Ladies and gentlemen, welcome to the Continental AG Analyst and Investor Call Q2 Results 2026. The conference will be recorded. At this time, all participants have been placed on a listen-only mode. The floor will be open for questions following the presentation. Let me now turn the floor over to your host, Max Westmeyer, Head of Investor Relations. Yes, thank you very much, welcome everyone to our Q2 2026 results presentation. Today's call is hosted by our CEO, Christian Kötz, and our CFO, Roland Welzbacher. A quick reminder that both the press release and the presentation of today's call are available for download on our investor relations website. Before we start, I'd like to remind everyone that this conference call is for investors and analysts only. If you do not belong to either of these groups, please disconnect now. Following the presentation, we will conduct a Q&A session for the sell-side analysts in this call as usual. To give everyone the opportunity to ask questions, we kindly ask you to limit yourselves to no more than three questions. With that, over to you, Christian, for the Q2 key messages. Thank you, Max, welcome everyone online also from my side. Thank you for joining us today. Let me start with a strategic milestone we announced in July. As you know, Continental has signed the sale of its ContiTech group sector to Lone Star on July 4th, which is fully in line with the timing that we have always indicated to the capital market. We could still close the transaction by the end of 2026, of course, subject to regulatory approvals and other closing conditions. That does also mean that we cannot rule out that the process lasts into 2027, please rest assured that we are working hard towards closing the deal as soon as possible. As you have probably seen, the agreed enterprise value amounts to EUR 4 billion, plus a potential performance-based component of up to EUR 250 million. I think this is a clear testament to the attractiveness of ContiTech as an industrial pure play. Based on the current transaction structure, expected net cash proceeds at closing are expected to be around EUR 3.1 billion. Also here, the exact amount will of course, obviously depend on multiple factors at the time of closing. When it comes to the use of the proceeds, we intend to combine attractive shareholder returns with deleveraging, as we always communicated and announced. In line with that, we plan to use around EUR 2.5 billion for shareholder returns. Our options include special dividend or a special dividend and share buybacks, as we also always explained and communicated. These are details that we are now working on. The remaining around EUR 600 million are planned to be used for deleveraging. This supports our path towards the leverage target of below one by 2029. Again, fully in line with our midterm targets we've communicated and explained at various occasions. Q2 certainly kept us busy, not least with the sale of the explained and mentioned sale of ContiTech. When we did find a spare moment, the Tour de France offered an excellent alternative, to be honest, to spend that extra time. Here, my warmest congratulations to Tadej Pogačar on an extraordinary fifth Tour de France victory, delivered with exceptional skills, but of course also supported by Continental Tires. A great demonstration of what talent, teamwork, and outstanding technology can deliver. With that positive and winning momentum, let us move on to our quarterly performance in Q2. Overall, we delivered a solid quarter with earnings and cash flow improving despite a still challenging market environment. Group sales came in at EUR 4.4 billion compared with around EUR 4.9 billion in Q2 of last year. The reported sales decline was mainly driven by the sale of OESL, so the ContiTech OE related or the majority of the ContiTech OE related business, which we have sold at the beginning of last year. Organically, our sales development was broadly stable at -0.3% and even slightly positive on the Tire side. More details to come. Our adjusted EBIT for the group increased year-over-year, reaching EUR 570 million, translating into an adjusted EBIT margin of 12.9%. That improvement was mainly supported by our Tires group sector, where we saw continuous strong price mix, still lower raw material costs, and a better operational performance. ContiTech continued to operate in a subdued market environment, which weighed on profitability. However, the impact was largely mitigated by portfolio measures, still favorable raw material costs, and the ongoing execution of cost-saving measures. The sales head measures we've explained also earlier. Adjusted free cash flow improved significantly to EUR 216 million, roughly EUR 250 million up year-on-year. The strong increase was, of course, driven by the solid profitability improvement, but also included some cut-off date related items such as favorable working capital development and the timing of CapEx, which remains weighted towards the second half of the year. The positive cash flow also supported further organic debt reduction. However, as always in Q2, our net debt increased sequentially versus Q1, mainly due to the dividend payment we have done in May. With the sale of ContiTech that I've mentioned earlier, we have also reached a significant milestone towards becoming a Tires pure-play. As a result, we have already now adjusted the guidance to reflect ContiTech as a discontinued business. Roland will touch