RHI Magnesita N.V.

Okay, good morning. Thank you for joining us today in London for RHI Magnesitas 2025 full year results presentation. As usual, Ian, both our CFO and myself will do this together and lead you through the events of 2025 and of course look at the incredible forecast of 2026 and maybe a little bit beyond even. Before we get started, let me just send our thoughts to our colleagues and our customers and our suppliers and our business partners in the Middle East. who woke up yesterday in a different world than they would like to be in, so our thoughts are with them, our support is with them and we hope that things normalize very quickly there and that people are not hurt as much as possible. 2025 was a challenging year, actually quite a challenging year, but ultimately with a good ending, at least for Archai Magnesita. Before moving into the presentation, let me highlight three key takeaways from 2025. First, highlight we delivered our self-help, mostly cost-based initiatives, as we had planned them already before. starting very early in 2024. And therefore, we could meet our profit guidance. This is important because we're improving the business structurally and sustainably. These are not short-term measures. These are structural improvements by focusing on what we can control and not relying on the outside world. Second, This momentum of self-help will continue into 2026. New measures that will start this year are already well advanced and they will then support that velocity also into 2027. Third message, there is currently no visible market recovery. We know All of you is not shared by all, but we retain substantial operating leverage ourselves that could benefit from this one day when demand improves. But we do not expect any improved demand before 2027. We're not relying on this. If we are wrong with our forecast and you are all right, And we will all have a happy drink at the end of this year. Before I go into the results, let me start, like always, with health and safety. Safety remains the core value at RHI Magnesita. In 2025, triggered by fatalities... in the year before, we made significant progress in our group-wide safety culture transformation program. This is not just a corporate initiative. It is a fundamental shift towards embedding a deeply rooted safety mindset across the organization. In 2024, we recognized that we need a different approach here. Greater depth and greater accuracy in our health and safety reporting. Therefore, last year in 2025, we added more than 200 sites to our safety reporting. Mostly on our customer sites, but also of course sites from acquisitions that we didn't have before. They often have a lower safety maturity because they come into the group, but also because we didn't focus on them enough before. And this maturity, now that we can measure, we can also address. And therefore, you see a different number in 2025 that looks shockingly increased, but it comes from a complete re-reporting. This increase... results in a big increase in transparency. And this improved visibility allows us now to address risks much more systematically and holistically. We are focusing with greater discipline on controlling the company's critical risks to prevent serious injuries and fatalities. Our key initiatives center now on visible felt leadership. How do people perceive their own supervisors on site? We have introduced seven life-saving rules and strengthened standard operating procedures and these practical measures is very practical on the ground. Influence behaviors, improve accountability and raise the standards across every site. We remain fully focused and committed to have a zero harm, no injury environment. That's the only acceptable objective. Let me now turn to the results. We delivered against the continued challenging market backdrop. While the steel business saw a slight downward trend across most regions in 2025, the fall in the industrial project in 2025 was unprecedented. Never seen before. This industrial projects business is a high-margin segment for RHA Manzita that contributes disproportionately to earnings normally. In addition to that fall, foreign exchange headwinds further pressured profitability, mostly the US dollar, but not only the US dollar. Despite these challenges, we achieved our full-year guidance, delivering 373 million euros of EBITDA and a margin of 11.1%. The earnings recovery was accompanied by strong operating cash flow. of 391 million in these days, this is at least as important as profit. This is a cash conversion of more than 100% and driven of course by a quite meaningful reduction in working capital, which shows you the financial discipline that we have in the meantime everywhere in all operations. We finished the year with a leverage of 2.9 times net debt to EBITDA, a little bit better actually than we guided, driven by that really good cash flow performance. Based on this performance, the board is recommending a final dividend of €1.20 per share, bringing the full year dividend to €1.80 in line with 2024. But That's not the whole thing about the story of 2025. It was a story of two completely different halves. The first half of 2025 was one of the weakest semesters on record of the company. Even if we include major economic shocks, It was one of the weakest. In anticipation of this, because we saw this coming already in 2024, and to be able to respond to such a development, management implemented targeted self-help measures that had an effect then starting in the second quarter, but especially in the second half. These actions underpinned a strong recovery then in H2, with adjusted EBITDA rising to 232 million euros just in the second half, actually starting in August, not even in July. This was 65% higher than in the first half and also 7% higher than in the comparable period in the year before. Nothing changed on the market. It's just purely 100% driven by self-help. We delivered, therefore, a step change of the EBITDA margin, which was at 8.4% in the first half, to 13.7% in the second half. It was achieved despite continuous market weakness. No demand increase. The steel business, if we now look at these two different sectors, declined slightly, reflecting either weak demand in many regions, and in those regions in which we had good demand, we had weak pricing. This demand weakness was primarily caused by record levels of Chinese steel exports which are displacing local production and therefore we cannot supply to the local steel plants. And that is a problem of course because the local steel demand is not growing. As a result, gross margins came under pressure driven by an unfavorable volume mix fixed cost under absorption, but also nervous competitors who made price concessions and elevated Chinese refractory exports into several markets, mostly attainable to China. India remains the main engine of global steel production growth, delivering approximately 10% steel growth. Our revenues, however, did not increase at the same pace as we had to make price concessions and therewith accept margin reductions in India. This is the