Holcim Ltd

Good morning, everyone, and welcome to Holcim's full year 2025 results presentation. My name is Dan Pomerin, head of investor relations, and I'm pleased to be joined by our CEO, Miljan Gutovic, and our CFO, Stefan Kindler. After the presentations, as usually, you will have the opportunity to ask questions. If you join us on this sunny day, Friday, in Zurich, then just raise your hand and we will hand you a microphone when it's your turn. And our colleague from Chorus Call will now instruct you how to ask your questions via the webcast. Xandra, please. Thank you.

You can register for questions at any time by pressing star and one on your telephone. Webcast viewers may submit their questions in writing by the relative field. I would like to remind you that all participants have been listened only mode and the conference has been recorded. For operator assistance, please press star and zero. The conference must not be recorded for publication or broadcast.

Grazie mille, Sandra. And with this short intro, I directly hand it over to Miljan. Miljan, please.

Thank you, Ben. Good morning to all of you and a warm welcome to HoldSim's 2025 Full Year's Results Analyst and Investors Conference. Stefan and I are pleased to be presenting our earnings to you today, and of course, there will be a time afterwards for your questions. We delivered strong, profitable growth in 2025 with an acceleration in the fourth quarter as we achieved all our targets. As you can see, we accelerated the growth of our recurring EBIT in Q4. It was up 12.2%, taking us to a 10.3% for the year, exceeding our guidance. Our industry leading margin increased by further 80 basis points to 18.3%. Margin expansion was driven by our high value strategy which includes scaling up our sustainable offering as well as continuously exercising strong cost discipline while enhancing operational efficiency. We generated 2.2 billion Swiss francs in free cash flow with a cash conversion of 54%. Due to our excellent results and their confidence in the outlook, our board of directors has proposed a dividend of 1.7 Swiss francs. That represents a payout ratio of 53%. With these excellent results, we are setting guidance for 26 that is fully aligned with our midterm targets. And I'll take you through the guidance in details at the end of this presentation. Now, let's turn to the region highlights. Very proud to report excellent results in Europe. Europe for Holcim continues to deliver a strong margin expansion, which is driven by our high value strategy. We are scaling our sustainable offering and accelerating initiatives in decarbonization and circular construction. In terms of the outlook, very positive on Europe. We expect strong activity in infrastructure. For instance, take, for example, Switzerland. We already communicated that we are supplying our products and solutions to Gotthard Tunnel. Now we have landed another big tunnel, and we will start delivering soon. Also in residential building, permits have increased across the whole Europe in recent months, even in the big markets like Germany and France. Let's look now in more detail on how we have made sustainability a driver of profitable growth in Europe. By scaling our sustainable offering, accelerating decarbonization and circular construction, as well as investments in value accretive M&A, we have achieved a consistent multi-year margin expansion of 430 basis points between 2020 and 2025. That is a period that includes COVID crisis, high energy crisis, challenging economical cycles, market condition, and also significant volatility in carbon price. Leading in decarbonization, we are using innovative and formulations and alternative fuels to continue to expand our margins. So too with recycling of construction and demolition materials into the new building solutions. During this period, we have also created excellent value through our disciplined M&A approach closing 66 acquisitions at very good prices, which were on average just around 5.3 times EV EBITDA at signing, including synergies. These acquisitions are increasingly focused on expanding less carbon-intensive high-value building solutions from foundation and flooring to vaulting and roofing. All of this demonstrates our agility, our resilience, based on our proven business model. I'm sure that we will get on to discussions on the EU ETS in our Q&A, so let me say a few words on this topic. The European Commission already announced its work program in 2025, so this is not new. This included a review of ETS to provide clarity for the post-2030 period, with a proposal expected in Q3 this year. I would like to emphasize that we do not expect any major changes in short term before 2030. Holcim, of course, welcomes the work that EU Commission is doing to provide clarity for the post-2030 period, including for topics that are important to decarbonization of our industry. If there are any changes to EU ETS allowances in the mid to long term, This will simply provide more time to build effective business cases and partnerships to evolve the carbon management value chain, including transportation and storage, as well as decreasing our costs. Once again, this slide shows that Holcim has made sustainability a driver of profitable growth regardless of the CO2 price. And more importantly, we have the strategic agility to adapt to different scenarios in our decarbonization roadmap with levers that expand our margins independent of the carbon price. Strong cost discipline and operational excellence are part of Holcim's DNA. Next, in LATAM, we delivered double-digit net sales growth for the full year with recurring EBIT margin above 30%. Even after absorbing the integration costs of our newly acquired businesses. The sense that the largest construction materials retail franchise in the region continues to grow strongly. We opened 460 new stores to take us to total 2,360. We expect the strong performance in LATAM to continue with 1.8 million new homes and the start of the next wave of infrastructure projects to accelerate growth in Mexico, as well as significant demand in residential but also in infrastructure to boost Argentina and Central America. Asia, Middle East, and Africa delivered outstanding double-digit increase in recurring EBIT in 25 and really outstanding margin expansion of 220 basis points. We saw strong growth in North Africa driven by public spending and also very, very good momentum in residential market. For this year, as a whole, we expect the strong demand in North Africa to continue with public and infrastructure projects in Egypt, Morocco and Algeria. We also see Australia as another bright spot where our team has secured important precast contracts for roads and tunnels. With that, I would like to hand it over to Stefan to talk through the financials in more detail. Stefan.