on that later on in more details. As a next step, we will also start disclosing more details on the Tires business in the next quarters. That means we will change our segment disclosure moving forward. You will receive a call invite in the upcoming weeks for an update call on our future structure, since we want to make the transition into a Tires pure-play as smooth as possible also for you. Looking at the group sectors on slide six, the improvement in margin was mainly driven by the strong performance at Tires. As I mentioned already, our organic sales were broadly stable, while the group-adjusted EBIT margin improved from 9.6% to the before already mentioned 12.9%. This includes a positive contribution from the diesel settlement as well. Tires delivered organic growth of 0.3% and increased its adjusted EBIT margin to 15.3%, so even slightly outside our full-year guidance corridor in the quarter. With that, over to you, Roland, for more details on Tires starting, I think, with insights into the markets. Thank you, Christian, welcome from my side to everyone on the call. Let me begin on chart seven with the market environment for Tires in the second quarter. In OE passenger car tires, the trend of declining volumes continued both in Europe and China, which also resulted in a year-on-year decrease in worldwide vehicles produced. In the replacement business, we saw imports going up year-on-year in our largest region, EMEA, resulting in higher volumes in lower tier tires. Chinese tire volumes showed a year-on-year increase while the North American market continues to trend below last year's level. Let's turn to page eight and turn to truck tires. The picture remains mixed across regions. In Europe, commercial vehicle production growth has moderated following strong prior quarters, while North America looks like it has turned the corner. A little silver lining here, showing signs of recovery from a low base, however. In the replacement business, demand in Europe remains supportive with year-over-year growth, whereas replacement volumes in North America continue to trend below prior year levels, driven by lower transportation demand. Let's turn to slide nine. Despite the continued softer volume environment, we delivered the expected margin improvement against a very weak Q2 2025, as you can see on slide nine. This happened on the back of favorable raw material developments and once more healthy operational performance. Sales were broadly stable at EUR 3.3 billion. One of the reasons, as FX this time had no material impact in a while after being a drag for many quarters in a row. Volumes, however, were down -2.3%. This was mainly driven by subdued PLT OE demand in EMEA and soft markets in the Americas, while we continue to perform well in the weak Chinese OE market. As in the past quarters, price mix was positive, though. At 2.6%, it's more than compensated for the lower volumes, both on the sales and the EBIT side. This continuous positive development was mainly driven by product and channel mix. Despite lower overall volumes, we managed to increase UHP volumes, especially in EMEA and in APAC. Consequently, our adjusted EBIT increased to EUR 510 million, a margin of 15.3%, which will presumably be the peak margin for this year. Besides price mix, the still lower raw material cost provided a mid-double-digit million euro year-on-year tailwind. Furthermore, in addition to that, the recently increased raw material purchasing prices led to a reevaluation of our inventories. This resulted in an additional non-cash tailwind in a similar magnitude. As I mentioned already, the prior year comparison base was, of course, materially impacted by tariff and FX headwinds. If we look at the regional breakdown on slide 10, the underlying dynamics of our business become even clearer. In the Americas, organic growth was -3.4%. The passenger car OE volumes declined stronger than replacement in a softer market environment. Good news in terms of mix U.S. American and Canadian replacement volumes declined only slightly, while South America clearly remained under pressure due to cheap imports. On the truck side, OE volumes have finally been stabilizing, but replacement volumes continue to trend below prior year. Nevertheless, we were able to increase price mix in North America, it could only partly offset the negative volume effects. In EMEA, we saw a healthy organic growth of 2.4%, even though PLT OE and replacement volumes declined modestly. One of the reasons are the increased UHP volumes, while the sale of our French retail network has started to affect reported revenues in Q2. The impact was limited in Q2, it should become more visible in the coming quarters. In truck tires, both OE and replacement volumes increased versus prior year, demonstrating outperformance against the market. Consequently, price mix remained continuously positive. In APAC, we also achieved positive organic growth, driven especially by increased ultra-high performance volumes. In particular, outperformance in China resulted in positive OE volumes despite decreasing light vehicle production figures and in a stable replacement volume environment. Our sales price mix remained positive while portfolio adjustment, such as the exit from our Asian truck business, provided a low double-digit million euro headwind to sales year-on-year. Moving on to ContiTech on page 11. In continued weak market conditions, ContiTech delivered a solid result. This was