Aalberts Indus Nv Ord

Good morning everybody. Welcome at our full year 2025 results presentation. It's good to see so many of you joining today's webcast. I'm happy to introduce to you our CEO Stefan Simonetta and our CFO Frans van Houten. Stefan will kick off the presentation with some business highlights followed by Frans who will give an update on our financial developments. Stefan will then share some insights on strategy in action and provide an outlook for the year 2026. After the presentation, we will give you the opportunity to engage directly with us via the Q&A session. Later today, we will make both the presentation and the recording of today's webcast available via our website. to start the presentation.

Thank you, Rutger. And good morning, everyone. Let's start this presentation with a few key messages about our 2025 results. First of all, it is no secret that our performance has been impacted by the continuous short-term and market softness. And during the year, we have been focusing at Alberts in what is within our control where we could still take action and we did some good progress in our operational excellence initiative in order to protect our margin. Very good progress in free cash flow improvement with lower inventory, lower capex. Very good progress. This is for me one of the key highlights in 25 with our portfolio optimization with great acquisitions and also progress in our divestment. But 25 was also the first year of the deployment of our Thrive 2030 strategy, a foundation for future growth. So in a year, one on one hand, we celebrated our 50th anniversary at Alberts. We took a lot of action to strengthen our portfolio, improve our position, and navigate through the end market challenges. The results going into the numbers. And France will give you more details in the financial development. So 3.1 billion euro revenue with a negative organic growth of 2.5%. 410 million euro EBITDA, equivalent to 13.2% of revenue. And sustaining good added value margin of 63%. More than 360 million free cash flow. A capex at 189 million euro. And as a consequence, an earning per share at 2.61 euros. In terms of shareholder returns, we are proposing a stable return with a stable dividend at 1.15 euros and starting a new share buyback program of 75 million euros. Many of you know us. Let me just remind you. the value proposition in our three segments in our building we are engineering solutions in heating in cooling in sanitary system mostly in residential and commercial buildings in industry we are providing services to all the global industrial oem in europe in usa with heat treatment with surface treatment and we are helping our customers to improve their energy consumption and on semi-con offering system solution to all the global OEM, not only in the front-end, but now also on the back-end side of the value chain. So, definitely, we want to continue to engineer mission-critical technologies, enabling a clean, smart, and responsible future. And when we look at the long-term, why Albert's? It's still very well positioned for the long-term growth driver because we are very well exposed to four global trends. These four global tailwinds, which are urbanization, technology acceleration, reshoring, and decarbonization. Long-term value creation is still very well promising. Now let's go to our operational development in 2025. How did we do in building? How did we do in industry? How did we do in segments? Starting with the global revenue, the breakdown of our revenue by segment, by end market, by geography, and by SDG goal. So on the geographical side, no major change compared to last year. Same on the SDG exposure, and you can see that building is still 50% of our revenue. Industry, 35%. And Semicon, 15%. I'll come back to the exposure by end market during the next slide. Our strategy is the same. We want to have leadership position and we want to be aligned with attractive end market. And so where we are investing is definitely aligned with some of these megatrends. Our performance by segment, a mixed picture. Will not repeat again what I said earlier, but we are back to growth on building with 1.3%, still a moderate organic growth. But of course, the margin has been challenging with 11.7%. Industry better organic growth than last year, but still a minus 2.8%. And this is where also we sustain very solid margin at 17.2%. And in Semicon, As you remember, it started in the last quarter of 2024, and we have seen quarter after quarter still the destocking ongoing from our customers. Now it is coming to an end, but 25% was still minus 13.8%. And our margin as a consequence, down to 11.9%, but also with a conscious decision for us to sustain our capability for the long term and not go too low in our cost optimization. now let me go through each segment and tell you some of their light and some of the low light so in building on the good side on the market continued growth in commercial building in our key prioritized verticals like data center like hospitalization like district energies and this is where we continue to optimize Very good solid growth also in the USA, in our overall segment, and more challenge in France and Germany, more challenge in our connection system, some of the highlights on the market side. And on the performance side, we continue to optimize our footprint, continue to drive operational efficiency, and are now also accelerating purchasing initiative to get back to a more robust margin in the coming years. Looking at the market trend, you see what we face in 2025 and what is our view about 2026. So, more stable trend on 2026 in residential building, more positive on commercial building and also on infrastructure or industry and utility building. So we continue to have very good position in residential building, but we don't expect major growth on the market side. And we actually see many growth opportunity where we are also pushing organic growth initiative in commercial building and infrastructure. That's our view about the 2026 market. Now, if I go to the other segment with industry, so... Where did we do well in 25? With good organic growth in aerospace, in defense, in power generation, and where we face the most challenge has been definitely in automotive, in the machine build, and that's also what we continue to see in 26. Solid margin, we continue to drive operational efficiency, further footprint optimization, and have the success to continue to deliver such a good performance. And the market trend, a bit similar to 2025. Actually, we see automotive now coming to a plateau with a flattish organic growth. Same for machine bean and other industrials, but more positive. And we continue to see more order, more positive growth on aerospace, power gen, and defense, where our order book in some part of the business is really increasing. So positive momentum, some more stable. And Semicon, I mentioned it already, challenging on the front end with the destocking from our customers, but we start to enjoy the growth of back end, only two months since the acquisition of GVT. Very good also progress in defense in this segment where we have some of our technology, some of our factories also supplying a major OEM in the defense area. And as you can see, now in our breakdown by technologies, you have a new segment called system build and qualification, which is actually what we do in GVT. I'll come back later about our back-end exposure and why we are so excited about the future growth opportunity. and here for 26 it's actually more positive right we see growth in the front end even higher growth growth in the back end and growth in other industries so more positive based on what we see on the market trend based on what we see on our customer order book and all the requests we are getting so a positive momentum going forward and to conclude the 2025 operational performance very pleased very happy to report that we are still on track with our sustainable commitment, still with more than 70% of our revenue linked to sustainable development goal. We're reporting 71%. And year after year, continuing to reduce our CO2 emission in scope one and scope two, absolute emission, also based on the portfolio, acquiring company, divesting company. So good progress, aligned with our target. So pleased with the performance on the environmental side. And that's what I wanted to share for 2025 operational performance. Let me now hand it over to Frans that will give you an update about the financial development of the year.

