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.

Thank you, Franz. So you have seen that we continue to remain very disciplined on all our financial KPI to manage whatever the market challenges. But while we manage the short term, At the same time, we continue to take action for the long term. And that's what I would like to report to you now, how we are doing, what progress did we do in the first half, you know, for strategic action as per Thrive 2030, as per our last Capital Markets Day in December. First of all, a quick reminder of the four strategic action. You can see from the left to the right, accelerating organic growth, optimizing and simplifying our portfolio, evolving our operating system, and driving sustainable entrepreneurship. No change. These are still the action with a goal to refocus our company, rebalance our portfolio, and recharge our three segments. That has not changed. What progress did we do in the first half? You can see it here with a simple scorecard. And this is what we will be reporting to you every half year, every full year. So you can count us to show you the progress every time we are live and disclosing our results. Obviously, the first action, the status is not satisfactory. With a negative organic growth in the first half, this has to be improved. But at the same time, we continue to invest in some specific organic growth initiative We start to see the early sign of improvement, but obviously it's still too soon to report progress. But I can tell you, so when you look at prefab solution, when you look at our boiler room technology, when you look at our offering for data center, When you look at our U.S. growth ambition, you'll remember our plan is still the same, to double our revenue in the U.S. over the next five years. Aerospace is doing very well, defense as well, and also our Semicon, which is all about innovation, system integration, and design to value. More to come, but obviously, the first half results are behind. On the second action, this is where we are actually making good progress with two close acquisitions, one intended acquisition. And as I said earlier, we still are working actively to make progress about divestment in our building and industry segments. The third one. The Albert way, it's all about the functional excellence. Where we did the biggest progress in the first half is on our operational excellence in our footprint optimization. And I'll show you a bit more because we are quite pleased with the progress on our inventory days, reducing 10 days compared to last year, well on track with our target to be less than 90 days this year and 85 days next year. And on sustainability commitment, also well on track. But let's not forget that also here it's about investing in our people to ensure we have a future proof workforce to enable our strategy. And as you can see, almost 400 of our leaders have been trained or went through our leadership development program. That, of course, what we will continue to do as we cannot win without our people now. one example which i think it's showing you and it's not about the size because it's still a modest order book it's still low revenue but this is where we are investing just showing you an example of a prefab solution that we are doing in our factory with one example of what we ship and sold to data center in london and we are doing that in europe We are also looking at expanding this offering also in other verticals like commercial buildings. And this is also an opportunity in the US. So you are talking here about the global vertical and our modular thinking where we can use many of the things we do at Albert. You see our expansion vessel, some of the valve, and we are very pleased with the progress. And we are investing in people, in footprint to be part of the growth because that's one of the growth drivers for the coming years to come. You can see also in a summary the three value acquisition. And it's all about growth. It's a growth agenda, which also enables us to keep our leadership positions, obviously, aligned with our strategy. And you can see one close acquisition for our industry segment with Paolo in the US, one close acquisition in the middle or on the right, sorry, with Geoflow for our building segment in the US, And in the middle, still an intent, based on what we announced, for our Semicon segment to enter Southeast Asia. And let me tell you a bit more about this great opportunity. Because indeed, you could say it's a transformative move for Albert. We are going to enter the Semicon Southeast Asia market. This is going to open new growth area for us. And the way we do it, is by having synergies, intended