supported by the measures we've implemented to improve efficiency and strengthen profitability. The market environment, however, remained difficult, this continued to weigh on volumes and profitability. Sales came in at EUR 1.1 billion, almost at the same level as last year, if we exclude the OESL effect that is still down in the previous year's comparison base. The organic decrease was mainly driven by the continuously challenging volume environment. At the same time, we had a good finish to the quarter, especially in EMEA and the Americas, mainly driven by solid execution in the project-related business, which makes us confident moving forward. Adjusted EBIT came in at a margin of 6.9%, as already mentioned. Our safeguarding measures defended profitability against a slightly unfavorable product mix and first negative impacts from raw material price inflation. Commercial measures we've implemented are expected to increasingly take effect from Q3 onwards, partly covering the increasing material costs. One more technicality. Due to the signed sale of ContiTech, IFRS 5 is applied starting end of Q2. In Q2 itself, this had no tangible effect on the result, it will come with a stop depreciation from Q3 onwards. You probably still know the drill from automotive last year. Turning now to our cash flow on slide 12, where we moved from -EUR 46 million in Q2 2025 to +EUR 216 million in Q2 2026. The improvement was predominantly driven by our improved operational performance by working capital and by CapEx. Working capital tailwind resulted from operational changes in receivables and payables, while seasonal inventories increased slightly stronger than in the comparison period, also due to valuation effects, as mentioned. The lower CapEx reflects this year planned H2 weighted phasing of investments. Thus, our solid operational performance contributed positively to our Q2 free cash flow, but timing effects also played a role. On working capital, which you can see on the next slide, development was in line with the typical seasonality and sales development. Working capital stood at EUR 4.6 billion at the end of Q2, corresponding to 25% of sales. Net debt was at EUR 12.5 billion and the pro forma leverage ratio stood at 2.0 x. That means our net debt was slightly up compared with Q1, which was driven, as mentioned by Christian, by the EUR 540 million dividend payment in May, while our positive free cash flow partially countered that effect. Let me now turn to our market outlook for 2026 on slide 14. Looking at our full-year market assumptions, we continue to expect volumes to remain unsupportive in challenging and uncertain market conditions. Within passenger cars and light trucks, we have become slightly more cautious on both vehicle production and replacement demand. A slightly lower outlook for vehicle production is largely driven by China. When it comes to replacement demand, we now expect slightly negative developments in both Europe and North America, given the year-to-date market development. In commercial vehicles, the picture on the OE side is more encouraging. We continue to assume decent growth in European truck production and have also slightly increased our North American production outlook, reflecting the strong Class 8 order intake in recent months. We have, however, become more cautious on North American truck tire replacement demand. Finally, turning to our guidance. As Christian mentioned already, we have updated our guidance to reflect the planned sale of ContiTech. The underlying expectations for our operational business, however, are confirmed. For the continued operations of Continental, we now expect consolidated sales of around EUR 13.2 billion-EUR 14.2 billion and an adjusted EBIT margin of around 12%-13.5%, coming from unchanged assumption in our Tires business plus the holding costs on top. Looking at day-to-day performance, however, I think it is fair to state that we currently assume to achieve the upper half of the profitability range in Tires, while sales will probably end up around or slightly below midpoint. Adjusted free cash flow expected at around EUR 0.7 billion-EUR 1.1 billion. Also here, no change in underlying assumptions. PPA amortization is no longer a material KPI for Tires, and special effects from continuing operations are now expected at around -EUR 200 million, while CapEx is expected at around 7%-8% of sales, reflecting the higher investment profile of Tires versus ContiTech. The underlying spending assumptions for this year are unchanged, though. For ContiTech, the outlook is unchanged and does not consider any IFRS implications such as stop depreciation. That being said, I would like to hand over now the rest of the time to you, operator. Could you please open the line for Q&A? Of course. Ladies and gentlemen, if you have joined by telephone and would like to ask a question, please press star nine and pound key on your telephone keypad. Star nine and pound key. If you'd like to withdraw your question, please press star three and pound key. If you are connected online and listening via the web interface, please click the telephone handset button and then the raise hand icon. This will allow you to ask your question verbally as well. The first question comes from José Asumendi from JP Morgan. The stage is yours. Thank you very much. A few questions, please. Maybe regarding your margin assumptions for the second half within the tire business. Maybe just going