Hello and welcome back, everybody. We are continuing our German Select Conference with a presentation of Knorr-Bremse. The company will be presented by Sophia Kursawe, who is Senior Manager of Investor Relation at the company. As in all other slots, we'll have a roughly 20-minute presentation followed by Q&A. If you would like to contribute questions, please feel free to use the chat box as always on the lower right-hand corner of your screen, and we will entertain those questions in the Q&A. Keeping an eye on time, I would hand it right over to you, Sophia. It's all yours. Yes. Thank you, Holger. Good morning, everyone, from my side, and thank you for joining us today at the German Select Conference. First of all, thank you very much to the mwb research team for organizing the whole event and for bringing us together today. I'm very pleased to present Knorr-Bremse to you today and to walk you through our business, our strategy, and our outlook for the full year. Let me jump into the first slide. Just one very quick one about me before we get started, but I want to keep it short, so we can focus on what really matters. My name is Sophia Kursawe. I'm a Senior Investor Relations Manager at Knorr-Bremse. I've been with the company for more than six years now. Knorr-Bremse is based in Munich. I'll be guiding you through today's presentation. Let's kick it off with a general overview, brief introduction about Knorr-Bremse. Knorr-Bremse, KB, is one of Germany's most successful industrial companies and the global market leader in braking systems and other safety-critical systems in the rail and in the commercial vehicle industry. We operate quite a balanced portfolio between our two divisions. RVS is Rail Vehicle Systems, with revenues contributing 55%, and CVS, Commercial Vehicle Systems, of 45% of revenues. Overall, rail is more profitable than truck, with more than 16.5% EBIT margin, operating EBIT margin. While truck currently is at 10.5% of operating EBIT margin, which is, in the current truck cycle, quite a good figure. I'll touch on that in a bit. We also like our general geographical distribution. We are not dependent on one specific region so much. Nevertheless, Europe is our biggest market, but we also have good operations, big operations in North America, and also in Asia. In 2025, KB generated revenues of around EUR 7.8 billion, with an operating EBIT margin of EUR 1 billion, which is corresponding to a 13% EBIT margin. One of our key strengths of our business model is the high aftermarket share, which is accounting for round about 46% of revenues. Jumping to the next slide. Here, I've chosen that slide because I think it shows quite nicely what KB is really doing. Most people, because Bremse in German is brake, think that we only provide brakes, but it's much more behind it. In most scenarios, and also best case scenarios, we provide hardware, software, and the brake control, meaning we provide the whole system. This accounts for both rail and for truck. Our braking systems are based on air. We focus on pneumatic systems. Yeah. That's why we also provide products that put air in the rail car or in the truck. We hold a global number one position across all safety-critical systems in both rail and truck. In rail, for example, regarding brakes, we have more than 50% market share. In truck, we have more than 30%, both number one. Yeah, our portfolio, besides braking, is also on power electrics, it's on steering, it's on energy supply, on connectivity solutions. We have electronics in our portfolio, and are here a Tier 1 supplier to our customers. We serve all major OEMs in both industry. We operate globally. We benefit from long-term customer relationships, driven by high safety requirements and homologation. One word to homologation. That's the kind of beauty of our business, especially in rail. Every rail car needs to be checked, needs to be homologated. Once it has that homologation, there's four standards in the whole world, plus regional and country standards. It's very, very difficult to exchange parts that are in that respective train with parts from a different supplier, for example. This is why we have this very, very high aftermarket share, especially in rail. I'll touch on that in a bit. What have we promised at the IPO 2018? I think the cornerstones are the very, very good market leadership positions. Also, we said that we can outperform the underlying markets. Yeah. While the overall rail market only grows 2%-3% per year, we grow 4%-5%. The same accounts for the truck market, where the market annually grows 3%-4%, and we usually grow also 4%-5%. This is driven by, we call it, content per vehicle, our offer. We are innovation leader and quality leader in the market, which is really helpful, of course, as we sell safety-critical products. We see that the customers, they will not go into any risk regarding the product that we provide, which is why the overall entry barriers are also very, very high. Also, and especially in rail, the competitive landscape is, luckily to us, really small because it's very difficult to build up such knowledge, such quality that we have from scratch. We benefit from attractive end markets, as already said, from high safety requirements and a clear focus on those mission-critical systems that we call it. Let's have a look on the topic of resilience. Our resilience, overall, is built on pretty much three key pillars. First, it's our exposure to different economic cycles. Both divisions have different cycles. Rail follows very long-term investment cycles. You can say it's a very slow-moving industry. It's pretty safe, while commercial vehicles, as most of you know, is very cyclical. Currently, regarding truck, we are also in a very weak cycle, and it's just starting to ramp up. Second, our high aftermarket