it valid also for the whole new Rieter Group. Let me highlight 3 areas: automation and digitization, supply chain excellence, and agile structures. At the ITMA in Singapore next week, we are presenting novel automation solutions that pave the way towards fully automated production. Imagine a fully manual mill today. It takes around 20 operators to produce 1.9 tons of yarn per shift and 10,000 spindles. In a fully automated mill with cutting-edge Rieter technology, which we will present finally then in 2027 at the ITMA in Hanover, it only takes 3 operators for the same output. Now at ITMA in Singapore, we are presenting 3 technologies that will be key to achieve full automation. According to our sample mill calculations, we are now already achieving a ratio of more or less 6 operators per 10,000 spindles. So great progress of the team. You can see these innovations on Slide #15, and let's start with SERVObale on the left side. SERVObale is a system for the automated transport of cotton and man-made fiber bales. The system adapts to different packaging sizes and enables customized laydown. SERVObale can also be easily integrated with an existing bale management system. In the middle, you see SERVOcan. This is our fully automated can transport system, which automatically guides cans from carting to spinning. SERVOcan replaces manual transport, lowers the labor cost and ensures continuous and consistent material flow. And last but not least, at the end of the whole line, SERVOpack. The fully automated packaging system is the comprehensive solution for the efficient processing of packages, including transport, quality control and packaging. It ensures final production stability, thanks to the quality control system. And SERVOpack also enables the customized design of pallets, boxes and bags to meet customer requirements. At the end, for the whole packaging activities, you don't need a single person anymore. The next chapter you see on Slide 16 is agile structures and supply excellence. We continue to push for performance improvements across the group. This means we are relocating functions to customer markets. This includes the decentralization and strengthening of the sales organization to improve customer centricity. We are also establishing P&L responsibility for regions and branches to increase accountability and entrepreneurial spirit. We are improving our production footprint. This means we are optimizing production to increase efficiency and leverage economies of scale. We are executing our "China + 1" footprint strategy for all machinery types to reduce dependency on global supply chain. We are optimizing our supply chain. This means we are rolling out and completing right at the moment our global procurement organization, and we reduce key dependencies in supply chain with a dual sourcing concept. And last but not least, we are heavily working on production cycle times to be faster and much more improved time to market. Last but not least, we are simplifying our organizational structure by increasing efficiency by reducing organizational complexity and redundancies. And last but not least, you will see that also by the end of the year, we continue to manage our overhead costs very, very tightly. Now let's have a look on our adjusted outlook for the full year 2025. As a number of projects have been postponed for deliveries to 2026 due to the macro-political uncertainties, Rieter, and this does not include the Barmag division, now expect sales for the full financial year 2025 of around CHF 700 million. Previously, our guidance was CHF 750 million to CHF 800 million. Despite these lower sales volumes, we still expect an operating EBIT margin at the lower end of the range of 0% to 4%. This excludes restructuring costs and costs associated with the acquisition of Barmag. In that area, we would like to give a little bit more insight. For the full year 2025, Rieter expects transaction costs with an impact on EBIT of around CHF 15 million. We also see significant additional restructuring costs with an impact on this EBIT figure. And then net financial expenses, including the expenses associated with the acquisition of Barmag, will be around CHF 20 million. As a consequence, if your operating EBIT is between 0% to 4% and at the lower end and you take into account all these extraordinary costs, our net result is expected to be negative and thus will deviate significantly from the prior year figure. With that, we conclude our presentations, and I hand over to Relindis for the Q&A session.

Thanks, Thomas. Ladies and gentlemen, we will now open the lines for the participants in the conference call. Then we will take the questions from the webcast. As usual, the Q&A session will be recorded. [Operator Instructions] I will now hand over to Moria for the questions from the conference call. Moria, please go ahead.

[Operator Instructions] The first question comes from the line of Amira Manai from ODDO.

I currently have some questions that I will ask one by one. First one is, could you precise which country is more affected by customer postponements and if you have seen any order cancellations or maybe further delays since end September?