through a few pockets. Do you expect volume to be, at some point, a positive contributor to the business, either in the third or the fourth quarter? Second, should we expect any impact of revaluation of inventories, the positive or negative impact, non-cash impact on the P&L in Q3 or Q4? And three, can you comment on your expansion plans in China and whether you're starting to see a revenue acceleration in the region? Any update you could give us on the region, please? Thank you. José, let me start. I think your question goes back to the guidance, and it's a fair question looking at the good H1 results. Let me answer this, first of all, a little bit broader, and then I will go into the specifics. First of all, we expect that the ongoing economic uncertainty will affect the market volumes also in H2 and will remain in total below prior year. If you remember, we've had this good Q3 quarter last year, which was very strong also on the volume side and in price mix. It's tough it comes to beat. Let's remind ourselves. Second of all, and this is the real difference, we benefited from substantial raw material win year-over-year in H1. We're talking about a triple-digit euro million amount, and this will fully go away, of course, in the second half. In fact, it will reverse in the second half and turn into a headwind of similar magnitude. Yes, you know, we put a mitigation plan in place. We discussed that in the first quarter already in May, still, it's a completely different ballgame than in the first half. This is why we said in terms of sales, we'll most probably come out slightly below the midpoint and profitability in the upper half of the guidance range. Talking volume, because you asked specifically, first half now in total, volume effect on sales, -3.3%. We expect this negative effect to be slightly lower in the second half. We expect some improvement on the passenger car tire replacement side, but again, it will be in total below prior year. In terms of revaluation, because it was mentioned that it was a non-cash item in Q2, we will also have a positive reevaluation effect in the second half. The magnitude still remains to be seen, I would say at least it's a mid-double digit euro million amount also in the second half. On China, Christian, you want to take this? José, before I talk about the situation in China and the status of our expansion plans, let me just add to what Roland said. Yes, we have consciously taken a conservative approach on our second year or H2 second half year assumptions. Why? This goes in line with what you've asked for. Basically because of the very high continuous volatility and challenging market environment. This is why we've also reused our market assumptions for the second half of the year, as explained. Even under these consciously conservative assumptions, we confirm our guidance with the, let me say, additional details of assuming that under these conditions or assumptions, sales will come in at the midpoint or slightly below the midpoint of our sales guidance and profitability rather above the average towards the upper end of the corridor. As you know, for us, Q3 and Q4 are decisive quarters, August and September are obviously already very important for us, let's see how the business will develop. It's definitely too early to tell, but at least the winter tire pre-orders are giving some hope that maybe the development is more positive than what we have assumed. As I said, too early to tell, this is why we have consciously taken a conservative assumption. Now to your question on the expansion plans in China, we continue to execute our expansion plans. We are ramping now our plant in Hefei from roughly 15 million to 18 million PLT tires per year. This goes very smoothly. We are utilizing fully our capacities. As Roland said earlier, we are clearly outperforming the light vehicle production in OE. We are rather increasing our volumes in a declining production volume environment and carefully balancing OE versus replacement volumes and are very confident that we will continue to be able to fill, let me say, the plant and execute our expansions as indicated and planned. Thank you. Just a quick follow-up. The Chinese business, what's the split, please, between PLT and CVT, OE, and RT? If possible, just to give some broad indications. Is it mainly passenger car and is it mainly OE at the moment, or what's the split between OE and- José, which part of the business are you referring to? I didn't get that on the phone. Within the Tires business, your expansion of the plant or your Chinese plant, is this mainly passenger car or is it mainly truck? What's the split, roughly, of your Chinese revenues? Is it mainly original equipment or are we looking at more replacement? Thank you. In China, we are purely focusing on PLT business. We are basically not selling truck tires. As we have indicated or communicated earlier with the closure of our truck tire production in our Modipuram India plant, we are basically withdrawing or really reducing our overall truck tire APAC activities to a bare minimum. China only, it is pure PLT, no truck volumes. Second, OE replacement. Normally, our split is between 25% and 75%. In China, we are a little bit more OE-heavy, without going in too much details. Why? Because we are still trying, obviously, to support potential future replacement growth by a slightly overproportional OE exposure. We are also benefiting quite a lot from all the export