synergies, between GVT and our Albert Advanced Mechatronics solution. Why we are so excited about it? You are talking here about growth agenda to support GVT customers and continue their expansion, where we will bring from Albert all our internal capability competencies, Second, we can also grow with our current customer and support the regional supply chain footprint development. So you are talking here about commercial growth synergy, also cost synergy, footprint commercial we have many synergy identified and that's why we still believe and we really plan to close this acquisition by end of the year because it's going to support organic growth and also support our margin profile as you can see here synergy that will enhance our profitability and cash so fantastic opportunity let's close it and i look forward to report more once the acquisition is closed but not for now And on divestment, I'm sure you remember the slide from our CMD. And now just a reminder that we are still working on divesting potentially 400 to 500 million euros, especially in our building and industry segment. And we hope to make progress in the second half. But that's what we're working on at the moment. So based on the same criteria, ability to win and market attractiveness. The Albert's way, this is where, as you say, we are quite pleased with the progress. Our operation team did a fantastic job. Look at these numbers. And that's what I like when you talk about functional excellence. It's initiative that delivers results. And you can see now, right, footprint. And footprint, we are on track, we are optimization, but I think due to the market uncertainty it's all about scenario planning we have a task force looking almost on a daily basis at the tariff impact we have made progress on inventories as i mentioned 110 million euro drop compared to last year 10 days 10 million euros saving on operation productivity on the first half and 14% capex reduction going down to 100 million. That's what we will continue to do and that's why we are building what we call capabilities to invest in resource and to ensure we have a continuous improvement culture so that we can repeat that year over year and not do that as a one-off. Good progress, outstanding work from our team. And on the decarbonization level, also no change. We are still working on our six levels as per our strategy. And it's actually to achieve two key objectives. The first one is our own footprint. to continue to reduce our Scope 1 and Scope 2 emissions, our intensity, thanks to our energy-efficient program, thanks to the usage of renewable energy, thanks also to electrification. And the second goal is to help our customers to reach their sustainability target through smart product design, through circular economy, and also through value chain collaboration. And I always like to say the sustainability agenda is good for the environment, but it's also good for our business and good for our growth agenda. So now you may wonder, based on the current headwind, what do we plan to do as a short term? We understand that the market uncertainty will continue. We understand that the market softness will continue for the second half. So we will continue to take the action that we took in the first half in order to protect our EBITDA margin and improve our free cash flow. So continue to pursue organic growth initiative, deploy the operational excellence program, as we announced last year, further accelerate cost out especially in a building segment and through operation productivity but also purchasing saving new area new opportunity continue inventory reduction continue with our capex reduction and we hope to make progress on divestment in the second half of the year so overall whatever are the market headwinds we still have strong foundation we have clear priorities and the full leadership will be focused on execution is focused on execution and that's what we will do to manage the short-term challenges now as a conclusion of course let's go back to our outlook as we have released this morning in our press release and you could say based on the current markets softness and market softness based on the uncertainty Looking forward, we don't expect an improvement, as you can see in the middle of the slide. We don't expect an organic revenue growth improvement in the second half of the year. Consequently, we are adjusting our full year outlook EBITDA margin to 13% to 14%. And you can count on us to continue to take action to protect our EBITDA margin, optimize our free cash flow, while at the same time we will continue to deploy and invest for the long term deploying our strategic action as per strive 2030. thank you very much

