Buzzi S.p.A.

Good afternoon, this is the Coruscall conference operator. Welcome and thank you for joining the BOOTSI SPA full year 2025 results conference call. As a reminder, all participants are in listen-only mode. After the presentation, there will be an opportunity to ask questions. Should anyone need assistance during the conference call, they may signal an operator by pressing star and zero on their telephone. At this time, I would like to turn the conference over to Mr. Pietro Buzzi, CEO of Buzzi SBA. Mr. Buzzi, you have the floor.

Thank you, and good afternoon, everyone. Welcome to our conference call, and again, thanks for participating. We do publish a presentation, which I will follow, at least in part, if not in full, that is available on our website, so I will mainly refer to the ZEPT and to the PACE. So starting from the first page, we have a brief summary of what has been the 125 for Buzzi overall a good year, although not as good as the two last ones, so with some decline in profitability, but still showing, let's say, very strong results in that. and very significant cash flow generation. So as you can see from here, we had a slight improvement in our revenues, in our net sales. This was already disclosed at the beginning of February with an impact, positive favorable impact coming from the changes in scope. MBDA is falling somewhat short of last year, minus 3% approximately, which would be actually minus 6 like for like. So the overall impact, again, of the Forex and the scope changes was favorable. The BDA margin, we are losing some profitability, which is mainly due to the fact that the additions, let's say, to the perimeter, to the scope, at least initially for the first year, they are coming in with an average profitability which is below the one of the, let's call it, traditional scope perimeter, and to the fact that or the strongest country for us, U.S. decline somewhat. CapEx are, let's say, similar to last year in terms of industrial CapEx, a little bit lower than last year, considering also the equity investment, and we can, let's say, enter into that later in the presentation. My financial position also with the help of some lower CapEx improved significantly and cash flow generation was very close to last year regardless of the slight decline in profitability. We have, we propose to the next AGM to keep the dividend unchanged versus last year. But, and we will comment later, the show this remuneration in 2026 is anyway going up significantly thanks to the buyback program which is underway. As you can see on the following page, let's say page two, one of the key feature, let's say, of 2025, was the scope in this, which included an asset swap, if you wish, which occurred in Italy, and it's a bordering country, in particular Austria, where we sold, let's say, the Fanna plant in the northwest part is in the province for those that are a little more acquainted with the Italian geography. And AlphaChem is the owner. It's part of the group. This group which acquired the is composed basically of three parts. One and a half, let's say, plant in Austria, which is quite strong, let's say, locally. The Slovenian plant where we used to have already a presence since some years, which is a very strong plant just on the other side of the Italian border. And some Italian assets that now includes also So quite a strong and integrated group in the northeast of Italy. And then we expanded our presence internationally between starting from March, April until December. It's an ongoing process. If you wish, by acquiring initially over, let's say, 30% stake in a listed company, in the Emirates named Gulf Cement Company, which is a single plant, let's say, entity, but with a quite significant capacity, very powerful in terms of machinery, let's say, and equipment. Then through the OPA, the ownership was increased, and later on, December and also Something more will follow during this year. We achieve a gradual improvement in our ownership, which at the end of the year is around 66%. Indirectly, it's a little less because we participate to this investment together with a partner in a specific entity called PC Mina. All this, we see as 90% and the partner as 10%. economic ownership is a little less than the 66% at the year end. On the following page, you'll see the bridge, let's call it, of the turnover, 2025 turnover by regions, so by main regions where we operate. And Italy had a fairly clear, I would say, if we do not consider excluding the scope impact, actually, our volume and pricing, volume remained basically the same, prices slightly better, so this was quite a strong support in Italy coming from the infrastructure project of the so-called resilience plan of the European funds allocated to Italy. Central Europe was kind of mixed, so there was a recovering volume, but prices suffered mainly in Germany, and this translated into, let's say, an offset of the progress that we achieved in the volume in our cement state shipments. Eastern Europe, I would say good results overall. There was a negative impact coming from the consolidation, from the sale of the Ukrainian assets. So this was the first year without Ukraine included in the scope of consolidation. But the remaining countries... overall performed well in particularly Poland and Czech Republic, and we did have also some benefits from the strengthening of the local currencies, both Zloty, Czech krona, and also the ruble in Russia. U.S. was, in a sense, the worst performer also due to the size. So every time that something, let's say, negative happens to U.S. in our case, the impact on our figures, on our numbers is inevitably more significant. What happened in U.S., we had a minor, let's say, decline in volumes. more in red mix actually than in cement. Pricing fairly stable, but no improvement. If we look at the average, there were some improvements in specific geographic areas, but some declines in other red mix prices were a bit under pressure, particularly in Texas, and the overall result was a little negative. And the dollar lost some of its value, affecting the translation. So 70 million negative on our net sales figure. Brazil is coming in for the full year for the first time. So the comparison... The first two bars refers to the last quarter of 2024. But the impact is, I would say, overall positive, with the exception of some unfavorable variances coming from the forex. And it's bringing in additionally, let's say, 2,065 million of turnover. Same reasoning, more or less, for the UAE, which is smaller in terms of turnover and is also including – it's been included starting from May, so about six, seven months. And this brings us to the 4.5 approximately level up to – 4.3 billion of last year that you see in the bar at the right side of the slide. And then if we move to the main, let's call it operating figure for the result, which is the which is the BDA. What you can see from here is, again, fairly simple, if you wish. So volumes, good trend, favorable variance of about 44 million, but a number of let's call it negative items or unfavorable items associated, first of all, with the price environment, which was overall slightly negative besides what happened in the U.S., particularly, I would say, in Germany. So Germany and U.S. were the two countries where we suffer, actually Germany more than U.S., we suffer the most in terms of pricing trend. Variable cost, not so much coming from energy, some fuel or electrical power. It was more related to raw material and other variable cost, for example, logistic ones. And fixed cost, typically labor, maintenance costs. were also going up, difficult to fully, let's say, control versus the volume and price trend. Other mixed costs also showing an unfavorable figure. CO2 basically not an issue last year because we still, This refers, of course, to the countries under the ETS scheme. And in those countries, we basically remain in line with the free allowances received with a few exceptions. And a minor, let's call it, negative variance versus the previous year affects overall negative, mainly in the U.S., And then scope changes that refer to, okay, on the positive side, Brazil and Emirates on the negative to Ukraine, rebalancing somehow the negative impact that you see on the center of the slide by 61 million. So overall, the decline is what we mentioned at the beginning. and this is the in brief, let's say, the explanation. Then more explanation can be given, of course, country by country or region by region where things did not behave, let's say, or happen in any consistent way. We had, of course, some regions more affected by cost, some regions more affected by prices, et cetera. In the following page is the cash generation and capital allocation. You see that the cash flow, as I was mentioning at the beginning, remained very, very close to last year besides the EBITDA decline. slightly lower than last year. Not really because of our decision to decrease them. It was actually somehow related to the execution phase, which on more complex projects usually takes more than you might budget or on your afternoon, say, translating the design in the engineering phase into implementation and