volumes from China. As we discussed and communicated in the past, we are nicely represented at the Chinese OEMs, and we are heavily used also on their export vehicles, mainly to Europe, which is helping us obviously also to increase our volumes. It is also part of the reasons why in China we have this higher share of OE versus replacement business. As everywhere in the world, replacement is by far above the 50% mark of our total volumes in China. Thank you very much. Very helpful. Thank you, José. The next question comes from Harry Martin from Bernstein. You can speak. Oh, yeah. Thanks for taking my questions. The first one I had is on the high-value segment in Europe. We have seen some very strong selling data in Europe this year of double digits here to date. Are you matching the market growth, in Europe? Do you have any comments or anything else you can share on market share and the opportunity in the high-value segment specifically? Secondly, on U.S. trucks, I just wanted to think about the implications of increasing the original equipment outlook, cutting the replacement. How different is the margin mix between original equipment and replacement for you in that segment? Would it be correct to assume that relative market share would be higher in original equipment with a much lower import share? The final question, just a clarification one really on the raw material impact. Is the underlying assumption around a low to mid triple-digit million amount still consistent as it was in Q1? I think that's based on $85 oil. If you could give any more color on the other assumptions around things like natural rubber that go into that guide, that would be very helpful. Thank you. Harry, let me start with the first two questions, and Roland will continue. First, the high-value segment in Europe. Overall, I would say we are broadly in line with market development. We have still some, let me say, improvement potentials, which we are trying to utilize by extending our product portfolio offering. Especially, on the summer side, but also on the all-season side. As you know, we have been rather a late entry into the all-season segment due to our history, let me say, of focusing very much on the winter tire segment. We are closing this gap very fast, which really helps now, I think, to outperform also in terms of sales development, in terms of euro, the market. This is an area where with extended product portfolio, we definitely will have the chance to further grow or continuously grow our UHP share. Overall, we are in line with market development in the high-value segment. U.S. trucks. A little different than in the PLT world. The difference between OE profitability and truck profitability, at least for us, is not that big. We have also a very profitable, satisfying OE truck standalone businesses. It really depends also on the replacement side, which customers you sell to, which brands do you use. The difference between OE and replacement for us in truck is, especially in the U.S., much smaller than what we used to see and what you're used to probably on the PLT side. With this, therefore, increasing amount of OE volumes compared to a still, let me say, under-pressure replacement market, this will not lead to a margin deterioration for us as far as truck profitability in the U.S. is concerned. I hope this addresses your questions on the first two, maybe, Roland, you take the question on the raw material side. Yeah. Harry. When the crisis started in Q1, we started to analyze what that means for Continental, we made an assumption on the raw material, energy, and transport cost increase. We said it would be a low to mid-triple digit euro million amount, based on the assumption that the oil price average in total would be around $85 per bbl. We have seen lately a lot of volatility on the oil price side. It came down pretty nicely in the last days. I think today it's trading around $84. The base assumption of $85 average is still our assumption going forward. There's no change. We believe for this to happen, oil prices need to go further down slightly in Q4, which this is our expectation, as hopefully the crisis is continuing to ease a little bit. That also means our mitigation plan we put in place with a high coverage ratio of the additional cost would hold for the second quarter, if this was the intention of the question. Great. Thank you very much. Okay. The next question comes from Thomas Besson from Kepler Cheuvreux. The stage is yours. Thank you. Hi, it's Thomas at Kepler Cheuvreux. I have three questions as well, please. I'd like to start with a comment on your trading activities. Your French competitor talked about a very strong June versus a relatively mediocre April and May. Could you talk about your own experience about June and July versus April and May? Is that part of what you were mentioning as maybe being overly conservative? The first question. The second, one of you guys has been on Bloomberg and talked about traction of M&A opportunities in the U.S. and in the specialty tire business. Could you talk about whether Continental could effectively be eventually active on M&A before the deleveraging targets are achieved? Or what kind of targets you would consider acquiring in 2027, 2028? Lastly, I understand you want to do a call on that, and it's great, but is it possible to have an idea of the additional disclosures you plan to give us about the Tires business? Are you going to provide us with the