Ladies and gentlemen, welcome to the SMA Solar Technology AG Half Year Financial Results 2025. I'm Moritz, the Chorus Call operator. [Operator Instructions] The conference is being recorded. [Operator Instructions] The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Kaveh Rui, CFO. Please go ahead, sir.

Thank you, operator, and welcome, everyone. We very much appreciate that you're taking the time for this investor and analyst call on our first half year 2025 results. With me today in the call is my colleague and SMA CEO, Jurgen Reinert. Welcome to the call, Jurgen.

Thank you, Kaveh.

This conference call is scheduled for up to 60 minutes and will be recorded. After the management presentation, we will be happy to answer your questions. Today's presentation is available on our Investor Relations website. The replay will also be available on the website shortly. Our agenda for today. First, I will give a review of our first 6 months figures, followed by an update on the restructuring and transformation program. Last but not least, we'll have a look at order backlog as well as our outlook for this financial year 2025. I expect the presentation part to last about 30 minutes. After the presentation, we are happy to answer your questions. I refer to our disclaimer on Page 2. So let's move to Page 4, financial highlights for the first half year 2025. Group sales reached EUR 685 million and were below last year with EUR 759 million in the first half 2024. In the Large Scale and Project Solutions division, sales improved compared to the previous year. The Home & Business Solutions division declined year-on-year. Operating group EBITDA before one-offs was positive EUR 55 million with a strong operating performance in our Large Scale division, more than offsetting for lower sales and the resulting lower fixed cost degression in the HBS division. Reported EBITDA came in at EUR 9 million after reaching EUR 81 million in 2024. This was mainly due to onetime effects such as write-offs on inventories and provisions for purchase obligations. I will provide more insights on the individual division in a moment. Free cash flow reached about EUR 66 million after minus EUR 203 million the year before, mainly resulting from ongoing measures to reduce net working capital, which achieved good results in the first half 2025. Total order backlog stood at EUR 1.2 billion at the end of June. Now let's go to Page 5, sales by region and by segment. On the left-hand side, you can see that EMEA is still our biggest region with 49% compared to 50% in 2024 due to the soft sales development in HBS, which has the majority of its sales in the EMEA markets. Americas revenue share decreased from 41% to 33% as H1 2024 was very strong for the Large Scale division so that there is a decline in H1 2025 despite solid revenues. The APAC shares region increased from 9% to 19%. Here, Australia showed a very strong development in the Large Scale business again. The main markets for the SMA Group in the first half were Germany, U.S., U.K. and Australia. Now let me walk you through the sales per division on the right side of the slide. Sales development in the division Home & Business Solutions was affected by lower demand as well as high competitive and price pressure and therefore, decreased by 48% from EUR 223 million in the first half 2024 to EUR 160 million this year. The Home business contributed EUR 54 million and C&I contributed EUR 62 million in H1 this year. The division share of total sales thus came down to 17% compared to 29% in the first half of 2024. EMEA remained the biggest region for the division. Large Scale again showed a strong revenue development from EUR 536 million last year to EUR 569 million in the first half 2025. Compared to last year, where Americas was the strongest region, EMEA was now the strongest region with 41% of the segment sales, slightly higher than the Americas share reaching 37%. Now let me provide you with more information on the profitability. Operating group EBITDA came in with EUR 55 million compared to EUR 62 million in the first 6 months of the last year. Including one-offs, reported group EBITDA reached EUR 9 million. As mentioned at the beginning of the presentation, one-offs include write-offs on inventories and provisions for purchase obligations of about EUR 50 million in total as well as provisions for doubtful receivables of EUR 7.5 million due to the insolvency filing of a customer in the U.S. These onetime effects significantly affected our H1 results this year. In addition, please note that this year's EBITDA includes a positive onetime effect from a claim settlement of EUR 10 million, while last year's results included a positive onetime effect from the sale of SMA's elexon stake of EUR 19 million. If you exclude all these effects, our operating EBITDA was very solid with EUR 55 million in H1 of this year and reflects the positive contributions from savings related to our restructuring program. EBITDA margin reached 1.3% compared to 10.6% in the first half last year. If we exclude the noted onetime effects, our operating margin of EBITDA was about 8% for H1 this year. With about EUR 28 million, depreciation in the first 6 months was slightly above the level of last year with EUR 24 million. Now let's have a look at the segments in detail. EBIT in our Large Scale segment again showed an earnings improvement in the first half '25, reaching EUR 113 million compared to EUR 101 million in 2024. Reasons were the higher level of sales and fixed cost equation. Factors that contributed to this included the increase in revenue, especially in the field of battery storage projects, the profitable product mix and the reversal of provisions for legal disputes in connection with the settlement of an O&M contract in North America in the mid-single digit million euro range. On the other hand, inventory provisions of EUR 1.1 million had an adverse effect on profitability. EBIT