Transcript Q4 and FY 2025 Schaeffler AG earnings

One thing here is standing out

that’s the negative performance in China and the positive performance in Asia Pacific. That's not just market; that also has to do with the fact that for one of our largest platforms, the EMR3 and EMR4 platform for a customer called Hyundai, the customer has moved this from a Greater China operation to a Korea operation. That explains why Greater China is two-digit down and Asia Pacific is two-digit up. The old program runs off and the new program is growth in Asia Pacific.

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Page number 9, outperformance by powertrain type. Nothing that you should be surprised about. This is just the continuation of what you saw in previous quarters.

We are outgrowing the market in terms of E-Mobility or, let’s call it, battery electric vehicles, plus 13%, while the other two powertrain types are lower than the market.

You also see order intake promising. Battery electric vehicle for the full year, 2 billion additional order intake over sales of 1.6 gives you a 1.3 times book-to-bill. That is also going well. And ICE certainly as expected with a book-to-bill ratio below 1. That is a picture that from our point of view shows again why it is important to have the hedges in place and why we think and why we are confident to make our targets in both divisions.

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Now, I will go through the next pages, Heiko, very briefly, because most of them are there for you reading it. I've already mentioned the key messages. Page 10 shows you

E-Mobility. Good sales growth, strong order intake and further gross margin improvement. That’s the key message here and you see it in the numbers. And for sure, that's a good starting point for the 2026 rate.

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Powertrain and Chassis, the key number here is: we are able, although sales were not growing and that has to some extent to do with the phase-out of certain portfolio elements, gross margin kept at a high level, even improved by nearly a percentage point. Order intake particularly driven by hybrid. That, I think, is also a quite remarkable result for the year 2025.

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Then our shining star, Vehicle Lifetime Solutions. Continued growth, strong profit margin, good fourth quarter. Nearly everything in the same ballpark like 2024. So that business sits really very well and also projects positive development going forward.

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And then on Bearings and Industrial Solutions. You remember a year ago we had to look at this very differently, had to push several ropes to bring this forward. And now we see the first results from this. Sales growth positive. Outperformance certainly not yet there. Book-to-bill 1.1 times and the gross margin that is slightly below.

We are fully aware that there is further room for improvement. And when Chris is going to show you free cash flow, you will see that Sascha has done a lot here to bring the free cash flow generation of his business back on track.

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Now 14. You have heard so much about new growth and what we're doing there that

I will really cut this short. You saw the latest news yesterday on this partnership with the Chinese company. That’s number three. Leju Robotics is a bigger player in the

OEM humanoid space in China, probably number three, very experienced.

It's interesting for us because they are asking for the full suite of products, not only just some ball screws or bearings, but also sophisticated actuators. That really points to the right direction. And we are proud now that we can complement our European activities with Neura and humanoid with a premier player in China.

If you go to this page and look at the last bullet point on the left-hand side, this is something that we have not marketed today with a press release, but that has

happened this morning

we have opened an innovative Humanoid Lighthouse

Factory. It's an innovation factory, it's not just production. It is a one-on-one or end- to-end structure where you can innovate not only products but also production processes.

Very much integrated in our high sophistication, data-driven super partners with

NVIDIA and Siemens. Everyone excited there and clearly another sign that this

17 humanoid ecosystem will take off and Schaeffler will play an important part in that, both in the various markets where we are active.

So I think the key message is

the activities are gaining traction. There's still a way to go for sure, you don't see this in the results at the moment, but we are absolutely positive on that development. What we have seen in the last months is much better than what we expected in September 2025 when we started these -- to market these activities.

Same holds true for defense. Yes, this is a much shorter period since we started this.

We are in the second phase of our program here that ends on the end of March. And again, I would have not expected when we started this, Chris, that we would see first orders coming in. Some of you heard that Helsing got the approval for the drone contracts from the German government.

