Aalberts Indus Nv Ord

Good morning, everybody. Welcome to our first half 25 results publication. It's great to see so many of you joining this webcast online. I'm happy to introduce to you our CEO, Stefan Simonetta, and our new CFO, Frans den Houten. Stefan will kick off the presentation with some business highlights. This will be followed by Frans, give an update on our financial developments stefan will finish the presentation with an update on our strategy and this will be followed by a q a session please note that the today's webcast and the presentation will be made available later today on our website please Let me introduce Stéphane to kick off the presentation.

Thank you, Rutger. Good morning, everyone. Let's start this presentation by giving you a business highlight to tell you how was the first half and give you also an operational update for each of our segments before heading over to France about the financial developments. And I would like to start with a few key messages to summarize the situation where we are. As you have seen this morning in our press release, our first-half performance has been impacted by the market headwinds and by the increased uncertainty due to the global trade policies. This has an impact into our organic growth, and that's why, as a key message of today, we are adjusting our full-year outlook to reflect the market conditions. But we continue to take action on what we can do to protect our EBITDA margin, to optimize our free cash flow. And we have made good progress on our strategy with three value acquisition that we will be sharing later today, two in the U.S., one intended in Southeast Asia for our Semicon. At the same time, we are still actively looking at our divestment program to simplify our portfolio, especially within our building and industry segment. So in a nutshell, managing the short-term challenges due to the market uncertainty, but at the same time, continuing to deploy our long-term strategic actions. Now, looking back at the first half, as you can see on this slide, basically now you see the key numbers that again will be explained in much more detail by France. So in a nutshell, the organic growth is basically the result of the end market headwinds. As you can see, we are reporting a 3.2% organic decline. with actually a mixed picture between our three segments. Because yes, in industry and Semicon, we continue to see organic decline. Also, Q2 was a bit better for industry, but Semicon continued to be very low. On the other hand, we still have growth. In our building segment, we are reporting a moderate organic growth of 1.4%. As a consequence, our margin is basically the result of the organic growth challenges as we have a semi-con margin going down following the volume drop. Our industry margin is still solid, right? And building is stable compared to last year. But of course, we were expecting a bit better performance due to all the action we are taking. On the other hand, I'm really pleased that thanks to all the action we are taking on pricing excellence and organic growth, we managed to sustain a good added value margin. And super pleased also to report that we are improving our free cash flow thanks to the great work from our team to reduce inventories and also to manage our capital expenditure. As a consequence, due to the lower margin, our EBITDA is down at 1.38 euro. So in a nutshell, as you can see at the bottom of the slide, good improvement in free cash flow and EBITDA margin under pressure. Let's go now segment by segment. And I would like to start, as you can see here, by a building segment. In a nutshell, our building growth still positive, 1.4%. And our EBITDA is stable compared to last year, 12.9% compared to 13% last year. Let me now explain to you, as you can see on the left of the slide, why our organic growth, you could say, is only 1.4%, because actually it's a mixed picture. On one hand, very good growth to continue in America, in Asia Pacific, and in some of our product lines, commercial valve, industrial valve, prefab solution. We are actually growing quite well. On the other hand, all this growth is offsetted by the challenge we see, especially in Germany and French market, but also in our connection system product line, which is being a bit lower than expected. And therefore our organic growth is only 1.4%. The margin is stable, mostly because of all the action we took. But of course, we were expecting a better margin because all the actions we took are on track. Cost start, inventory, footprint, innovation. And that's what we will continue to do to manage the short-term uncertainty. So as a nutshell for our building segment, good progress on our operations initiative and lower than expected organic growth, but still positive. If you go now to industry, a different picture. still a solid performance 16.8 percent and as you can see the second quarter better than the first quarter especially because the organic growth is also better in the second quarter than in the first quarter but overall you can see it on the top left of the slide it's a minus five percent organic growth and we are doing very well especially in aerospace high growth in our defense high growth in our power generation very good growth