Aalberts Indus Nv Ord

Good morning everybody. Welcome at our first half 2026 results presentation. It's great to see so many of you joining today's webcast. I'm happy to introduce our CEO, Stephane Simonetta, and our CFO, Frans den Houter. Stephane will kick off the presentation with some business highlights. This will be followed by Frans, who will share an update on our financial development. Stephane will then share an update on our strategy in action and provide an outlook for the remaining of the year 2026. After the presentation, we will give you the opportunity to engage directly with us in a Q&A session. Please note that after the presentation, both the presentation and the recording of today's webcast will be made available on our website. Please welcome Stephane to begin our presentation.

Thank you, Rutger. Let me start with our key messages. In the first half of the year, we report positive organic revenue growth in our three segments, and particularly in Semicon. We also report an improved EBITDA margin in our three segments. and you can see the strong contribution of all the portfolio update that we have done last year with our acquisition and our divestment which are all contributing positively to both growth and margins. And we continue to see positive and market dynamics based on our good position at Alberts aligned with four compelling global tailwinds being urbanization, technology acceleration, reshoring and decarbonization. So in a nutshell, we improve our performance, we are rebalancing our portfolio and we continue to see positive market momentum. Going into the numbers, we are reporting €1.5 billion revenue with an organic revenue growth of 5%. Our EBITDA margin is €225 million, equivalent to 14.4% of revenue. and another solid free cash flow with 89 million euro with the earning per share improving to 1.47. So improving organic revenue growth, improving EBITDA margin align with our outlook. Now going to the operational development, as I mentioned, we continue to be well positioned with these four global tailwinds. Urbanization, where we still see more and more people in the future that will need to live in residential, in commercial building and it's all about comfort and energy efficiency and that's where our portfolio is so relevant. AI adoption being used in more and more applications is driving a very high growth in semiconductor equipment and we are also well positioned into that trend. The reshoring trend continues You produce in Europe for Europe customers, you produce in North America for North America customers, and you produce in Asia for Asian customers. That's also our strategy, and our footprint is well aligned to this trend. And at the end, we still believe in the long-term energy efficiency driver across all the end markets and across all geographies. So we are well positioned with this long-term growth driver. Looking at the first half of the year, you see the breakdown of our revenue by segment, by geography, and you see also that we continue to be well aligned with the sustainable development goals. The key change compared to last year is that now you can see the weight of Semicon is also increasing, representing now 21% of our revenue. And you can see on the geographical side that Southeast Asia is now a bit bigger, especially after our acquisition of GBT. And you can see also in North America, we continue to make further progress, aligned with our long-term ambition to double our revenue in this part of the world. So, attractive market and we have a good and strong ability to achieve leadership position. Now giving you an overview of our performance by segment. In building, 2.9% organic growth, 13.5% EBITDA margin improvement compared to last year. In industry, 6.4% organic growth, very strong quarter, where here we are actually doing a bit better than the market, with 18.6% EBITDA margin, which is basically the best proof about all the action we took last year, continuing to invest in organic growth initiative, in operational excellence initiative. And in Semicon, We are very pleased to see an accelerated growth. Our Q2 has been very strong and as a result we are pleased to report 9.2% organic growth equivalent to 14.2% and now we see the strong dynamic in both our front-end but also back-end. So as I mentioned, improving in our three segments. Let's go now one by one with a bit more details by geography, product line and end market. So building first. As you can see, Q2 was actually a bit better, with 4.4% organic growth, and it's a mixed picture in the geography. Strong in the US, mixed in Europe, as on one hand we continue to see positive momentum in Europe, in Benelux, in the Nordics, and early sign of recovery in Germany. But on the other hand, France, UK, East Europe remain challenging. And Middle East is still a big uncertainty. In the first half, we couldn't simply ship anything to our customers, and we are looking closely about the situation. By technology, very strong momentum on the valve, very high order book in all our boiler room technologies and a more stable activity in our connection system. Link to the residential building activity, which we also see stable. And on the other hand, we continue to see very high order book in data center and commercial building. And talking about data center, let me highlight one example of the many things we do. You can see here a picture of our stainless steel air separator that is used actually in data center cooling solution. And this is our own IP, our own design. And what makes us win is actually our speed to market. We have been very fast to go from prototype to mass production to support the increased need of our customers. Going into industry, Very pleased about the result. I think our team have been doing a fantastic job. And you see that our organic growth is much higher than most of the industrial index. More than 7% organic growth in the second quarter, after already a first quarter. And this is a result of all our organic growth initiative, our geographical expansion, our business development initiative. And we see also here strong dynamics, continued strong dynamics in aerospace, In power generation, in defense, and more stable activity in automotive and general industry. And an example I would like to highlight is that we continue to invest in technology. I think we are pleased to now have put our second HIP vessel in Eindhoven, where here it's all about removing the defect of all the parts, Improving the material characteristics and with a hip vessel we are putting some parts up to 2000 bar in order to improve the material characteristics and the strength of all the components we treat. And the good news is we see more and more demand from our customer about this type of services. In Semicon, Very strong dynamic, very healthy order book. And it's actually a bit better than what we expected because we already saw a huge organic growth with more than double digit, 16% organic growth in the second quarter. We were more expecting that in the second half and it came earlier. So our team are really doing a great job to manage the volatility and the different dynamic of the end market. So strong in front hand. Strong also in back-end, GVT is already contributing positively to both organic growth and margins, and we continue to invest capacity Our greenfield factory in Dronten is in the final step and we are ready for the huge ramp up coming in 27 and beyond. Also adding capacity in Southeast Asia as we see more and more demand and requests from our customers. So great dynamic overall all driven by AI adoption in more and more applications. But innovation is also key, and I would like to highlight just one example with a robotic system we are doing for the Somicon industry with our pre-aligner, with our own design, our own technology in order to move wafer in a very accurate way. So just to highlight that innovation remains at the core of what we do, especially in this segment. And as a last point regarding our operational development, I'm also pleased to report that we continue to make further progress with our sustainable commitments. More than 70% of our revenue linked to sustainable development goals and also now making an additional progress in our scope 1 and scope 2 reduction with more than 6.6% reduction compared to last year. So on track with our sustainable commitment. So that's what I wanted to say regarding our operational development. So let me now hand it over to Frans to give you an update on our financial development. Frans?