Okay. Thank you, Amira. So the major countries impacted by the tariffs has been, mid of the year, India. You will all know that Trump, due to the oil deliveries from Russia to India, he has imposed 50%. So a lot of Indian customers are exporting the yarn or their fabrics to the U.S. and the U.S. is the biggest consumer market for textile. So India has been impacted and some of the Southeast Asian countries. China, not so much. And Latin America, although they have partially some tariffs, in fact, is progressing quite well. And regarding cancellations, there is no new level of cancellations. We always have the one or the other maybe order which is canceled, but it's more about postponement of deliveries and, in the order intake, postponement of decisions.

And could we have the impact of the Chinese contract in Q4 2024?

This was very small. The first quarter -- if you look into the presentation where you see this quarterly result, this Chinese contract has been issued to us in 3 quarters. A big chunk was coming in quarter 1, the second big chunk was coming in quarter 3 and then a small part was coming in quarter 4. All in all, if you take these dotted lines on the Slide #7, all in all, it's roughly CHF 150 million.

Okay. And can we have also the current spinning utilization by geography?

Could you repeat it once more? I did not understand fully.

It's about the spinning utilization rate by geography.

Yes. Okay. So spinning utilization in India is -- and we measure that per year per customer. So we don't have it for the whole country; we're measuring that with our customers. So in India, it's around 90%. So very strong because the majority of our customers are in the north. And the northern customers are bigger and not so much suffering because they're also vertically integrated. In the south, you have smaller spinning mills and they are struggling much, much more, but that's not so much our problem. In China, we are quite stable on a level of 70% with our spinning mills. Turkey is still struggling also there. The big ones are quite well occupied. And the small ones, there are a lot of small spinners in Turkey, they are struggling, but they are not so much our customers. And then when you look on Southeast Asia, it's a mixed picture, stay somewhere at 70%, 75%. The U.S. and Latin America has improved, has become better. And so all in all, we are still globally slightly above 70%. A real good figure would be 80%.

And now for 2025 guidance, on which key assumptions it is based by business unit and by geography? And do you anticipate or is there any risk in Q4 related to postpone maybe projects? How confident are you in achieving this new guidance?

Maybe Oliver, that's a good question for you.

Yes. Thanks. Obviously, that's the key question on the confidence level. Of course, it might well be that we still have some postponements as we had throughout the year. Nevertheless, if you compare the implied sales level that we plan to do in the fourth quarter, it is slightly below what we achieved in Q4 2024. So that is certainly something that we have delivered already. And a large part of the orders that we still need to deliver is today in our backlog. And as we move forward in the year, the risk decreases, obviously, when it comes to sales execution. That's what we can say for the time being.

And do you anticipate further restructuring costs for 2026?

Well, maybe I can start with the general trend and there maybe a little bit more in the details Oliver can answer. Everybody asks when is the market coming back. And I have mentioned that many times, the investment cycle is overdue. It's just overdue. And in the last semesters, each time we thought it's now coming back, there was another hit somehow coming from the outside world, whether this was an earthquake, whether this was now the tariffs, whether this was a war. But the fact is that it is the longest phase in the market ever. So it's 4 years now in a row. And all these machinery is becoming older. It's not latest state of technology anymore. The ones who are investing now, they have better machinery, so they are more competitive. And this, of course, creates a handicap for the ones who have not done any investment. So investment cycle is overdue. That's very important. Second, due to the fact that we experienced one or the other negative impact in the last 2 or 3 years, we take a conservative approach for 2026. So if then the market is better, we take it with pleasure. But our planning assumption is more conservative. So if we have this conservative approach, we have to prepare a successful but still challenging 2026. And this requires that we continue the execution of our performance program. Now what it means in times -- in terms of facts and figures, we can give you maybe a little bit of a guidance, but this is still subject to finalization of plans and also Board approvals. And maybe, Oliver, you can elaborate a little bit on that.

Sure, with pleasure. As you may understand, we are at the moment in the middle of the planning for next year. Now as Thomas said, that the underlying assumptions for next year will be cautious. And if the market then develops better, we take that, obviously, with pleasure. That means that the strategy execution, as we explained on Page #8, will require additional funds. Whether we will book that in this year or in next year is not yet decided and not yet approved, but our directional preference would be to book the majority of any additional restructuring expenses in this year. Now what does that mean specifically? As I mentioned, neither have we taken a decision on all the measures yet nor do we have approvals on the internal side for it. But for the half year, we had restructuring expenses in the amount of CHF 10.4 million and, as our planning goes, you may expect additional restructuring costs between CHF 20 million and CHF 30 million for this year. And if we were to do that, that would then be the majority of the costs and no significant additional costs in the same magnitude could be expected for next year. That is our current status of planning.