Thank you, Frans. Thank you, Stefan, for the presentation. Yeah, as we are starting the Q&A session, I'd like to remind every one of you how to participate. For conference call participants, please press hashtag five. Hashtag five on your phone to join the queue. Those tuned in via webcast, please submit your questions via the Q&A form, which I see already some of you have done. Very nice. I would now like to give the word to Martijn den Drijver from ABN MRO Auto for the first questions. Good morning, Martijn.

Good morning.

Good morning, gentlemen. Thank you for taking my questions, Martijn den Drijver, ABN MRO. I have three questions, one each for each division. I will do them one by one, if you'll allow me. The Q2 was softer than in Q1. in terms of organic growth. Is that end market demand softening? Is that destocking? Can you tell us something about customer behavior and what you're seeing there? And in relation to that, you mentioned corrective action taken. Can you elaborate a little bit on what type of actions we're talking about? That would be question one. Thank you.

Thank you for the question, Martin. And you are right that Q2 organic growth was a bit lower than the Q1, I think, especially in our building and Semicon markets. So Semicon, it's basically the continued effect of the destocking for our customers so seeing no no major change it it was expected at least for us and that's what we have seen in the first half and the corrective action we took with semi-con is i say finding the right balance adjusting cost but skipping the flexibility and the capacity for the long term so I think that and that's also where we don't see improvement in the second half. So expect the same activity in Semicon. On building, actually, you are right, the organic growth has been a bit lower than the first half, and we saw a market, I think, impact, especially in our connection system and in the German market. That's where the second quarter, so it's market-driven, was softer than expected, and that's why the growth in the second half, I think, was only 1%, so a bit lower than expected. and if you look at industry you have seen actually q2 organic growth was better than the first quarter right from almost minus seven we reported minus two so here we saw improvement still negative uh so what we plan to do on the corrective action think industry it's all on track and because the footprint initiative the cost out actually we expect the benefit higher in the second half than in the first half so that's why in the first half almost 17 i think it's still a solid performance and in building it's basically continuing so The footprint benefit should also come in the second half. We just finished to close one major site at the end of the first semester. Then you continue to take operation productivity, so about flexing our costs in the factory. It's about direct labor, semi-variable overhead, fixed cost also, a lot of SG&A cost action taken in building, but also in the other segment. And it will not be for the second half, but we are taking a lot of action on purchasing that should help to have a better impact also in 2026, because we are just starting to launch a new initiative on purchasing and basically using the power of our segment across all our business team to have more functional scale and also global scale.

Okay, thank you. Well, you've answered quite a number of questions. But to come back on Semicon, that would be my second question. My understanding, you correctly, that previously the statement was we expect destocking to flush out during the summer, meaning more stabilized sales, perhaps, you know, growing with the market. Are you now guiding for the same type of development in the second half? Is that the right way to think about it? Or do you expect that flushing out to occur?

We don't expect improvement in terms of organic growth in the second half. That's our statement. We believe the destocking is coming to an end. That's what we see. But we don't see higher activity and higher requirements from our customers in terms of new equipment.

And then the third question is on industry. In the second quarter, as you already pointed out, the EBITDA margin was quite strong, 17.2. You made some remarks about production footprint, operational actions. Is that 17.2 sustainable, you think, in H2, given the top line development?

As you know, we are not giving outlook by segment. But I can tell you that we expect the benefit in the second half of all the cost action we took in the first half. On the other hand, we don't expect organic growth improvement in the second half based on the current market condition.

These were my three questions. Thank you very much, gentlemen.

Thank you. Thank you, Martin. I'd like to give the word to Chase Coughlin from Landschot Kempen. Good morning, Chase.

Hi, good morning, gentlemen, and thank you for taking my questions. I have a couple as well, and I'll take them one at a time, please. Maybe also starting off on Semicon. Obviously, there's been quite a lot of talk in the market the last few weeks about maybe 2026 expectations for the space being a bit softer than initially anticipated. I'm curious, also given the, yeah, let's say the commissioning of your new plants, do you, what are your expectations there internally? And do you think there's any risk of

underutilization for that facility for the for the coming years thank you for the question let me first report that our new plant is still on track we have actually equipment being installed and tested so a line also align with the need from our customers to have this new facility ready and i would say the market is quite dynamic. There are so many uncertainties that at the moment we are really focusing on 25 and 26. It's too early to say. There may be growth. It may be stable. We will report when we have more visibility this month. I think we can only report that we don't expect a recovery in the second half. And 26, still a lot of uncertainty whether there will be growth or not in the Semicon market.

Okay, thank you. And my second question going back to building and specifically in Germany, there was another building products player who reported recently who actually spoke rather positively about Germany saying that there was some inflection in new dwellings and building permits. So I'm curious on where specifically you see so much weakness. Is this more from sort of the renovation side of things or if you could elaborate a little bit more on that German market from the building standpoint? Yeah, let's see.

You are right that we all expect better trend due to all the investments that are happening on the German industry. We just believe it's too soon to promise that second half will be much better. We are still doing well in our boiler room equipment, also in Germany, where we see the biggest pressure is in our connection system. So it's a specific product line. It's not all our product line, but that's what is making us only grow, like I mentioned, with 1% to 2% and a bit lower than what we were expecting. So we were expecting much higher organic growth. Now, on this specific product line, this is where we see the biggest challenge.

Okay, that's clear. And then my final question, I believe you booked a 20 million release of provisions in the P&L in the first half. Could you maybe elaborate a little bit on what that was, or if I've misunderstood something there?

Yes, of course. Good morning. Indeed, release of provision of 90 million, comparing with 2 million last year, that 90 million is related to restructuring costs that come out of the balance sheet. Okay, perfect. Yeah.

Thank you very much, gentlemen. Those are my questions.