Thank you, Stephane. And good morning, everybody. And happy to talk you through the first six months of this year and show you these four important KPIs. First of all, revenue. Our organic revenue growth improved with 5%. You see very clearly also in each segment we had nice step-ups. This all converted to an EBITDA margin of 14.4%, 225 million, which is 15 million up year on year. Also nice to see added value in a solid place, 65.5%. Net profit, 7 million up, bringing us 158 million in net results. Capital expenditure, you see a step down of more than 30 million. Basically, that's all phasing. We will see the reversal of this in the second half year as we have a bit of timing effects in our capital expenditure programs. So the full year guidance for CAPEX to be on around a level of last year, 190 million is still firmly in place. Free cash flow improved, nice to see, third year in a row, small step up in the mid-year free cash flow, bit more better balance in the year. Driven also, of course, supported by the lower CAPEX and predominantly the EBITDA, which is also supporting this number. Then the net working capital was a cash out. So all in all, solid performance in the first six months. If you go to revenue, we see nice contributions of our three acquisitions. We added Geoflow, Paolo and GVT to the portfolio and you see a 135 million step up in revenue. The divestments of Bruun and Maite Lee and the reduced shareholding in Cannes brought to the number 278 million negative correction for the divestments and also a negative impact from Forex, 21 million. Good to see the 5% organic revenue growth driving our absolute revenue with a plus of 68 million. So on the revenue side, a good set of numbers to go to the EBITDA. The acquisitions we just mentioned, 24.4 million. If you do the numbers, that's more than 18% EBITDA on the companies that we acquired in the past 12 months. On the divestments, a negative of more than 15 million. That is a little bit over 8%. So 18% on the acquisitions and 8% on the divested companies. Small forex, 2.8, a million effect. and then the organic EBITDA contribution was more than 9 million. So good to see there also being back to growth, but also a positive impact on the EBITDA from the hard work by our business teams on driving our improved revenue to a 9 million plus. 225 million, I repeat, 50 million up versus last year. On the free cash flow, of course, we see again the EBITDA and the CAPEX effects contributing positive. On the working capital, six months rolling, we lose 25 million year on year. Small plus in the other is mostly provisions and timings, almost 8 million. And then a nice 80.8 million, a step up of 30 million. The EPS, very important slide, $0.09 improvement in the first six months driven by the M&A portfolio. You see a plus 18 on the acquisitions and a minus $0.09 on the divestments. That comes, of course, with financing costs, a little bit of a tax impact, negative one-off element there from a divestment, a little bit of Forex impact, and then really nicely $0.05 improvements from our organic performance and $0.03 improvement for the share buyback program. and this year's share buyback program. We're halfway through the scheme, so still continuing that. And for now, we report a three cents improvement to 1.47 earnings per share. Then we go to the segment reporting. And Stephane already talked you through the revenue and the EBITDA effect. You see the CAPEX added here. Yeah, no surprise. The total CAPEX was down. You see that here as well in each segment. But that will reverse in the second half. Specifically in industry and Semicon, we will see a step up as we complete some of the divestment programs that we have ongoing. In the third column, we added holding eliminations last year. So you see also now again, 13.6 million reported, 3 million up versus last year. Some small effects in there. And I think all in all, growth and operational excellence driving improved profitability in the segments. Exceptional cost, yeah, we normally report this only at year end. We decided to also show this half year, improve transparency. A small number here for the first six months, three million, mainly related or fully related to our project to leave Russia. Some progress there in the first six months. We're still continuing in that. We hope to finalize it this year. and we already mentioned in the annual report that the total exceptional cost expected for this year will be around 25 million, mostly non-cash, and that guidance we still leave in place. So there's expected to be more to come in the second half. And then let's go to the balance sheet. A resilient company with, you see on the right top, equity and solvency in a good place. On the left top, the debt has gone up. Of course, we drive the M&A year on year. Our ratio is still 1.9, same as it was at year end. But yeah, versus 12 months ago, it went up because we increased debt to drive the M&A portfolio. at the left bottom you see our capital employed still same level as last year small step back on the road sheet but that's a 12 months rolling number so I think better to deep dive on that at full year again and yeah very nice to close off I think with the net working capital 62 million lower that's a two days reduction yeah it's inventories went down a little bit our receivables as well and we made a step up in in payables six days in total Also driving the growth of the company and that's really increased purchasing. So no payment stretch there. So strong balance sheet in supporting our strategy. And to give you a bit more insight how we are driving our strategy, I give back the floor back to Stephane to tell you all about strategy in action.

