Andritz Ag Graz Akt

Ladies and gentlemen, welcome to the UNRID's full year 2025 results conference and live webcast. I'm Sergan, the course call operator. I would like to remind you that all participants will be in listen-only mode and the conference is being recorded. The presentation will be followed by a Q&A session. If you would like to ask a question from the webinar, you may click the Q&A button on the left side of your screen and then click the raise your hand button. If you are connected via phone, please press star followed by 1 on your telephone keypad. For operator assistance, please press operator assistance button on the bottom left side on your screen or star 0 on your telephone keypad. At this time, it's my pleasure to hand over to Matthias Eifenberger, Head of Investor Relations. Please go ahead, sir.

Good morning and a warm welcome from Andritz out of Vienna this morning. After preliminary headline results a few weeks ago, it's my pleasure to welcome you to the final full year earnings call and webcast. I have the pleasure to present to you our CEO Dr. Joachim Schönbeck and our CEO Vanessa Helving. The earnings presentation will be structured as usual. We will present the CEO highlights, followed by the financial performance, followed by the performance across the business areas, and then ending up with guidance. We'll also conduct a Q&A session, and please register with your full name. And now I'd like to pass on to Dr. Joachim Schönberg for his elaborations.

Thank you, Matthias. Good morning, everybody. Thank you for being with us this morning on the disclosure, not the disclosure, but on the details of our last year's results. If we look back to the year 2025, we can say the world has been cautious on investments but rich in geopolitical surprises. For hundreds, this means we go back to what we can do best, giving out our clear priorities and executing with a high discipline. And I'm very proud how well our team achieved what has been asked to do and the dedication they put into it to achieve the results we finally came up with. The trust of our customers helped us through this difficult year, and we are happy that they showed the confidence with the many orders they placed with us. We definitely came back to growth in order intake. We had a strong order intake in the full financial year, strongly driven by hydropower but also by pulp and paper. We saw a slight decline in environment and energy where I would say investment decisions were pending and postponed. but structurally we believe demand is okay. And in metals we definitely are faced with broader structural issues in the industries in automotive as well as in the steel and metals industries where investment was not at highest priority for the last year. Our revenue declined a bit, but due to our disciplined execution and cost discipline we could keep the comparable EBITDA margin stable. Very, very happy that this turned out very well. We compensated significant FX effect translation and through the improved order execution on the one side, and the timely implemented capacity reductions, we could protect the bottom line very well. We even saw margin progress in hydropower as well as in metals. All in all, we are confident to propose to the General Assembly to increase the dividend to 2.5%. 7 euro per share up from 2.6 euro per share in the previous year and the payout ratio increases from 52% last year to 58% in this year. So that's all well in line to what we have promised to you, how we want to manage that part. If we have a look to the Q4 in more detail, The order intake reached the 2 billion. That's down from the previous year. Revenue at a high, 2.3 billion euro, up 3% from the previous year. Order backlog reached record high in hundreds history, 10.5 billion Euro at year end, never had that, 7% up from last year. EBITDA margin in the Q in the fourth quarter. at 9.7% and at 228 million Euro. The reported EBITDA was at 8.5%, 200 million and the gap is basically all costs for restructurings that have been done and that are prepared for this year. Net income is at 6.6% and €154 million. If we have a look to the full year order intake, a bit shy of €9 billion with €8.9 up 8%. Revenue €7.9 billion, so a very positive book-to-bill ratio. Order backlog, as I said, 10.5%, and the comparable EBITDA margin for the full year was at 8.9%, exactly where it has been last year, €698 million. The reported EBITDA is down at 8.2%, down from 8.6% at €648 million. Here the gap is the cost mainly for the restructuring that we have done in the year 25 and that we will do in the year 26. Net income is with 5.8 at a good stable level, 457 million Euro. The project activity, as you can see, is on a considerably high level, now five quarters in a row, with more than 2 billion euro order intake in a quarter. And with the project, I would say, pushovers from Q4 into Q1, we expect also that trend not to break. If we go into the details of the business areas, you see a nice increase in order intake. If we look on a quarter-to-quarter base, we increased to previous year in all three quarters, but in the last quarter where we dropped by 21%, that was driven by a very large order we booked for hydro business, the project in the first quarter of 2024. So that's, I would say, more a one-time effect. If we look to the business areas, we can see a very nice increase in pulp and paper and hydropower, 20% up for pulp and paper and 16% up for hydropower, while in metals it's down by 13% for the full year, and environment and energy. basically 3 percent down. So I would say, pipe and paper, very happy to have – to be successful on the – let's say this wave of investments we saw in China for backward integrating The paper industry, in total we receive five orders for complete pulp mills in China. Very huge success showing that we are really well positioned in the market itself, but also technological wise. In hydropower, strong demand on renewable energy, but also our new offerings around grid stability, energy storage and turbo generators is picking up. So I would say overall it's the energy demand and in particular the demand in electrical energy is really supporting us. In matters, the investment climate is down and basically we saw the third year in a row where the market declined and that is true for the steel as well as for the automotive industry. Environment and energy, we saw interest in the market for these new green technologies for the green transition of industry, namely green hydrogen and carbon capture, but we did not see investment decisions in the markets where we are in, namely Europe and North America. regulatory uncertainties playing definitely one role. High energy prices still in Western Europe or in large parts of Western Europe play another role. But I would say on the positive side, we had received many orders for engineering studies, both for carbon capture and green hydrogen. So we see there is a demand Industry is preparing and we, UNREDS, we seem to be a trusted partner for these endeavours. Looking to the revenue, we see a decline. compared with the previous year of 5% here and here and you can see that we had a decline in the first three quarters and we had basically the turning point in the fourth quarter where we exceeded the revenue of the previous year's quarter So also here we believe that this trend will continue in the upcoming year because the good order intake and the significant backlog we have will definitely help us there. You could see in the fourth quarter, all through business areas, pulp and paper, metals and hydropower increased their revenue compared with the previous