Thank you. Well, we have some more people in the queue. So I'd like to give the word to David Gerstens. Good morning, David. Good morning. Good morning, David.

Good morning, gentlemen. I also have three questions, please. I'll take them one by one. First of all, regarding the building segment, you're guiding for similar organic growth trends for the second half of the year. I was wondering what will be the impact of copper price inflation with potential tariffs of 50% on copper, which should be accretive to top line growth, but potentially dilutive to margins. What's your view on the impact here, please?

We that's something we are actively working and I think it's it's too soon to report if there will be an impact. I can tell you we have been able to manage in the first half, specially in the US. Thanks to our pressing all the impact on the tariff and at the moment we don't expect major impact based on what we know today. Thanks to the latest developments or not something we expect to have a major impact and that's why we are. giving as an outlook a similar trend for the second half.

Okay. Okay. And then my second question is related to the acquisition of GVT in Semicon. I think in December you highlighted that portfolio optimization, including M&A, should be accretive to margins and drive profitability towards at least 18% by 2030. but GVT seems to have relatively lower EBITDA margins. And I understand you have not quantified the synergy impact yet, but does it become more challenging in Semicon to get to the 18% EBITDA margin target by 2030 because of your acquisition strategy here?

I think you are absolutely right that what they have reported in 24, it's not at the level where we want to be in Albert. Let's see what they will report for 25. I think this is still within their hand, but we are quite excited with the potential synergies that we see, as I mentioned, in terms of commercial synergy, cost synergy, footprint synergy, and we believe together we can make it accretive for margin, for organic growth, and for EPS as per our long-term ambition. So really, it's about the synergy that we have identified during the due diligence process. So let us close the acquisition first, and I really hope to be back next year to explain you a bit more in details our plan to bring it to reach our long-term objectives.

Okay, great. And then my final question is on the unallocated cost of 10 million in the first half of the year. Frans, you indicated 5 million was related to acquisition costs for Palo and settled claims, small claims in the first half. What will be the figure for the second half? Will you also have acquisition costs related to GVT in the second half that will get you to the same number of around 10 million, so a 20 million number for the full year?

Yeah, thanks. I think an important one. Indeed, we will have acquisition cost of GVT expected to close this year. So then we will add that as well. That will be a higher number than the one for Paolo. So the guidance would be that the second half will be a bit higher even than the first half in terms of the non-normal holding costs, which are between 10 and 15 per year. So the guidance would be based on what we now know, 20 to 25 million for the line item for the full year.

Okay, very clear. Thank you very much, gentlemen.

It's time for the next person in the queue, which is Christophe Samois from KBC. Good morning, Christophe. Good morning.

Good morning, everybody. A few questions have already been answered, but I have two left. First on SEMICON. In the first quarter, you indicated that you would optimize the cost structure, but you didn't quantify it. Can you now give us a little bit more color on the exercise you have been doing there in terms of costs, saving potential, and the timing of when these costs and savings will kick in? That's the first one. And then on T, the recent transaction that you announced and that you hope to close by year end, At the time of the announcement, 65% of shareholders approved with the transaction. Is there a scenario where you would go ahead with the acquisition if you don't arrive at 100% of shares, meaning that you could end up in a situation with 80% of shares and a continued listing in Singapore? Thank you.

Thank you. Let me take the first questions. And I'm sure you have noticed that actually our margin in the second quarter was a bit better than the first quarter already for Semicon, right? Almost 10 versus 12. And the action we are taking is first to, of course, take out all the variable costs. Variable costs in our factories, in our operations. So that has been taken. We are also adjusting our SG&A the level is the absolute minimum to not compromise the long term that basically what we have been doing we're still trying to do a bit better also on the purchasing side but that's why we say the 11.5 12 is actually you could say our choice even if it is not satisfactory compared to last year but to find the right balance compared to the long-term growth also to be ready to do all the synergy work with the intent acquisition with GVT. That's the action we have been taking. So also in Semicon, cost and SG&A has been taken out.

Yeah, and then your second question on GVT, and the answer is no. So we really want full control over the company. That's also where bid assumptions are based on. And we're confident that we have an attractive proposition. But that process is, of course, for GVT to comment on because it's a discussion between their management and their shareholders. But we're confident we have a good proposition for them. So let's wait the coming months how that will work out.