Thank you, Frans. So you have seen how did we perform in the first half of the year. Let's see now how did we thrive in the first half of the year. And as you know, 2026, it's only the second year of deploying our Thrive 2030 strategy. So you have seen how we continue to be well positioned with these four compelling global tailwinds. We continue to rebalance our portfolio across our three segments, across geography, across end market application, with our organic growth and our portfolio update. So let me give you a short update, as you can see on the right, with our four strategic priorities. And I'm pleased to report that actually we made good progress in our four strategic actions in the first half of the year. Driving organic growth, optimizing our portfolio, the Albert's Way being our operating model, and then further progress in our sustainable commitment. If we start with profitable growth, I think one of the key examples is the very strong momentum we see in data center, where our order book is increasing month after month, thanks to either our flow control and boiler room technologies, either with our engineering system and prefab solution, but also with our connection and piping system. And we are well positioned in both the primary loop and the secondary loop for the cooling system and solution of the data center. We see more than double-digit organic growth, and this is all for our building segment. Today it's only roughly 2% of our revenue, but we see a very good expansion in the coming months. And what makes us win today is our global offering and also our speed to market. We are quite good to go from prototype to mass production. And as you know here, speed is of the essence to support the accelerated growth, especially in North America. Another great example of driving organic growth is our geographical expansion we are doing in our industry segment. You see here four examples of either greenfield or capacity expansion in Netherlands, in Mexico, in France and in Hungary. This is driving organic growth and this is a result of all the investment we have done over the years and we see more and more demand for our services either with heat treatment or surface treatment, in aerospace, in power generation, in defense but also in automotive like in Mexico and Hungary. In Semicon, we are investing for the future. The growth is there. The semiconductor industry remains very strong. And I'm pleased to report that we are ready for the growth. Very soon we will start and ramp up operation in our Dronten factory in the Netherlands, where we expect the ramp up in 2027, mostly for lithography systems. And in Southeast Asia, we are adding capacity in Penang in one of our factories to support also the increased demand from the back-end customers. So preparing for the long-term growth. On the portfolio update, just a reminder that we are well on track. We did four transactions on the divestments, mostly in our building and industry segments, and we did four transactions on acquisitions in our building, industry and semi-con segments. and we will continue. We have an active funnel. We still have the same M&A criteria and the same priority also with our divestment program where we expect to make further progress in our building and industry segment. So continuing to rebalance our portfolio in order to have a creative EBITDA margin and organic growth update. One example of the Albert's way, it's the operational excellence that we continue to drive, making further progress also in our Albert's production system, and it's all about footprint optimization, about inventory optimization, driving production efficiencies in our factories, and also optimizing our asset utilization in order to have a better capex intensity. Most of the drivers today are within building and industry segments, but also Semicon is becoming more and more relevant as we see this huge growth, so an opportunity also to safeguard our margins, so continue to drive operational excellence. So now time to give you an outlook, and to be very simple, we are confirming our full year outlook. with improved organic growth EBITDA margin compared to last year. Because the market dynamics are similar with what we shared in our full year result, building remaining a mixed picture, Strong in US, more mix in Europe. Middle East remaining a key question mark. Are we going to be able to ship? But also what will be the indirect impact? And when you look at the product line, strong on valve, strong on hydronic solution, strong in data center and commercial building, and more stable in residential building and some geography. Industry, we expect similar trend in the second half, mostly driven by our own initiative, but also continued growth, aerospace, defense, power generation, and more stable activity in automotive and general industry. And in Semicon, We are actually satisfied to see actually a higher growth than expected. We expect similar organic growth as in the second quarter, in the second half of the year. And we continue to invest capacity in order to support the demand increase as we see more and more capacity requests from our customers in both front and back end. So based on this end market dynamic, we are pleased to reconfirm our full year outlook. So let's wrap up before opening the Q&A. So as you have seen, our first half of the year 2026, we are pleased to report improved organic growth and EBITDA margin in our three segments. We are entering the second half with positive momentum and a very healthy order book. So as a consequence, we are confident to deliver a full year outlook with improved organic growth and EBITDA margin compared to last year. You see that our portfolio rebalancing is well on track and all our integration plans are progressing well. And we continue to deploy our capital allocation according to our policy, first returning dividend to our shareholder, investing for our business to drive profitable organic growth, doing accretive acquisition and continuing our share buyback program. So at the end, I'm really pleased with the first half performance. and also I want to acknowledge the resilience and commitment from all the Albert's teams. You can see that first half shows the strength of our diversified portfolio and you can count on us to continue to discipline, to execute in a disciplined way our Thrive 2030 strategy. Thank you.