Thank you, Stefan. And good morning, everybody. And indeed, let me talk you through the financial developments of 2025. First of all, on the revenue, you see on the left here, the challenging market circumstances resulted in a negative organic growth of minus 2.5%. And the year ended with a total of 3.09 billion. On that revenue, we delivered 13.2% EBITDA margin, which is 1.8% lower than 2024 and translates into 410 million of EBITDA. The net profit landed at 284. We have been focusing on finding the right CapEx balance and we aimed to be below 200 million by year end and we landed the number for CapEx on 189 million. Still investing in the future of the company in organic expansions and innovation, but also being mindful of the cash impact. As such, free cash flow numbers really strong, 361 million, 64% conversion, really a good number. Of course, reflecting the CAPEX that I just discussed, but also inventory, networking capital, and I will come back on that in a bit more detail in a slide to come. So 30.2% margin as a conclusion in a challenging market for the year 2025. Let me give you a breakdown of our revenue impact. And first of all, corrections for the M&A. In the acquisitions, you see 105 million plus, basically driven by the acquisition of SGP in 2024. And we did three acquisitions that we completed in 2025. Geoflow, Paolo and GVT were added to the portfolio and delivered, as I said, 105 million. On the divestment side, in 2024 we divested EPC and December 25 we announced divestment of Meta Lee and also confirmed that we have reduced our shareholding in Cannes to 45%. With that, that company is now accounted for as an associate and no longer fully consolidated in our books. 59.6 million miners on the divestment in terms of revenue. Forex did not work in our favor in the revenue side, specifically the US dollar, minus 26 million, and the organic decline translation of the minus 2.5% total, 77 million, bringing it to 3.09 billion on the revenue. If we then go to the EBITDA breakdown, again, of course, the M&A impact, and you see for the acquisitions that we've done, really good contribution to the EBITDA margin, 18.7 million in the first year of integration. And on the divestment side, as we have progressed our portfolio also there, the minus four is the impact on the EBITDA. Of course, also a small currency effect, minus three million, basically also predominantly the US dollar. And then the organic decline on EBITDA is 73 million. And that requires a bit of context because there are a few elements in there I would like to highlight. First of all, a minus 20 million on inventory, a non-cash one-off correction, as we have revised the group accounting policy for inventories to make it more robust and aligned throughout the company. That again resulted in a minus 20 non-cash correction. On holding elimination, we see a year-on-year deterioration of 10 million. I will come back on that in the next slides. And then the remainder is really the drop through of the lower revenue that we saw in the previous slide. Also, please bear in mind that on Semicon, we have been careful in flexing our costs. Yeah, as we see and want to be prepared for the growth in this segment in the short future. Totaling $409 million, 30.2%, basically most important driver, the lower organic decline. Coming to free cash flow, I already mentioned we're very happy with this number, 361 million. That's a healthy free cash flow. We have a 64% conversion, which is 10% higher than the previous year. and we in the waterfall you see first of all of course the negative impact of the low performance almost 60 million of EBITDA impact on the cash flow in a negative way and that we need to compensate with capex and networking capital in the line item other there's a cash out on the provisions that explains this item On an earnings per share bridge, you of course see here the translation of the lower organic performance also in the APS impact, 30 cents, the biggest one in this list. But also be very mindful of the financing costs that have gone up with 30 cents as we have increased our debt level in the company with 300 million to support the acquisitions that we have done. Acquisitions, nice to see also that the acquisitions contributed positively and were value accretive from an earnings per share point of view. Small impact positive from the share buyback and then totaling the earnings per share on 2.61 for 2025. On the segment reporting, Stefan already showed the revenue and the profitability, but here you see also the CAPEX that we added. If you look in the building segment, be very mindful in the 11.7% EBITDA margin. That's also the impact of the one of non-cash inventory correction of 20 million that I just explained. But also please be mindful of the CAPEX where you see really almost 50% reduction. As we have been investing also in 24 in preparing for growth, you see this year that is a more modest number. In industry and in Semicon, CapEx numbers are in both segments comparable with the previous year. Well, in industry, we keep investing, of course, in a footprint and in expansion and also good to see 17.2% EBITDA margin in a challenging market. I think still earmarks a resilient performance in that segment. In Semicon, markets have been tough, but still we are fully confident in the long term. We have invested in an acquisition in a nice company called GVT, but also you see here that the CapEx is still of a high level, 53 million, as