for HBS amounted to minus EUR 129 million compared to minus EUR 67 million in the first half '24 due to the price and volume-related sales decline as well as the one-off effects from inventory provisions of about EUR 47 million. Excluding the one-timers, HBS profitability was approximately EUR 10 million below last year's level despite more than EUR 100 million less sales. Hence, the saving efforts are contributing strongly here, but the market headwinds and related onetime effects were too significant to compensate for. If the business prospects for HBS deteriorate further in the course of the current fiscal year, additional write-offs on inventories may be necessary. The overall reported EBIT margin of the SMA Group amounted to minus 3% compared to 7% last year. Now I will move on to the balance sheet and net working capital on the next slide. Net working capital, which is shown on the left of the page, decreased to EUR 283 million compared to the 2024 year-end figure of EUR 473 million. This leads to a net working capital ratio of 19%, which is significantly improved compared to the ratio at the end of last year, but also includes a reduction related to inventory provisions and write-down of receivables already mentioned. Let me explain the net working capital. Inventories at the end of first half year were at EUR 534 million compared to EUR 564 million at the end of 2024. The decrease is related to the inventory write-downs of EUR 47 million as well as an additional decrease of physical inventories in our HBS divisions of EUR 50 million, which was offset by a buildup of inventories of EUR 67 million related to projects in our Large Scale division. Trade receivables decreased as a result of lower revenues compared to Q4 '24 as well as ongoing measures to ensure timely customer payments and reduction of overdue payments and the onetime effects from a provision for doubtful receivables. Trade payables increased in the first half of this year, mainly related to timing of supplier payments. Advanced payments received from our customers slightly increased since the end of '24, in line with our solid Large Scale project pipeline. Net cash increased by over EUR 50 million to EUR 135 million at the end of H1, mainly driven by the net working capital improvement I just explained. The most significant improvements on inventory management and accounts receivable collection have already been achieved in H1. However, our liquidity protection measures remain ongoing. For example, we carefully review and analyze any inflow of inventories. Now let's have a look on the group balance sheet on the right side of this page. And as I already explained, the changes in the net working capital positions. I will now focus on the major changes in the other balance sheet positions. As I just explained, the change in net cash, I will start with the changes in total cash and financing liabilities. As we need to ensure that we have sufficient cash for our business operations, we continue to use our revolving credit facility with a utilization of about EUR 70 million per end of June. You will find this under financial liabilities in our balance sheet. Our total cash is hence EUR 205 million at the end of June. Regarding the other balance sheet items, noncurrent assets have increased as a result of an additional IFRS 16 asset related to our new gigawatt factory building lease. Other assets increased to EUR 106 million, mainly explained by IFRS 15 contract assets related to projects in our Altenso business, part of Large Scale division and receivables from currency derivatives related to our currency hedging positions. Shareholder equity decreased to EUR 505 million at the end of June as a result of the negative result. Provisions decreased to EUR 179 million at the end of H1, mainly driven by a settlement agreement and payments made related to an exit agreement in our O&M business as well as initial severance payments as part of our restructuring program. Other liabilities increased to EUR 526 million, mainly related to additional leasing liabilities for the new production facility. This is the corresponding liability to the IFRS 16 asset. That concludes my explanation of the balance sheet. Let's now have a look at our summary of cash flows on the next slide. In the reporting period, our cash flow from operating activities was plus EUR 90 million as compared to minus EUR 174 million in the first half '24. The strong turnaround on cash is driven by the significant decrease of net working capital in the first half of this year, as explained earlier. Net CapEx amounted to EUR 24 million in the first half '25, below the level of last year as we are managing our cash spending very closely and currently focusing investments mainly on our new Large Scale platform. Considering our cash flows from operating and investing activities in total, our free cash flow was positive with EUR 66 million in the first half of this year and much better compared to last year with minus EUR 203 million. Please note that we had cash outflows from the restructuring program in Q2 and further payments will also be made in Q3. Let's move to the next page, order backlog. Looking at the left side of the slide, you see that our order backlog remained on a level of about EUR 1.2 billion at the end of June and product order backlog stood at EUR 848 million. On the right-hand side of the page, you can see that our Large Scale product order backlog remains strong with EUR 802 million and HBS with EUR 46 million. For the total group in total, order intake in Q2 for the Home & Business Solutions division was on the same level like Q1 while order intake for the Large Scale division was lower than the last quarters due to the uncertainties from the OBBB and U.S. tariff situation. I would now like to hand over to Jurgen, who will briefly give an update on our restructuring and transformation program as well as new products and solutions.