So we are only waiting for the next days to come to sign our first supply contract with a player here. Achieved in record time and there is definitely more to come. We are very well positioned to grow in the defense sectors. Yesterday, just one example, we had Lakestar with a two hands full of defense players with us here in Herzogenaurach to see what we can do and the interest is overwhelming.

I would also like to add, I've done this in the press, one more area that is interesting.

Certainly something that is more sophisticated and a new area, but very much linked to defense, and that’s the space area. Again, not just announcement, but something where we look very carefully into product opportunities. What you see here on this little page and I'm not going to go into more detail -- is a reaction wheel.

Every satellite, whether it's for civil or military purposes, needs these reaction wheels.

It's exactly something we can do. Consists of motors, consists of bearings, it needs a system, it needs power electronics, and we are already starting conversations with major players here to see whether that growth potential opens up new growth opportunities for us. This is the growth side. I already said this. We look at this with an ambidextrous mindset. You cannot only do offensive, you need to do defensive as well.

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And I'm proud to say on page 15 that our performance program is not only on track, but is in implementation faster than expected.

Just to put some numbers behind this. EBIT promised as an improvement for 2029,

100% achievement rate was 815 million. Most of that from synergies, the other part from additional structural measures. And I can say with the number in 2024 and what we achieved in 2025, we are nearly 40% there in terms of impact already in the numbers.

And if you sort of do that math in a similar way for the headcount reduction, we promised 4,700, of which 2,206 or 47% have already left the company. And another nearly 30% are contracted. So it's fair to say that as of today, we are 76% there. While some people still have to leave the P&L and the company, the remaining 24% should be doable.

And I dare to say that we are able to deliver that program at least a year earlier than expected. What gives us confidence here is that all the negotiations with Workers'

Council have been successfully completed. The number of plants that we are closing has even increased with two more German plants. And that gives a lot of positive

19 hope that we are able not only to deliver on the growth side, but also in further improving our cost base.

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Capital allocation, page 16, nothing really surprising. We invested nearly a billion, 0.6 times depreciation. Capital employed came down by 500 million in the fourth quarter.

And you see that that is allocated as you would expect. One-time depreciation in E-

Mobility, certainly lower in PTC, in VLS small at 0.5 times. That has to do also with investments into logistic operations. And B&IS also a very capital-conscious type of investment.

I leave that for your questions and hand over to Chris for the further explanations on the financial performance.

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Christophe Hannequin

Thank you. Thank you very much, Klaus. I'll take you through the full year sales, EBIT, free cash flow and talk briefly about the dividend.

But before we jump into it, maybe one comment on quarter four, which is not in the slide deck here, but is noticeably better than quarter four from the prior year, which was a complicated one, as you all know, with positive growth of 1.6% during Q4.

A gross profit margin, once you adjust it for the one-off effects related to the impairments of some E-Mobility topics in North America, once you correct it for the other impacts that we had in gross profit, is essentially 2% -- 2 points of gross margin above the prior year at 19.6, overhead under control and EBIT which is almost twice as much as the one from 2024 Q4.

Keep in mind, when you look at our numbers, Schaeffler and Vitesco combined is not a group where you have a steady EBIT generation throughout the year, our quarters because of the activities behind them because of the industrial setup in some of our divisions has different physiology quarter-over-quarter-over-quarter.

So what I take away from quarter four 2025 was a solid one given the visionomy of our P&L and for sure, significantly better than the prior year, capex was also in check

22 at 275 million during the last quarter and cash flow was substantially positive, as you can see in full year numbers.

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If I go back to the flow of our presentation, and again, not reading forever on the slides. But if you look at the sales and gross profit adjusted for FX, we are more or less stable year-over-year, even more so you're correct for the fact that we have divested some building some businesses towards the end of the year and profit adjusted goes up by almost one full point. You can see that on the top right. If I give a little bit of flavor on the biggest contributor, which is the production cost bar that you see there, essentially our performance improvement and where we visualize most of our structural improvements as well.