share, which is supported by a globally installed base, depends, of course, on the trains that we are in. As a rule of thumb, you can say that Knorr-Bremse is in more than every second train worldwide with its products. Third, we have a diversified customer base and a very global footprint with high local content. This really helps us, also in crisis. This is also one promise of the IPO, actually, that Knorr-Bremse is quite resilient in crisis, especially regarding tariff impact. We didn't have so much exposure because we produce U.S. for U.S., we produce also China for China, Europe for Europe. One of our approach has always been to be really close to the customer, and this helps us also in terms of shipping of goods, for example, et cetera. Here I've outlined for you our aftermarket, which is the backbone of our profitability, you can say. The backbone of our business model, you can say. The good thing about the aftermarket business, it's annuity-like in nature. It's supported by long product life cycles. A train has a life cycle of around about 30 -40 years, more 40. Sometimes even beyond. A truck has, let's say, a lifetime that matters to us, of 10 years. Where we do aftermarket business before it gets sold somewhere where we don't have aftermarket business anymore, Africa, for example. With an aftermarket share of 56% in rail and 34% in commercial vehicles, it provides strong margins, cash flow stability, and a significant future potential. Yeah. Digital and connectivity-based services that we focus on quite a lot also further enhance this growth potential. A quick look on our megatrends. Yeah. We are very well positioned to benefit from the key megatrends shaping the future of mobility, you can say. It's urbanization, sustainability, digitalization, and connectivity, which are driving demand for safe and efficient, but also intelligent transportation solutions. Yeah. The key trends of our two businesses, they differ a little bit, of course. In truck, as most of you know, it would be e-mobility and the way to autonomous driving, automated driving solutions. For rail, the focus is clearly on digitalization, on electronics, and we also focus on signaling control systems and intelligent rail solutions that are needed. Keep in mind, rail is the most eco-friendly mass mobility solution now and in the future. Based on those structural megatrends, you can say, we have a clear strategic focus underlined by our BOOST program, which was published or launched in 2023. We have the clear focus to systematically drive margin expansion, to drive cost optimizations and footprint improvements across the whole Group. I think we have done a really good job on this. I'll show you next couple of slides as well. BOOST was deliberately structured into two areas, you can say. First, it's brownfield. This is housekeeping topics. We make sure that we have good cost base. We got rid of several underperforming assets. We did some footprint reorganization, stuff like this, focusing on efficiency and structural improvements. You have on the other side, so-called greenfield initiatives that are aimed to expand into growth areas, into profitable areas. What have we done so far? We have almost completely completed, so there is one more asset outstanding. We will sell our HVAC business in rail, air condition business. Why? In terms of profitability, we have the clear focus that all business units need to be contributing to the overall group margin or have such an important strategic part that it is okay that they are a little bit below group margins. We see that the HVAC business will never be able to reach those margins, and that is why it is the last part to sell it. We will do it in the next couple of months and then sell it. We'll be completely done. Fix-it means efficiency measures, cost measures that are running across the Group. We've done great jobs here. This is an ongoing project. We have more than 12,000 measures implemented within the whole Group. We have done very good progress here. This is to be continued over the next couple of years, of course. What have we done regarding greenfield? What we are focusing on a little bit more now, or management is focusing on more now, we want to expand into good margin accretive growth areas. What we bought in 2024, for example, was a signaling business in North America. We bought it from Alstom back in the day. It's the first, let me say, step into the signaling business. We have always had a look at it and wanted to enter it. With that step, we are market leader with Wayside Signaling in North America. With that technology, we can expand into other countries such as South Africa, such as Australia, India. That's what we also do. Based on that technology, we cannot enter the European market. We have done a smaller acquisition last year in September with duagon. They do have some signaling footprint in Europe. This is our first tiny step into the European signaling business. Yeah, we also want to get bigger here in Europe, which is why one could expect some more smaller M&A regarding signaling in Europe in the next couple of years. Overall, while we analyzed the assets that we wanted to sell within the Sell-It program, we also identified some really jewels within the KB environment. Yeah, we're looking on them, focusing on them a little bit, meaning on electronics business, for example, on damper business, for example. We have a little tiny bit of energy business within our rail industry, and we see that it has very good growth margins and a very attractive market right now. We are focusing on different, also very accretive topics within rail and truck going forward. Having a look at financial strategy. The strategic framework that I was talking about before translates, of course, also into clear financial priorities. We focus