Thanks, Kaveh. And as you know, we have defined an ambitious cost saving target with an EBIT improvement of EUR 150 million to EUR 200 million. And we are well on track to achieve more than half of our original EBIT improvement ambition already this year, which is above our plan. The cost savings at the end of June resulting from our key measures for decreasing material costs and operational expenditures are better than originally planned. The savings for personnel costs, which is the biggest level are also well underway. In total, we are confident that we will achieve our ambitious savings targets. We go to the next slide, then I would like to mention that alongside the successful implementation of our restructuring program, we have, during the first half of 2025, also launched new products and solutions to meet evolving customer demands, especially in the field of storage and grid stability. The new Sunny Island X is extremely versatile and ideal for both on-grid and off-grid installations. It allows to adjust the AC power and battery capacity of the system to meet customer-specific needs. Thanks to the integrated DC/DC converter, the Sunny Island X is compatible with a wide range of batteries, offering great flexibility in energy storage. For Large Scale customers, we introduced the Sunny Central Storage UP-S. And this one is featuring silicon carbide MOSFET technology and it offers superior power conversion efficiency and grid forming capabilities. The silicon carbide technology of the power semiconductors can switch faster with lower losses than conventional silicon technology. And last but not least, we are continuing to provide solutions that allow seamless integration of renewable energies worldwide, like in Chile, where one of the largest battery storage projects in South America is being built in the Atacama desert. It complements an existing 220-megawatt power plant, providing a capacity of 980-megawatt hour battery storage. At the heart of the project are 67 battery SMA battery systems. And these innovative offerings make us look into the future with confidence. This is it from my side, and I'll hand back to you, Kaveh.