So 281 million additional if I bring it back to divisions, the two biggest contributors would be E-Mobility by 117 million, which is, again, the proofpoint that scaling up and being efficient in launching in E-Mobility works. And B&IS, 185 million additional contribution through performance and restructuring.

A little bit of noise around it. Obviously, some costs related to our restructuring programs, you see in the 153 million on the right side, we program forward for 70 million, 78 million. And the other point of note is our sensitivity to foreign exchange where at gross profit level, you see that the evolution last year cost us 168 million.

Maybe one last comment on our price policy or our price achievement the 33 million that you see at the beginning is positively back to by E-Mobility, which makes sense,

24 when you think about the messages around improving programm quality in this end.

Business quality in VLS, which is an even bigger achievement given the context that they operated in PTC and B&IS almost neutral to slightly negative, mostly due to the mix between our products.

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I am going to the EBIT slide. We continue with, again, the same logic, so the significantly improved gross profit contribution. Some, again, I apologize about that, but some noise still in our numbers in R&D and SG&A as we book restructuring costs and integration expenses, especially in SG&A.

On the R&D side, the only point of note about what I've just said is a slightly lower amount of R&D capitalization year-over-year. So shows as a negative, but it's not per se a negative message. On the blue 101 million, you see the cancellation since we're talking about EBIT B&IS, you see the cancellation of the items that are located on the left and they have not been adjusted yet through gross profit. So all in all, a solid 0.5 point plus of additional EBIT year-over-year, even though the readability again of our financials is still impacted by the many transformations that we have going on in the company.

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Going quickly through E-Mobility and Klaus already spoke to some of it, so I will be very quick, but 7% growth on the sales side, coupled with a very nice 6.1%. Yes, we're still in the negative zone. But moving from minus 22 to minus 16, mainly pulled by business units around E-Crives and Controls. And if I was to take a regional angle, in all regions as they go through different launches of different programs, the business is growing and it's growing in a more profitable way. What is still missing again is the scale. That's part of the roadmap as discussed many times.

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On PTC, slight decline in sales as expected, also impacted by some of the sales of businesses towards the end of the year. Almost stable at EBIT level, EBIT bsi. Again,

I'll qualify that as a fairly strong sense of resilience in the business where they are absolutely focusing on operating cost and operational performance. If you think back about the EBIT bridge, we find some of it.

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VLS, hope it never gets boring to say this, but continues to be the success story that it's been so far with another 5% growth year-over-year at the very high level of 14.8%, almost 15% EBIT level. It's even more of an achievement when you look at the growth of the platform business, which although it's not the biggest part of the business, it is one of the strongest growth with plus 42% almost.

And it carries a slightly less gross profit margin than the rest of the business. So for them to hold stable means that they counteracted that mix effect elsewhere through performance, growth, and pricing. So another solid year for years.

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Bearings & Industrial, if we move to the slide, slight growth. What is more notable again is this combination of restructuring benefits and operational performance, combining to deliver almost one point of additional contribution to the EBIT bsi line.

Some units within the Bearings and Industrial, by the way, growing at double-digit rates. Aerospace bearings in Europe and North America being one of them.

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If we look at net income, still negative on a non-adjusted basis. If you adjust it for the special items, net income is positive at plus 148, which is an important number for us.

We are doing what's needed to restructure the business and drive performance. It has an impact on reported net income, but adjusted net income again is above the zero line at 148. No specific points to note on financial results. On the taxes side, we are impacted by write-downs of our deferred tax assets. And that takes us to the minus 424 that you have here.

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We move on to free cash flow. Massive would be the adjective that comes to mind regarding the improvement year-over-year. A little bit careful with the reference for

2024 because we all know that there are some integration effects in there, but fundamentally almost a billion additional cash flow year-over-year.