market with the most undisciplined competitive behavior. North America delivered a very strong performance, not solely due to the acquisition of Resco, which happened, I think, at the perfect time. Excluding Resco, revenues increased still by 6% against broadly flat steel production in North America. We are benefiting from the green steel transition outside of North America mostly, but there also actually, because the strength of our 4Pro offering, our total solution offering, and our very solid market position wherever these green steel transformations happen. In contrast, revenues in Latin America, in Europe, in China and in East Asia declined in the steel business, as weak domestic steel demand coincided with record Chinese steel export volumes, which continue to displace local production and reduce local refractory purchases as a consequence, of course. The Middle East, Turkey, Africa region, the META region, experienced a revenue decline, primarily mostly because of two issues with two key customers in the first half of the year. So they just bought a lot less. So it's a one-time thing. We're not so worried about it. But also, in this region, with significant margin pressure due to Chinese refractory imports. Steel production growth elsewhere in this region was insufficient to offset this impact of these two very big customers that had a week here. We focused on restoring that performance in the Middle East region now in 2026. At least that's what we thought until yesterday. We have to see how this unfolds now. Looking forward, we do not see in our order book any green shoots of improved steel demand. We do not see an order increase in no region. Let's turn to the industrial business. 2025 was an exceptionally weak year for our industrial project business. The impact was particularly visible in the first half of the year. Our cement business which is not the industrial projects, it's a different business unit, was remarkably resilient, but the number of industrial projects declined by 40%. Our glass business remains at a historic low level. There's no sign of recovery anywhere. The non-ferrous part of the industrial projects is a little bit more resilient. We are not yet seeing a big turnaround here either, but there the forecast is a little bit better. As a result of this industrial project downturn, revenues declined by 9%. This is the first top-line contraction in this business since 2020. More significant, however, was the impact on gross margin here. Industrial project business, particularly in glass and non-ferrous, typically generates above average margins because this is a very technical and supply chain complex business. We are the clear market leader worldwide in these high complexity projects. The sharp reduction in project volumes, therefore, has a disproportionate impact on our margin mix because these projects are done in very expensive, complex plants. And if they're not utilized, the fixed cost there is very high that we are stuck with. To support this business globally, we operate these specialized plants with structurally high fixed cost basis. The exceptionally weak order intake leads then to these material fixed cost underabsorptions, which we can only partially compensate with short-term reduction of cost, which actually we don't want to do either, because then we're not ready for the recovery. looking forward we expect a gradual improvement now in the industrial business project activity could particularly improve in the second half of this year although it will remain way below historic levels why are we so sure because the delivery time for these projects is somewhere between 9 and 18 months so whatever we don't see in the order book now will not happen in 2026. Let me update you a little bit on our strategy. We sharpened our strategy at the end of 2025 together with our board to adapt to these new geopolitical and also technological challenges and opportunities. We are reviewing our portfolio. We are innovating with new products, but also with new business models. Both of them should create greater value, of course, for existing and future customers. We are boosting productivity through scaled and optimized footprint, through smarter operations and through a digital transformation. We lead in sustainability by pioneering technologies that set the path for green transformation of our industry. Our main objective continues to focus on the consolidation of the global refractory industry in order to get scale for all of these things. In 2025 the acquisition of Resco of course transformed our North America footprint for the better. Leveraging our scale remains the only structural avenue to be able to continue to pay for innovation and for improved customer services which they expect. We will go into more detail in a couple of minutes together with you. We continue to evaluate these opportunities, these acquisition opportunities in many markets. We don't expect a meaningful cash out in 2026 because these negotiations take time. When we look at the broader steel and refractory industries, it becomes evident that global demand no longer moves in a synchronized demand-driven cycle as it once did. Instead, we see more and more diverging regional trajectories also influenced by the growing scale and impact of Chinese exports and protectionist reactions that are very different from one region to another. In the past, regional demand for metals and industrial goods drove local capacity development and then trade flows. Together, however, global and particularly Chinese industrial capacity is sufficient to supply demand growth almost everywhere in the world because of the overcapacities there. This structural overcapacity in China places sustained pressure on local industries in many markets. As a result, global trade is gradually shifting from a free trade model towards a more protectionist environment, with countries and regional trade blocs increasingly managing supplies differently, depending on their capabilities. Given their strategic importance, refractory consuming industries are at the center of this transition and of that protectionist. The only large exception to this is the cement industry, because it operates anyway under a fundamentally different dynamic. Unlike steel, Cement is not broadly exported around the world. Never has been, due to technical and commercial reasons. As a result, the cement sector is less exposed to global overcapacity and to rerouted trade flows. This more regional market, which always was a regional market, allows our cement business to perform resiliently. Mature markets such as Europe and North America, but also South America in a way, are leading the implementation of trade protection measures. Markets like India and Meta are less protected, and therefore they absorb much more of the rerouted Chinese exports that don't make it into the protected markets anymore. This adds margin pressure there. And as you have heard, we saw this already last year. It therefore also limits at least profit growth opportunities for us in these markets, because volume growth gets