on strong and profitable organic growth on margin expansion very much at the moment, improved cost conversion and overall disciplined cash allocation, capital allocation. M&A remains very important to us. I've already outlined our strategy regarding signaling. We are not shying away from M&A. We always have 10-15 targets on the table and are evaluating. We have more focus on rail at the moment because, as I showed you before, the margins are a little bit better in rail, or not only a little bit, much better in rail, and we see that we have very good opportunities to grow here. When I look at capital allocation priorities overall, and they are unchanged, they have been like this for several years. First, we want to invest into organic growth with attractive returns. That's what we're doing, clearly. Second, to pursue disciplined and value accretive M&A. Thirdly, with a very long distance to the first two, we return capital to shareholders via dividends. That's what we are going to do, but with a payout ratio of 40%-50%. Share buybacks, special dividend, this is nothing that we really have in a big focus at the moment. Touching on M&A, already outlined what we like. We focus on CapEx on strong aftermarket exposure. We also want to keep driving our aftermarket business. Overall, it needs to be a good strategic fit, that's clear. We want to safeguard high returns, focus on strong cash generation, and always keeping in mind, of course, our investment-grade profile, because the financial superior profile that we have had forever, pretty much, is very important to us. We currently have a net debt to EBITDA of 0.5x, which is very low. Of course, for some larger transactions, we could imagine to go up a little bit, but overall, a superior financial profile is really important to us. What have we from the capital market, looking at our guidance for the full year? We expect revenues between EUR 8 billion and EUR 8.3 billion, an operating EBIT margin of around 14%, and a free cash flow between EUR 750 million and EUR 850 million. This is fully in line with our midterm targets. The midterm targets, they are also ending in 2026. We guided also the 14% here on group level. Rail overshot it, I would say, already reached its midterm targets of 16.5% last year. This year we will be definitely above the 17%, while truck, currently in a rather weak truck cycle, underperformed a little bit, but the overall group margin target of 14% holds true, and we are confident to reach it this year as well. One could expect an update of midterm targets with our Q2 results end of July. Yes, I think overall with our BOOST program, we have done really good progress. To keep in mind, in 2022, we had an operating EBIT margin of 11%, and we managed to increase it by 300 basis points until 2026, despite a very weak truck market. I think that's quite a good success, so we're happy with it. What we clearly say is we are not done yet. Yeah. We have ambitions to further grow margin and also have a focus on profitable growth going forward. Yeah, that's clear. We will end BOOST officially 2026, but one could expect that there would be a follow-up program to drive further efficiency and costs. To sum it all up, before you can ask your questions, I think Knorr-Bremse combines market leadership, a resilient business model, and a very disciplined strategy execution with a great management team in place. They're a great team. They want to drive Knorr-Bremse to make it further successful. Yeah, I think overall, we're very well positioned to deliver on profitable growth for sustainable shareholder value. For now, I would say thank you so much for your attention already, and happy to take your questions now. Thank you so much, Sophia. That was almost on the dot 20 minutes. We do continue with questions of which we have quite a few already, a lot of them focusing on the growth trajectory in the different business segments. On the one hand, how dependent is the margin story on rail growth versus truck recovery? You say rail is a steady eddy. It's continuously growing, a little cyclicality. On the other hand, trucks, very cyclical. Going forward, is the truck recovery the bigger growth driver or the continuous growth in rail, or both? Clearly, there is some more headwinds coming with the truck cycle, yeah. Because truck has been really weak over the last couple of years, so definitely there will be an upward cycle coming up now. We saw first signs of recovery. The recovery is rather slow, but it's visible. We expect, for example, for this year in truck to increase margin by 150 basis points. Yeah. From the 10.4% that we had in 2025, we believe that we can bring it up to 12% in 2026, in a still not so good market. We see that market and truck should grow slightly. This is the word we're using. Slightly means maybe 5%. Only with that slight growth, we are able to increase margins by 150 basis points. What management has also shared is that in a good market, truck is clearly capable of doing 13% of margin. In a very good market, truck can do 14%. This is nothing for this year, but this is going forward. You see there is a lot of potential in our truck business because management has done a lot of measures regarding costs, even more in truck than in rail, because we said we always have to use a crisis to bring down costs going forward. Also rail, of course, is important. We also see that rail margins should further grow. I told you before that we expect for the year 2026 around about 17.5%, depends on how quickly we will sell the HVAC business this year. Management has also already shared that we will also be able to find back to old strength, because back in the very, very high China days that Knorr-Bremse had in the teen years, like around about 2012-2019, we had unbelievable China business, which normalized