year only environment and energy dropped a bit and over the full year only hydropower could increase. could increase the revenue. That's basically in line what I've told you in the previous calls that we had together that in the hydropower, the large order intake that we have takes a bit more time than in other businesses to turn into revenue. But as we execute disciplined and in time, this revenue will come. And you see this trend starting now and it will It will prevail. One word to the, I would say, significant impact on the revenue side is definitely the FX translation, which was 85 million euro in the fourth quarter and 222 million for the full year. Significant impact. strong Euro and we will see what this impact will be for this year. The backlog, as I said, record high, 10.5 billion at year end, and you can also see that the historical balance between pulp and paper and hydropower is now largely driven towards hydropower, now 43%, almost 50% of our entire backlog from hydropower, and therefore... we can drive the revenues out of that very effectively over time. Looking to the EBITDA, comparable EBITDA margin remains stable. The absolute EBITDA went down by 6% along with the revenue. I would say we are quite happy that despite the downturn we could keep the margin. Main drivers for that is timely implemented and executed capacity reductions in the area where needed, namely in metals and in pulp and paper. but also significant improvements in project execution and there I can specifically name metals on the one side and hydropower on the other side. We really made a strong improvement on that discipline. I would say looking a bit forward, while pipe and paper, some residual capacity adjustments need to be done, but it's mainly right sized for what we see to come. in metals. We will continue the restructuring this year because we see the markets will demand it and we also see that the business is really capable of delivering good operational results at the same time when they are restructuring. So very happy to see that. Turning to ESG, we have finished our ESG program, which was targeted for 2025, I would say with a very satisfactory result. We reached all but two goals and these two goals I would say we missed only slightly. The one we missed was this share of green products. We wanted to have 50% of our revenue based on that. We ended up with 47%. Still it's a record high level 400 and I believe for sure targeting in the right direction. And we significantly increase the share of women in the workforce. You also see it in this panel. We are not, but in total we are not on one third. So we wanted to be at 20%, we ended up with 17% at the end of 2025. Maybe the target was a bit too ambitious, but that is the way it is. So we see we are moving in the right direction, and as it was, Well executed this program, we gave way to a new ESG program for environment, social and governance. We want to enable the green transition and we still believe there is demand and we can cope with that. We want to support people to grow, people in hundreds and outside hundreds, and we want to govern with integrity. These are our commitments for the new ESG program. We have targets laid out for 2030 on the environment, the social and the governance. I don't want to go through with you in all the details. No major differences to what we have done before. Maybe one main difference is that on the greenhouse gas emissions, we got certified and approved by SBTI. So our reduction targets on greenhouse gas emissions is now fully supporting the Paris climate targets. That is good. On the social, we focus on excellent frequency rate. because that everybody returns safe from working in hundreds is still one of our key priorities. So we want to go below one ambitious targets, but I believe we have the tools in hand to do that. We're focusing on women in leadership positions. We want to move above 15% and we want to keep the voluntary return over below 4%. Very important employee engagement index. We want to stay there above 75%. We believe in a people's business like we are doing, that's very important to deliver to our customers what they expect when they engage with hundreds. Under governance, we put a focus on supply chain, as you rightly expect, that we ourselves will govern in full compliance and so therefore we have moved the targets into the supply chain. Supplier social audits, supplier pre-qualification, supplier rating on sustainability by third parties. So that's the area we are focusing on. And the excellent work of our teams in the ESG has also been recognized by the outside world and the top rating agencies all rated us up with very nice results. We moved to the science-based target, so I believe we have made up the gap that has been communicated to us in the previous years. So I would say we are on a good track there. We had a very successful year in 2025 regarding M&A. We had made six major acquisitions. I think they all have been communicated individually anyhow. two acquisitions that completed our portfolio. The one was the Solico group in metals basically being fundamental closing of the gap between the metals processing and the Schuller part of our metals business. We have a portfolio completion done on the paper side. We acquired Arcelli in Italy. They are strong in supporting our business on the tissue machines, but they are particularly strong on the winder technology. That was one of the key technologies we were missing. On decarbonization, we acquired LDX Solutions in the United States. That is an engineering company offering clean air technology. ideal addition to our product portfolio, technology wise, but also excellent addition for our strategy to increase our local content in the United States and we are now well positioned there to support to support the industry for their environmental investments. In China, we acquired Sun Cheng. It's a technology provider for induction heating technology. They are specialized in induction heating for cold strip. So ideally a combination with our matrix processing group. We know them already from several projects we have done together with them inside and outside China and so therefore We believe it's an excellent acquisition and can really give us a more complete offering to the customers in an area where they really are looking for a single source solution from us. On the customer service, we have made two acquisitions, both acquired from Babcock and Wilcox in the United States. The one is Diamond Power, a soup lower company for boiler cleaning, and the other is a material handling company taking care of the ash that is coming out of the boilers. Both are very good. We know the companies very well. Diamond, they are, I think, 130, 140 years old. It's an ideal fit, not only that we know them from the industry, but also our culture-wise. So we are very confident our six acquisitions will fully deliver what we expect from the business plans that we have concluded. Service business reached another record level and that is very exciting, especially if we know about the decline we have on the paper side, in the paper business and with the paper machine utilization around the globe. Not above 60%, also the service revenues are down, so we are very happy that we could increase revenue once more and keep the growth stable in that very important area. We did not only reach all-time high in the service revenue, we also increased the relative share to 44%, so you see we are moving closer and closer. to the 50% we all wish that could be. Having said that, I hand over to Vanessa to learn about the financial performance. Thank you.