compensated by margin pressure. RHI Manzita began this regionalization focus in 2021, and we're so happy that we did this, because we continue to steer the company now strategically by regions. We believe this regionalization is a key response to this ongoing reorganization of global trade. The creation of the meta-region, Middle East, Turkey and Africa is the last step, the latest step in this approach, probably not the last. Many of these markets still import the majority of their refractory demand, and are therefore also particularly exposed to this global trade dynamics and of course imports from places like China. Under the right conditions, trade barriers can create a more supportive local environment under the right conditions. But only locally, not globally. In the United States, for example, tariffs on certain Chinese refractories used in steelmaking support more sustainable pricing levels for us to keep local production running. That has been a political decision actually since many, many years. In Europe, measures to limit steel imports could eventually help to put a floor under domestic production. which in turn then can support local refractory demand also. We expect this to potentially have an effect in 2027. Potentially. In Brazil, investigations into tariffs on Chinese refractories could restore pricing a little bit there to more sustainable levels, but also there not for a while. There's still an investigation. While we have not observed any tangible impact on our order books globally, there remains a possibility that pricing and demand dynamics could gradually improve across certain regions over time, but it could also then go at the detriment of other regions. At present, however, ladies and gentlemen, there is no direct benefit from this for our forecast in 2026. Not on cash and not on profit. At the same time, while this is all happening, China recognizes that globally deployed excess capacity is straining their trade relationships and maybe more than trade relationships. Therefore capacity reforms and potential export limitations in China could benefit other regions in the years to come and support the development of a more sustainable value creating refractory industry within China also because capacity reduction there has to happen. It is recognized but again This will take years until this will take effect. At present, we see no benefit from these announced measures. Not in our order book, nor in our forecasts, nor in our performance for 2026. I want to spend a couple of minutes on North America and particularly the US. This is our most attractive refractory market globally at this moment in the cycle. It doesn't have to stay like this. The US market is characterized by balanced supply and demand structures, maybe that's the most valuable part here, which enables disciplined pricing and mature capital allocation among suppliers and between customers and suppliers. At the same time, US steel producers operate at very healthy margin levels, supporting continuous investment in low-carbon steelmaking. Despite the noise you hear, the US is the leader in low-carbon steelmaking. And this is important for us because it creates strong demand for our market-leading 4PRO and electric arc furnace offerings. While the US currently offers attractive margins, it also presents challenges, particularly around tariff volatility, where should we supply from next month, and the US dollar devaluation, because we account in other currencies. The recent acquisition of Resco significantly strengthened this local for local strategy and thus reduced the tariff risks and gives us some more natural hedges. We have launched a network optimization Americas program to increase our local for local share in the U.S. to approximately 80% from which we will attain in 2028 from about 50% that we had until 2024. This will allow us to deliver best-in-class services with lower working capital intensity and reduced tariff exposure, while also delivering further margin upsides through synergy realization and self-help measures also in the US. Let's talk about sustainability. In 2019, we set ambitious sustainability targets that many believed were unachievable. There are and they continue to be a cornerstone for developing our business model for the next decade because the emission problem doesn't go away. In 2025, we delivered the first key milestone on this sustainability agenda. including a meaningful reduction in CO2 intensity. This is really significant for a heavy industry here, more than 15%. On the back of this progress, we remain committed, fully committed, to our decarbonization roadmap. And now the next set of targets that we have set. First, our recycling rate now stands just under 16%. up from 3.5% in 2018. Despite the delusion from acquired businesses who had a much, much lower percentage. They now all operate at much, they did operate at much lower recycling levels and we are bringing them up step by step. So you see there's still potential here, quite a bit of potential here. With continued investments and now technological advancements in recycling and sorting, we will further increase this recycling content and scale also the commercialization of secondary raw material businesses globally. Second, our carbon capture and utilization technology developed together with MCI Carbon in Australia is currently undergoing industrial scale testing. This green mineral technology could become a key lever in addressing geogenic emissions, which are unavoidably, technically, especially in our raw material operations. We are targeting the first international large-scale industrial development in 2030. Third, we continue to test hydrogen. where it is economically and technically viable. A specialized furnace in Germany is central to advancing these trials where we have technically everything in place across different refractory products because hydrogen burns differently. The technical feasibility of using hydrogen as a fuel is very much possible. We know this now and we know how to do it. But commercially, hydrogen is not a viable fuel alternative for the time being. So we will not continue any more activities here, at least in the short term. Recycling already contributes meaningfully to earnings. via our joint ventures in Europe and in the US, on top of the raw material cost savings that it brings. Our recycling capabilities in particularly are a clear differentiator now also in our 4Pro offering for our customers, because we can present to them a true 100% circular economy solution for refractories. We are seeing strong interest from the new green steel mills overall around the world, actually in every region, that are looking to integrate these circular solutions into their operations. They don't want any landfills anymore. In 2025, we signed four green steel contracts, some including recycling components, and we expect further progress in the years ahead. Let's go to the financial review that you've all been waiting for so long, and I would like to ask Ian to lead you through the numbers, and then I'll come back at the end.