margins by region? Are you going to break down your margins as well for trucks and the specialty on top of passenger tires, or do you want to keep that for that call? Thank you. Thomas, let me get started. Talking first, I think, was your question June, July trading versus a weak April, May trading. I think that was the question. I believe that is probably more related to Europe. I did not really get whether this was European-specific or global. I assume that was more a European-related question. We do see, let me say, a slight stabilization and improvement in June and July versus April, May. Do we see step change improvements? No. This is why, as Roland said earlier, we continue to assume that in the second half of the year, volumes will be negative year-over-year, but less negative, let me say, compared to last year, compared to what we have seen in H1. As said, maybe we are a little bit too conservative. On the other side, we have seen so much volatility and so much change short notice that as I said earlier, I was trying to explain earlier, we consciously have taken a conservative assumption. I think it is fair to say. Maybe one word on the M&A activity side. To be honest, there is no update compared to what we have always said. What did we say? We always said that M&A or inorganic growth is part of the tire industry. It has been part of Continental's history forever. We will continue to evaluate if there are options which do complement and fit to our portfolio. What would fit? Also no change to what I have always said. There is a regional, let me say, a product perspective. On the regional side, as you all know, we are underrepresented in Asia. On the product side, we are specifically underrepresented on the commercial specialty tire side. Everything which would fit would be obviously an option. Is this now a change priority compared to after the ContiTech sales or being in process of hopefully closing the ContiTech sale soon? No, this continues to be an option. It is not a priority for the time being. We will continue to work on our priorities first. This means closing and completing the transformation, doing our operational necessities. Obviously in the long run, it is always an option if the news or what you have heard indicates that this may have now triggered a change in terms of priorities and timing, I would say that is not the case. Maybe a word, Roland, from you on the changes in our disclosure policies and structures. Yeah. I will happy add to this, Thomas. I got the question this morning on Bloomberg. It was a rather general question. I gave a rather general answer. I probably should have said it is not the number one priority. There is no change in scope and focus, also not in terms of priority, of course. With regard to disclosure and reporting going forward, as we mentioned, we plan that starting in Q3, we will provide more details on the regional development. In order to help the analyst community to prepare and build models, before we actually come with the Q3 figures, we most likely will invite for some sort of capital market update, a bring down call pretty soon in order to give you the chance, and before we go into the quiet period, to tell you a little bit more about the past and provide more details on the region so you can actually start preparing for this way before. Yep. This will include margin breakdowns as well. Yep. Yep. On the regional view, on the regional level, I think it's fair to say, don't expect significant details on the product segment level. Yeah, exactly. Great. Thank you very much. You're welcome, Thomas. Next question is from Ross MacDonald from Citi. The stage is yours. Yes. Thank you very much. My first question is just coming back onto the revenue bridge, actually, and just picking up on the comments around where we're tracking in the full-year guide on revenues. I think, Roland, you said we're in the middle, maybe slightly lower half of the guidance range. If I do the maths, that would imply to hit the midpoint, around about EUR 7.1 billion of revenue from the Tires business, which would be up about 1% versus the second half of last year. Just interesting. I take your volume comments on board. It sounds like volume will be a negative in the second half, let's say, -1.5%, -2%. How do I think about the price mix contribution? It feels like price mix should step up versus Q2, so maybe 3%, something like that is more appropriate for the second half. I'd be interested what we should pencil in on the price mix side. When I add those two up, that would imply that we're maybe slightly towards the middle of the guidance here rather than the lower end. I'd be interested in your comments there. Obviously linked to that, just if you could update on how you see the FX headwinds for the second half. Next question, just on CapEx. If I look at the CMD targets from last year, the Tires business was talking about midterm CapEx to sales of around about 7%. You're obviously guiding 7%- 8% now for the Tires business. If you could comment on whether this is a sort of transitory period of higher investment spend and you're still happy with that 7% level. We'd be keen to understand that. The final question is just on the other/holding consolidation line, maybe more for 2027, but obviously now that you're a cleaner, leaner business, how should we think about the full year 2027 central cost line? Can we get that number down? It's obviously 100 basis points at the