Okay, thank you. I have no further questions.

Thank you, Christoph. Now I'd like to give the word to Christoph Greulich, Berenberg. Good morning, Christoph. Good morning. Good morning.

Good morning. Thanks for taking my question, Jay. It's also a two from my side, please, if I may. And the first one is regarding the Semicon project. I was wondering after the minus 13% organic growth that we've seen in H1, if you could roughly quantify how much of that is attributed to customers destocking compared to general underlying end market trends. And then I was wondering, implied in your guidance for the second half, that we see a similar organic growth trend. If you look at the compays, I mean, that gets a lot easier, especially in Q4. So if I take into account it's easier compays, does that actually mean that the situation is getting worse from here? Yeah, that would be my first question. And then the second topic would be the GVT acquisition. If you could just remind me What is the timeline to reach or obtain the shareholder approval? And then also in the press release, you are flagging an immediate EPS accretion. Could you quantify that? What are you expecting there in 2026 when taking into account the financial expenses for the investment?

Thank you for the question. Let me take the first one on the on the semi con. So in the first half most of it it's coming from this talking that we have seen from all our customer. As you remember, it started in Q4 and that was been the major a driver. We see lower demand and that's what we don't see at the moment. Second half getting better. That's why we are adjusting our outlook. We don't see that it will be worse, but we don't see an improvement in the second half of the year. That's basically the reason for adjusting our outlook. When you talk about the GVT acquisition, I think the vote is expected in September. So that's where That's why we also report that following the vote, we expect to close before end of the year. And you understand that before we talk about all the synergies and all the potential, like the previous question, our first priority is to close this acquisition. Then we can be more open and transparent about all the synergies and action and opportunity we see following this acquisition.

Yeah, that's very clear, thank you. And just maybe to confirm, so when you provided the guidance for H2 and Semicon, you took into account that the common base is getting a lot easier in Q4?

We took all the latest outlook from all our customers because we all, of course, have a good collaboration with them. And that's what we believe is a realistic outlook. There are still opportunity, like our customer I'm mentioning also in 26, but for the second half, we don't see improvement in our organic growth.

Great. Yeah, that's very helpful. Thank you.

Thank you. Perhaps on the GFT timeline.

We just discussed it.

Yes, we found it.

There's one more on the, there's one more question.

Yes. It's Ruben de Vos from . Good morning, Ruben.

Hi. Good morning, all. Yeah, I just had three questions as well. I think, I'm sorry if I repeat a question that has already been answered because I was a bit later to the call. rather revolves around the margins, right? So I was thinking about the quantification of the moving parts. I think the 13% to 14% full year guidance, is that mostly operational deleverage from lower volumes? Or is there other factors like product mix or pricing pressure that we have to think about? Yeah, and then I have a follow up on that.

Thank you for the question. let me just repeat the first half and then answering the in the first half it's a margin drop it's mainly linked to two key points right the lower volume in our industry and semi-con And that's what we expect also in the second half of the year. Plus also like Franz mentioned, a higher extraordinary holding cost compared to last year. So mostly driven by lower volume impacting organic growth in industry and Semicon.

Okay. Okay. So the, I guess, In H1, sort of the revenue decline was 60 million. I think the EBITDA decline was 30 million. So let's say 50% sort of dropped through. I guess is that, I mean, typically you had 25%, right? Dropped through, but that 50%, is that fair to assume that continues? You may be, yeah, 25, but if an upcycle would happen, yeah.

Yeah, so I think there are three elements. So first of all, indeed, if you look at the drop through of the EBITDA of 32 million on the revenue of 50, we first need to correct the holding elimination line item that Stefan said. I think second, we lose 11 million in Semicon half year on half year, but that's also a decision to protect our capabilities. And Stefan explained uh in his introduction yeah we also look at in the long term and make sure we're ready for for the upturn a third element in comparing is that in industry we in industries segment we have been contained operational excellence programs where we expect also some some further results in the second half so that that brings that percentage a bit more in perspective

Okay, and then something unrelated to Semicon, I think you've said that the construction of the new location in Drompton is on track with equipment being installed and tested. Just curious, given the current market softness, how are you thinking about the pace of this ramp up? Will you align the pace of bringing this capacity online with the market recovery to protect margins or how should we think about that?