to a certain extent, but China is the most profitable market for us. It's still big business for us, but it's not growing anymore. Margins have slightly come down. We believe that with our initiatives and the market position that we have, KB will be able to go back to old margin strength within radius, which was around about 19%. Yeah. You will get the midterm targets in summer, but this should give you around of a ballpark of what we think we can do. You're saying that you are expecting a modest recovery in trucks. Have you seen a recovery already, because one of the questions concerning the U.S. market and then what you have seen regarding the truck market in the first three and a half months? Yes, we saw the first kind of recovery in our orders in Q4 last year already. It was quite nice surprise, I would say. It was better than we expected. Also, Q1 should be solid, but it's not a huge catch-up, I would say. What we, best knowledge for now, expect is that the second half of the year 2026 should be better than the first half. When I look at 2025, Q1 was the best quarter, Q2 second best, Q3 and Q4 then stable. Now we should expect basically a mirror picture. Yeah. We believe Q3 and Q4 should be very solid also because we believe there could be certain pre-buy effect. We don't have it in our budgets, but that's what markets expect, of the EPA regulation in North America for 2027. Overall, everyone is ready for that catch-up. We see it a little bit, but the big one is not there yet. Okay. We've seen the trough is what you're saying, basically. Yeah, absolutely. Okay. We've seen the trough. Great. Thank you. One question you already touched on in one of your slides, that's regarding capital allocation. Considering your high and strong free cash flow, the question reads, Can shareholders expect a share buyback program and/or dividend increase, special dividend? You mentioned that's a distant number three and a more distant number four. Is that written in stone or is that something that could change over time once you have worked through the organic growth and CapEx and stuff like that? Of course, we get this question quite a lot. Yeah. For now, it's not an option. Yeah. Of course, it would be weird if we wouldn't have a look at it every now and then. Yeah. Of course, we discuss it internally. Now, clearly it's not the right time because we have growth ambitions. We have good ideas. We really want to use the capital for different things as outlined before, but of course, never say never. Yeah. I still don't want to create too much hope now because I don't see it in the near future now. Yeah. All right. We've talked about digitalization and solutions and investments that you've made in this new business. How quickly do you think those investments will actually start to pay off for you? Yeah, that's a good question. What we see is that we have a lot of pilot projects running, for example. We do focus a little bit on predictive maintenance, on condition-based monitoring, this kind of stuff. Especially rail, as I said before, is rather slow industry. Yeah. New innovations don't come in so quickly. We see that there's great potential going forward also, with the aftermarket business and, like I said, predictive maintenance, condition-based monitoring. We do have slight effects, of course, already, but the bigger impact should be expected end of 2020s, I would say, going forward. Yeah. Keep in mind that we are a quality and innovation leader. We are on the forefront, yeah, of introducing new products, making the life of our customer better and, of course, the life of the end customer as well. Great. Thank you. Regarding the recent acquisitions that you've done, duagon, TRAVIS, can you give us a better color as to how they integrate into your overall product portfolio? Yes. Absolutely. TRAVIS, for example, is a rather small acquisition. Overall, TRAVIS is truck, yeah, Commercial Vehicle division. We see that there is quite a big potential also to drive aftermarket business. We already have a very good asset, it's called Cojali, measuring the condition of a truck. We see that the data that is provided and the service that is made by a Cojali has great potential to further grow. With that, TRAVIS, it's an app, yeah, where the truck fleets can download, and they can pretty much book everything around that truck. A truck driver, he needs to park, he needs to sleep, he needs to eat, all that kind of stuff. So we are trying to bring everything together that a truck driver needs and a fleet needs in terms of aftermarket and services, and we see that there's this great margin potential here. So TRAVIS, perfectly fits in the so-called truck aftermarket ecosystem that we are focusing a little bit. duagon has two interesting approaches. It's rail. Yeah. Half of duagon is signaling business in Europe, yeah, that we want to enter. But to make the full step into signaling Europe, we would have to do two more acquisitions. But duagon, with half of its revenues, I think, around about 70 to 80 million of duagon are already in Europe signaling. And the other business of duagon is electronics business for rail. We already do have electronics business, but we want to combine it, and we think it's a great fit for us. Great. Thank you so much. It's high noon, 12:00 P.M. Unfortunately, we have to end with this presentation because TKMS, so we're going from above the ground to underwater now, is already waiting to get started. I've put the link to the next presentation in the chat box in case you want to join that. Everybody, thanks so much for participating and great questions. Sophia, thanks so much for the insights and answering the questions, and have a great afternoon, Sophia. If you don't mind, then stay on the line. Yes. Thank you. Reach out anytime for questions. Bye-bye.