Thank you, Joachim. Also from my side, a warm welcome. And based on the good overview that Johan just gave, I would now like to walk you through the financial details of our results from 25. But let me first start with some key highlights from the CFO perspective. So, UNREITs have generated a strong operating cash flow again. We closed with 653 million for 25, which is 3% above last year. Throughout the year we have used our cash to expand spending on M&A significantly as you have seen to 329 million outflow. And despite that, we continue a very strong financial position. We have actively reduced our net liquidity by almost 200 million and 25 while generating quite remarkable cash flow in the fourth quarter of almost 340 million euro. And that way we managed to increase our net liquidity sequentially. Therefore, We follow our focused capital allocation by proposing higher dividends to the AGM this year. With €2.70 per share, this is not only representing an attractive dividend yield, but also implying a significant increase in dividend payout. We will discuss our performance on the operating networking capital and return on our IC in more detail in a minute. But to give you a quick preview already here, with an increased management focus on working capital, we have improved our networking capital as percentage of sales sequentially and leading to a strong cash inflow in Q4. Our return on invested capital decreased in accordance with our M&A activities. However, it remains strong on an industry level and still substantially above our average cost of capital. Turning now to our usual EBITDA to net income bridge for 2025. Our EBITDA margin remained relatively stable at 10.4%, while absolute EBITDA decreased by 9% to 823 million euro, which is in line with a decrease in revenues in the course of the year. Depreciation remained flat year on year, resulting in a reported EBITDA of 648 billion euro. Reported EBITDA margins slightly declined year-on-year to 8.2%, which is based on higher net NOI, so non-operating items, summing up to 50 million in 2025, compared to 30 million in the previous year, 24. IVIR-3 amortization increased to 65 million, naturally driven by our enhanced M&A delivery. The amortization of Xerium, you might remember a large acquisition done in 2018, amounted to 18 million in the fiscal year and was now fully amortized in Q4-25. Our recent acquisitions, on the other hand, have been adding €25 million to annual PPA amortization. In the financial results, you see a big swing from minus €15 million in 2024 to a positive €16 million in 2025. This comes basically from decreased interest income by 26 million based on a lower interest rate in combination with a reduced gross liquidity that you see. And furthermore, we have seen the negative impact of 24 million from the deconsolidation of Otorio already in 2024. Hope you remember that. In the meantime, we have sold Otorio to Amis and received a consideration in Amis equity. We have now divested our Amis shares, which resulted in a positive net effect of 24. 36 million Euro that we have gained from the transaction in the course of 25. And just to recall, Anrids has sold its stake in Notorio to Armis, which is a leading supplier of cyber exposure management and security. For Anrids, cybersecurity is certainly a key element of our business, but it is not part of our core activities. And that way, with this sale, we will continue a close cooperation with Armis and participate from their high innovative services. And here to complete the picture of the net income elements, the tax rate slightly increased by 0.5 percentage points to 23.7%, which is basically reflecting also a one-off effect that we have already reported for 2024. Summing up, the decline in net income to 457 million and 25 is caused by the revenue and consequential EBITDA decline, as well as higher non-operating items. Our net profit margins, however, as already mentioned by Joachim, remain solid at 5.8%. So on the next slide, let me walk you through the free cash flow calculation for 2025 and start again with the EBITDA at 823 million. Our enhanced focus on working capital management has paid off. And therefore outflows for networking capital are quite decent for 25 compared to an impact that we had with minus 115 million in the previous year. Cash outflows from income taxes remain broadly flat year on year and changes in provisions and others were slightly higher with minus 17 million compared to last year. generally driven by personal related provisions for pensions and severance payments. Also to mention, provisions on projects remain stable here. Adding up the items mentioned, it leads to a slightly improved cash flow from operating activities of €653 million for 2025. So deducting higher capex of 270 million, we arrive at a free cash flow of 383 million, which is slightly below the 399 from the previous year. As Joachim reported, our M&A delivery exceeded recent year's levels with the number of deals that we have signed. Our M&A capex significantly increased to 344 million compared to only 76 million and 24. And this spend was well covered and digested by our free cash flow in 2025. Now let's turn to the networking capital development. Here we focus on the quarterly development of the operating networking capital. As you can see, we are pretty lean overall with current run rates of some 12% to 13% of revenue. And just to recall once more, for a project engineering company like Andritz, the operating net working capital consists of the typical trade working capital as well as contract assets and liabilities and prepayments related to our POC orders. What you can take from that picture is that operating networking capital has increased somewhat over the last few quarters coming from a level three years ago where we received several large projects with respective prepayments. A structural increase in operating networking capital also results from the growth in service business where generally higher inventory levels are required. The good news is that after the increase throughout the last year, the operating net working capital has been well reduced in Q4 25, after the all time high that we saw in Q3. And important, this also includes working capital from acquisitions. It has been reduced in absolute terms, but also in percentage of sales. 12% is now in line with the average of the last few quarters again, with the increased management focus on networking capital in general and the full consolidation of the acquired revenues in the course of this year, so 26, we will continue, of course, to monitor that KPI very closely. To discuss the sequential improvement in Q4 in more detail, let me now turn to the next slide. As you already saw, we have split the operating networking capital into its two components. Straight working capital on the upper blue part of the chart and contract assets and liabilities with advanced payments. And those are displayed in gray at the bottom of the chart, reflecting our project cash flows, which are rather typical for us as a project engineering company. On the prepayment side, we have seen a constant improvement over the last few quarters, which created additional contract liabilities, of course. On trade working capital, we achieved a sequential improvement in Q4. This reflects stronger management focus and also normal seasonality. Typically, we see a buildup in the first three quarters, followed by a release in Q4. And as mentioned on the last calls, on the Q3 call, the full year increase was largely acquisition driven. Revenue from acquired businesses are included only on pro rata basis, while the assets are fully consolidated from the first day of consolidation. And this creates a temporary distortion, especially