execution usually takes longer. And remuneration of the shareholder was quite good, I would say. You can see the split between, let's say, dividend and buyback. We have an ongoing... program which started at the end of February which has been more or less so far 50% completed and we should get to the end we will see of course it depends on the liquidity of the shares on the daily trading but normally with this kind of trend we should be able to complete it by the end of May or maybe even earlier. We will see. It's well advanced and likely to be completed in maybe two more months. There is also a proposal, proposed resolution taken today by the board directors to cancel the shares that will be in portfolio, let's say in treasury at the time of the AGM. So we don't know exactly the number, but anyway, both the share that were already in treasury at year end and the ones that are being bought currently will be canceled, which is also, I think, overall a positive news for the shareholders. Just to give a little more colors on the different geographic areas, we move to page seven. always a very strong contributor to our results. But last year, they were not able to keep up with the same level of profitability that we enjoyed in 2024. Basically, in terms of ABDA margin, as you can see, we went back to the level of 2023, which is anyway, very good one, both in absolute terms and also in relative terms when you compare to other peers operating in the U.S. But the trend was slightly negative. We faced difficult volume part of the year. Then in the second part, there was a, sorry, but not full, so we were unable, let's say, to close with a favorable volume trend, minus 2.2, I think, very similar to the overall market trend. And ready-mix volumes suffer a little bit more in terms of shipment deliveries and also pricing. Ready-mix, as you know, as you recall, in our case, they're mainly in the Texas area, which was one of the I would say more difficult in terms of market environment also due to the presence of, the significant presence of both incumbent and new importers into the, along the coast from Houston to Corpus Christi, etc. We have a structure in the U.S., a cost structure, which is compared to our countries, skewed in a sense of more significant weight of the fixed cost. So when you lose also slightly volumes, this has an immediate impact on our profitability, which was the main case. Cost not really going down, volumes going down a bit, pricing not moving, or more, let's say, moving unfavorable than the opposite, and this was the result. On top, we had the negative foreign exchange impact. following the devaluation of the dollar, which on the EBITDA means around 26 million, not a small amount. Moving to Italy, which is the following page, more favorable situation. Support, as I was mentioning before, mainly from the PNRR programs. to public building infrastructure project which also are typically enjoying a greater cement intensity versus either residential or residential renovation. So there is a decline in cement volume, but this is a direct consequence of the scope changes that we were commenting at the beginning. Meanwhile, for example, Our randomness concrete subsidiary has been able to increase volume by around 6%. Pricing performance was okay. Some improvements. And our cost, both fuel and power, were definitely under control. So we did not suffer any significant, let's call it, energy inflation during 2025. The changes in scope on DBDA means 13.14, let's say about 14 million of the impact. which is not very different from what you see in the BDA variance. Actually, we are showing a plus 3.5% like for life, so it was fully offset by the good trend or the stable trend. In Central Europe, which means for us basically mostly Germany plus Luxembourg and ready mix operation in the Netherlands. Quite a different trend if we look at Germany versus Benelux. Unfortunately, Germany has a much greater weight on the area because the performance of Luxembourg and the Netherlands was growing, was okay, was improving. Meanwhile, Germany did improve some. So there was a rebound in the volumes, but there was no rebound. Actually, there was a decline in prices, which started already on the previous year. Actually, we entered 2025 approximately. The exit price, let's say, of 2024 was already lower, and we were unable to recover or to change it significantly or just slightly to 2025. And this was the major impact on the – I mean, the major reason for the EBITDA decline together with – a cost situation, a cost environment, which was not favorable or quite different from what we experienced in Italy. We suffer mainly on the energy cost, on the power cost, not so much on the fuel, but yes, on power. This is also somehow related to an edging which was made in advance, so to cover the purchase for 2025, which at the end was not, if you wish, successful in the sense that maybe it was bad timing, but of course, I mean, the reason behind edging is not to pick the right timing. Just in this year, I mean, in 2026, we will see a totally different trend because the market condition has changed in the meantime. So the change, the favorable change in Benelux was able to help somehow the region, but Germany clearly is waging waiting significantly on this specific portion of the business. And the performance in terms of the BDA certainly was poor overall. I mean, there are reasons behind it, which explains it, but it was overall quite poor. In Eastern Europe, on the following page, we are, I think, continue to be on a steady, let's say, profitability outcome. Of course, these businesses are not as big and as significant, so their contribution, let's say, to the overall profitability of the company is not as significant as Germany or US but the good news is that there is a positive momentum both in Poland and in Czech Republic which should also continue in the coming year so strong cement volume dynamics in Poland was clearly I mean, it was quite meaningful. Czechia is smaller but also stable. Our already mixed business in Czechia performed very well. We lost some of the volumes in Russia. That's the only area where I think also after some years of war, let's say, the impression is that the economy is starting to feel more, let's say, than in the previous year, and also probably in Russia the prospects for the next year are also quite difficult or more difficult than in other Eastern European countries. Ukraine is not part of the region anymore, but its contribution was not very significant anyway. So if we exclude Russia, there is a margin expansion and driven by higher production and also, in this case, lower energy cost, which did not, as opposed to Germany, that we commented before. Exchange rates also favorable. If you wish, not minor, let's say, contribution, but anyway, a favorable contribution. and the impact of the consolidation of Ukraine was, I would say, totally absorbed, and also the negative contribution from Russia was totally absorbed by the strong performance of Poland and the Czech Republic. Brazil, which is a newcomer, let's say, first year, in the group, so let's say that we perform a comparison here because last year actually only the last quarter was included in our figures. We had a volume trend which was favorable. to 3% up again compared to the full year 2024. Price trend in local currency also favorable. This translated into, I would say, significant margin expansion. Our costs also were particularly energy costs are lower than the previous year. So as a first, let's say, year of full operation in the group, I think we can be fairly happy with the overall performance. There is room to do better in the coming year if the external condition and also the industry trend will go in a certain direction, which is possible. And the only negative factor, the only negative is the change rate, the trend, but not so impactful, I mean, not so dramatic on the overall figure. minus 5 on net sales and minus 1.5 million on the BDA. And currently, actually, if we look at the, of course, it's not necessarily a trend that will continue for the entire year 2026, but what we're seeing lately is actually a more stable real versus the euro trend. since the beginning of 2026. So if the local currency, if the Chinese local currency will perform better, which is what we expect, also in Europe we should have, we should have, it should be reflected, I mean, also in Europe terms in likely absence of negative effects impact in the coming, in the current year. Mexico is not part, as you know, of the group. It's not line by line consolidated, but it remains a very important part in terms of, let's call it, also management involvement, but in particular in terms of net result contributed to the other company. The Mexican performance was mixed, but overall still very good. We suffer a bit on the turnover on the BDA in Europe terms, but when we clean up, let's say, from the from the foreign exchange impact, actually both figures were better than last year. And this is one of the few countries together with the European country, Poland and Czechia, that was able to achieve an improvement in the BDA margin, which is already very, very