Thank you, Jurgen. Let's turn to the last page, our guidance for 2025. As already said in our Q1 call in May, the market environment is currently very difficult due to macroeconomic deterioration, the declining expansion rates in the residential and commercial sectors as well as the increased uncertainties caused by the volatile tariff policy and the potential direct and indirect effects on SMA's business. The so-called One Big Beautiful Bill Act, which was signed on 1st of July, adds another factor of uncertainty that, in our opinion, will weigh on the prospects of the development of the PV market in the U.S. in the short to midterm. Due to the ongoing planning uncertainty, our guidance does not account for potential financial effects of tariffs and other trade restrictions as well as the gradual phasing out of tax incentives from the Inflation Reduction Act under the OBBB. For the individual divisions, we expect sales in Large Scale and Project Solutions division to be slightly above the high level of the previous year. For the Home & Business Solutions division, sales are expected to be well below the previous year's level. Group EBITDA and EBIT will be positively impacted by cost reductions and efficiency improvements as part of the restructuring and transformation program. On the other hand, earnings in Q2 have already been negatively impacted by declining demand, including the EUR 46 million one-offs mainly from inventory write-downs in the first half and in some cases, still existing inventories at distributors and changing customer requirements in the Home & Business Solutions division. Despite these onetime effects, our guidance from May, sales and EBITDA in the lower third of the guidance range of EUR 1,500 million to EUR 1,650 million and EUR 70 million to EUR 110 million is currently still valid. However, if the business outlook for the HBS division continues to deteriorate in the course of the current financial year, additional write-downs and one-off effects could arise. The next few months and the concrete impact of the OBBB will be crucial to assess further developments. Regardless of this, we are currently evaluating various options for action in order to be able to be well prepared and react quickly in the event of a further deterioration in the business development in the HBS division. In particular, further measures and efforts to optimize costs and cost structures are being examined. Last but not least, a note on our upcoming events. The first 9 months 2025 financial results will be published on November 13, combined with an analyst and investor call. With this, I conclude the presentation, and we are now happy to take your questions. Thank you again for your interest and please do not hesitate to contact us in further questions.

[Operator Instructions] And the first question comes from Constantin Hesse from Jefferies.

I'm going to take it one by one. I'm wondering if we could talk a little bit about the dynamics of the different businesses. So specifically talking about Large Scale. It goes without saying that the execution here is going extremely well. Profitability is coming through really strongly. But order intake has, of course, been quite weak. It's gone weaker again relative to Q1. So when we look at the development of that order intake into Q3, into Q4, I'm just trying to have an idea of how the backlog could actually develop until the end of the year. And if you believe that the Large Scale business could, in fact, still be a EUR 1 billion business as we go into '26 because of the lack of orders potentially in the second half? And if that's the case, how should we think about the profitability of that business once sub EUR 1 billion? That's my first question.

Okay. I can take this one. So as mentioned in the presentation, the big question is how the U.S. market will react, right? And we have seen the high uncertainties in the last months in our order intakes, as you've also observed. I think crucial is what will happen in the next 2, 3 months. What I can give as feedback is that the discussions we have with customers are quite promising. And there might be a catch-up effect in terms of the safe harbor requirements for the OBBB. And well, talking to customers, we are quite optimistic that we have a good chance of making up for some of the order intakes we kind of lost against last year so that going into next year, we could be looking at a sales figure of around EUR 1 billion. But it's too early now to promise that, let's say, and I would like still to be cautious, but I would say the signs are positive.

Maybe, Constantin, to just add on that. Fully agree with Kaveh, of course. But on the profitability, we can also not give it in full detail, of course, as we move along and looking at the order intake. But on the other hand, we now know probably with a little bit higher certainty of the taxes towards the U.S. at least. And we are more comfortable now than we might have been some months ago due to the fact that we then didn't know what is going to happen. Now probably a little bit more security. So there might be changes in regards to our investments, et cetera. But when it comes to the profitability from the orders we take right now, we are quite confident.

That's good. Maybe just to push back a little bit, Kaveh, I mean, what kind of an order backlog do you need to have in Large Scale to be comfortable with EUR 1 billion? Because even if I model for another EUR 400 million or even EUR 500 million in order intake in the second half, I don't even get to EUR 700 million in backlog by the end of the year. So I wonder, given the time frame of delivery of these projects, what kind of a backlog would you be comfortable in order to deliver that potential EUR 1 billion in '26?

I think what is important that the backlog, let's say, the time between order intake and sales has decreased over the -- let's say, over the last year. So we're not talking about a 12-month period to convert order intake into net sales. So we talk more about, let's say, 6 months in the European area and I would say, around 9 to 12 -- 6 to 9 months, more 9 months in the U.S. business. So even if we don't have a full EUR 1 billion at year-end this year, we can still make up for that if we have a strong order intake in Q1. I think that's how I would like to answer the question without committing to a certain figure now. I hope you understand that.