also in a pack and middle east and unfortunately this good growth are offsetted by the organic decline of the automotive market and again by the french and german industrial market which remains soft and this is where we don't see improvement in the short term on improvement I think we continue to take out all the cost out measure footprint optimization, and that's why we sustain a solid EBITDA a bit lower than last year. That's what we will continue to do in the future. And to conclude, We are very pleased to report that our acquisition with Paolo is actually well on track, and we already see early signs of contribution in terms of growth and in terms of margin, so confirming the strategic rationale of this acquisition. So to summarize industry, organic revenue growth a bit improved in the second quarter, solid performance thanks to all the cost out action we took. And the last segment, Semicon, this is where we have the biggest challenge on the organic growth. You see, we are reporting a first half at 13% decline revenue. This has an impact in our EBITDA margin. And that's why our EBITDA margin is down to 11.5%. But this is also where we are very careful in our cost-out action, because we have to manage the short term. But also, we have to protect the long-term. We don't want to be short of capacity when the market will recover. And we are fully aware that this industry, it's about long-term growth. And yes, short-term, we are challenged, especially on our frame and module, in our machine conditioning. We believe now inventory adjustment from our Semicon customer is coming to an end. And now we are just exposed to the market trend in our Semicon market. what are we doing about it managing the cost like i said still investing for the long term in term of innovation and of course the key highlight even if it's not finalized is our intended acquisition with gvt to enter the semi-con southeast asia market and i'll come back into that because this is where we will improve and we will enter new area for the future growth of the company so In a summary, for Semicon, we continue to see lower demand, very careful about our Q2, and that's why our EBITDA margin is under pressure. But I would say it's also about the choice to not go too low in terms of capability and capacity. And before I head over to France, I will just report also that we continue to make progress. on our environmental performance i'm really pleased that we sustain our percentage of revenue linked to the sustainability development goal with more than 70 percent of our revenue and we continue to take action on our own footprint and thanks to the work from our teams we managed to reduce eight percent of scope one and scope two soon to intensity so continue to be on track and make good progress in the first half of the year. That's what I wanted to report as a key business highlight. Now, let me hand it over to our CFO Franz to share with you a more update about our financial development. Thank you, Frans.

Thank you very much, Stefan and Rutger. And good to be with you here this morning and discuss the H1 results of Alberts. But before I do that, I want to thank all the colleagues in Alberts to give me such a truly warm welcome. I really enjoy being part of the organization and I look forward to our Thrive 2030 journey. But before we do that this morning, it's all about the first half year results. So let me dive into those In this first slide where you see four important KPIs that basically summarize where we have been working on and where we are in terms of financials. First on revenue, we see a decline of 62 million, which is organically 50 million, and that translates into the minus 3.2% organic revenue decline. Driven by, explained by Stefan already, building, we still see small growth, but industry and Semicon clearly lose revenue growth. That translates into an EBITDA margin of 13.5%. That's 1.5% below the previous six months of last year. Still a very good added value, as already mentioned, 63.7% in line with previous year. And also the net profit of 151 million, translating into €1.38 per share. Of course, we have been working hard to protect our cash position, and I'm pretty pleased with the free cash flow. Also, if you compare year on year, $8 million up to a number of $56 million. Yes, we lose money on EBITDA because that is the translation of the operational step back. But Networking Capital and CAPEX both deliver $80 million, and as such, a nice free cash flow of $56 million. And I'll come back to that in a bit more detail. On CAPEX, 100 million, we have been trying to rationalize our CAPEX programs and phase them out, adjusting to market circumstances. 