Klaus mentioned we did take some steps during the year in order to safeguard our E-

Mobility launches on one hand and our overall business on the other hand, and are carrying slightly elevated inventory levels in some businesses. I say some businesses because on the other hand, B&IS did a tremendous job in working down inventory levels, but we chose again to invest a little bit in inventory in order to ensure that E-

Mobility scales up properly and that we protect our customers against supply chain disruptions and experience semiconductors, rare earth tariffs.

I mean you all know the story for 2025. This is not a permanent state of things and we get worked on in 2026, for sure, the following year. Continued spending on capex at

974, so below the EUR1 billion mark. None of the savings or none of the capex steering that was done has any impact on the future of our business.

Said differently, we did not sacrifice future growth, or we did not sacrifice opportunities. We just manage capex extremely closely compared to the need and

32 especially when it comes to the E-Mobility ramp up. So trying to avoid as much as possible to have capacity installed before its truly needed.

Which again, potentially protected us also a little bit against some of the swings in demand on the E-Mobility side in North America. We did have to take an impairment during the year, but compared to some of our competitors or some of our customers, the amounts are - I'm not going to say minimal, but they are fairly contained.

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If we move on to our debt profile, you see the result of the two actions done during the year, so the two issuance of bonds, one during H1, the second one done during

Q4. Both of them successful, oversubscribed at very tight and favourable market conditions, which again puts us in the right position as we enter into 2026 where we have maturities that are completely manageable.

Net -- sorry, leverage ratio ends the year at 2.1, slightly better than what we had planned and approaching the top range of our corridor that we set up in our midterm targets from 1.5 to 2.0. Not to say that we're satisfied about it. We of course will continue to aggressively work to bring that down, but progress is now visible there.

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Dividend proposal made to the Supervisory Board and accepted last week at 0.3, underpinned by a healthy underlying free cash flow of slightly more than half a billion.

It allows for us to do what needs to be done in order to be consistent with our dividend policy and our dividend story over the years and share some of it with our shareholders. It's a EUR0.05 increase as you see over the previous year and again, makes - it's an integral part of our equity story as written there.

And that being said, I will hand back to Klaus, who will cover the guidance for 2026, which was published this morning.

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Klaus Rosenfeld

Yes. Thank you, Chris. To finish this up, Page 29, full year '26 guidance. We titled here on our way to achieving midterm targets 2028. That's our commitment. And there is, as of today, no reason to deviate from these targets.

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2026 is a rather conservative guidance, what I think is absolutely prudent in the environment we are in. As I indicated before, the latest developments starting over the weekend are certainly not included here, but in terms of market assumptions, you see what we based this guidance off.

If you read through this guidance, you see and take the midpoint of what this indicates here, that we are rather flattish in terms of our sales activities. This includes what we always said, none of the new growth activities will have a meaningful impact on top line in 2026.

And the rest, you can easily derive this from the four divisional guidances that we gave you, is a question of mix; E-Mobility growing, Powertrain and Chassis reducing,

Vehicle Lifetime with some growth, and also Bearings & Industrial Solutions. That makes then up the overall group situation.

EBIT margin, also here, when you see the -- take the midpoint, 4.5%, a slight improvement. And you see also the divisional ranges as well. For sure, yes, one of the key things that you may be concerned about is E-Mobility. We have said several times, this is not a linear curve. This is something that needs to build over time and for sure the year 2026 will be decisive.

If you take the low end of this, yes, this could mean that in a worst situation there is a, you know, EBIT that comes under pressure. But again, a range is a range. And what

I just said, our ambition is to improve even in a situation where the markets don't allow for significant top line growth.

Free cash flow, 100 to 300 is our commitment after 266. That also indicates to you that we are committed here to strengthen our free cash flow generation that has historically been high and will continue to be our key focus going forward.

So I think, once again, this guidance is certainly rather conservative but prudent. I don't know what KI does with this, but I know that this is something we can deliver and I can promise that we will do the utmost possible to deliver it for you.