Thanks, Stefan. Good morning, ladies and gentlemen. I'll walk you through our 2025 financial performance and our expectations for 2026. 2025 was a challenging year externally. However, internally, we responded with discipline and with speed. And the second half performance clearly demonstrates the impact of our managerial actions. Adjusted EBIT A declined from $407 million in 2024 to $373 million in 2025. The primary drivers were market related. In industrial, EBIT A declined by 74 million. This as the number of high margin projects in glass and non-ferrous metals fell by 40% as customers postponed rebuilds and delayed maintenance. This also led to under absorption of fixed costs in our specialised plants. In steel, EBITDA declined by 41 million. This as demand remained weak in Europe, in Latin America and in the first half in Meta. High levels of Chinese steel and refractory exports intensified pricing pressure across multiple markets. Currency reduced our earnings by 13 million, mainly driven by the weakness in the US dollar and the Indian rupee. These were significant external headwinds. Offsetting this, management-led self-help measures delivered 70 million in 2025. This included pricing discipline, operational cost improvements, and SG&A reduction. In addition, Resco contributed to 25 million including synergy benefits. The important point is that the earnings recovery in the second half was execution driven, not market driven. 25 was clearly a year of two halves. The first half was one of the weakest since the merger with EBIT A of 141 million This reflected the full force of the industrial downturn, weak steel demand, pricing pressure, and fixed cost under absorption. In the second half, the benefits of our self-help measures came through strongly, increasing EBITDA to $232 million, 65% higher than the first half, and 7% above the second half of 2014. This improvement was delivered despite continued market weakness and a 19 million currency headwind in the second half. Against our guidance, steel outperformed. The industrial recovery was delayed with projects moving into 2026. Pricing delivered at the top end of our expectations. SG&A savings were more than double what we guided and the plant measures were delivered as planned. All of our cost actions are structural and will continue into 2026 and beyond. They do not rely on temporary reductions or borrowing from the future. Even in this challenging environment, we defended our margins. Since the 2017 merger, our adjusted EBITDA margin has remained above 11% every year. That consistency reflects our diversification across regions and end markets, but more fundamentally, it reflects disciplined execution and active management. The refractory margin remained robust at 10%, supported by synergies, pricing discipline, and operational excellence. The backward integration margin, however, remained at cyclical lows at 1.1%, contributing EBIT A of 37 million. This was primarily due to continued weak Chinese Magnesite pricing, reflecting industry overcapacity, and high levels of above-ground inventory of ore, as well as lower fixed cost absorption at our own raw material plants. Importantly, our backward integration margin remains positive, demonstrating the competitiveness of our cost base. To improve returns from our raw material assets, we've implemented targeted self-help measures to reduce costs, and expand sales into non-refractory markets, and we expect these actions to support a gradual recovery in profitability from 26 onwards. Moving to working capital, working capital intensity improved strongly to 21.7%, marking the third consecutive year of improvement. This reflects disciplined credit management with our accounts receivable as well as inventory reduction driven by continued progress on our local for local strategy and the rollout of new supply chain technological solutions to strengthen our inventory control. The acquisitions of Resco and BPI added 51 million of working capital At the same time, we reduced our working capital by 143 million, with roughly half of that driven by management actions and half by currency movements. In total, this translated into an 84 million release of cash flow from working capital reduction. Cash generation remains a core strength of our business. In 2025, adjusted operating cash flow was 391 million, resulting in a cash conversion of 105%, and free cash flow of 214 million. Net debt increased to 1.5 billion, primarily reflecting the acquisition of Resco. Leverage closed at 2.9 times net debt to adjusted EBITDA, This was slightly stronger than our guidance. Our liquidity remains strong and approximately 70% of our debt is fixed with an attractive weighted average cost of borrowing of 3.3%. We are comfortable operating temporarily at elevated levels of leverage to fund compelling value accretive M&A particularly in high margin segments such as in 25 in North America. Our strong cash generation provides a clear path to deleveraging and we expect leverage to reduce to around 2.6 times, about 1.4 billion, by the end of this year. This level of cash generation gives us flexibility to invest in growth, to reduce net debt and to maintain disciplined shareholder returns. We are therefore recommending a final dividend of €1.20 per share bringing the full year dividend to €1.80 in line with our dividend policy. Finally, looking ahead, we expect the market environment to remain challenging as ongoing global uncertainty continues to dampen customer demand and investment. Steel end markets remain at cyclical lows globally, with no near-term recovery in demand apparent in our order books. At the same time, Magnesite-based raw material pricing is likely to remain subdued, keeping our backward integration margin around current levels. In addition, currency is becoming a much more material headwind this year, both from the US dollar and from the Indian rupee, with an expected negative impact of around 35 million at current exchange rates. Against this backdrop, our performance improvement will once again be driven by what we control – We are therefore guiding to 435 million adjusted EBIT A on a constant currency basis, representing a 17% increase versus 2025. After reflecting anticipated currency headwinds, this translates to approximately 400 million of reported adjusted EBIT A, implying a margin of around 11.5%. The earnings improvement is underpinned by four structural measures, each contributing approximately $15 million on a like-for-like basis. First, we expect a gradual improvement in the industrial business. Project activity should improve particularly towards the second half, although it will remain well below historic levels. We do not expect a demand improvement in our steel business overall. Second, we continue to drive pricing discipline and expand our 4Pro offering, increasing the share of higher-value solution-based revenues. Third, our network optimization programs in Europe and the Americas will deliver further benefits, with the Americas now contributing around $5 million of the $15 million total impact this year. And finally, we achieve further structured SG&A reductions through administrative efficiencies supported by the investments that we've been making in digital transformation, in process standardization, and leveraging our shared services model. These measures have already proven effective in driving the second half turnaround, and we will continue to build on them to deliver further improvements in 2027. We are not relying on market recovery to achieve this guidance. So to conclude, 2025 demonstrated the resilience of our model. We acted early, we defended margins, we generated strong cash flow and completed a transformative acquisition in North America. 2026 is now about continuing our disciplined execution and delivering in a still challenging demand environment. Thank you. Now back to Stefan.