As we are starting the Q&A session, I'd like to remind everyone how to join the queue. For conference call participants, please press hashtag 5 on your phone to join. Those tuned in via the webcast, please submit your questions via the Q&A form. I would like now to give the word to Martijn ten Drijver from ABN AMRO for the first questions. Good morning, Martijn.

Good morning, Rutger, and also good morning to Stephane in France, of course. Good morning. I have three questions, and I'll take them one by one, please. What was the reason that the building division, despite 4.5% organic growth in Q2, saw a decline in EBITDA margin year on year and quarter on quarter? Can you elaborate a little bit on that development?

Maybe you want to ask us three questions and then we go one by one?

I'd like to go one by one, please.

So, a few comments. You are right, first of all, and I will mention three main reasons. First of all, we have had some challenges in the Middle East, where we simply could not ship any goods, so we have also more inventory, but our invoicing has been nil in the second quarter for the building segment. Second, I think as we mentioned, we continue to see a challenge in our connection system, especially in Europe, due to the low activity of the residential building. And then we have also some one-off costs, especially in this segment. So that's the three main reasons where it's a bit lower than expected in the second quarter.

And that one-off element, is that a material amount, low single-digit millions?

Yeah, low single digits. I would put a number like that on it.

Okay, thank you. I'll move on to my second question. Semicon obviously had a blowout Q2. You already mentioned that 16% organic growth, EBIT margin of close to 15. How should we think about H2 in 2027, given the positive statement from ASML on the front end and Basie on the back end? and also your own statements in the presentation, a further acceleration. Does that imply that we should think double digits in H2 and perhaps even high double digits in 2027?

I think you mean the second half of 26, right? Yeah, that would be my assumption.

The H1 2026 was almost 16% growth. You mentioned...

We know the statement from ASML and Basie. So how should we think about H2 2026 and 2027?

First of all, you are right. And let me confirm that indeed, the second quarter organic growth with 16% in our semi-con segment was higher than anticipated. and actually we can confirm that we expect a similar trend in the second half as in the second quarter. So a 15% organic growth continuation in the Semicon and we are also quite confident for 2027 but you should expect a second half organic growth similar to the second quarter for Semicon segment.

Martijn, are you still there? Because you had a third question. I think that we lost Martijn. But we have some good backups. So David Kerstens from Jefferies. Perhaps you can also ask some of your questions. Good morning, David. Good morning.

Good morning, gentlemen. I hope you're well. Two questions from my side, please. First, on the industry segment, you said momentum in the second half in line with the first half. and accelerating to 7% in the second quarter despite the impact of higher energy prices and despite the impact from the increasing pressure on the German OEM car industry. What is the impact of those two factors, the higher energy prices on the organic growth and how do you see the increasing pressure on the German auto industry impacting your industry segment growth? And also margins seem to have reached a new level following the divestment of brune at 20%. Is that a sustainable level going forward? And I may be a follow up on Semicon growth, very clear guidance. But I think in the fourth quarter you will have also GVT coming into the organic growth for two months. And from what I understand, GVT is growing more than 20% or 25%. and can you give an indication what the exact revenue contribution was of GVT in the first half of this year? Thank you very much.