No, absolutely. That makes total sense. Then if we quickly jump over to HBS, it goes without saying environment here continues to be quite tough. If we look at the current development going forward, is the EUR 150 million to EUR 200 million in savings enough to take you to breakeven, assuming no improvement in the environment? So if we continue to stay at this level of around EUR 300 million and maybe a little bit below EUR 300 million in revenues, is that level enough to take you to breakeven? Or would you have to take additional action?

Yes, I think this is a totally valid question. As you can imagine, that's something we're analyzing back and forth. And in the presentation, I was talking about additional measures that we're preparing in case we see that we don't have an uplift. So a EUR 300 million revenue base case is not enough to keep HBS profitable or even breakeven. So we need a higher level. On the other hand, we can still do things in our cost base so that with both things, I would say, more improved revenue base, but also even further cost measures that we're currently preparing and looking into, we can then reach breakeven. So that's exactly what we're currently doing.

Okay. Fair enough. Then maybe just lastly on HBS. I mean, obviously, it's a bit of a tough one because distributors still have relatively higher inventory. Some competition is back quite aggressively. If we look at a potential recovery curve and I've been trying to speak to some industry experts about this too and it's been hard because apparently there are no European countries currently discussing any kind of potential subsidies. So is there anything that you're seeing that could give you any glimpse of hope of a -- even if it's a small recovery in the European market in Home & Business Solutions or at the moment, it's just going to stay as is?

Yes, Constantin, good question. And that is really why we -- as Kaveh was answering already, I mean, we will look at both parts. If the revenue does not go up, as you can imagine, right now, we are -- if we get an order, we are able to deliver rather quickly, of course. And if we don't see it going up substantially, then we will need to go into further cost-cutting, which we are preparing, as Kaveh said. But -- so the -- you're right, we don't see glimpses right now that are very positive. In fact, if we look at the smaller powers and I've been referring to the [Foreign Language] meaning what is being implemented in Germany, then we see until from 0 or 1 to 10 kilowatt that we are nearly on half of the volume implemented in Germany in the first half year of '25 towards last year, first half year. So it's a big decline and we see that in -- not only in Germany, but also in other countries. And right now, we don't see any real big change in that due to normative changes or changes on subsidies, as you said, et cetera. What we do see is 3 things. The one is, as you also mentioned, the destocking will continue and that will put us in a better position. We are, of course, working on new products that we will be releasing. That's the second one. And the third one is we would -- if we see changes in the positive direction, that would be more on battery applications and charging applications, but they are not of the same magnitude. So this is where we see that we have probably come to the bottom with the number you said, which is not a bad estimation for this year. And we would see a smaller increase probably next year, but not a substantial one. That is how we look at it right now. But that's why we say we will look at it very carefully then the quarter 3 months and then decide from there.

And the next question comes from Lasse Stueben from Berenberg.

I just wanted to ask a follow-up on HBS. You mentioned that when you are getting orders, you can deliver very quickly. I'd just be curious to know what is pricing like given the environment? I'm guessing it's reasonably poor, but I'm just wondering what is the incremental margin when you are getting those orders in? And I guess a bit longer term, is there a point where you potentially reassess your position in the home or the resi and commercial markets, just given, as you said, there's not much near-term hope for recovery? So I'm just wondering how you're thinking about how much cost you can really take out before you maybe decide to either divest or do something else with that business?

Yes. I mean, if you look at the prices, I think you have to differentiate a bit the different regions, right? So if you look at the European market, I would say that the pricing remains very tough. And we, of course, with the current product range we have, we are more the premium player. So we have higher prices than competition. However, we see that the market volumes don't -- are not much sensitive currently at least to the pricing. So that's currently, I think, what we do and what we want to do going forward and that's what I mentioned with the HBS cost structure that we're looking into to make a big step in terms of reducing the pricing that we can offer to customers. So we will do things there. However, we will always be the more expensive premium player compared to the others. When it comes to the U.S., I think there, the price levels are much different, the profitability is even higher. And there, we are also pretty much in line with what's happening in the market due to the lack of the Chinese competitors.