Thanks Ian. Let me summarize for you. First in 2025 we delivered significant self-help cost initiative as we had planned to meet our profit guidance. We're improving our business structurally and sustainably by focusing on what we can control. Second, the momentum of self-help continues into 2026, and new measures get added to improve 2026, but that already will prepare the next improvement for 2027. And third, there is no visible market recovery that will benefit our business in 2026. We retain great operational leverage which will enhance our performance if and when such a demand recovery will come. We don't expect this before 2027, even if we want to be optimistic. On that basis, Ian has outlined the guidance, so I don't need to do it again. Our gearing will go down more. Our cash generation will become, we'll stay disciplined, and our expenditure control will provide the actual improvements. And it will... build strategic opportunities for the future. Let me summarize our investment case. Before we move, in 2025 we made very good progress towards this investment case. We have significant opportunities to grow the business and improve our margins. We do have these opportunities. We demonstrated in 2025 how disciplined self-help measures can deliver stable performance, even in a weak market environment, and that's what we continue to focus on. Second, we continue to consolidate the refractory industry, unlocking on average around 35% synergies per acquisition, 35% of the acquired companies EBITDA, in a structurally stagnant global market. The acquisition of Resco marks an important milestone in the US because we had this gap there. It's just one of the examples. At the same time, we're building a highly efficient, digitalized corporate platform. We're in the middle of this transformation. that will enable us to integrate future acquisitions dramatically much faster within weeks and drive cost leadership. It will also make us AI ready. And we're not five years away, we're 12 to 18 months away from this. Our strong cash flow supports an attractive dividend while also giving us strategic flexibility that many competitors do not have. Already today we generate FTSE 100 level cash flows and EBITDA with the market capitalization of the FTSE 250 company. Taken together, this underpins a value accretive strategy and a long-term compelling investment case. Thank you, Ian, for being at my side here, like all the time, and like we've done in so many years. And let's take your questions now. Please. Yeah, please wait for the microphone so that in the phone call we can also hear about it.