high, as you can see. I would say that we cannot complain about the maximum performance. The only complaint is that it cannot be included in the line-by-line consolidation, but for the rest, very strong performance coming from this country. Some comments on how we see 2020, also in the light of what has happened so far and and also recent change in the macroeconomic environment. I mean, we are, or we were, let's say, but we still are pretty confident that we can continue to perform fairly well during the year. There are uncertainties. There are certainly geopolitical tension. potential inflation pressure for how long this difficult situation in the Middle East will last and will affect particularly the energy cost but not only because there are anyway also impacts on the demand in part directly like in the Emirates or indirectly like in Europe or probably less in the U.S. and Brazil. But anyway, so by major, let's say, regions like we showed before, U.S., the expectation are for the association is, let's say, forecasting some additional decline in demand, probably in the range of 2%, 3% or something similar to what happened in the previous year, but of course, if this happens, it would be already the three, four, five, six, four, at least fourth year in a row of decline versus the previous peak, which was not historical peak, but anyway, the previous peak of the cycle in 2022. And this is something that clearly is not, let's say, helping the overall price environment because there's, in most of the regions of the state, some capacity available. And, as I said before, due to our cost structure, to lose some volumes – almost immediately translates into a margin construction because the fixed costs are quite high in the area. On the other hand, we have seen also the beginning of the year, particularly during the month of February, demand quite resilient. so it's true that on one side you have residential weakening but there are definitely in the non-residential portion of the demand or yes some kind of projects that are going well that require cement and concrete typically just to mention one which is of course very much on the on the fashionable data centers construction, but this is actually happening. It's happening and it's relatively intense in terms of cement consumption. So again, a mixed environment with the non-residential segment and also the infrastructure probably supported. and maybe even better than what the association has been forecasting for the full year. So we will see. There are, of course, other factors to be considered in the U.S., which we mentioned in the comments of the press release that are a bit disturbing or potentially disturbing let's say the price environment, but okay, a situation or a scenario which is, I would say, moderately optimistic about the outcome for the U.S. in the coming, in the current year. Italy should be a year very similar to the previous one as long as we continue to have demand coming from the infrastructure plan let's say or the European funds there are good chances that we can more or less repeat last year results and also Italy is more likely probably than the U.S. to be able to improve somewhat the prices. There are underlying reasons related to the introduction of the CBAMA, the scarcity or the lesser availability of CO2 allowances, which also translate into a higher cost. So there's probably more room than in the U.S. on the pricing side to be a favorable variance. Central Europe, we should see some rebound. We are forecasting some rebound in Germany. The federal infrastructure plan should start to have some impact also on cement demand. We are coming from a year where the The prices, as we were commenting before, remain fairly weak, so there is – there should be a possibility also couple being within, let's say, the ETS system, similarly to the – to Italy, there should be a possibility to recover something on the pricing side. This means also additional cost for CO2, but more chances, let's say, to gain something on the price level. Eastern Europe, with the exception of Russia, which is probably entering a much more difficult phase than what we faced in the last two, three years, We don't see a reason why Poland and Czechia should be worse than the previous year. These are also countries where, as opposed to Germany and Italy, we are operating at a very high capacity utilization level, and so we are definitely optimizing, I would say, our profitability thanks to their capacity utilization, which is, we think, there to stay. In Brazil, we mentioned it already, we see a positive trend overall, particularly in the Northeast, which has been growing in terms of volume and prices more than the Southeast. But if there is an easing of the monetary policy, which today represents significant constraints for the construction investment with interest rates at 15 or 16%. The number of projects that have been on hold so far should start and clearly this has even more impact in the Southeast where most of the consumption and population actually are because because this is where the bulk of the cement consumption of the country is located. In the Emirates, we will certainly suffer from lower cement consumption until at least, well, we will see until something different happens, but that's the country with more direct impact coming from the from the local, let's say, turmoil or conflicts going on. But on the other hand, we have a number of initiative of projects that have been put in place last year and will continue this year to improve the profitability. So even with the lower cement volume, we may be able to do something better in terms of the BDA. Basically, okay, it's not affecting directly our numbers, but we're seeing, we were, let's say, more positive versus last year in terms of volume trend, and profitability should remain at a very, very high level. This for the, let's say, the top line and the volume prices scenario. The risk or the, let's call it, the uncertainties are definitely more related to the cost side, where it is true that many components or many items have been contracted for a certain number of months. We have certainly some stability for a good part of the year, but it is clear that on the energy cost in particular, the current situation is creating an environment of rising cost. driven by renew inflation like we mentioned here. So there is volatility, but volatility mainly on the high side in the sense of more expensive side. This is difficult to let's say assess completely right now. We ran some number. taking, of course, a kind of sensitivity analysis. And there is certainly an impact that we don't know if we will be able to offset with a price improvement or not. It will mainly depend on the specific situation and demand, let's say, a competitive environment, what is the attitude of the competitors, et cetera. The idea is, of course, to try our best to preserve the margins, but how much we will be able to do that and how much actually the cost environment will be unfavorable is difficult to assess. In general, we do see a significant risk of rising cost, in particular the energy component, in the coming months. The effects for an exchange is same, very difficult to somehow forecast. Initially in our budget, we introduced an exchange rate for the dollar, which was definitely weaker than than the 2025 average. Is this going to be true? Is that going to be true? We don't know. So far, again, not as much as we forecasted, but this could change in the coming months and can certainly move, let's say, the variance from positive to negative if the dollar will weaken more than what we expected or more than what is showing up to now. So overall, again, reviewing our numbers, doing our budget in a quick way, we think that it will be quite difficult or actually as of now impossible to achieve an EBTA greater than in 2025. So our view right now is to as we wrote, let's say, marginally declined by how much is difficult to tell right now. But I think the message which is important to give today is that looking at all the variables, looking at all the available information as of now, this is the best let's say, forecast that we can make, and we think that is a correct one, which means that, okay, our stability will not improve in 2025, but if it is a marginal decline like we expect, it will remain anyway at a very good level. And we would be happy, of course, to... to change this view as soon as possible. But this, realistically speaking, will likely to occur if it does occur only after more months of actual results available. So with, say, one quarter or maybe let's call it six months behind us, we will have definitely a clearer view on the full outlook. But I think it's important to give this message today, which has been, I mean, analyzed in a very deep and serious way with, again, running several sensitivity analyses that are giving us this kind of outcome, at least at the current stage. So I think I spoke for almost one hour, so probably in order not to be tedious and to make the conference a little more interactive, I would let you read the following pages by yourself. and open now, let's say, the Q&A session. Thank you for listening.