And maybe to add one comment here, just to add one comment. The year 2025 has so many special impacts. So we have restructuring, but we also have this huge transaction costs, which, of course, impact our net result. And in our favor is to have it clean by the end of the year. So we don't have to have all this different type of profitability levels and all the explanations, what is in and what is out, but to have it in one wash all done. And then we don't have all these alternative measures or performance measures for 2026.

Okay. And my last question is about monthly performance for July, August, September and maybe start of October and the measures that could be taken to limit ForEx impact?

So quarter 3 was a good quarter in order intake. You have seen that it has been better than last year. It has been substantially better also than 2023. Within the quarter, it was an extraordinary good month of September. But as Oliver mentioned, a month doesn't make a quarter and a quarter doesn't make a year. Now October looks so far good. And let's wait where we end up the year. Maybe the next, yes.

Just about the ForEx impact and measures that could be taken?

FX impact, Oliver.

Yes, sure. I mean just for the avoidance of doubt, that is a translation impact predominantly that we show. And translation impact always occurs if you consolidate in a different currency than you book your sales, and that cannot be mitigated. And every other impact, we are well under control with our hedging strategy. I think we need to speed up a bit. We have a lot of questions in the call. I hope that was helpful for you, Amira, and then we will go to the next one.

The next question comes from the line of Walter Bamert from ZKB.

Let's start with the guidance you give for the financing cost, CHF 20 million in this year. Can you also indicate what to expect as a run rate in the next year?

Oliver?

Thank you, Walter. That is premature to provide you a guidance on. As you may understand, we have not closed the transaction yet. Also, we are not allowed to talk to the target at the moment on sensitive information such as current trading, financing structure and so on. And we will provide you with that in due course post the closing of the transaction.

Okay. You didn't give the Barmag trading update. And here, perhaps you can explain us how you track what's going on with Barmag these days? And if we have to read from your indication of trade uncertainties impacting your incumbent business, that you also have to be more cautious on Barmag into the next year?

As I mentioned...

Please go ahead.

Yes. We are between signing and closing, and we operate in similar markets in the textile industry, and it is highly sensitive and actually forbidden to talk about the details of the business unless we have closed this transaction. So we are not in a position to provide you with a trading update. You may please reach out to OC Oerlikon if you want to know any more details on Barmag on current trading.

Okay. Then you indicated that the book-to-bill cycle in aftersales is extending. That's for me somewhat counterintuitive. How should we interpret it, that people are booking earlier or they just delayed the delivery because they don't have the financing to pay for it? Or what is causing that lengthening of the cycle?

So there are 2 elements. It's a very good question. There are 2 elements. One element is that in the After Sales business, we also have the installation of new machinery. So we booked the order, but the execution of the new machine business has been delayed. Then also the installation is delayed. And that's quite a substantial amount. So this is almost half of this negative or it's even more, let's say, half of this negative sales development in After Sales. So there is a time lag due to the installation. Then in After Sales, we also have modernization and upgrades of the -- of existing spinning mills. Our most famous product is the ROBOspin. And they have a similar trend like new machinery business. So we booked all the orders, but customers at the moment are delaying the delivery. They don't want to cancel, but they somehow do very strict cash management. And then in the rest, so which is parts and repairs, in the repairs, there is no delay. And in parts, they know as soon as they have the full mill utilization, let's say, above 80%, 85%, they will need spare parts. They, at the moment, use spare parts internally from machines they don't use. But they know they have to have it once the mill utilization is ramping up. So they already ordered to be ready, but they wait -- some of them wait with the delivery. Over time, this should balance out then.

Okay. Then regionally, I only saw the revenue generation, but not the orders. Is that a good indication also for the order development regionally? Or are there important differences in there? For example, in Africa, I see low revenues, but probably that market is picking up.