I'm Vanessa Jeffries from Jeffries. Just first on the points about the Chinese export problem in India, just given the weakness that we saw in China production last week and what you're saying about the help you'll get, I'm just wondering why you're not factoring in any benefit from that for this year. And then secondly, just on M&A, given how tough things are and the fact that you don't expect demand to recover this year, would have thought there'd be a few more consolidation opportunities than there are. So just wondering about that point as well. And then third, just a reporting question. Just wondering, last year you switched to reporting EBITDA for the divisions and now you've stopped doing that. So just wondering why you did that.

All right. On Chinese exports to India, this is unfortunately not a major problem in India. There are Chinese refractory exports to India, of course, always have been, because in some realms, India is not self-sufficient. But the biggest problem in India is local competition. International refractory companies and local promoters have overbuilt. And the biggest problem in India is dramatic overcapacity that we have in the country there, and that leads to the margin decline. And we need competitors to understand this, finally, instead of continuing to build, which they're still doing. So I don't see any short-term hope, unfortunately, in India. The avenue for us also here is not so much on cost cutting because the cost levels in India are very low. But the approach here is on technology improvement. So it's the solution approach to the customer that will help us to decommoditize. And that cannot be done by everybody because it takes global scale in order to bring robotic solutions, sensor technology, circular economy setups and things like that that are not being able to match. That's the avenue in India. On M&A, you're totally right. The opportunities will be there. They are there. It's just a matter of negotiation cycle. It takes an average of two years from when we engage with somebody who is willing to talk about merging with us until we close the deal. And that's the reason why 2026 we have no cash up or no big one.

And Vanessa, on EBITDA, we actually got some very helpful feedback from the investment community last year around the merits in trying to thin down our material, reduce the complexity, and that's what we sought to do. So we have continued to provide gross profit. If there are certain specific metrics, EBITDA is an example that you find particularly helpful, please reach out to us and we can certainly help.

Good morning. Hi, it's Jonathan Hearn from Barclays. Just a couple of questions. Firstly, just topically Middle East. Could you just talk a little bit about your exposure there in terms of size? Also in terms of your guidance for 2026, your guidance for 2026, your overall group guidance, what were you expecting? What was the Middle East contributing to this? No, just in terms of revenue. So I'm just trying to get a feel for the importance of the Middle East, what the outlook for that business was in terms of 2026 for your guidance and also sort of what actions you can take there. And then the second one was just in terms of coming back to those regulatory tailwinds or potentially regulated tailwinds. Can you just give us a feel for what the impact of those could be in terms of monetary value, EBITDA, both for Europe and potentially what regulations in Brazil could bring through as well? And then maybe just lastly, if I can squeeze another one in, just in terms of that backwards integration margin. I mean, look, you've given us some steps about what you're going to do there to improve it. Can you just give us a little feel for how you think the profile of that margin should develop going forward, please?

Maybe, Ian, you can talk about the META guidance. Let me pick up the other two pieces. The regulatory tailwinds. Well, in Brazil, this is an investigation. But Brazil is very connected with China. So there's a... basic hesitancy to put big trade barriers for Chinese imports in Brazil. Why? Because it goes both ways. In principle, it's a free trade spirit between the two countries, which in principle is good news, because I think in general, long term, we need less protectionism and more free trade again. Therefore, nothing will happen this year. This is all under discussion. This is under investigation. It's done in a friendly way. We are sitting on the fence and watching this. I think if at all there could be a bit of a margin stabilization effect for our Brazilian business for 2027. And this can come from a stabilization of the steel production. Steel production in Brazil has been reducing 1%, 2%, 3% per year, mostly because of Chinese imports. And on the refractories, it's the same thing. It has been reducing because customers have started to come up first. And that trend could be turned back and then bring a couple of percentages of margin improvement for us, more on the margin side than on the volume side. In Europe, it's an investigation as well. There could be a flaw on imports, but actual Chinese imports into Europe are very small. It's not a very large issue. If you had hoped for some of this to happen already, I advise you to look at January world steel numbers that have just come out a couple of days ago. Europe steel production is down by 2.5% compared to January 2025, which wasn't exactly a bombastic January either. So we're not seeing any of this now. So please don't put any hope in it. And should this happen again, this is maybe putting a floor on European steel production and therewith on refractory consumption as well. So nothing happened this year. On the backward integration, look, there's two components here. There's a cost improvement, mostly on mining optimization and energy consumption and processing for us. And then there's a portfolio aspect. We've always looked at our raw material backward integration as a raw material backward integration. How many refractory raw materials can we make? at which cost and so we don't need to buy it and have an advantage out of this. If we look at our raw material assets from a perspective of a raw material asset, then we have started to ask the question last year, what profit can we generate or what revenue and profit can we generate out of these raw material assets? Of course, for refractory purposes, but also for maybe other markets. And so there's a bit of a market expansion opportunity here because we have some minerals there that are not suited for refractories, but maybe for other applications. And we're looking at this. This is a benefit from maybe two, three, four, five million this year. But it will be one of the elements that gives us velocity for next year. Because we need self-help for 27 as well. We cannot rely on the market to give us a bonanza. We have to create that ourselves.