Thank you. This is the Chorus Call Conference operator. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. To remove yourself from the question queue, please press star and two. Please pick up the receiver when asking questions. Anyone who has a question may press star N1 at this time. First question is from Ben Radamartin, Goldman Sachs.

Hi, good afternoon, Pietro. Thank you very much for the questions today. Let's have three, please. My first one was on CapEx. I know in the release you spoke to an increase planned in 2026 versus 25 and some of the buckets in terms of decarbonisation and and production, would you be able to talk to what kind of quantum you expect for 2026 CapEx and then in terms of the medium term CapEx expectations as well? And then the second would just be on the guidance assumptions and very much understand how uncertain the backdrop is currently and very helpful to kind of talk through some of those impacts but if we look at that moderate decline or slight decline in EBITDA expected, is it right to assume that there's limited energy impacts so far in that number or I guess what kind of pressure do you see embedded within that forecast? And then finally just be another quick one on energy. When would you expect to see, I guess, pressure come through the cost basis at more of a second half story at the moment? Thank you.

Yes. I mean, the last two questions are, I think, related. And the answer, yes, is that definitely we have, as usual, I mean, we have in front of us about – I mean, starting from January more than today, because already three months have passed, but usually five, six months of fairly stable energy costs, or at least as we budgeted, because of, let's call it, aging policies, which is different from one country to another. But if you look at The mix or the weighted average, in general, we have 40, 50% more or less of our cost already edged for electrical power or fuel. So, yes, the trend... If it changes, which I think it will change, unfortunately, it will be more evident in the second half. By how much, it depends. Because we have, for example, also countries in Europe, typically Germany, and in Europe, you know, the debate about the power cost is really... I mean, there's a lot of political pressure on our cost being too high to reduce, even talking about how to amend the ETS tomorrow, and we'll speak about that. Let's see what they say. But so specifically in Europe, the big countries like Italy and Germany, we don't see a big risk on power cost. The famous also energy release has been approved. So there we should be okay. On fuel cost, it is different. Of course, also even if our share of energy so-called waste-derived fuel is increasing gradually, we are still strongly dependent on that coke. So it's a price which is somehow linked or indexed to some extent, certainly, to the oil price. So there, easily, you could see an increase of, I don't know, 20% or so. Unfortunately, this is well possible. It will impact only partially. As I said before, the full year results, let's say six months, but it's well possible. On the CapEx, our trend, I think, I mean, we are always very kind of ambitious where we are proving potential. the budget, and then, as I was explaining before, some of the biggest projects are actually taking longer to be executed, to come to the execution phase. Engineering is more complex versus the initial, I mean, the time of the initial approval. So if you want to take an average of the next project, two, three years, I would move it to between, I mean, to be, except for, I mean, just the industrial capex, then there will be other kind of equity investments or M&A transaction is different, but I would move it to between 500 and 550. It's probably a number that, considering the major project that we have underway, including some expansion projects, is likely to be the right one.