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Let me finish with my last page and share with you the top CEO priorities for

Schaeffler. Certainly, the top number one priority for us is further closing the gap to

EBIT break-even in E-Mobility while delivering the order book. The changes in the U.S. have an impact on the order book that has been to some extent delivered, to some extent adjusted, but is in an overall number still something that will allow us to grow that business going forward on secured business.

The second one, as I said before, is to secure our operating performance by continuous self-help measures and portfolio optimization as promised in the Capital

Markets Day. And I can tell you, we know how to do that. We have shown this over the years and will continue here to be focused on how can we help ourselves to drive performance forward.

And last but not least, we'll continue to invest and go forward in our main growth areas, Humanoid, Defense and Space as a new one. You should all remember that we said several times we are doing this by leveraging existing capabilities and competencies. These are not adventures; this is just an extension of our core business beyond the core and I'm very optimistic that that will pay off in the next years without impacting the P&L both from the top line, but also from the cost side too much in

2026.

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Let me finish with 31. After today, we will be available tomorrow for an analyst breakfast and a Citi roadshow. Heiko and myself will then go to the U.S., speak to investors there that have been very interested in our development and will then continue with several roadshows in Europe until we all probably meet again at the

Hannover Fair at our Hannover Fair investor booth. AGM is on the 23rd of April here in Herzogenaurach. You're totally invited to participate if you are interested.

And I close here and to leave enough time for your Q&A. Thank you very much. Back to Heiko.

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Heiko Eber

Thank you very much, Klaus. Thank you very much, Christophe. So since we have a number of colleagues already waiting in line, not to waste any time, let's directly hand over to the operator and take the first question.

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some point. What I would say today is

we are suboptimal in the way we organize today. The work is ongoing. You will see moves in 2026 to address this. It will not be a silver bullet magic wand type of thing, there will be actions that we should be able to communicate on to get in Q3.

That will tackle a part of it, the rest also has to come from an improvement in our cost competitiveness and the health of our business in Europe, which tends to focalize from the German tax pool. So when will it normalize? Not in a few months, but work ongoing and again happy to give you more flavor and actual numbers over the next few calls or during one of our meetings.

Horst Schneider, Bank of America

But is that kind of the target tax rate with regard mid-term 2028?

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Klaus Rosenfeld

Horst maybe I can expand it slightly with an additional fold. In the last years, we have always been conservative with balance sheet risk. And then you see that we have more or less no deferred taxes anymore on the balance sheet. That's a good thing in an environment that is risky.

That does not mean that the losses that sits in the system somewhere are lost? So you can think about this like being conservative on the balance sheet, therefore, a high tax ratio but in terms of cash that you can say because we can utilize still existing losses that potential has not been given away.

Horst Schneider, Bank of America

Okay. All right. That’s great. Thank you.

Operator

Then the next question comes from Ross MacDonald from Citi. Please go ahead.

Ross MacDonald, Citi

Yes, thank you very much, gentlemen. It’s Ross MacDonald at Citi. I had four quick questions. I'll keep them brief. The first one is on the seasonality in the business. If I look back over the last two years, first quarter of the year has typically been the high- est from a margin perspective. Obviously, the exit margin in Q4 is on the low side.

Can you maybe talk around the seasonality that you expect in 2026? Would it be fair to assume another strong performance on the margin side in Q1? And maybe some of the building blocks behind that. I'm conscious that China is rather weak. So, first one on seasonality on the margin for the 2026 guidance?

Second one, just on Slide 15, looking at the performance improvement programs at

Schaeffler. Can you maybe talk around why. given those 1,800 headcount reductions potentially in 2026, why we shouldn't expect to see larger P&L savings this year? It looks like the year-over-year delta in the EBIT benefit from those restructurings is somewhat slowing '26 versus '27?

So just good to understand the dynamics that play there. Maybe everyone leaves to- wards the end of the year for example. Third one on VLS. You're guiding again to 5% top line growth at the midpoint, which is obviously very solid. Can you talk about why

49 you expect margins in VLS to be down slightly in 2026 and therefore, no operating leverage in VLS this year?