Ian, on the matter? On Middle East, Turkey and Africa. So we had 350 million of revenue last year, almost 80 million of gross profit. Our forecasts anticipate around a 10% step up in that gross profit. Really, as you see, the benefits of the slightly stronger second half 25 industrial volumes coming through and slightly stronger pricing that we realized in 25. And then very importantly, with the benefits of the lower plant costs, both because we import a lot of finished goods out of Europe into that region and the Europe cost structure improves, including with the footprint rationalization, meta is one of the regions to benefit. And then also from the measures that Stefan has just touched on around raw materials in our turkey plants. One of the areas that I think we'll be watching carefully is obviously the impact of the increase in oil prices that we've seen during the course of the last 24 hours. Our energy cost last year was about $225 Half of that went into gas, 20% into electricity, 30% into diesel and typically we would expect to pass on any increase in the diesel price to our customers. We do have somewhat of a hedging for part of this year. So that's an area that we will continue to focus on this year. Clearly, our guidance is based on an expectation that there is no net negative from an oil price increase.

And I think that with what happened now, the volume recovery, at least in the Middle East, I would argue is at risk. It's early days because we're only two days into this new war, but I don't see customers as a first priority now. Looking at volume increases, their first priority is to protect themselves. And hopefully industrial infrastructure doesn't get hit. So it's anything but good news.

Harry. A couple of questions, please. Just thinking about the working capital number, which has been very impressive, and just noted, thankfully, that the factoring element was very stable as well, so it was a clean number rather than a variable number. Just thinking that how much, if we look to the medium term and think about recovery, thinking around working capital intensity into that how much might that change if at all and sort of if you like to sort of realign to step into recovery how much do you need to put back in and then the second is sort of more thinking about the sort of margin profile of the business again into the medium term where the sort of picture of, say, a 14% to 15% margin, 300, 350 basic points from vertical integration, balanced from refractories, given the extent of the self-help that you're currently conducting and the network optimization post the M&A and the sort of market issues around vertical integration, does that sort of change that mix in any way, or is this just a sort of transitionary process that will work its way back to norms in the future.

Okay, let me try to take a stab at this and then Ian please you should add a couple of thoughts here. On the margin profile, in the second half of this year we were at 13.7%, so of course there's some good positive effects here, this is not 13.7% sustainably, but The refractory part of the business can run between 12 and 13%. That's clearly possible. And this is not very far away. And then the backward integration between two and three. So we're between 15 and 16 as a margin potential. In a normalized way and when the market recovers during the recovery phase, when we have operational leverage, then it could be even higher. But that's a short-term phase. But now we are lower in a short-term phase. Well, it's a pretty long short-term phase, but we have that potential. On the network and capital, this is also a long journey. Actually, one of the major focus areas of our digital transformation is network and capital. Because we have buffers in our inventories everywhere. We have buffers at the supplier, we have buffers on the boats, we have buffers in the warehouses, we have buffers at the customers, we have buffers in our plants. And why? Because our planning accuracy capability are not where they could eventually be. And this big digital transformation in which we're spending a triple-digit million amount of money, which will be completed eventually, in the middle of 2027, will give us then the machine to drive working capital down. If you look at world-class, very complex industrial businesses, from a working capital perspective, world-class, we should run at about 20, 21, 22% working capital. So that's massive. I'm not yet saying we get there because we first need the machine to use, but that's the ambition level here. Ian, would you say I'm too optimistic here?

No, no, I think that over the next couple of years delivering a 2% reduction in our working capital intensity must be our north star. I think that the focus for 26 is very much on operating in a stable fashion at this 21.7% that we've achieved. We achieved that At the end of last year, there was a good performance. But during the course of the year, we weren't consistently at that level. And if we can use our new 09 technology, if we can use the local for local to drive that consistency, then we also get a very important finance charge benefit. And that's the focus particularly for this year. I'm not sure that we would expect to be in a very different place at the end of 26, but going forward,

So what I'm saying, when I'm saying 20, 21 percent, this is without financial measurement. So this is a 4, 5 percentage point improvement. That's the long term potential.

Hi, Mark Fielding from RBC. I just want to follow up on your answer to Harry's question and talking about the second half margin was 13.7% and your comment was not near term sustainable. I suppose my question is why isn't that margin sustainable this year? in the context of, I know there's a second-half bias in the industrial business, but it was much less pronounced last year than is normal, and you're looking for it to be a bit better this year. There's a number of other self-help factors. Why aren't we taking the second-half profit and doubling it, ignoring, I am very cognizant of the Middle East stuff and how that then feeds in.