Excellent. Thank you very much.

The next question is from . Oh, hi.

Good afternoon. Thanks for taking my questions. Maybe you could talk to us a bit on the price action that you're taking in Europe to start with to offset indeed the increasing inflationary environment. You talked about your hedging strategy. Are you pushing prices a bit more? the industry pushing prices and where we are at the moment in terms of price increases in Europe. And same question for the U.S. You talked about better demand year-to-date. So how do you see a scope for price increases? I guess April will be the big start in the U.S. And then I had – clarification on your buyback plan. You did 200 million very recently, I think, and now you announced another 300 million plan. Is that the correct way to understand it? You can do another 300 million from here. Okay, now I'll stop here. Thank you.

Yeah, on the buyback, in theory, well, first of all, we have to complete the undergo, let's say, 200 million. And then the idea is to renew, let's say, to ask for a renewal, to ask the AGM a renewal for the authorization, to authorize an additional 300. This 300 still will – I mean, it doesn't mean that we will necessarily – exercise the authorization so this is a preliminary authorization which is given by the AGM and then the board will have to decide whether to actually start the program or not what I think is likely to I mean this is unless, again, the market changes completely. But I think we will complete the undergoing 200. And then we will have an opportunity or a possibility for another, let's say, 300 in the 18 months. See, it's lasting, let's say, 18 months after the AGM resolution or authorization. On the price section, well, there are some countries, I would say in Europe mainly, which are also the biggest one, Italy and Germany. The winter has been difficult in Europe. in general, what we saw and what you also will see when we release our, let's say, quarterly summary. There's been cold rain, so particularly January and February was not a good time, let's say, to go for a price increase. In March, is better. Also, the weather has been improving. And, of course, January and February are not big shipment months anyway. So, the attempt in Europe to increase prices is driven mainly by the cost trend, which includes an additional cost for CO2, like we mentioned in the beginning, probably an additional cost associated with the CBAM, let's call it, also decline of free allowances because you have the two components. And, yeah, more, let's say, today than yesterday. of cost pressure on the energy side, mainly fuel, as I said before, then power. The magnitude, I think it's moderate. We have to make sure, let's say, we will not be, let's say, losing volume or market share either against the importer or local competitors. But I think there is, at least in these two important countries in Europe, there is a chance to price improvement and being able to offset the additional cost like we were commenting before, let's say, on our policies to at least keep the margins. In the U.S., very differentiated from area to area. There are – okay, we don't have the ETF, but we have other issues that are – associated with the, first of all, okay, the imports where they are strong that continue to be, let's say, have a very competitive approach in terms of pricing. Second, the industry structure has changed quite significantly. As you know, in particular, I think the growth of the presence of QuickRit as a cement player has changed the picture quite a bit. Also, QuickRit being a major customer of cement from us, but also from other competitors, and the fact that the declining capacity of utilization is clearly For them, that's an opportunity to self-supply cement to their, let's say, mixing operation as much as possible. It has to be obviously economically feasible, so if they are too far away from one of their plants, they will continue to buy from another competitor. But if they can, they will obviously buy from themselves. And this is something that is putting pressure because if you lose volume, you have to look for volume somewhere else. To look for volume somewhere else, maybe, I mean, pricing is a tool. And this is one of the changes we have to, which, again, is very regional, but can have a significant impact. Another point... which we also briefly mentioned in the press release, is the product mix. There was an effort two, three years ago, particularly by the European player and the U.S., to move as quickly as possible to the so-called 1L product, so with a lower content for limestone, which is actually a very good product, but more capacity available, and again, players in the market that don't have maybe a European parent like again QuickRit their interest in developing or in pushing the 1L is much less and this is also translating into competitive pressure which is different from the past where you compete not only maybe on pricing, et cetera, but you compete also on the kind of product that you're selling. So, again, mixed environment. Anyway, if the demand stays, I think that maybe not everywhere, but some price improvement we can get also in the U.S., and then we will see how much the cost pressure, how much cost pressure there will be on the margins, but It's a more complex landscape than two, three years ago, certainly.

Okay, thanks very much.

Next question is from Emanuele Calazzi, Equita.

Good afternoon, everybody. Thank you for taking my questions. I have three questions. Well, the first one is on Germany. Can you just discuss a little bit more on your expectation for the German market in 2026? You mentioned a gradual recovery supported also by the infraspending plan. When do you expect the first contribution from it to kick in? The second one is on the capital allocation, very clear on the buyback. I was looking at the M&A. Can you just update us on your M&A strategy at this stage and the opportunities that you see in the current environment? And the last one is a clarification on the guidance. I probably missed it, but on which euro-dollar exchange rate is based your current guidance? Thank you.