Thank you, David. And let me do a first few couple of answers. So on the industry and the price increases that we saw in the first half, I think, first of all, price increases, be it from energy or from raw material increases, we are able to price that on really well to our customers. So pricing excellence is there. and I would say in the mix the total impact one to two percent on pricing with inflation in there is I think a good proxy. So you can see that the organic growth really driven from the volume is very strong and as we said we give no specific organic growth expectation for the second half but in the voice it's pretty clear we expect that to continue. and then on brun so you ask a little bit of guidance on the EBITDA levels for the second half of the year yeah of course the impact of brun is positive you can see that also in in the waterfalls we just showed you and we give those guidance overall over the whole portfolio so no specifics there but of course in the second half this will continue to have a positive impact and then on Semicon yeah very clearly GVT organic growth in GVT you can deduct from the Semicon numbers and and we acquired this company at a revenue level of 107 million yeah if you do the numbers now you see quite a significant step up and indeed We don't give guidance and expectations on an individual level, but from October onwards, GVT will be added to the organic growth calculation. And that, of course, will also help the semicon number there.

Thank you very much. And the 20% EBIT mark in industry in the second quarter, that is a new high for industry, right? Now the new sustainable level following the divestment of brood?

So we only give guidance on a company level, as you know. So I try to give you a bit of color where we are, and I think also from the voiceover of Stephane, clearly per segment on building an industry, we expect the second half to be continuing what we see in the first half in general terms. And then there's the guidance on a company level, and that's where we leave it for now.

Okay, thank you very much.

But I can understand the question.

Okay, thank you. I would like now to give Martijn den Drijver the opportunity to ask his third question, because I see that you are back in the queue. So hello, Martijn. Do you hear us? No, we lost him again. So now I'd like to give the word to Christophe Semois from KBC. Hello, good morning, Christophe.

Yes, good morning. Good morning. A few questions, if I may. First of all, just as an observation, looking at the organic revenue growth and the organic EBITDA evolution in your waterfall schemes, could you comment on the drop through which we can expect going forward? Because in the first year, it was well below 25%.

And then

In terms of the inventory, we typically see a seasonal uptake going from year end into first year half. But we've seen considerable growth in industry in the first year half. We also see considerable growth in Semicon. There have been already some optimizations in building. Could you detail maybe what the impact was of the Middle East on the days of inventory outstanding? And then finally, just on Semicon again, to make it clear, you expect similar growth in the second year half as you have seen in the second quarter. So that means that quarter on quarter, you're not expecting any significant uptake in growth in Semicon anymore. Thank you.

Thank you. Let me maybe start with the last one, and then I will let Franz answer your first two. So you are right, and I confirm that you should expect an organic growth in the second half of the year for the semi-con segment, aligned with our Q2, which was a bit more than 16%. So that's what I can confirm, knowing also in Q4, Like I said earlier, we will also add GVT in our organic growth reporting numbers.

Yes, and let me come back on your first question on the drop-through. And that's a good observation because normally you would expect a drop-through to be of a higher level. It's 9 million. We're happy with positive organic growth. We're happy with a positive EBITDA contribution organically, but it should be a bit higher. Basically three reasons. The holding elimination cost that went up with 3 million year on year. That's holding us back a little bit. And then we have, as Stephane in the introduction also shared, in building, we see lower profitability because connection systems, UK market holding us back, and also the Middle East. So those effects hold back a little bit the step up in organic, which we will work further on, of course, in the second half of the year. And then you also asked about the impact of the Middle East on inventory. That's also indeed one of the drivers there. I would say single-digit euros as an indication. So single-digit million euro impact on the inventory from Middle East. Thank you, Frans. Thank you.

Okay, if I may just follow up on building. You mentioned the UK situation. But you've recently took some action in DomCaster. What is the reason that the situation there remains difficult or is deteriorating? Could you provide some more color there?

It's more the market trend and especially in the residential building where we don't see, I think as per our guidance, a flattish market. And this is where also we have our biggest exposure with our connection system portfolio. So that's the two elements, market, Trend, Residential, and Product Line Exposure.

Okay, thank you very much.

Thank you, Christophe. I'd like to give the word to Luc van Beek from De Groof Peterkam. Good morning, Luc.

Good morning. Good morning. First of all, a question about buildings. Do you see any support of the higher energy prices and the efforts To reduce dependency on fossil fuels, so maybe more demand for heat pumps and things like that. And secondly, on buildings, how do you look at your portfolio? You mentioned a couple of challenging areas. Do you think that's something that's just cyclical and will improve over time? Or do you think some adjustment in the portfolio would be needed to optimally position for future growth?