in relative terms. One structural factor is also shaping working capital and sales conversion. We actually see a shift from large-scale projects to more mid-sized and smaller orders. And as a result, we have less POC business and more completed contract orders. This leads to lower overtime revenues, but also to a higher work in progress that needs to be managed here in the working capital. So here I would now like to turn your attention to more details on the development of our operating cash flows in 25. Operating cash flow amounted to strong 339 million in Q4, supported by the working capital improvement mentioned before. For the full year, operating cash flow also improved year on year to more than 650 million, which is a reasonable achievement considering the absolute EBITDA decrease. Also here our increased focus on operating networking capital is becoming visible. In general, we are still seeing a usual volatility in operating cash flows on a quarterly basis, which is very typical in the project business, of course. Important to emphasize here again is the overall high level of operating cash flow that we are maintaining compared to the historical level. This is driven by higher top line levels, better margin, and also improved cash conversion. It becomes evident when we look at the right side of this chart showing not only the absolute level of operating cash flows for each year, but also the three year rolling average that you can see in light gray. And two to three years actually reflect the average execution cycle of our capital business. On this slide, we turn our focus from generating cash to allocating it properly. And I'm very happy to present here again our dividend proposal for the fiscal year 2025 to you. subject, of course, to our 26th Annual General Meeting. To highlight again, €2.70 per share proposed does not only represent the fifth consecutive dividend increase, but also a significant increase in our payout ratio to 58%, coming from 52% last year. And this is in line with our progressive dividend policy and with our 50 to 60% target corridor for the payout ratio. And despite declining earnings per share, we are here proposing to exactly balance it through higher dividends once more. Since last year, we are providing transparency on our capital allocation and we can now add 2025 which somewhat alters the historic average that we have presented. In the last years, and especially in 25, we have increased capital allocation significantly. And this actually while keeping a strong financial position and sufficient net liquidity. Our cash was allocated especially to the M&A side where we have used 25 to close a much higher number of value accretive deals compared to previous years. And we have talked about the dividend increase just a minute ago. But also on the conventional CapEx front, we have increased our investment in service, in green solutions, in digitalization, and also in R&D. And we are planning to provide more disclosure on this going forward in the course of the year. Our capital allocation strategy remains balanced across capex, dividends, and M&A, and we also might also place some opportunistic share buybacks as a more flexible option on top of this. And we can say capital allocation at hundreds remains internally funded. Our aggregate cash outflows in the last six years have been more than covered by operating cash flow generation. And in my opinion, that's a very sound picture. So let me now turn from capital allocation to our strong financial position and walk you through the changes in our net liquidity profile. Over the last three years, we have steadily decreased our liquid funds by termination of bonds and promissory notes. We still maintain a strong financial position, especially when including our 500 million revolving credit facility. Our net liquidity declined further from 905 million at the end of 2024 713 million by the end of 25. We saw lower net liquidity levels also in the course of the year. So remember due to the outflow of the purchase price for acquisitions and also for our annual dividend payment in Q2. Net liquidity has been restored again towards year end and that was driven by the strong cashflow generation in the fourth quarter. So as mentioned FX also had a negative effect and this also liquidity of course with roughly 50 million which is translation effect only and before you ask yes of course we do hedging on all our projects where relevant. 700 million net liquidity and more headroom from our revolver, from our RCF, UnRitz continues to hold a strong financial position with sufficient liquidity as part of our DNA. Following these details on capital allocation and net liquidity, let me provide you a quick update here on our RIC performance. To recall, RIC is our main metric monitoring the value generation over the long run. It has been increasing since 2020 and stands as a substantial margin at our cost of capital. So the RIC has started to decline somewhat in the first half of 2025 and now also for the full year to just under 18%. This is in fact still an industry leading level considering it is post-tax and including all restructuring costs. On the one hand, this is obviously driven by the organic EBITDA decline. But more importantly, this is because of our recent acquisitions, with purchase price allocation leading to higher goodwill and intangibles, of course. Nevertheless, UNRID's balance sheet ratio of goodwill and intangible is still very low in industry comparison, and our equity position remains strong. And also important to keep in mind that EBITDA from these acquisitions is only included on a pro-rata basis. If we would adjust the acquisitions for 25 entirely, our RIC would remain close to 20%. However, our aim is to restore our RIC in the future, of course. At the end of my presentation, let me quickly summarize the development of our headline financials again. So our main leading indicators are still pointing upwards. Order intake increased notably in 25 by plus 8% year on year, resulting in a book-to-bill ratio of 1.13. Order backlog stands on a record level for the year end. The notable increase in order backlog in the last year to this record level already secures material part of the next year's revenue generation. As a consequence of high revenue recognition from the completion of larger orders in 24, our revenue trajectory is still pointing downwards. But we have reached the inflection point as consistently addressed in the course of last year. And so we returned to revenue growth and the fourth quarter despite the significant FX headwinds as outlined by Joachim before. And even though not stated in our official disclosure, I would like to proudly mention here that we reached a historical high monthly revenue volume in December only. of one billion, indicating the capability of our global organization and management. Along with lower revenues and restructuring expenses from capacity adjustments and pulp and paper and metals, our reported EBITDA decreased, but we were able to maintain our comparable EBITDA and net profit margins stable on high level. Operating networking capital and RIC remain in high focus going forward. The development this year was obviously impacted by the many acquisitions we had. And our enhanced capital allocation and higher M&A delivery support value creation and have reduced our net liquidity position, as mentioned. And as mentioned, FX has been significantly hard-winned, especially from March. and also the tariffs have still not impacted our key end markets so far. We will provide further details on that later in the presentation. And for now, I thank you for your kind attention, and Joachim will now focus on the key developments across the business areas.