group level, but just curious if there's any juice you can squeeze on that number. Thank you. Okay, Ross. Thanks a lot. Let me start with the first one, guidance second half and some more details. On the volume side, as I said earlier, I would expect a lower but still negative effect compared to the first half. On the price mix side, it will also be a little bit lower than in the first half according to our expectations. First of all, we have seen a fantastic price mix effect in Q3 and a pretty good price effect in Q4 last year, and it's really tough to beat this. On the other hand, what we might see is a little bit of a higher drop on price mix side than usual because we have not only product, we also have channel and regional effects playing a role here. On the FX side, however, this has been really a drag for many, many months now, this is now turning positive, actually, slightly positive on the EBIT side in the second half, no headwind anymore. It would rather be a slight tailwind. You want to take the CapEx question, Christian? Yeah. Also I can talk about the CapEx. No, our 7% as the average midterm assumption still holds true and is valid. Why are we a little higher now short term? It's basically because we are investing into our Asian footprint and making some real step changes there. We talked about the next step we are doing in China, from the EUR 15 million to the EUR 18 million. We've also decided to pull ahead the next expansion step of our Rayong plant in Thailand. You probably know we have closed our Malaysian PLT factory by the end of last year and are consolidating a lot of the volumes into our more efficient Rayong plant. To be able to basically then scale Rayong also to a mega plant as quickly as possible and serve the South, [audio distortion] let me say, market, including then also Korea and parts of Australia and these parts of the world out of our Thailand factory, where we have opportunities to utilize the profitable growth, let me say, the market provides. That's why short term, we are rather a little bit above the average, but in the long run, the 7% assumption is still valid and is still what we believe is a healthy investment rate. Central costs. Yeah. I'll take this. Finally, holding costs. You probably have noticed that we had some positive one-time effects in Q2. We got a reimbursement on the insurance side on diesel, and we also had, because we started sectorization, putting central function from holding into the sector in the second quarter, we've had still higher cost of the holding, which now went into the different sectors, went away with automotive, will partly go with the ContiTech and will also remain with Tires. Looking at 2027, I would expect EUR 30 million-EUR 35 million quarterly holding costs going forward for 2027. Of course, we're trying to drive this down over time a little bit. Just shy of 1% of net sales I think is a fair assumption. With the clear intent, obviously, as you said, Roland, to become more efficient on that line item as well. First of all, we need to confirm and complete our transformation before we can more actively work on that part of the business as well. Understood. Thank you. Can I maybe just check on the FX, given that turning to a tailwind, is there any change in the drop-throughs we should assume into the EBIT line from FX? Or maybe a quick update on how that drops. Thanks. Yeah. It dropped normally 30%-40% roughly. I would assume similar drop now also in the second half. I don't see a big difference. Yeah. Obviously, it depends also which currency pair you look at, right? Absolutely. Yeah. When you consider our footprint. Yeah. in U.S. versus Europe, in terms of production versus sales, obviously drop through tends to be a little higher. That works in both directions. Depends very much on where exactly you would look into the currency pairings. Thank you. As a small reminder, if you'd like to ask a question, please press star nine and pound key on your telephone keypad, or if you're connected online and listening via the web interface, please click the telephone handset button and then the raise hand icon. At the moment, there are- Oh, there is a question. The next question comes from Monica Bosio from Intesa Sanpaolo. The stage is yours. Yes. Good morning, thanks for taking my questions. Just a follow-up on the price mix. You just said that the price mix for the second half will be a bit lower sequentially, but with a higher drop through. Can you just remind me what do you expect in terms of drop through for the second half and for the full year? My second question is on the IEEPA tariff refunds. I was wondering if the company benefited from any tariff refunds in the second quarter. My final question is on the ultra-high performance tires that went very well in Europe. Can you give us an update of the overall weight? On the other side, I was wondering whether the company is cutting some capacity in budget tires, or if it plans to do this. Thank you very much. Okay. Roland here. Monica, I'll take the first one because it's basically a follow-up on the price mix side. Yeah. We have seen last year a drop rate of 60%-70%, which would also be our midterm average we've seen. This year, the drop rate is a little bit higher because it's not just product related, it's also again, general related, we've had regions performing better, which are more over-proportionately profitable. This is why I said the drop rate is a little bit