Okay, we are at 120 right now as an average for... for 2026 versus 114. How was that? 113. 113 approximately. 125. 125. So this, of course, can be, as I said before, can be better. If you look at the trend so far, it's better. Will it last? I don't know. Anyway, M&A, yes, is the focus. I mean, the focus... in a sense that our idea is to be, of course, continue with a stronger financial discipline and consider only, let's say, targets that can represent a real opportunity, not only on a strategic view, but also on the financial, let's call it, soundness of the overall situation. I think that today, today, today, but also before, it really hasn't changed much. The focus remains countries where we already are. So the opportunities, if there are opportunities where we already have a presence, certainly we give them much more investigation but much more let's call it the focus versus opening a totally new country or venture as someone else. I say something that is publicly known, publicly available. Certainly in Brazil, recently, there have been movements, announcements, CSN movements, It is announcing, more than announcing, I think it started actually a sales process of its cement division. And is it this real opportunity or not for us? Difficult to tell. I mean, we have to, but certainly, again, looking at the main strategy, which is reinforced in a disciplined way, the presence where we already are, it could represent, let's say, an opportunity. It has to be investigated. I mean, the process is at the beginning, so we need to understand a little better. But generally speaking, these kind of, let's call it, opportunities are more interesting than others. And basically, that's it. In Germany, it is not totally clear how much of the, let's call it, public infrastructure plan will translate into a greater consumption already this year. We think that something will show, will start to show, will start to be available in terms of quantities, let's say, of cement coming from this kind of project it's difficult to tell but maybe I don't know I don't want to spend a clear number without support but what we are seeing that yes there is a rebound due to the normal, let's call it, cyclicality, the fact that after two, three years of declining consumption, it is rebounding. There is more, I think, also optimism, let's call it confidence within the country after the change of government, and there is a potential but more than potential consumption coming from the infrastructure infrastructure plan so what we can do maybe is to look at the come back with some figure with you looking at because last year the association was giving some information or some was somehow trying to to assess the overall impact, but was more on a longer time horizon. So in the next, let's say, five, six years, maybe there are more recent, let's say, population assessments of what could be or what will be. but I think certainly there is some. Very clear.

Next question is from Arnaud Le Man, Bank of America.

Thank you very much. Hello Pietro and Giovanni. So I have three questions please. Firstly, on CO2, do you have an idea how much reduction in free CO2 allowances you will get for 26 relative to 25? That's my first question. The second, yeah, go for it.

No, no, let's take it. Okay.

So the other one is I think you're announcing a stable dividend. for 2025, even though your net cash position is above $1 billion and seems very comfortable. So maybe we could have hope for a little bit of growth in the dividend. And lastly, on your assets in Russia, we've seen some competitors in different sectors seeing their assets being seized. Do you think that's a risk for Budzi as well? Thank you.

Well, it is a risk. It's probably the largest or the greatest, the biggest risk that we have also in our, if you call it, enterprise risk management tool. The probability is really difficult to tell, I think. Because this thing really depends on one person how he wakes up in a certain morning. I mean, if you ask me, I don't see it very likely. I believe that we can continue this way, which is not great because, unfortunately, we are not able to manage the way we would like. But to see really... A political attack of this kind, in my opinion, is unlikely. Anyway, the risk is certainly there, and it's, I think, yes, the biggest risk we have currently in our system, let's say, in our, you know. The second question is, Tell me again.

So the other two were how much reduction in free CO2 allowance and why a stable dividend?

Okay. Reduction is about one million less for the group, one million ton less. And I think we estimate to be in deficit certainly in Poland, I think in Czechia too. And in Germany, I don't recall if we will be in a deficit also. Yeah. Yeah. In Italy, probably slightly deficit, but not as important. And I think we will continue with our internal, let's call it, guideline, which is to use the bank or the inventory of free mutual allowances in the countries where they were – be coming from, so meaning in Italy we will continue to use them, and in the other countries, also the way of somehow, you know, edging the cost by CO2 rights to the extent needed. But we are also able to secure some already at the beginning of this year when the prices went down, so I think we should have a yes, of course, a cost, an additional cost versus last year. but probably a per ton cost, which is still, let's say, favorable. On the stable, the idea behind the stable dividend was quite simple. Our net income is the same of last year. It is true that our payout is not that great, and there would be room for improvement. I think there is room also in the coming year. It is basically an overall to examine and to consider the overall shareholder remuneration. So it is true that on one side we did not increase the dividend, but we do have the undergoing buyback, which makes the dividend. Overall, maybe not for everyone because it depends if you're selling your shares or you're keeping your shares. But in general, I think the buyback is beneficial to everyone. And also, did it seem to cancel the share? We'll adjust at least finally in a definite way. the EPS with an improvement there which should translate sooner or later providing let's say that the markets are also becoming a little less volatile and improvement in the share price so we thought that this would be a balanced decision and also looking at the coming year where our outlook is not for an improvement it seems to us that to keep the dividend which is, yeah, same as last year was a balanced decision. Thank you very much.

Next question is from Yacine Touari on field investment research.

Yes, good afternoon. Thank you very much for taking my question. I would have three questions. First, a question on pricing. I think in Germany and Italy, some of your competitors have announced price increase of 5% to 10% as soon as April. Have you seen similar price increase later? In the U.S., I think it was outside of Texas, you had also price increase of, I think, between $8 and $12 per ton sent by many of the largest players to ready mix and create producers. Again, as you announced, similar price increase. Then I would have a second question beyond the price development on your vertical integration strategy in the U.S. I think that a lot of your competitors are vertically integrated, and you can see, I understand from your comment, that the lack of vertical integration, for example, versus quick rate has been an issue. Is it something that you could consider addressing in the next five to ten years? with potentially more acquisition in aggregates or ready mix. And the last question would be on Russia. Could you give us the amount of cash which is currently in Russia when we are looking at your net debt position?