Very well. Vanessa, thank you very much for this detailed overview. Now let's move to the business areas. So, pipe and paper market recovered on the pulp side, still flat on the paper side. We were happy to really benefit from the move in China as the paper industry to backward integrate into pulp mills. As mentioned before we had been awarded five complete pulp mills in China and we see this trend continuing in the year. So we are in Asia on that side of the world we are quite quite optimistic on the investment climate and we usually also see that the Chinese industry is then moving ahead. With the good order intake and the good references we have, we believe that we also will take our fair share of the market. We have a strong momentum last year in power boilers. Basically these are not only boilers, these are small power plants, sludge incineration in Germany with special focus on phosphorus recovery. Here we have a special technology and we took 100% of the market in Germany. These were three small power plants. very, very good achievement of our teams. We also saw momentum on the pipe side picking up in the U.S. So smaller modernization started and we might see more to come on the for sure investment environment and climate in U.S. is definitely also a bit influenced by some of the political decisions taken. On the revenue side, we believe that we've gone through the valley and we can grow that. The good order intake of 25 will now go into revenue this year. And we are happy to see that although steep decline in revenue, that through the timely capacity reductions we have done in pulp and paper, we could keep the margin on a nice level. We dropped from 11 to 10.8. So I would say a rather small drop on a very good level. Also, of course, supported. by the strong increase of the service share now up to 59% of the total revenue. In matters, I can tell you the industry is in a difficult situation. However, I can be really proud of our teams, how they coped with it. on the few projects that have been on the market, they have positioned themselves very well. So we got the trust from our customers and that is true for Asian market as well for the European and the North American market. We went through significant restructuring. taking out around 500 employees in the past year, closing several locations in Germany, so really protecting the bottom line through some cost discipline, and very happy to report that it's not only an increased profitability for the fifth consecutive year, but with a 6.1% EBITDA margin the first time in our profitability target for 2027. So we are very proud how that develops in difficult times. Hydropower, I would say we are also very proud, very good development, but here we for sure have support from a market, strong demand. I would say worldwide on renewable energy, but also our new offerings for grid stability, energy storage and turbo generators support that strong growth. We could increase the order intake for the full year by 16%, could grow the revenue by 12% and on the EBITDA margin we moved up from 6.1 to 6.8%, so very close to the targets we have set. We see this trend continuing. Environment and energy. Here we, I would say, faced a surprisingly subdued market, which frankly we did not expect. And this is why we also were not, I would say, in time with our capacity adjustments that we have done on the green transition side. A lot of interest. We received many orders for engineering studies, but no orders for equipment and plant deliveries. Clean air developed very well, both in Europe and in North America. And in our separation and pumps business, we saw many projects delayed. A lot of exposure to the mining business and also here uncertainty on the green transition definitely have played a role. So at the end of that, our margin dropped from 11.1%. to 10.6% still on a high level, still within our target margin, but here you can see the effect that we had been prepared for growth and started with our capacity adjustments a bit too late. What is to say on tariffs and FX? I would say we can confirm no direct impact on the tariffs yet on anything we should report and can report. So we will, of course, monitor that. We cannot allocate the indirect effects, so what I would say no direct impact on the FX translation we have mentioned several times. Strong impact for the year, increasing over the year. Now let's see how the Euro develops in this year, but you see that's basically, that's a nominal loss of 222 million Euro in revenue, but at the end it's not a loss, not a single equipment has been supplied less and not a single customer has not been served, so that's a pure financial effect. 2026, what can we expect? I would say project activity, we expect to stay on that level. We would expect from that a revenue growth and for sure it's supported by growth and service, which we believe we can continue, but also our record backlog will help us. We will further improve profitability and restructuring is ongoing in environment and energy and in metals. So we got for this year a revenue between 8.0 and 8.3 billion euro and a comparable EBITDA margin between 8.7% and 9.1%. The mid-term targets basically have been confirmed and in looking to the time no need to repeat that. Instead, give me two minutes here. You see we have now environment and energy in the target margin range. We have our, let's say, child of special attention, the metals business area for the first time in the target area. We believe the trend that you see here on improving profitability will continue. This is why we continue the restructuring. And you see the pulp and paper and hydropower, they are only 0.2 percentage points out of the range. So we are confident that we can grow in that direction. We have learned that even in difficult markets we can do that. And if there is anything left you want to know, we have not told you so far. Now we are ready for questions and answers. Thank you very much.