The major market we still have is China. Thanks god, we were putting a lot of emphasis to strengthen our organization. So China is developing very well. Even according to our internal targets, they are doing good. The second strong market in order intake is India. It's also improving compared to the last year. The so-called rest of the world is more quiet, but there are a lot of -- there's a lot of interest into new projects. So companies like -- countries like Vietnam, we see a lot. Also Bangladesh is coming back. Also Pakistan now with certain stability is improving. But it's not yet in our order book. The only region where we can say they are already improving in the orders is Latin America. The others are very busy, but they have not yet pushed the button.

Okay. And then I got different -- I picked up in your presentation that Q4 revenues will be significantly higher than last year. And I think in the last question, there was -- or somewhat lower than last year. So can you repeat exactly what you said on Q4 revenue generation, please?

Maybe, Oliver, you can repeat that once more.

Yes, happy to take that. Walter, if you look at the last year's numbers, the 2024 numbers, you see that we did in Q4 around CHF 270 million in sales. And if you look what our implied Q4 sales number is, if you assume the CHF 700 million top line guidance, that is slightly below that number. So we expect sequentially stronger sales in Q4, so more than in the previous quarters. But on a year-on-year basis, slightly lower sales versus 2024.

The next question comes from Alessandro Foletti from Octavian.

Just a couple, again, a little bit on your confidence. You mentioned that you expect -- the customers have pushed out the orders, no cancellation, pushed out, and that they will decide in '26. What gives you the confidence that they will then really decide at some point in 2026 and not keep pushing out?

Well, I'm very close to our customers. I spend about 1/3 of the time with customers. In fact, I'm sitting at the airport jumping to a plane to Indonesia. So I will step out at 10:00 and Oliver will finish everything. So it's very clear, customers, they want to get rid of this overdue investment cycle. They know that. They are just a little bit like -- it's a little bit like Mike Tyson once said, everybody has a plan until you are punched into the face the first time. And they had some punches. So they are somehow recalculating when is the best time to do the investment. I see that they start to organize themselves. They recalculate. And it's also interesting, they have a little bit the benefit of reduced interest rates as these are huge investments they have to do. They say, wow, okay, I have a negative part of the trade, the tariffs. They have now more clarity how much they have to bear by themselves, how much they can pass on to customers. So this gives them more confidence now. And then they see, okay, financing becomes cheaper. So they are a little bit opportunistic, before, to now really push the button and close the deal. And that's what I see in many -- on many customer sites who are depending also on external financing. Those who are very strong with their financing accounts and have a good balance sheet and do not depend on external financing, they now already do the investment.

Okay. I would like to ask you a bit of a clarification on something that you mentioned earlier when you said that about the capacity utilization that is still around 70%. But in some areas, you mentioned China and India, where you are active with the largest clients, and the smaller have troubles. So in a way, I don't understand, if your clients are only the largest one that are doing well, why is still these uncertainties then reflected in your numbers?

That's a good question. It's not that we only have large customers. We are also dealing with the small ones. As we are a market leader, we have all type of customers in our book. But of course, the share of the large customers is bigger than maybe with some competitors. So this is a benefit for us. And most of the orders we have booked this year in the new machine business have been dominantly been booked with larger spinning mills. But the smaller ones we have, they are still hesitating. And so that's the reason why we say we want to be -- we don't want to overpromise. We would like to over-deliver. And the history has taught us that I don't know what happens in a month or in 2 months. So we take a conservative approach looking forward with the hope that it really becomes better, and this we will take then with pleasure.

All right. Maybe my final question on the gross margin of your clients, which you also mentioned. Can you give a bit more indication maybe regionally or how big is the squeeze or that they might have between cotton and yarn prices? Or how are these moving?

So the margin of a spinning mill over a cycle is usually less than 5%. The operating profit of a spinning mill is less than 5%. So it's quite a thin margin spinners are working with. As soon as they have higher volumes, then they have an operating leverage. The margin goes up because they have much more fixed cost absorption. Now large customers are usually integrated. They do not only spinning, they also do weaving, knitting, dyeing and garmenting. And you see that the profitability of the bigger ones is better than of the smaller ones. Now in a down cycle, the smaller ones are more serving around the 0 line or some of them even do a loss at the moment. But they know, almost like us, when the market is coming back, then this can turn very quickly. So the size is important. The utilization is important. The vertical integration is important. And of course, at the moment, where are you located and what kind of tariffs do you have.