Okay. Yeah, Russia, we'll check it and let you know as quickly. Okay. Well, we are not totally, let's say, without it. I mean, in some areas, actually, our integration in Texas and San Antonio is quite significant. We don't have a presence in the aggregate. I mean, this is true. We have some aggregate production, but not Never considered the business in itself and always somehow related to our readiness activities as a way to supply our own readiness activities. Has this become more significant in the coming years? I would say yes. I think initially at least the more oriented towards business ready mix than aggregate because it's the most important in terms of keeping your production levels steady, again, not losing customers or avoid losing customers. So it can be seen more, I would say, as a defensive move than a strategy devoted to additional vertical integrations. in a market which has been shrinking in a way or another, in a market that changed, like we mentioned before, and also changed in terms of big ready-mix producers that are importing cement for their own supply. The number, I mean, The risk of losing customer and not being able to replace it with another customer, particularly in a ready-mix environment, is greater. So it can certainly make sense to write the vertical integration more as a defensive move than something else. But it is a defensive move that will allow you to keep your volumes and also to keep your – at the end to keep your margins. On the pricing environment, no, I think we moved up, but not by the same percentage.

I think the percentage I mentioned where the price increase announced, not the price increase expected to be realized. I suspect that the The message, I think, of some of the large cement players in the U.S. would be that a low single-digit price increase being expected, which I suspect means like maybe half of the price increase.

Yeah, probably this is, again, not everywhere, but probably this is the most likely outcome usually. The protection you have anyway, as I said, many players that are behaving maybe in not exactly as the big ones that are particularly in this moment where the output is not going up so clearly, looking very much to their capacity utilization versus just – even if economically speaking it could make more sense – sometimes to lower your production and increase prices in the long run, this is not necessarily a good move because if you use a customer and you're not able to recover it in the long run, this will translate into lower profitability too. So, yeah.

But the question was, have you sent a price increase letter for April in the U.S., Germany, and Italy?

The so-called price increase letter is more a technique of – more common in the U.S. than in Italy or Germany. In Italy and also in Germany, it's more a case-by-case, customer-by-customer, let's call it – or any way proposition.

If you look at your own vertical integration into concrete in Germany and Italy, are you increasing prices in April substantially to offset the higher fuel cost that you're expecting and the CO2 allowance?

It's not yet the higher fuel cost. It was more, let's call it, a decision taken already at the beginning of the year And, yeah, we have a price improvement in place, which I don't think will be the magnitude that you were mentioning, for the reason that you were mentioning. But, yes, we think it's likely to stick also because, again, more recently people are feeling pressure also on other cost factors. So, It's easier, let's say, to accept total increase of the cement price if there is a general inflation rebound.

And maybe following on this situation, I think like the importer in Europe, especially in Italy, they will probably have to pay a CBAM cost, but it's a bit unclear. They don't know, I think, what kind of cost they will have to pay because the benchmark is not publicly What do you feel? Do you feel the independent importers are being a little bit careful because they might have a 10, 15 euro extra cost or they are not yet increasing prices?

No, I think they've been already increasing in general. It's like you're saying, it's not totally clear what will be the... It depends actually on their CO2 content and... Yeah, each importer can have a different impact according to the kind of product that it is bringing in. But, yeah, I think everyone is considering just maybe the conservative move to make sure that they are not – losing the pay versus the previous price or that they will be able somehow to offset the additional CO2 cost associated with the CBAM scheme.

And on the pricing in Texas as well, I think on one side you've got the imports that are making it difficult to increase prices. But at the same time, I guess the cost of importing is probably increasing a lot with the oil price making shipping more expensive. Is it something that could be helpful? for you to either increase prices or get back the market share that you lost versus especially the big bag imports?

Yeah, yeah. It is a chance. Anything that makes the imports more expensive will allow, let's say, or will help, let's say, domestic supply to be more competitive. Certainly... Yeah, it is a chance.

On the other side, on Texas, we've got a new cement plant. I think it's the first time there is a cement plant in Texas for many, many years in West Texas. It looks like it's 10% of the Texas capacity, so it's a lot. It looks like the cement plants could be, I guess, do you see a risk for your market share in West Texas? I think we're There is a lot of oil well cement. Is there a risk as well in your market share in the Dallas-Fort Worth area? I guess that if they want to ramp up, they will have to sell to Dallas and Fort Worth. Is there a risk for H2?

Of course, there will be more competition, particularly on the oil well. On the other hand, it is true that GCC was already preparing, let's say, the commissioning of the plant. by importing cement from Mexico in the area. So it's not totally new. I mean, of course, they have more capacity locally, so they are more competitive, and they can be more aggressive, but they were anyway preparing the commissioning already before. And on the oil well, yeah, at the end, the oil well is really a matter of what is the oil price. So if the oil price stays or goes up, I think, yeah, okay, there can be more. I think this kind of customer is a little different. I mean, being really a special product with a very strong significant quality requirement, the consistency must be difficult. It's much more difficult for a customer of all the ways to change supplier versus the normal or the mixed customer. Okay. There must be, okay, if there is a huge pricing difference, they will consider it, but then they have to test it. I mean, they have to go to their quality department. It's quite complex. So, and again, the demand is driven purely from the cost, from the price, oil price.

Okay, but is it fair to assume that in the U.S., in your forecast, you've assumed maybe a bit of a price increase inland, but no price increase in Texas at this stage?

Correct. Correct.

Thank you so much. You're welcome. Maybe in Russia, you don't have the number, even approximately the amount of cash that is in Russia.