Mark, you're absolutely right in your initial premise. You can't double our second off because of the industrial on the cement side. Also the fact that we have slightly higher steel production And obviously there is a significant currency headwind that is built up during the course of the second half of last year. If you look at the 15 million, those four drivers, if you look at pricing, we delivered 27 million in the second half of last year, now we're guiding to 15. Why? Because we can see an increasing headwind around certain of the raw material prices coming down and the threat that that imposes. On our plant measures, actually a very good message. We're going from 10 million second half of last year and we're adding 15 million now. On SG&A, we did 21 million in the second half of last year. Now we're guiding to 15. Remember, there's still a significant labour cost inflation headwind that we hit. So that's around to short of 10 million euros for us. So to achieve that 15 million, as we've outlined, we need to do more around our processes, our shared services, our Europe footprint. And then from an industrial perspective, we delivered 23 million second half last year. Now we're guiding to 15. And that's because of this impact of industrial projects just moving And it's not that we've lost the projects that were supposed to be delivered in November and December last year. They've moved now into the first quarter. But that drift carries on.

There's a normal seasonality in our business. The second half is always stronger because of the project's delivery focus in the fourth quarter. CapEx projects are always back-end loaded in every company. And, of course, we're in the CapEx cycle here, but also because of the cement season. So you can never double the profitability of the second half to the first half. Usually we have a – last year we had a 65-35 split between first half and second half, but normally we still have 45-55 split. Therefore, you've got to take the second half down a little bit. On a margin side.

And then just the last component of that waterfall, on steel clearly we're adding zero because here we believe any modest low margin growth that we get out of India is offset by weakness in Brazil, in Mexico, in Canada and in Europe. So that's how you get to our numbers.

Could we just follow up slightly more on the big currency headwind? Because it feels like a lot of that should have started to be there in the second half when I think it feels like currency was about 5% headwind but the guide is on profits. The guide's more like an 8% for this year. So maybe just talk a little bit more about the moving parts there, whether there's also some hedging factors and things too or anything like that.

So there is no hedging disadvantage that we have this year. We have put in place some protection to avoid significant further weakness in the basket. If you look last year, the first half, we had a currency advantage of $7 million. And in the second half of last year, we had a weakness of $20 million because of the weakness in the Canadian dollar, the Indian rupee, the Brazilian riyal, and particularly the U.S. dollar. So that $35 million impact for this year, that's the impact of going from about... 1.18 now from 1.112, and every one movement is 4.2 million. You've got that detail in the appendix. That's 25 million euros just on the impact of the U.S. dollar. And in the Indian rupee, again, you'll see it in the appendix, currently it's about 1.07 versus 90. That's another 13 million impact coming through. So it's a very significant headwind for us.

Actually the Indian rupee devaluation is such a big effect that it has destroyed profitability totally for some of our competitors in India who are importing. Because they pushed on pricing and then they got the rupee on top of it. So some competitors really look terrible.

Mark, at a macro level, really what's happened during the course of last year is we started to benefit from weakness in our producer currencies, which is a good thing for us, and then in the second half it moved to weakness in particularly in our high revenue geographies, and that's now what's continuing in 26. Thank you.

Shall we go? Any questions in the conference? No? No questions in the phone conference? Sure.

Can I just ask just one follow-up question? Just in terms of your sort of see-free and obviously the rates there, I mean, if we do see a spike, how are you priced for that in terms of obviously, you know, you move stuff by that method. Are you sort of locked in in terms of your forward rates for that or do you buy it at spot? Just any idea there, please.

No, we have a structurally actually really good setup on freight. So it's super predictable. It's very well contracted. It's variable enough that we're not stuck with any freight and by and large it's a pass-through item. So we don't have any downside because we are really well integrated now with some of the very big companies around the world. It took us two and a half hours yesterday after the attack in the Middle East and the close of the street of Hormuz to understand which containers were. Two and a half hours. So that's outstanding. We really learned our lesson from the post-COVID mess that we had. So we react really, really fast and we can keep customers supplied because as C4, Freight gets redirected now. Some of the boats that were going through the Suez Canal now, that's completely closed. So now this is going around the Horn of Africa, which means some customers will be delayed. But we see this coming, and we already started production elsewhere to supply those customers who would have been affected, including some in the Middle East, actually. So that is good and therefore we can pass on sea freight costs quickly because customers see a real, real, real service upside. Good. Well, thank you very much for dialing in this morning. Just to summarize, we delivered or self-help measures which saved the 2025 year and improved our business structurally. Second, that momentum continues into 2026 and with new measures that are already under full implementation, that momentum will also continue into 2027. Third message, no help from the market. So those companies who can help themselves should bring the focus of your investors and those who hope on the market not. Thank you very much for dialing in this morning and for being here this morning. Goodbye from London.