We will now take some questions coming from the webcast. Relindis, back to you.

The first question comes from [ Reto Bekhavi from AVT ]. Did I understand that correctly, you expect the order intake in Q4 2025 to be higher than in Q4 2024 even without the DIW effect? Can you quantify the postponed orders?

Well, we cannot give you now a clear figure for the order intake in the fourth quarter. But as we mentioned before, September was good. So far, October is good as well. So this would mean that we do have a good confidence that orders -- total orders for the 3 quarters will be higher than in the previous years. However, I have to say when you look on this chart on Page #7, both in '23 and '24, the reference was quite low. But still, if we go into a magnitude of maybe CHF 150 million, plus or minus, this depends, of course, of individual projects, then finally, we come to a region where we can say, okay, now we really have a substantial improvement year-on-year without this extraordinary DIW order.

Good. The next question comes from Eugen Perger, Research Partners AG. Are there other countries to mention in Asia, for example, Bangladesh, Vietnam, may they take over business from India if the latter stays under tariff sanctions for a longer time because of the Russian crude oil issue?

It's a good question. Bangladesh is especially strong in the weaving and garmenting, so especially in garmenting. What happens today is that a lot of yarn which is produced in India is exported to Bangladesh and then they make clothes out of it. Now India, in our assumption is more and more now challenged that they have an increasing domestic demand. So this is a good challenge. And I believe that the Indian spinners and weavers are more and more focusing to satisfy this domestic demand. So this might be that someone else is jumping in into more export activities, and Bangladesh definitely is one of those countries who could benefit from that. Another one in Southeast Asia is Vietnam. Vietnam has a lot of large spinners and also working for U.S. companies, so U.S. textile companies. And after the first shock in Q2, they now start to plan more projects to expand their facilities. So I'm slightly optimistic for the Southeast Asian countries.

The next question comes from [ Ingo Stoessel ] from UBS. In light of your guidance for negative result, can we expect the dividend to be suspended for this year? Also to help with deleveraging.

So good question. I think a dividend is decided by the Board of Directors. I'm now here not as a Chairman, but I'm here as a CEO together with my CFO. So in the history, Rieter always has been very meaningful with the dividend policy. And we want to satisfy all stakeholders, so shareholders, but also our credit facilities. We are interested in a strong balance sheet. And so we will take all this into account when the Board will have the final decision. But the reality is that we have a dividend policy, which says we are paying 40% or more out of a profit. And so if there is no profit, we will have to rethink whether it is meaningful or not to pay out the dividend.

Thank you, Thomas. I have 2 questions from [ Beat Kaser ], [ WINVEST ] Asset Management. I will read question by question. Any outlook for 2026?

So I mentioned before, we take a conservative approach. We had a good September. But Oliver has said it very well, September does not make a quarter and a quarter does not make a year. Definitely, we see -- I come always back on the Slide #7, we see that year-on-year-on-year our sales team has improved the performance in a challenging environment. Our assumption is -- our planning assumption is that '26 remains challenging. So we are preparing from a cost point of view all our cost measures to be successful in this challenging 2026. And yes, there is some hope and there are signs that '26 becomes better than '25, but we prepare for a conservative approach.

The second question from [ Beat Kaser ] is takeup of rights issue may be okay, but a big part of the new shares seems to create selling pressure in the stock market.

Perhaps I might go on for that question. Explaining the share price, it's always very difficult and it's not my core profession. I would rather trust in you, dear attendants of this call, to explain that better to me. What we can clearly see is that today's share price does not reflect the strategic value of this transaction. It also does not imply a closing of the transaction in due course. And very honestly speaking, we're also a bit surprised by the share price reaction because during the road shows that we had both of the announcement in May, but also in the lead-up to the capital increase, we had predominantly and actually exclusively positive feedback from the investor base. Everybody was understanding the strategic rationale, most of the people said it makes absolute sense. And that was also reflected then obviously in the consent at the AGV and in the take-up of the shares. Now is there some short-term speculation in the shares? The right was probably a bit too cheap when just assessing market dynamics, and that led to rather low entry prices for some shareholders, and they might realize now some short-term gains and lead to certain share price pressure? We all hope as a team that, very soon, the focus shifts towards the long-term perspective of this company. And as a good wine, usually a good strategy and also a share price takes time to ripe. And we are very confident that we can be more successful in the future with this transaction, and that will also then reflect in the share price. That's all I can add to this point.