higher. It used to be higher already in the first half, this continues most likely also in the second half. UHP. Let's maybe talk about the tariffs for a second. Okay. I think a EUR 10 million refund impact of the IEEPA, whatever you pronounce them, tariffs in the U.S. in Q2. This is not, let me say, corresponding to the full refund we believe we will get, so more to come, but EUR 10 million, I think, correct me if I'm wrong, Roland, Max. Yes. Yeah. Is what we have considered or have seen in Q2. UHP tires in Europe. Yes, it works in Europe, which is obviously for us, the most important region. The positive mix development in terms of sizes you see worldwide and actually, in North America, probably with even some stronger opportunities for us as well as in some of the Asian markets. Talking about China, for example, in OE today, I think we don't even sell a single tire below 18-in in OE. I think the average size is in the meantime, significantly above 18 in. There are significant mix improvement. In North America, also due to our under-representation in the light truck and full size SUV segment, we also have significant positive mix improvement potential. On the overall weight, I think we are now at 62% of our total PLT sales represented by the sale of UHP tires. On the Conti brand. On the Conti brand. Sorry, on the Conti brand. Without the Conti brand, we are 55%. Okay. Okay. Capacity in budget tires, we are now for at least a number of quarters not selling more tires. The only improvement we are seeing is basically due to mix. Nevertheless, we invest 7% in average CapEx in our facilities. This is partly obviously in terms of capacity increases. I mentioned Rayong and Hefei. Asia being obviously the most pronounced region where we invest into capacity, but the majority of our investments are really going into structural investments. Turning existing capacities into future-ready capacities. We do this in line with market development and also, let me say, preparing for some opportunities so that we hopefully never get into a situation that we cannot fulfill additional UHP opportunities. We always should have a little bit of excess capacity and capabilities in this segment. As long as we can sell also non-UHP tires and tier 2 and 3 tires as a part of our overall customer value proposition in a profitable way, we will continue to do this. If you ask the ultimate question, do we decide or have we decided to step out of non-UHP business, then I would say a clear no, because especially from the customer perspective, we want to be a reliable partner. We want to make sure that our B2B customers can buy from us what they really need. They not only need UHP premium tires, they also need other brands and other tires. We do believe that this is a very, let me say, strong value contribution or value proposition from a customer perspective. Got it. Very clear. I understood it. Thank you very much. You're welcome, Monica. For the moment, the last question is from Thomas Besson again from Kepler Cheuvreux. Thank you. Just a small modeling question. Can you talk about the net interest charge? Your net debt is declining. It's still around EUR 300 million. Can you give us an indication of where you think it's going next year? Same question for the tax rate. You're guiding for sub 25% this year. Can you stay there or improve that further, or have you already done the best you can on that front? Thank you. I'll take this one on net debt and then on the tax rate. If you look at our financial targets, which we communicated back at the Capital Markets Day on June 25, we said midterm, we want to land at a leverage ratio of 1x. On a pro forma basis, we're now around 2x. That means we need to drop by 0.2x, 0.3x every year, and this is also the plan for this year. If you put that in the model, I think this is a fair assumption. On the tax rate, we went down now from 27% to 24% because we have a different business and country mix going forward. I cannot really judge how it's going to look like in 2027. I would say it's a similar level. I'm not seeing any influencing factor changing this dramatically next year. Thank you. Sorry, the question was not on debt, but on the interest charge. As your debt falls, should we assume that you can take down your net interest charge next year as well? Yeah. Maybe, Thomas, let me jump in there. What we see right now for the time being is stable gross debt. We have to pay the interest for that regardless. Sure. For this year, there is no change to be anticipated. Once we then look at how we are planning on using proceeds, we have said roughly EUR 600 million will be used for deleveraging from the ContiTech transaction. Let's assume maybe there is one bond that might become due that we might not refinance. This will then end up in lower gross debt, and this will also then contribute to slightly lower interest rates. It's going to be rather a stepwise approach, given that gross debt has to go down in the first place, not necessarily net debt related. Yeah. That was my question, whether you are going to use these proceeds. Okay. Thank you, Max, and thanks all. Thank you. This was the last question. I hand over to Max Westmeyer. Thank you very much, and thank you all for participating in today's call. As always, we, the Continental Investor Relations team, are available should you have any follow-up questions. With that, let me conclude today's call. Thank you very much for dialing in, and goodbye.