Maybe to just add a little bit on to that. First looking at Europe or mainly looking at Europe. Of course, we do see -- if we look at the market, sometimes our products considerably below our sales price because they are sold from the distribution at a cost reduction or at a price reduction. And that we have seen over the months to be up to 30% or something. We do tend to see an increase there, meaning that our products are now in average being sold more again at our prices that we delivered them for. And the other part is that we do have, of course, differences when it comes to the application. So if it's a PV-only product, then typically, it's going to be very difficult with the price, especially also due to the fact that the Chinese competition is pushing in quite a lot into Europe, focusing more in Europe instead of USA and other markets. And -- but as Kaveh said, we are on a comparatively low level and thereby have a customer base which is continuing to use our products and thereby, we do see a rather stable momentum going forward once this destocking has taken place. And of course, we account for cost reductions every year, price reductions every year, but they are definitely in the single digit range where we also anticipate to continue for our base of customers, of course, not the whole range. We are not in the low-cost niche or low-cost areas.

And the next question comes from Jeff Osborne from TD Cowen.

Great. Just a few on my side. I was wondering on the destocking, if the volumes didn't change in the HBS segment in the second half, how long do you think that would take to have the channel cleared?

Yes. I think destocking is one of my favorite topics. So we've been analyzing that as well quite a lot in the last month, looking at the run rate. I think it's fair to say that for certain products, the destocking has happened. So there is not much more on stock. So basically, what's on stock now is just the baseline that you need to have -- to just make sure you have products available on the shelf when you want to distribute to customers. And we have products which are still -- which still have a high stock level. And I think if I want to give you some details here, I think it's fair to say that when it comes to high-end products, to hybrid inverters, when it comes to battery solutions, these kind of things, they are mostly out of stock, let's say, or destocked, maybe that's the right word, not out of stock, but destocked, when it comes to smaller units, PV-only units, there the destocking still needs to take place. And the main driver now is what is actually the consumption rate on the customer side and not anymore is there too much on the stock side. So I think if the market would have been on a similar run rate as early '24 or even mid-'24, we wouldn't -- we would see much higher sales revenues already. So I would say the destocking is not our biggest problem now in HBS. It's more is the sales picking up on it.

Got it. And then just very quickly on that topic. Is it about a 50-50 split of hybrid demand versus PV-only for you, just more broadly across Western Europe?

I think we see a shift from PV-only more to hybrids. I'm not sure if it's 50-50, but the shift is clear. And I think the other topic, just wanted to mention again, I said it in the presentation. So when we look at our inventories in HBS, we reduced -- if you disregard all the write-downs and write-offs, whatever, we really reduced inventories in our end by about EUR 60 million, right? So there you see that there is a product outflow.

Got it. Very quickly. And just if we could switch gears to the U.S. Can you quantify the impact of tariffs for you financially? And then can you just give us an update on any plans potentially to manufacture in the U.S.?

Okay. So I think it's -- that's a tricky one, obviously. So let me start with the easy piece. The easy piece is what did the 10% tariffs do to us? Basically nothing because when we look at our Large Scale business, we have a change of law clauses and we could pass on for our customers, the tariffs 1

1. So the margin that we make now looks a bit worse, but the EBIT is neutral to that because we basically pass it on. So that's one effect. When we now talk about 15%, I think we're quite confident that whether it's not 10% or 15% will not make a big difference. So this should be okay. The question is more what happens with Chinese imports and what do the Chinese in the U.S. agree on tariffs because the modules are still imported to a large extent from China. And if they are twice as much as expensive, this would obviously hit the project profitability from our project customers' perspective because modules make out around half of the total cost of the construction of the site, right? So this is basically where we have still a uncertainty. From the European tariffs part, I think we are okay. What we still do though is that we work with our partners on increasing the local share of our products. So the inverters that we currently produce here in Kassel, they will stay here, but the MVPS stations and [indiscernible].