Thank you, Oliver. I have 3 questions from [ Nicandro Varilek ] from [indiscernible] AG. I will read it question by question. When it comes to future procurement savings, can you confirm that probably the CHF 20 million savings are rather conservative?

I can confirm that.

Okay. Then we move on to the second question. What is your expectation when it comes to future EBITDA margin levels during a downturn, 6%? And in better times, 10%? Are these levels realistic?

Please, Oliver, yes.

Obviously, understand the question, but you may well understand that we need to rework our midterm margin guidance and come up then with a proper framework post closing of this transaction, which as mentioned you may expect in due course. And we will update you then on time on what you may expect in terms of margin framework in the future. I think for Rieter stand-alone case, it's still valid what we have announced in the past. And for the combined unit, we want to close first.

The third question, as even the best companies like EMS, VAT are rather given cautious outlook announcements regarding the next 1 to 2 quarters, do you think that you have to go further reducing your overall costs? Or are you already gone quite far?

I mean on the outlook, as you may understand, we have just decreased our sales target for this year. So the cautious approach of other companies seems to mirror as well in our industry. On the cost side, I can reassure you, and you can also find it in the press release, we have reduced our overhead costs by more than CHF 100 million in the last 2 years. So we are actually ahead of our next level cost saving target, and we are not finished yet in optimizing our structure, as was also presented on Slide #16. So we will continue to improve on that end. We continue to improve the company, and you may expect further improvements on that end as well.

Okay. The next question comes from [ Andrea Frei ]. Can you provide a guidance for net leverage for financial year 2025 and 2026?

Oliver?

We do not provide guidance on leverage so far, and we will also not change this policy. You can rest assured that we are closely monitoring the situation, that we are working heavily on the various levers that you have to improve your leverage situation such as net working capital optimization, et cetera. And with regards to 2026, since we do not know the details of the Barmag current trading and their immediate future for next year given we have not closed the transaction, we can also not provide you with the guidance for the combined unit.

The next question comes from [ Andy Egloff ]. Is there a financial outlook 2026 including the Barmag acquisition?

I think that was answered already.

There's another question from [ Andy Egloff ]. Is there any comment that existing shareholders considerably lost out, the transaction basically raised the value of existing shares?

I could just reiterate what I mentioned before. And honestly speaking, Thomas and I and the entire management team, we are significant shareholders as well, and we fully participated in the capital increase. We don't see that the current share price level reflects the value of the company from a long-term perspective and the relevance of the transaction in a meaningful manner. We don't see that. Now what can we do to change the share price levels? We just need to continue to work on the strategy execution on our core business and then hope that it will over time reflect in the share price. But in the short term, it's clearly disappointing.

The next question comes from Claudia [indiscernible]. As of September 30, 2025, Rieter's order backlog was around CHF 590 million; in September 2024, CHF 690 million, while 9 months in '25 book-to-bill ratio is smaller than 1.0x. What does that mean in terms of revenue evolution for the next 6 to 12 months?

Well, we calculate the book-to-bill and in a way that we divide the order intake by sales, and if you win -- in the same period. And if you win more orders than you book sales, basically, you may expect that your sales level in the immediate future is going to rise. And otherwise, you may expect that it's going to fall, neglecting any changes in trends in the immediate future. As we outlined previously, the order intake figure on absolute terms is below expectations. That's clear. All we can do is continue to work on the various initiatives. And as mentioned, we had a solid September, and we continue to work towards the further materialization of our order pipeline. And then we may expect also a change in the sales development. But I can assure you that normally in this business, you have a visibility of 6 to 9 months ahead. And so this order backlog level, which is slightly up, is not usually on normal level.