150 million euros.

Thank you very much. That's very helpful.

Next question is from Alessandro Tortora, Mediobanca.

Okay, thank you. Good afternoon, good evening. Mr. Pietro, three questions, if I may, fast, obviously. So, the first one is on brazing. You made a comment on a very significant margin expansion. Clearly, volume were up, let's say, in the single-digit prices, let's say, slightly up. So the game changer not to stay in this, let's call it new level, very good level for you. It was the work you did on the cost side, and the real ambition of the Brazilian market is, I don't know, to be actually above 30%. So just understand that clearly, I understood your comment on we need, let's say, a more, how can I say, a more disciplined market. competitive landscape, you know, and therefore the CSN deal could help on this. So just a little thought on this, because Kelly, the margin expansion, especially in the second half, was very, very good on Brazil, thanks.

Yeah, I was driven, yes, by two, well, volumes were good, let's say, so capacitalization is that some plant is really approaching capacity, which is giving the best of both operating libraries, so this is always important, I guess. The energy, the power cost in particular, we take some. We are also becoming, in a sense, indirectly, but let's say, a producer of renewable energy. We are now an investment into a renewable energy company, which is... allowing us to enjoy, let's say, better, lower, let's say, power cost. And pricing, not a great change. I mean, you don't see such a significant improvement, but there are some improvements in prices. Also, again, because the market is quite brilliant, let's say, and... And, yes, CSL could be an opportunity besides. I mean, whoever buys it will buy anyway, will have to invest a significant amount of money because, okay, relatively speaking, it can be cheap or expensive. It depends on how much you want to pay. But in absolute terms, it's anyway a sizable company. So, and... And yes, CSN has been certainly more aggressive, let's say, than other competitors on prices, particularly in the southeast region. So we hope that this could translate into a more disciplined competitive environment. There is certainly a chance, let's say.

Comment on... pricing strategy discussion client by client in some countries. So is there at least with some clients in some countries some kind of indexing with, let's say, CO2 price and so on? Because, Ken, you know, we saw the declines in CO2 price recently. So just understand if there is or not.

No, there's not. It would be too dangerous in Europe. I mean, someone definitely did it in the past. But it's very dangerous. I think, in our opinion, it would not be the right commercial marketing strategy.

Okay, thanks, because there are different opinions on that. And on the capex side, the question is, first of all, you mentioned this run rate for the next two, three years with 500, 450 million per year capex rate. Does this include the, let's say, U.S. expansion project you had in mind? Yes. Yes. Correct. Okay.

And which will start, but we'll start at a slow pace, let's say. But it will start, yes.

Okay. Okay. And secondly, in theory, we should have, let's say, a second round of grants, let's say, in Europe also for, let's say, some innovative carbon capture projects. Is it something that you're still monitoring? Do you believe that maybe you can take, I don't know, a decision on developing at least one single project for this technology, or let's say the approach is to be extremely, let's say, conservative and maybe waiting a little bit for a technology getting more mature? Thanks.

Monitoring, yes. Lorenzo, you want to add something?

No, I mean, again, monitoring for sure, but let's say at the same time we need probably more clarity on the regulation and also on the criteria that will be, let's say, handy. considered by the Commission when it comes to, you know, the evaluation of this project.

Now, let's see if there is – what happens on the ETS side. I said tomorrow, but not tomorrow. I mean, the so-called revised ETS by June, I know it's June, if I recall correctly. Let's see what happens there, because still we believe that – the cost-benefit of a carbon capture project is unjustifiable, let's say, today. So what you're on is much – and also, you know, to – okay, if you build a totally new plant, but again, cost-benefit, very difficult to justify it. It can make sense. I mean, you build a totally new plant, you introduce also the carbon capture installation. But to add the carbon capture installation to an existing plant, which dates to maybe the 70s or the 80s, not bad, but let's say there's plenty of room for improvement in energy consumption and also fuel consumption. before carbon capture is related. So we are a little bit shifting our focus on projects in countries also like, I don't know, Poland or Doina, same Doina where we put on all the carbon capture projects to something that will reduce, say, maybe CO2 emission by 20, 25% and modernize the plant. So being ready to possibly at a later time, which I think it would be inevitable because the deadlines that are set today are unrealistic, at a later time to introduce the carbon capture on a plant which has already been optimized instead of doing it on a plant which is, again, 30, 40 years old.

And maybe, if I may add, with a return, I mean... return investment, that's something much more interesting than a single installation, carbon cap installation with a business plan, which is at the moment and with the current situation is not really flying.

It's a better way to lower CO2 emissions, for sure.

Okay, thanks, Mr. President. Just a minute, sorry. You mentioned that the financial, let's say, income was not pretty high this year, but Can you help us to quantify, sorry, the FX gain component in that number?

Yes. Well, one item which is included into that figure is also the bed wheel of the UAE acquisition, which is 44 million positive items. So if you look at the pure net interest expense and net interest income in this case, we have $60 million. And last year it was $65, $60, yes. Last year it was $55, so it is $5 million up. This is the cash portion. The non-cash portion, the two big items are, yes, $75 of Forex, so non-monetary. Well, I don't know if you see non-monetary, the bad wheels. because we paid anyway, but we paid less than the equity, book equity, and so we have 44 positive that will also inside the same line item. Okay. Grazie mille. Prego. Ciao.

For any further questions, please press star N1 on your telephone. Mr. Buzzi, there are no more questions registered at this time.

Okay, good. Thanks, everyone, for listening. I don't know if many are still listening. But anyway, I hope it was somehow helpful. And we stay in touch, of course, with our investor relations team. I'm looking forward to meet you personally in the coming months. Thank you.

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