100 million, 70 million improvement year on year. Also good to mention that for the full year, we expect CAPEX to be at a level of 200 to 225 million, which is also a bit lower than our earlier guidance. So first half year results impacted by challenging markets. And let's dive a little bit more deep into the year on year comparison. Here we see the revenue coming down with the 62 million already mentioned, 23 million by acquisitions. We added SDP and Paolo to the portfolio. On the other side, we had a divestment of EPC company. And then a small currency effect brings us basically to the 50 million revenue decline. As already stated, predominantly driven by industries and semi-con, which are in a more difficult period. And I think well summarized here at the bottom, also driven by the pressure in automotive that is specifically hitting the industry segments. Next slide, we translate and we look at EBITDA. Of course, in acquisitions and divestments, we see the same companies, but then the EBITDA effect, small currency effect again, and that brings us to the organic decline in EBITDA of 35 million. Basically three things, we lose 11 million in Semicon, We lose a similar amount in industry. And then there's the year on year effect of the holding elimination line item where we lose 7 million. And I'll give you a bit more context in two slides from here and give you a breakdown also comparing with last year. So organic decline mainly driven by the drop through of the lower revenue that you saw in the previous slide. Asset, let's go to free cash flow. Here we see in the first red bar the lower cash because of the EBITDA that was at the lower level, but then very clearly CAPEX focus, rationalizing our programs and phasing them out, 80 million recovery in cash position. And then the net working capital, also 80 million, driven by lower inventories, which is hard work, driven by collecting receivables, and then slightly offset by the payable position that was a bit lower. But also translation, I think, of good quality of cash. There's been hard work in inventory and collecting receivables to get this 80 million in our cash position. This, I think, nicely summarized lower EBITDA offset by lower CAPEX and improved networking capital. the next slide it's a busy slide but i think it summarized really well year on year what has been going on in the segments and the holding elimination let me talk you through i think stefan commented already of course in his intro in building you see summarized here yeah the decline in in in in revenue year on year also because of the the divestments but organic growth of 1.4 still positive And I think good to see also the CapEx positions per segment, 25 million, significantly lower than last year as we also try to rationalize CapEx and use the assets that we already have optimally. In industry, 4.9% revenue decline, but the revenue is still at the same level, of course, supported by the two nice acquisitions that we have added. And CapEx level, similar to next year, also because we are still finishing some green fields and also the normal replacement CapEx. In Semicon, you see the revenue relative big delta. So already explained by Stefan, we remain focused on the mid and long run, also supported by our acquisition that we intended acquisition that we announced, but also visible in the CapEx where we keep investing in in our footprint because we really believe that the mid and the long run, this will be the place to be for us. Finally, as I said, holding eliminations, important line item. Of course, the elimination line item is more an intercompany correction. Let's focus on the minus 10.4 that we see here, 7 million down versus last year, 7 million more cost. But I think first of all, good to mention that last year there was proceeds from an insurance claim included in here. So 10.4 reflects half of it, the normal holding costs that we have, 10 to 50 million in total per year. So this is for the first six months, let's say 5 million. The other 5 million come from the acquisition costs for the Paolo acquisition, and we settled two small claims. And that brings us to 10.4 on this line item. Well, again, summarized at the bottom, building stable, industry resilient, and Semicom clearly under pressure. Now, this is a new slide where we review some key balance sheet items. I think it's really important to also have a good look at it, and I'll talk you through. On the left top, you see clearly that our debt position has gone up with 220 million. That basically reflects the Paolo acquisition that we added to the portfolio, and it brings the leverage to a level of 1.6%. towards year end the attendant acquisition we hope to close before Christmas and that of course will then increase the leverage ratio but we will stay below two and we will stay comfortably below the the leverage ratio ceiling of 2.5 that we always announced On the right top, the equity and the solvability, I think in a good place, representing a solid company. And at the left bottom, yeah, the ROCI is lower than last year, which is a setback, of course, driven by the lower EBITDA. But also on the other, on the capital employed side, we also see the net debt effect that I just discussed increasing our capital employed. Networking capital, also translation of good progress already discussed. We have made progress on inventories, which Stefan will touch on in a bit more detail. We have been focusing on collecting the cash from our receivables and the payable position year on year has come down. So that offsets a little bit, but a nice improvement of our networking capital position. And that, I think, overall gives a very strong balance sheet that will support the next steps in our Thrive 2030 journey, Stéphane. And I think you will tell a bit more what you're doing there.