Okay. To switch gears and the transformers themselves.

Exactly. Thanks. So for those, we will move to the U.S. with our partners because we buy them and then we would buy them in the U.S. and integrate them in the U.S. to the full station and then pass it on to our U.S. customers. And with that, we would have a much higher share of local content and would reduce the tariff impact even more for our customers on the European.

And the big interesting part, of course, is the copper and the steel where the tariffs are higher, but that's exactly the part where we then have the local content at least in the next year.

And the next question comes from Guido Hoymann from Metzler.

Two questions, please. The first one is actually a follow-up to previous, I would call it, devil's advocate question. It is should we actually ask ourselves the question if and whether it still makes sense to hold on to the HBS business? So given that it is shrinking that much, it might possibly fall below critical mass or critical size. So that's the first one. And second, last time we discussed how the use of the inverters for batteries is growing and how this business could offset potential slowdowns in PV. So the question is, what is the share roughly of battery inverters at group level at SMA?

Yes, Mr. Hoymann, 2 things on that. If I look a little bit longer in history, then we've had the situation quite often in SMA or even in our competition that it was wise to keep onto the different segments or divisions in our case as the -- it's very difficult to predict long term how it is going in the one or the other direction. So we've had times when Large Scale was doing bad and HBS in our current nomenclature was doing very well. So we are definitely going into prepare that we reduce our cost, reduce our focus when it comes to countries, reduce our portfolio in order to focus on where we are earning money. And this will continue this year, might even be increased, as Kaveh has pointed out earlier. So this is ongoing and this is what we will continue to do. And we think that with an uptake, even a smaller uptake and with maybe an additional adaptation of our cost structure and our focus areas and markets, we should be in a position then to get it back into a good profitability. Cannot say now when, but that will definitely be our case. If it should then completely differ or develop totally different than what I see right now and what we see right now, of course, we will always have to revisit our thoughts. But this is at least for the time we are now and it's what we are aiming for and where we also think that we're doing good in having the -- at least some diversification within the company and continue to do so. When it comes to the inverters, actually, it's an interesting part because I would think you mainly referred to the big powers. So if we look at Large Scale project solutions, we are at 50% or more on batteries. But for the time being, when it comes to the OBBB, we do see that we have a safe harboring at least for the next 12 months to middle of next year and then even beyond that for PV and PV-only. But we do see that the chances for batteries will be longer. So we don't foresee right now that we will reduce the share of battery inverters, rather on the contrary. And also Europe is starting to focus more on battery applications than on PV-only applications due to the discussions here on total float and what have you and needing more storage in the entire grid. So I wouldn't see anything right now that the inverter part goes down, but rather still in the other direction of that becomes more and more and we are above 50% already.

Then the next question comes from Zgaya Anis from ODDO BHF.

I have 2 left question on -- mainly on HBS business. The first one is on the strong sequential improvement in revenue in this business in Q2, I mean, versus Q1. It's almost 41% and around 15% increase in sequential order intakes. So my question is why do we seem to think that things are going to get worse in this segment? And my second question is on market share. And I just want to -- because you spoke about Chinese competition. And my question is, are you losing a lot of market share in Europe to Chinese competition?

Maybe I'll take the first one on the -- why we think it's worse. I think what we are looking at is a run rate, right? And of course, in Q2, the run rate was much better than in Q1. But I think the other colleagues had the right question. So is that run rate enough to become profitable? And we would say no, we need this run rate to go up in the next months, but also towards the end, especially the summer peak is for us an important seasonality. And if we don't see that coming, this also then, of course, has an impact on the following years because then we have to revisit what is the baseline for our planning for our scenarios going forward. So we don't expect the run rate to go down, to be clear, but we are asking ourselves and I think also the other ones, is the run rate even going further up? So that's maybe the answer to your question. And the other thing is are we losing market share in Europe? I think it depends on the countries that you're looking at. If you look at our core market in Germany, I would say we don't see that because the overall market, as we mentioned, from the customer perspective, is not there. It's not picking up. Hence, we more or less kept the market shares as stable. If you go to low-cost countries, when you look at, I don't know, Brazil, if you go to the Far East, India, those kind of big markets, which are super price sensitive, I would say that there we have lost significantly market share, but not only this year or last year, but over the last years.