Ladies and gentlemen, we'll now begin the question and answer session. Anyone who wishes to ask a question from the webinar may click the June A button on the left side of the screen and then click the raise your hand button. If you are connected via phone, please press star 4 by 1 on your telephone keypad. You will hear a tone to confirm that you have entered the queue. If you wish to remove yourself from the question queue, you may press the lower your hand button from the webinar or press star and 2 on your telephone. Anyone with a question may queue up now. You have the first question coming from Akash Gupta from JPMorgan. Please go ahead.

Yes, hi. Good morning, and thanks for your time. I have a few, and I'll ask one at a time. My first one is on growth. So when I look at your guidance, 8 to 8.3 billion, maybe if you can help me with what is the implied organic growth we have in this corridor. We starting point is 7.9. I think you may be having some exchange rate headwinds already embedded given we saw higher exchange rates headwinds in second half. And also you may have some carryover effect of M&A. So first one is on what is implied organic growth in 2026 guidance. And then the second part of the first question is that If we then take the midpoint of 8.15, what level of organic growth would you need in 2027 in order to hit at least 9 billion Euro revenue target for next year?

Akash, thank you very much for your question. We have not in detail provided our planning and our guidance, what is organic and what is not organic. I would say as a general rule, we also know from the history that we grow 50% organic and 50% through M&A. That is still true. I would say with the good acquisitions we made, we might expect now next year a bit more on the M&A side, but I would say only that's more marginal. We are working and we are preparing ourselves to continue the growth. On the service side, as we did even in the last difficult year, so we expect further growth. We had an annual track record of 7%. We believe that we can return to that. And on the capital side, we... do not have the growth exactly in our hand because we also depend on the market there. So this is why we gave out that guidance, and I hope this clarifies a bit what you were asking.

Thank you. And second one is on automotive in metals as well as environment and energy. So yesterday European Commission adopted industrial accelerator act where proposals to increase demand for low carbon European made technologies and products. I wanted to ask if you are seeing any optimism on project activity on the back of these regulatory changes in Europe? Or if not, then how long it might take before we see any activity on your end?