Yes, I think we mentioned it, let me repeat, because we start to see, you could say finally, some early sign of recovery in Germany driven by higher demand of heat pumps. All the indexes that we see are quite positive. We don't see it yet in the short term, but this gives some hope that the situation will improve maybe in the second half, but also in 2027. But as you know, there is a usual disclaimer about the government incentive. What will the German government will do to continue to incentivize the demand for house and homeowner to go for heat pump? So start to improve. Let's see. But it's, I think, compared to the previous year, a bit more encouraging. And the second point, I will say it's a continuation. We are still, first of all, doing very well in our valve business, doing very well with a very strong order book in our ballroom situation, also doing very well in North America. And we continue to see market stable in residential in Europe, especially I think we talk about the French markets, the UK market, East Europe. And then we are challenged in terms of performance still in our connection system. So we still have the same strategy in terms of portfolio optimization. We are not done in both our acquisition and our divestment. And indeed, we still have further opportunity to optimize our portfolio in both building and industry segment also, where we still have opportunity to do further divestment.

Thank you. One further question, if I may, on automotive. We see some mixed signs on the one hand, obviously all the restructuring in German automotive, but also pickup and new car registrations. Do you see any signs of improvement after the stabilization that you already had?

Too early to say. We see the market still stable, and if yes, you can see some reports or some index showing 1-2% growth, but for us, we're still more a stable activity, but... Thank you.

Thank you, Luc. That's still a nice queue. And I would like to ask Ruben de Vos from Kepler Chevreux to also ask your questions. Good morning, Ruben.

Hello. Good morning. I have the first one regarding Semicon still. So that's helpful for the H2 guidance. But just thinking about your visibility, How far forward it could stretch maybe compared to what it was a year ago? I'm just thinking of the prior up cycle right during COVID where you were also talking about quite long visibility. I think it was 12 to 24 months at some point, but then we had quite a drastic turnaround at late 2024. So just wanted to hear a bit your sense of, yeah, The visibility you have, the firm commitments you basically get from your customers and how that might be different from the prior upcycle, let's say. Yeah, let's start with that one.

I think you are right. I think we also mentioned it. We have a very strong order book. and we have more and more demand for products and solutions and the good news is we see that not only in Europe with a very strong exposure to lithography but also now in Southeast Asia so both in front and back end and not only our order book is very high but we see more and more and many capacity requests coming from our customers. So we are doing a lot of scenarios. How could we do more? And that's not for the short term. I think we are quite confident for second half of 27. But what could we do more beyond 2027? And the good news is we are ready with our footprint expansion, with our new factory. We will be ready in 27 with our new factory in Dronten. We are adding capacity in Southeast Asia and Malaysia. So very promising, very strong. I think let's see how the second half will be and then will be the time to give a new outlook how we see 27.

Okay, thanks. Very helpful. And then a follow up on that actually. CapEx fell almost 30% year-over-year, but you still have those, you basically have the accelerating semi-con cycle, right, and then two capacity projects running in parallel. Is that CapEx basically just a matter of timing, or does it reflect maybe a structural shift towards serving the upcycle with less capital than the previous one? and you of course have the return capital employed at 12.5%. Basically for these new projects in Drompton and Malaysia, what is sort of the hurdle rate you're looking for here?

Yeah, so thanks for your question. So maybe a few elements. So first of all, the phasing within the year, and also explained in the intro, but let me repeat, we have 71 million of CAPEX in the first half year, which is relatively low. So we really expect a lot of additional CAPEX to materialize in the second half. And Dronte is a significant element there, where we are preparing the finalization of the project and the startup of our factory. Total guidance for this year also again repeating it but good to stress it out 190 million which is in line with previous year in indeed an area where we are spending more CapEx than we depreciate so we're investing in the company we saw that in building we keep seeing that in Semicon and we are still specifically in or we doing it in industry and specifically in Semicon for this year we see some significant numbers And we will keep on doing that because we will keep investing if we have good opportunities organically to drive new projects, we will keep investing. And I think the market confirms also that we have good opportunities to improve the company performance based on that. And then, of course, there's the Rochi, where indeed year on year, the 12.5%, it's a little bit lower. That's a rolling number, so we need to take a long perspective on that. Yeah, the guidance we gave, and then we go back to the capital markets today, is basically on Roichi in the longer run, where we want to be above 18% in 2030. So that's a number that's clearly in our minds on where we want to go. But that is Roichi guidance, not Rochi. I hope that helps.