Yes. This is roughly -- I fully agree with everything that Kaveh said, of course. So I think the market share did not drop for us, but that also is due to the fact that there is still some products of ours, as we've mentioned earlier, in the value chain behind us, meaning that we do see what is implemented into the market in Germany or in some other European countries. And there, we don't see that we lose any market share, rather 2%, 3% up, but that is partly also a product being sold under our price, as I said earlier. And the interesting part will be how it develops once the destocking has taken -- has fully come to an end on all products and what will everybody do then on the pricing. But as I said earlier, we are not unconfident there that we can increase it again. But right now, the most important question is really what is the market going to do. And as I said earlier, the market is still going down if we compare the last 6 months towards the 6 months of the last year. And that has to stop. I mean, the demand on the markets needs to pick up independent of the destocking, et cetera. And this is what we are closely monitoring the whole time.

And we have another question coming from Constantin Hesse from Jefferies.

Just a very quick follow-up. Just on the write-downs commentary. Does the -- so in terms of the risk of further write-downs in the second half, do we have to see a worsening? Or would stability in the market basically lead to potentially another write-down? First question. And second question, when it comes to the potential rush in demand in the U.S. following the guidance from the treasury on safe harboring, would it make sense to see a rush into inverters given that you can deliver so much quicker today and that inverters, I think, make up about 5% of the project cost? So I'm just wondering where we could actually see this rush in terms of solar components specifically? Those are my 2 questions.

Yes. Let me take the first one again on the write-downs. So yes, we would need to see an uplift to avoid write-downs. And then, of course, it depends on how big the uplift is or how far it's not coming to then basically calculate potential write-offs, right? But it's clear that we need to see that. When it comes to -- what was your second question?

Delivery time. I would say, Constantin, the situation is, of course, as we said earlier, the inverters are produced here, then they still today, as I said, the integration and transformers are being localized in the U.S., but that is mainly from the end of this year and beginning of next year. So still today, we do the integration in Europe and then everything is sent. So there's still some time left. And it depends always on how much the companies who are building the projects have safe harbored on the modules or can get them from the local suppliers in the U.S., which we know, of course, the amounts of roughly of what is being able to produce in the U.S. So therefore, we did not see the real big uptake, as you've seen in quarter 2. There was not the uptake on order intake. But as we've also mentioned, now we see very promising discussions, which might lead to a good uptake there because then with the time line I've said with the integration still in Europe, it does take 2, 3 months until everything is over. And we do expect that the project implementation would pick up again for the time of next year and the next year. So it could start rather soon with order intake uptake and then also with delivery starting maybe more in quarter 4 in the next year. So that answers it roughly. And in next year, still the inverters will always come from Europe, but then the integration more and more in the U.S.

Just one more side note, Constantin. I think it was the first question of the call. I was still thinking about it when you said that the order backlog of Large Scale is not sufficient to reach the EUR 1 billion next year. So when I checked, we had -- same time last year, we had more or less the same order backlog in last year. So I'm not sure I could follow your analysis, but happy to have a short quick call after that [indiscernible], actually quite good.

Yes. Same level as last year, absolutely, but you had EUR 800 million in order intake in the second half in Large Scale, which basically hugely increased your backlog towards the end of '24, right?

Which was only EUR 100 million higher than now at year-end, so. But, okay.

[Operator Instructions] So it seems there are no further questions at this time. So I would now like to turn the conference back over to Kaveh Rouhi for any closing remarks.

So thank you all. It's exciting times at SMA. It's interesting times and it's quite a challenging time, let's say. But we are confident in all the measures we've taken. And at this point, I would just like to thank you for your interest and all the good questions that you raised. And please do not hesitate to contact us in case you have any further questions. Goodbye and hope you [indiscernible].

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