For sure, this will help our customers and usually if it helps our customers, it at the end helps us. As I have explained, we see both in automotive and in metals, we see now three years in a row a shrinking market, which means that Basically, the industry is overrunning the equipment a bit. You know, it's a traditional business. If you run it 24-7, there is a lot of wear. You come to end of lifetime. You can always push it a bit. So, from being in these industries long enough, We are quite confident that the market will increase and we are very confident that we will take our fair share. And for sure, these legal acts from Europe will definitely help and protect a bit the European automotive and also maybe the European steel industry. I'm not aware of that act in detail.

Thank you. And last one is on capex in hydropower business. So when we look at your competitors, especially in broader power generation market, almost every company is increasing quite substantial capacity. So can you talk about what sort of capex need do you anticipate in 2026 in hydropower, and would that have any impact on total capex for the year?

The majority of our manufacturing capex for 2026 will be for hydro. There is a strong demand on the turbine side as well as on the generator side. But it will not exceed our natural cash flow. So we will invest and I think it's wise to invest because For you, as you know, it's still the cheapest way to spend our money into growth.

And the overall capex level last year, it was around 200 million. Do we expect to increase or stable in 2026?

Increase.

Thank you.

The next question comes from Stan Weier from UBS. Please go ahead.

Yeah, good morning. Thanks for taking my questions. Hope you're well. The first one is just wanting to go through the order pipeline because you said it's stable on a high level. You know, as usual, I'm particularly curious on pulp and paper because you also alluded to China.

Yeah, what's the question? We cannot hear you.

I think we lost Sven Weyer.

Could you turn to the next question, please? Yes, of course. The next question comes from Patrick Steiner from OdoBHF. Please go ahead.

Good morning. Patrick Steiner speaking. Three questions from my side. The first is a bit of a follow-up on a previous question, basically. Could you provide a bit of a bridge regarding your revenue guidance to 26 and 27? I mean, what are the major drivers between behind the less dynamic expected revenue development to 26 including M&A effects and the expected better dynamic from 26 to 27. Thank you.

It is driven by the strong order increase we saw in pipe and paper and in hydropower. on the one side and from the project structure itself, pulp and paper will turn more quickly into revenue, so what we see in order intake in 25, We will see a significant amount of that already in revenue in 26, while on hydropower it takes a bit longer, so it's a build-up more over time, and this is why the outlook is a bit cautious. As we have reported, we had a decline in other intake in metals and environment and energy. and this is why we do not see particular growth there. This is why the outlook is a bit cautious. This is also why we go to capacity adjustments in metals and in environment and energy to protect the profitability.

Okay, thank you very much. It's very helpful. Second question. You had a very good slide on operating networking capital as percentage of revenue. Could you elaborate a bit how this is going to look like in 2026 after your acquisitions are fully included for one full year basically, and also how this would change if you received a larger project?

Well, the acquisitions are already fully fledged on the networking capital as you can see here. It's only the ratio that is a bit blurred due to the pro rata revenue recognition of the acquisitions done in 25. It's just that their percentage might decrease further on. So if we would receive a larger project, we usually see this in combination with larger prepayments, which would of course have a positive impact on the overall networking capital.

Okay, thanks a lot. Last one for now. Capital allocation has been not been fully funded by operating cash flow in the last two years. Should we expect this to change in 2026 and 2027 or are you comfortable increasing net debt if favourable opportunities to deploy capital occur?

Well, so we will continue our capital allocation or quite aggressive path on this. So it depends a bit, of course, on the opportunities that we see from M&A. And of course, we will not just shoot on targets that are not very accretive to hundreds overall. But furthermore, As mentioned, capex spend will continue, even slightly increased. And yes, I mean, the dividends, of course, we will keep also on a path here. So we actually see that we continue the picture that you saw the last two years or three years to continue. really spend the capital or spending capital to further manage our net liquidity well. But still keep, of course, substance for hundreds as this is part of our DNA and necessary for dealing with large projects and an engineering company like we are.

Thank you very much. So if we think about capex maybe slightly increasing, dividends increasing, and in terms of M&A and share buybacks more of an opportunistic stance for 2026, this would make sense, right?

Yeah, exactly.

Okay, perfect. Thank you much. I'll get back in line.

Thank you. Next question comes from Lars from Kleff from Deutsche Bank. Please go ahead.

Thank you very much. Good morning. Maybe quickly starting with a follow-up question to Akash. I understood that with regards to the reported revenue guidance, you're not willing to split between organic and inorganic, but would it be fair to assume that included in your revenue guidance, you are calculating with an FX headwinds that is comparable to last year?

That's what we do.

Okay, perfect. And then you already mentioned our order intake rather driven by mid-sized orders at this stage. If I remember correctly, on the Q3 call, you said there are no major project negotiations in public paper currently, but in hydro. Is that still the case, or could we hope for a large greenfield order in public paper this year?