And then final one, and apologies, that's been a lot. Just on free cash flow, can you give us the key moving parts for the free cash flow bridge? Should we expect working capital tailwinds in '26? You've talked around taxes already, but just interesting in how we should expect capex to develop '26 versus '25 and the working capital trend?

Thank you.

Klaus Rosenfeld

Okay. Let me maybe take the one’s in the middle, Chris, and if you take free cash flow.

And I can also do the margin seasonality. Let me start with obviously interpretation on Page 15, you're going beyond what we have been thinking about. We gave you the actual figure.

That is certainly not a booked figure in a sense, but a figure derived from the implementation of measures of EUR285 million. And by no means, I want to indicate that as the column - the dark green column is a little lower in 2026. That just is now already the profile for what's coming next year. That would be wrong.

So please forgive us there the shape of these bars is not proportionate to what you saw in 2026. I have not even thought about this, but I will do this next time as you obviously interpret something into this. The way from EUR285 million to EUR815 million, there's nothing that is projected in this chart. Otherwise, I would have put the

EUR815 million somewhere else. Forgive for that negligence, but we will take this away for next time.

And in terms of the margin and the growth, yes, that's a legitimate question, why is the margin not improving I would give you as an answer that this is, to some extent, a mixed question. You know that we have a Chinese activity in the VLS activity. There's more platform business as that grows. It is slightly dilutive to the margin. So you can basically say the classical business generates more margin.

The growth to some extent comes from these Chinese activities and the blended mix is still at the - around 15% mark from our point of view, it's certainly something that is healthy. In VLS, yes, I would love to see all quarters boringly the same. But that's

50 not the case. There were some issues here that impacted the margin that have to do with logistic investments and other things.

So take it over the year and don't interpret too much in the quarter, the fact that Q4 was down a bit, also has to do with here and there changes in the programs. In general, we are optimistic that we can stay over the year at that level. Chris, if you want to add something on VLS, please, otherwise, I'll give you the free cash flow question.

Christophe Hannequin

I'll take the free cash flow. So capex, you should expect something more or less in line with what we had in 2025 and a little bit more. We will work to phase down some of the working capital that was added in 2025 as we have a little bit more visibility. Again,

I put this between markets, given what happens in the world these days.

But as soon as we have a normalized situation, obviously, we work on normalizing the inventory levels. We are also getting better at E-Mobility launches, which is a significant driver of the buffer stocks that we implemented on upstream components in order to protect safe launches in 2025. So as we get better and better at it, we can target more traded inventories than not necessarily have as much, let's call it, excess inventory.

Coming back on the quarterly topic, again, when you look at our business, you really need to take it piece by piece because the dynamics of our profit and the way gross profit and EBIT is generating during the year really, really varies. If I always simplify things, PTC is automotive-driven.

So expect three quarters of solid performance and a typical fourth quarter where the

OEMs will manage their year-end inventories and tailor down the demand. Obviously, this has an impact on efficiency of our plants. VLS, it's more or less the same thing.

Normally in the bottom line, if I put myself at EBIT level and I take away the one-offs that we book here and there, it's normally a healthy stable conclusion throughout the year. The fourth quarter tends to be a bit weaker simply because what you're seeing flowing through is the increased cost per unit coming from the plants of the group that made the VLS part running at slightly suboptimal parts.

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E-Mobility and it's actually the flip side in 2025. If you look at the quarter-by-quarter, you many things that’s happening. You have the relative scale of during the year, but you also have the fact that a lot of the negotiations with our customers are only concluded in Q3, in Q4 which tends to lead to a stronger invoicing on R&D, on the cost recoveries during the second half of the year and especially the Q4, which tends to drive better contribution still negative during the second half of the year.