Okay, thank you. yeah that's that's great and just the final smaller question um regarding the data center opportunity right so i think it comes up in building every quarter now um but we never had that really sized right so is it is it large enough now to move the divisional growth rate on its own um and how does the the margin um for that Thank you.

Let me repeat because actually we started to size it. Today we have disclosed that it's roughly 2% of revenue of our building segment. and we see an addressable market of 1.5 billion and we have an order book increasing and we expect double digit organic growth, especially in North America. So that's the first sizing we have done and count on us, I think in our full year result, to give you a bit more transparency. I can only tell you that we continue every month to win orders. And I'm really pleased with the work by our team, especially in North America. I mentioned a few examples in the presentation, and it can be on our stainless steel ball valve. It can be on an air separator, also stainless steel. And we do that with our own IP, our own design, and we are super good to ramp up. And I think that's what, as a data center owner, they are looking for. They look for global companies that can ramp up, that can provide quality. And I think this is where Albert's offering is quite unique. So promising, still a small number of our building segment, but I look forward to share more in our full year result presentation.

All right, that's great. Thank you very much for your comments.

Thank you, Ruben. I'd like to give the word to Rajesh Patki from Barclays. Good morning, Rajesh. Good morning.

Yes, good morning, all. I've got three questions, please, if you don't mind. You can go one by one. First one is on the Semicon business. Thanks for the top-line guidance for strong growth there. I guess the next question on that would be how should we be thinking about the incremental dollar of revenue dropping down to EBIT A? And just to follow up on that, you talked about capacity addition for this business. Once that is complete, will you be in a position to service a 20% to 30% demand CAGR over the next three years, or will you need to add more capacity? That's the first question. Thanks.

First question, as you know, we don't provide outlook by segment, right? So I think here we are pleased first to have improved a lot, I think in the first half compared to previous year, our EBITDA margin. I think it shows the strength of our portfolio, and we are focusing now to support the high demand from our customer, but also adding capacity, adding cost in our operations, in our capability to support the growth. And because, as I mentioned, we see this similar growth in the second half, but we are getting capacity requests without order from our customers. So I think our biggest customers have made it public. They expect 30% growth this year. They are asking their supplier to be ready for 30%. So work is in progress. To ensure we don't miss the upturn. But so far I can confirm that we have our capacity plan well aligned with the demand increase from our customers.

That's great.

The second question is on margins. The added value margin has grown more than 200 basis points in the first half, year over year. Can you talk about what has driven that and do you think that is a sustainable level going forward? and follow up on that as well. The EBITDA margin has grown only by 90 basis points. Is the difference between the two related to fixed cost investment in the Semicon business?

Thank you, good observation and indeed a good step up in our added value. In all honesty, there is also a positive contribution from our M&A that we have done, so the mix effect. Specifically, if you look at the divestments that we've done in the industry, they typically carried a lower added value. However, also a very good pricing discipline. So we saw price increases on raw materials, on energy, general cost increases, and we were able to price that on really well to our customers. I think as a guidance, we have a target to be around this level. So we want to sustain this number. So that's why we keep on also executing the pricing discipline and making sure we drive towards that number. And then I think on the EBITDA, I think your question was, I think more on the drop-through again. Can you repeat exactly the point you were asking?

I just meant the added value margin was up more than 200 basis points, but the EBITDA margin was up 90 basis points. The lower improvement in EBITDA margin, is that related to Thank you. And lastly, on M&A. Can you talk a bit about how your pipeline is looking? Are you focused on any specific regions or businesses? And do you see much opportunities on increasing the scope for your Semicon business? Thank you.

Let me confirm, we still have our three same priorities and to do further acquisition. I think we are well on track with our portfolio rebalancing, as you have seen also. And we still have the same priorities. So in building, looking at further expansion in North America and also Europe, from a portfolio optimization, especially in our commercial building where we see high exposure to building consuming more energies and exposed to key verticals like data center, healthcare, hospitality. So that's still the priority. And we have a good funnel to look at target. Also water treatment is actually one of our priority. Second industry is to continue what we have been doing. I think Paulo was a great example. So continue to expand in North America, but also looking in Europe in higher exposure to key verticals in order to rebalance our exposure between automotive and non-automotive. We have a good funnel in Europe for Bolton acquisitions. And in Semicon, after having done, of course, GVT, we are now fully focusing and I'm really pleased with the progress by our team to do the post-merger integration. And soon it will be time to go to the next one. And we already have a funnel to continue to look in Europe, in Southeast Asia, additional M&A to expand I think our portfolio and to become more and more an integrated module provider in order to support our customers in both the front end and the back end. And we see actually more and more synergies and more and more there is a need to have global supplier, global partner. and I think that is where we are well positioned. So here also we have a key funnel. I think in SOMICON you should not expect some move in 2026, but I think we still have some further acquisition to be done in the coming years.