we also invest in our new factory in Dronthe, which will come into operation early 2027. So you see still there are a lot of assets that we are having under construction in this segment. As I said, holding elimination in the last column requires a bit of context. We see a minus four in 2024 as a comparable number. Please be mindful that there was an insurance claim proceed in that number, so that number was really lower than it normally is. For this year 2025, minus 14.8, which basically translates the normal run rate of holding costs. We earmarked that between 10 and 50 million, and that number is in this range and comparable with last year. On top, the movements in 2025, there were significant additional M&A costs. You already saw some of that in the first half. But we have been able to compensate that with the book profits on the divestments that we have done. So that netted out. That was circa 30 million of book results compensating the additional M&A costs and bringing this to basically reflecting the normal run rate on holding costs. In the tagline you see at the bottom here, low profitability due to challenging end markets. I think that summarizes from a P&L point of view. If we go to the balance sheet on the left top, net debt increased with 300 million, I already mentioned, which translates into a leverage ratio of 1.8. Yeah, we target always to be below 2.5 and we're comfortably below that number. We already deleverage a little bit, of course, additional year ends because of the proceeds from the divestments that we have done. And then with that, a leverage of 1.8. On the equity side, we see, of course, the impact of the lower result, but also, again, the dividend that has been paid and the share buyback had impact and, yeah, a small step down in solvency, but still 56.1% earmarks a resilient company and also has the balance sheets to support the Thrive 2030 agenda in the coming years. The capital employed and the ROCE at the left bottom, ROCE has come down with 2% to 12.7%, partly because of the majority is explained by the lower profit from the P&L. And the other part is because of the increased capital employed, which is driven by the higher debt that we also just touched on. Bit more context on the net working capital, because there we see really an important step from 80 to 71 days, 563 million net working capital. Reflecting lower inventories, we improved our inventory position with 12 days to 82 days DIO, which is a good number. We had a three-day improvement on accounts receivable and a six-day lower accounts payable, which then compensates the other two parts because the lower payable position is a cash out, of course. And with that, on balance, a nine-day improvement. If we go into a deep dive a little bit on the 12 improvement days on the inventories, there are a few elements to mention. Roughly half of it is really hard work by many people in the organization, managing our stocks, managing our supply chain, and really understanding well what the forecast requires from our inventories. That is half of the progress. The other part, we were also supported with some tailwinds. Two days of Forex, for example, in our favor. The whole M&A mix and the impact on inventory was also another two days. And the inventory item, the non-cash 20 million correction that I've discussed earlier, translated into two working day improvements. So six days of one-offs, and the rest is really because of progress on inventory management, which was absolutely a good step in 2025. Then let's go to the exceptional costs. Three items in there totaling 84 million. First of all, operational excellence, 40.8 million. Yeah, we keep making our progressing on our efficiency programs and drive operational excellence into the organization. And with this 40.8 million, we target a yearly reduction of 50 million as a benefit. Then 28.9 million as an impact from the write-off on investments. The majority of this is explained by a Semicon innovation where we have been investing money, but we do not see the perspective on how to commercialize this. So it's a nice technology, but we have not sufficient confidence and perspective on commercialization, resulting in the write-off of 28.9 million. In 2024 the company has already decided to exit Russia, which is a lengthy and complex process. Again in 2025 we made progress on this and 14.5 million as a result in the exceptional cost for the Russian exits that we are working on. And with that, let's also take a little bit of a wider perspective into capital allocation. And you can see in this slide, we keep, of course, investing in a company in CapEx. We just discussed how it was for 2025 in M&A. We also touched on this and here you see over the past five years how we have been investing in the profitable growth agenda. Next to that, we value shareholder returns, and we think it's important. And you see here a perspective on the past five years where we allocated almost 700 million to the shareholders, normally in dividends, but in 2025 also complemented by a share buyback program. And that is a nice bridge to the proposed shareholder return for this year. As my last slide and Stefan already mentioned, we propose a dividend of €1.15 over the year. And we announce a share buyback program that will start tomorrow of again €75 million. And with that, 2025, we deliver a stable return to our shareholders. And with that, I would like to hand over back to Stefan to update you on our strategy.