The B&IS, exact opposite, normally runs full with efficient plants for the first two or three quarters of the year and is impacting during the fourth quarter by the sheer size of its industrial assets running at a slightly slower pace.

Again, it's in line with market demand. We are reacting to what our customers want us to do, whether they are automotive, just-in-time type customers or distribution type businesses. But for sure, very few businesses call for excess inventory in Q4 of any year. So again, the readability of our numbers really to be done at division level.

And understanding the seasonality of it to wrap up on this. On some of our divisions, we have been working in 2025 in trying to balance the use of our assets during the year to try to avoid some of those ups and downs. The successful Q4 results in 2025 versus what happened in 2024 is one example of that. But we cannot shy away from the visionomy of our businesses and the assets that are through.

Ross MacDonald, Citi

Got it. Maybe just to close that point out, the Q1 trading then, should we expect a sequential improvement in Q1 versus Q4 '25? Just be helpful given the U.S. weather patterns in the China demand, how you think about Q1 margins specifically for

Schaeffler at the group level? Thank you.

Klaus Rosenfeld

That was very quick, Ross. Can you -- would you say it again?

Ross MacDonald, Citi

Yes. So really helpful color on the seasonality. It was just really - just on the Q1 trading in 2026, how we should think about the performance of Schaeffler in the context of the full year guidance, given that, you've had typically quite strong Q1s in '24 and '25?

Should we be expecting Q1 to be comfortably in the guidance range?

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Klaus Rosenfeld

This was not -- this was obviously not only VLS but the whole group. Again, the plan of the last year's is nothing that is going to change over one year. So typically, yes, we have been strong in the first quarter. Let's see what this quarter brings. I can only say what we saw in January so far.

It was an encouraging start in the year. In terms of profitability, how that continues now in February with China New Year was happening now in elsewhere around the globe remains to be seen. It's really difficult to project. We're not forecasting and guiding on quarters, but guiding on a full year. So forgive us, if we are not giving you more color, than what we just gave.

Ross MacDonald, Citi

Thank you.

Operator

And the next question comes from Vanessa Jeffriess from Jefferies.

Vanessa Jeffriess, Jefferies

Hello, thank you for taking my questions. Just, if we can go back to your mid-term targets. Knowing E-Mobility has the order book. But I guess where our question most is B&IS, where you expect sales to be kind of 10% higher in 2028 at the midpoint even though industrial production is basically growing 1% to 2%, if we're lucky? And areas where it's still such a small part. So wondering, if there's something we should think about in terms of growth dynamics there.

And then just another one on E-Mobility and the low margin development in 2026. I was under the impression that kind of 1/3 of that business, which is ICE, is already making good margins? And the improvement potential is in the rest. So there actually should be some offset within that division from slower EV adoption and mix benefit.

So maybe you could comment on that.

And then lastly, congratulations on your announcement yesterday. I was wondering if you could talk about your actuation capabilities in cumulative versus some of the

Chinese competitors?

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Klaus Rosenfeld

Okay. Thanks for the nice words in Humanoid. […]

I remember that we said we want to go to 10% to 12% for Bearings & Industrial. […]

Oh, we said 9% to 11%, sorry, my mistake. […]

So 9% to 11% was the number and not 10% to 12%. If you take that, and say, 3 years to get there, then I need to deliver something around 10%. That basically means that you have to further improve margin from 7.5% to 10%. That's 2.5 percentage points in 3 years. Is that doable? Yes, for sure that’s doable.

Knowing that we have some of the impact from our improvement programs not already in there rolling in. Yes, you also need a little bit of growth if the market becomes completely sour and only moves sideways, that would be, from our point of view, at least not the base scenario, then it becomes more difficult.

But I don't see any reason why with this base now in 2025, with the assumption that the whole industrial production market will grow over the next years in a 2% to 3% range, it is possible to bring that into the 9% to 11%. We need growth. We also need to push growth there.