Very clear. Thank you very much. Chase Coughlin from Van Lanschot Campen. Good morning, Chase.

Yes, good morning all. Thank you for taking my questions. I just have two. Firstly, on building, you know, previously we saw the stock levels that wholesalers and distributors were at relatively low points. Could you just speak to where those sit today? Was there any pre-buying effect in the second quarter? And how do you expect sort of inventories to progress throughout the course of the year? And then my second question would be on the Semicon plant, the Dronten plant, when she flagged as, yeah, sort of on track to ramp up in 2027. Could you give any indication on Thank you very much.

So let me start with the first, and I will let Frantz answer the second one. So the first one, I think what happened over the past year, right, with the famous destocking about wholesaler, we see that more as a new normal. I think the wholesaler have been used Thank you very much. Thank you very much.

Maybe on the depreciation, earlier we already indicated asset under construction, way over 200 million. Majority of that related to Dronte. I think that's at least two statements we made. Depreciation guidance should be around 6 million for this location.

Okay, perfect. Thank you.

Thank you, Chase. And now I would like to give a third attempt to Maarten to ask his third question we are waiting for now for quite a bit of time. So, Maarten.

Yes, I apologize. I had some issues. I want to come back to industry, please. If general industries, machine built and automotive was stable, and that represents roughly 75, 80% of your sales, how did you get to 7% organic growth in Q2? Can you elaborate a little bit on that? And my second question also on industry. Would it be fair to say that given the ramp up towards commissioning in Tronte and the GVT expansion, not only in Malaysia, that you're incurring OPEX in 2027, excuse me, in 2026 in preparation of taking those plans really into sales mode? In other words, are those OPEX investments not hampering your 2026 EBITDA margin already in Semicon?

So the first one, you are right, that what we see by stable is a market, right? But we are doing better than the market. I think that's where I'm really pleased with the work done by our team in the industry segment, all our business development plan, like the EAP expansion that we are doing. We see more demand. And let's not forget that aerospace, power gen and defense, are going quite quite well and we say i single digit organic growth we see that in in both part of the world and in automotive even the market is flattish we have actually had a better growth than the market and with the additional service and and our exposure to some new platform where customers can maybe move or have the same activity but when they move Sorry, could you repeat your comment, Martin?

Yeah, I asked whether the GVT expansions in Malaysia and the expansion in Dronthe, the two new plants, whether that was not already resulting in OPEX investments. Therefore, the EBITDA margin in Semicon is probably hampered a little bit in 2026. Yeah, we understood that.

Very clear. Indeed, we are investing there and we are planning to commission those plants. That will bring some OPEX. Most of it is CAPEX, of course, but there's always some. I think that is a minority and it's not a factor in our EBITDA numbers that you see. So it's not material. And the moment we will start to operate those sites, it will contribute in a positive way. So there is no leakage on EBITDA because of the OPEX on OPEX. Capex Investments, Noor in GVT, Noor in Dronten.

Okay. And my final question for you Frans, is there any components of working capital that we should be aware of in H2 in terms of how free cash flow in the second half will develop? Normally you have a release of working capital. Is there any element or development that we should take into account that could influence that normal seasonality?

No, I think not other than what we saw in the first half. So in the ramp up, there is an impact because your payables and receivables and also inventory increases. So there is in that sense a bit of a negative, but we saw that in six months. How that exactly will evolve in the second half, that's difficult to forecast. But if that further enlarges, it's a positive thing because that's a result of further growth. and that's what we want and then it's and so there are no other one of elements that you should take into account on working capital i think if we look at cash flow there's clearly the capex that you should not extrapolate there's a phasing element and so that will be a significant switch in in the second half understood many things okay thank you thank you

It's good to see that we also have some questions actually coming from the Q&A forum. And one I would like to address to Frans. And that is whether you could comment a little bit on your full year outlook for holding cost.

Yeah, that's a good question indeed. So we saw 13 million in the first six months, so 3 million up. Basically, the run rate we saw in the first six months, you take that as an assumption for the second half, so basically doubling it. But there's always the question, what are the one-offs that we will encounter? Last year, we had some gains from divestments, some book gains. The year before that we had some income on claims. So that's always a bit the unknown. But yeah, as a basic assumption, I would just keep H2 in line with the first half.

Thank you. There were some other questions submitted, but I think they've been answered already during the call. So I think that we are concluding today's webcast. I'd like to thank everybody to join today again. Later today, we will make the presentation and also the recording of today's webcast available on the website. Thank you so much. Thank you. Enjoy your day.