I can only confirm that the pace is fully aligned with our customers. We are working very closely. And again, it's about managing the balance between short-term and long-term. And the long-term, the growth is still there. And the long-term, this capacity is still needed. So it's fully aligned with our customer. That's what I can tell you now.

Okay. And a final question just on the inventory reduction. I think you've already gone a long way now. in H1. But yeah, what's the additional potential for further improvement in the second half and into 26, please?

I think we are well on track. You're absolutely right. So first of all, we need to continue and sustain this level to be less than 90 days. And we are well on track also to deliver our 26 targets, as shared earlier during the year, to be at 85 days.

Maybe it's good to give a bit of extra color because indeed 10 days reduction and really good work by all our teams. It's also fair to add that two days improvement is driven by the Paolo acquisition that typically brings a lot of revenue and not so much inventory. And also the Forex exchange was helping us with two days. So I think six days of real progress. But you see, yeah. Some elements like Forex, of course, and M&A impact are also to be considered. So also, if we give guidance for the full year, please take that into consideration as well.

All right. Thank you for the call. Thanks very much.

Thank you. Thank you, Ruben. I'm happy to see that also we receive quite a bit of questions also via our web. So I'll pick one which I think is quite relevant. It's a question about the full year 26 EBITDA margin, the target of 16%, whether that is still achievable.

Yeah, fully understand the question. Let me first repeat that our priority right now is to continue to take action to protect our margin for 2025. That's where all our team is focusing. And then regarding 26, we will get back in February to update our new target for 2026 based on the current market condition.

Thank you, Stéphane. I have a question also for Frans. about Capex. Can you elaborate a little bit more on the CAPEX towards 2030, as mentioned in the CMD?

Very good. Good question. So, indeed, let me repeat. For this year, we guide on a CAPEX level of 200 to 225, and that is based on the current portfolio. For next year, we expect a similar amount organically, so no M&A impact taken. And after that, that level of CAPEX will come down, as we now have modeled, and it will be around 200 million, say, 27 onwards. The number that has been mentioned in the Capital Markets Day, which is higher, is a preliminary number based on also a very larger company. So we mentioned four and a half billion of revenue there with an active M&A agenda. There was an indicative CapEx number of 250 and 300. I think that's five years from now and a lot of open questions. I would like to focus on the guidance on the current portfolio, which I hope we clarified this morning. Thanks for the question, though. Very important one.

Thank you, Frans. There's another question coming in, and that's about the status of the divestments. You could give any color on the progress here, and how could divestments potentially also benefit your NAPDEP or EBITDA?

Great question. I think I can only repeat what I've said, that we are actively working on it in our industry and building segment. We hope to make first progress in the second half of the year, continue next year. The goal is still the same, 400 to 500 million revenue. And the divestment we intend to do should help us to improve our net debt position and also improve our leverage ratio. Very good. Thank you. um well similar topic on the subject on m a do you expect stefan also to do still more acquisitions in the second half of this year it's a great question but first we need to close our intended acquisition that's priority number one we need to close the great opportunity we have with gvt yeah then we are still looking at potentially bolton acquisition but the second half priority is clearly gvt

Thank you. Very clear. There's another one on capital allocation, perhaps one for you, Frans. Yeah. The 75 million share buyback program is nearly completed. Yeah. Do you intend to propose an additional share buyback program in the second half?

Now, I think share buyback, it's good to have a program this year, and I'm really happy with the capital allocation policy of Albert, where this is a final consideration. So we always look at strength of the balance sheet. We invest in our business. We look, of course, at M&A. And then if it comes to shareholders, very committed to the 30% of net result dividend. And then just to rehearse a bit how the sequencing is, when there's excess cash available, we look at share buybacks. And that is a discussion we do after we close our books in discussion with our Supervisory Board in February.

Thank you very much. I think that we have had all the questions. Yes, I think we've managed to answer all of them. So as we conclude today's webcast, I would like to thank everybody. Also, thanks, Stefan, for joining us today. Thank you. Thank you. Enjoy your day. Bye.