And you will see from announcements in the next months that this is clearly a question also, fight for market share. But it's on the other hand, also cost improvement. When I see what happened from 2024 to 2025, when I see what we are projecting for next year, then that is certainly something that I see as a very realistic path in Bearings & Industrial Solutions.

Operator

Then the next question comes from Tobias Willems from LBBW. Please go ahead.

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Tobias Willems, LBBW

Yes, hello, thank you for taking my questions. The first question would be about the business with Humanoid robots in defense. Schaeffler stated that numerous partnerships have been concluded in the last couple of months. What further turnover are we talking about here when it comes to order intake or revenue? And also can statements be made about future margin targets in the business fields of robotics and defense?

And the second question is about the businesses E-Mobility. I'm wondering here a little bit what makes you exactly so serious to achieve profitability in 2028, because the whole market, especially in China, is quite under pressure when it comes to volume and margin? Or do you see in other markets significant opportunities when it comes to margin improvements to come to your targets?

And my last question would be about the restructuring costs. Are there any restructuring programs or costs ahead for the years 2026 and 2027. Would be very helpful if you could provide us with a little bit more color here? Because, obviously, you said that the big part of the restructuring costs and also programs are also gone in the last couple of years. So I'm quite wondering what is the target here for the 2026 or 2027 costs? Thank you for my questions.

Klaus Rosenfeld

You're welcome. Let me start with the last one. What I said is that we -- we've always done it this way, we'll finish the existing restructuring from first before we think about new restructuring programs. This is a way to do it. This is, I think, restructuring program #5 that I'm responsible for, and we've always been doing good in doing this sequentially when needed for the time being.

And at the moment, there is no new restructuring program necessary and also no new restructuring program planned. If that changes, we will certainly think about what we can do next. And we have that experience, and we know how to do that.

The second answer to your restructuring cost question is what I said is that we have booked all the provisions on the balance sheet to be able to now pay the necessary restructuring outflows. That means from a balance sheet point of view, yes, we have enough provided for the existing programs.

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For new programs that would be a next decision we need to take. I can also say that for the time being, also with the speed in terms of realization, what we see in terms of the average cost we need for headcount it looks like that our restructuring costs are rather conservative that having said, meaning that they are rather rich than too small.

E-Mobility, again, you asked an interesting question. For sure, E-Mobility is not only

China. There are also other markets that start to embrace and discover E-Mobility.

One of the markets that is quite interesting to observe is India.

We have, by the way from China now being localized to India, a program with a major

OEM in India, a name that you all know called Tata.

And what we see there in terms of interest and volume is certainly not being a surprise growth driver that takes over the Chinese development. But it's something very interesting that also in other markets, the application of E-Mobility starts in place a role. And if India continues to grow as also as an alternative to the Chinese market and for sure, India is important to us. That could be an interesting mid-term opportunity.

On humanoids, as we said, we are in a starting situation here. We don't book at the moment any bigger revenues, except for revenues for prototype orders. But we see that our -- the interest is increasing and increasing. I'm 100% sure that we will, during the next years built a proper order book there.

And therefore, we remain on track to deliver on that opportunity. As we always said, it's nothing for 2026, only minimal impact in 2027, but the long-term opportunity from this business is huge.

Tobias Willems, LBBW

Okay. Understand. Thank you.

Operator

Ladies and gentlemen, this was the last question. I would now like to turn conference back over to Heiko Eber for any closing remarks.

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Heiko Eber

Thank you very much. So being respectful of your time and ours, let us close today's call. Thank you for your continued interest in our company. Thanks for the questions.

Thanks a lot to the speakers. And of course, thank you very much to the team for the preparation.

And as always, if there are questions afterwards, feel free to reach out to us. Happy to see you tomorrow during our Roadshow in London. And with this, thank you very much. Have a nice rest of the day.

Operator

Ladies and gentlemen, the conference is now over. Thank you for choosing Chorus

Call and thank you for participating in the conference. You may now disconnect your lines. Goodbye.

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