You know, the hope never dies. As I told you, what we can be pretty certain of is that this backward integration in the Chinese paper industry continues, and as that continues, it also impacts a potential greenfield, new pulp mill in South America, because that's one of the major markets. So we cannot see these two topics independent, and I would say, as it is said in many areas of this world, inshallah.

Perfect. Thank you. And then quickly staying with the order intake or the backlog at records or at least close to record levels. Nice book to build in 25. We could also hope for a book to build exceeding one again for 26 if momentum continues. Or am I wrong here?

If momentum continues, you are right.

Yeah. Okay. Perfect. And then maybe ending with... You also said on one of the recent calls that you're seeing increasing pricing pressure from pipe and paper peers. I guess that also has not changed much recently, given that everyone is fighting for juicy projects.

Yes, you are right on that.

Perfect.

Thank you very much.

I'll go back into the queue.

Thank you. The next question comes from Daniel Line from Erste Group. Please go ahead. Yeah, hi, good morning.

Thanks for letting me on as well. I would maybe elaborate a little bit on the adjustments plans now in 26. How far are we actually in the metals division? What would you expect to come in the ENT division? Maybe overall, how much should we include in our models for adjustments?

So we expect in total, I believe we are talking about 700-800 people. And this is already provisions to some extent? To some, but not fully.

So for the NOI in 2025, about 50% were accrued for this year. So we will cover a lot with what we have digested already in 25, maybe some more to come.

How long would you expect to have this impact the figures? done in the first half already or will we have to expect some impacts in the second half year as well?

Second half year as well. It's, you know, seven, eight hundred people you don't do overnight. It's a process you need to negotiate and depending on which country majority is Germany, takes long time and so I would expect we need the year to work through that. But as you could see from the previous year, we can do this in parallel to do good order execution. So from that point of view, I think we are on a good track.

Okay and then maybe also again slightly focusing on 27 and what kind of revenue, what kind of order intake or backlog would you expect roughly that is required in order to reach 9 billion in revenues next year?

I have not made the calculation but we do not step back from the targets we have for

So, anything that would need to happen on the way there, something sizable, or like, I don't know, big contract in paper or in order to make the guidance happen.

We would definitely support, but we do not believe that we need a large greenfield mill in South America to reach our targets.

Okay, perfect.

Thanks a lot.

As a reminder, for questions from the webinar, please click the Q&A button on the left side of the screen and then click the raise your hand button. If you are connected via phone, please press star 4 by 1 on the telephone keypad. We now have Sven Weier again from UBS. Please go ahead.

Yeah, morning. I hope you can hear me now. Yeah, perfect. Ah, finally. Thank you. So, going back to the hydro business, I was wondering if you could go through the turbocharger business a bit more in detail, how sizable it is, what kind of growth rate you see, So any color on the turbocharger business you can give would be appreciated. That's the first one. Thank you.

So turbo generator business is a, I would say, medium-sized three-digit million business. Growth rates double-digit at the moment. We do not, of course, we do not know how we... how this will continue, that's a business we are selling to energy to engineering companies in the energy business and not to the end customer. So we have, I would say, it's a bit of a different feeling for the end market. Prognosis is good for the years to come. So currently that's the volume we can report. This is why it definitely supports the hydro business.

And when you say three digits, is it like in the low three digits or get a feeling?

It's in the mid three digits.

Okay. But you're not selling to the turbine makers directly, but basically to those guys who install the whole?

No, no, to the turbine. We sell to the turbine makers, but not to the users, not to the utilities. Oh, okay. Yeah.

And those are kind of the known names like Siemens Energy and GE?

Potentially.

Okay. Thank you. And then, I mean, the pipeline in hydro in general, I guess, probably also looks pretty promising based on what you said for 2026.

Yes, I can only confirm that, yes.

And then you said you had some spillover into Q2 from Q4, if I understood you correctly, on orders. Does it mean that you think Q1 order should be higher than Q4 overall because of that spillover?

Could be. We definitely had some decisions that have been pushed over the year end. We cannot tell you whether they will be pushed across the next quarter, but there are feasible projects that have been pushed. And so I would say we are not, with what we see on the project side, we are not pessimistic.

But it won't be lower. Let's put it this way. Thank you for... Yes. We can agree on that. Good. The final question I had was just on the M&A because obviously you kindly provided the revenue details, the money you paid. So I can calculate the kind of EV sales multiple. But I was just wondering if there's also kind of an average... profitability across those targets that you bought? Are we talking like average 10% margin?

I don't have the figure in my head, but in average higher than what you see from hundreds in total.

Okay, that makes sense.

Thank you. That's it for me. Thank you. Thank you. There are no more questions at this time. I would now like to turn the conference back over to Matthias Feifenberger.

Okay, thanks a lot. Thanks for the presentations of the executive board and the extended interest in UNREADS and in this call. And we wish you a good day and see you next time.

Thanks a lot.