And there is a second question. Net financial position, you closed half year 2025 with CHF 286 million net debt. Meanwhile, you received net cash of CHF 460 million, CHF 470 million from the concluded capital increase. Then you are in the process of acquiring Barmag for an enterprise value of CHF 850 million. The calculation would suggest a pro forma net debt of roughly CHF 670 million after the deal closing at year-end 2025. Is this a fair assumption? And the second part is, I would assume that leverage will go up well above 3.0 and will stay there for several quarters at least. What are your plans and strategy in terms of leverage and deleverage?

As I mentioned before, and I am now not in a position to fully challenge or give a comment with regards to your estimates, it very much depends first on our trading and our business development, but also on the situation on the Barmag side. And given we have not closed this transaction yet, we do not know those details. We're not allowed to know, actually, to be precise. But you can rest assured that we are at the moment, intensively working on different scenarios. We will prepare for different scenarios. And our strategy is unchanged that we want to deleverage this business as fast as possible. Even a leverage, as we mentioned during summer of around 3x, we believe is too high on a mid to long-term basis, and it should be significantly lower. Now you may also understand that a strategic transaction of this magnitude was not possible to conclude without debt. So we had to accept the temporarily higher debt level, but with a clear strategy and intention to deleverage over time.

Okay. And there is a question from [ Martin Helsweg ] from [indiscernible]. Mr. Streuli, allow me to correct you. The theoretical cheapness of the subscription rights is irrelevant now. Even with the rights issue, there is no short-term gain left for any shareholder who participated. Your share price is now trading near its all-time low and significantly below the capital increase price. So the capital market foresees a negative strategic value on Barmag transaction. So will we see an extra Barmag, Rieter signing call with the new details?

You may expect that we will provide you with an update as soon as we have them post closing of the transaction where you may also expect the results for the full year in due course from Rieter and then also a view on the combined guidance. And as I mentioned before, speculation around share price and why it is where it is, I think about that we have talked sufficiently. But in principle, I agree with you, at the moment, the capital market is not assessing any value to the transaction. But on the other hand, we are convinced about the strategic rationale and about the value of the Barmag business. And you also seem to be convinced, as was the feedback during the various road shows, and so we leave with this discrepancy at the market, obviously, at this point in time.

There is a similar question from [ Cristiano Oduna ]. Since the start of the capital raise, October 23, the share price has fallen by 1/3 corrected for the theoretical -- [ ex rights ] price. In your view, what are the reasons for this heavy drop?

I can just speculate. But first and foremost, you have to consider that this was the biggest capital increase in relation to market cap ever conducted in Switzerland. So the fact that you were able to execute is a significant success if you look over the medium and long-term perspective of the combined company. That has to be said first. Then on the mechanics of this capital increase, I could just speculate. But one of the reasons mentioned was that the right was probably rather heavy given you had to subscribe for 25 new shares if you owned 1 right. That led to certain selling pressure on the rights side, which was then not reflected on the share price level and so on and so on. But I see it from another perspective actually. Unless you need to realize your loss now, unless you absolutely have to, you have not lost anything. It's just the book value. And if you are convinced about the medium and long-term strategy of this combined company, and as I mentioned before, a transaction, a good strategy needs time to ripe and you may not expect the reaction after 2 or 3 weeks' time, then I just ask for a bit of patience. And that's what I read into the share price. And honestly speaking, and I can just repeat myself, me, Thomas and the entire management team, we are exactly in the same boat as you. We are all core shareholders.

Thank you, Oliver. There are no more questions. Back to you, Thomas, for the closing words.

Okay. As Thomas mentioned before, he had to leave as he is seeing customers in Southeast Asia, he had to leave for a plane. So let me address the closing words. Now with the planned acquisition of Barmag, we are accelerating our growth strategy, to become the undisputed leader in the textile machinery industry with a strong presence in both natural and man-made fibers. By broadening our range of applications, we are convinced that we are ideally positioned to seize the opportunities in expanding markets and to generate more resilient returns. And this will create value for customers, employees and also for you, dear shareholders, in the coming quarters and years ahead. About that, we are convinced. Now we will keep you informed on the status of the closing and the opportunities this opens up for us and our stakeholders. Thank you again for your patience and for your interest. Goodbye.