Thank you, Miljan, and a warm welcome to you all also from my side. It's a pleasure to be with you today for the full year results. Turning first to the net sales bridge, you can see that organic growth was the main contributor to a 3% rise in local currency as we achieved our 2025 guidance. While there was a contribution from acquisitions, we also divested Nigeria in the fourth quarter, which is categorized as a large transaction. The foreign exchange effect on sales was negative 810 million Swiss francs, or 5%. Just a note on our guidance that you may have picked up from the presentation and press release. As a technical simplification and a move to the more common terminology of organic growth, we will be guiding on organic growth for 2026. OG for 2026 is expected to be very similar to the LC definition used so far. For the full year, on the next chart EBIT, on the full year, we delivered 10.3% growth in recurring EBIT in local currency, excluding large M&A. Now you know why we go back to OG. And even 12.2% organic growth, significantly exceeding our 6% to 10% targeted range for the year. Despite foreign exchange headwinds of 200 million Swiss francs, or 7%, we managed to grow our absolute EBIT in Swiss francs by 1.4%. Next, let's look at the progression of our recurring EBIT and recurring EBIT margin over the last four years. This graph here shows that we have been consistently expanded both our recurring EBIT margin and our recurring EBIT, now well above 2.8 billion Swiss francs. As Mirjam said earlier, our margin expansion is driven by our high-value strategy, as we scale up our sustainable offering while keeping a strong focus on cost discipline and operational excellence. We saw strong recurring EBIT contributions from all the regions, around 1.5 billion Swiss francs in Europe and more than 900 million in each of Latam and EMEA. Europe delivered strong EBIT growth with margin expansion of 140 basis points. Net sales growth was double-digit in Latin America and we maintained a recurring EBIT margin of above 30%. In Asia, Middle East and Africa, there was double-digit growth in recurring EBIT at 14.1%. The strong performance overall shows the benefits of our regional diversification playing out well. Our deeply embedded performance culture and disciplined financial management ultimately drives the growth of our earnings per share, or EPS, which is up 5% in Swiss francs from 2024. This shows that we pay equal attention to operational performance and financial discipline. And as you see here, also on the lines below EBIT, obviously, you can see that by all measures of the bottom line, we are producing superior profitable growth. Next, you can see the development of our free cash flow in 2025, which exceeded our target of around 2 billion Swiss francs In the last five to six years, Holcim reliably delivered superior free cash flow with cash conversion rates consistently above 50%. This is driven by strong EBITDA, a focus on working capital, financing costs, other cash-relevant items, and last but not least, a very disciplined approach to CapEx, prioritizing those projects with the highest returns. On this chart, you see our net debt leverage ratio, which closed 2025 at a comfortable 0.9 times. This will provide Holcim with sufficient financial flexibility and the ability to navigate all economic cycles by continuing to invest in profitable growth through CapEx and M&A and to offer attractive shareholder returns. We remain committed to a healthy balance sheet and net leverage below 1.5 times over the long term. Reiteration to what we said at the capital market state. Holcim is investing for growth while delivering steadily increasing ROIC. Our return on invested capital continues to tick up year on year, reaching 11.2% in 2025. And, following our strong value creation for shareholders in 2025, the Board of Directors has proposed a dividend per share of 1.7 Swiss francs to be proposed to our AGM. This will be paid out of foreign capital contribution reserves of more than 7 billion Swiss francs, which amount to 17% of our market capitalization, and these are not subject to Swiss withholding tax. This represents a payout ratio of 53%, and very important, a post-tax dividend yield of 2.4% after tax. This next slide is a bit of a reminder of our growth-focused capital allocation out to the year 2030, which we frequently discuss in smaller group meetings with our investors. The execution of our next-gen growth 2030 strategy will provide Holcim with a total capital deployment capacity of up to 22 billion Swiss francs until 2030. In order to ignite further growth, we will deploy this capital strategically, focusing on growth as well as shareholder returns. We remain committed to a progressive dividend and returning substantial value to our shareholders. We will return a total of 7 billion Swiss francs until 2030, corresponding to a paid-out ratio of approximately 50% or higher per year. An additional 4 to 6 billion Swiss francs from proceeds of larger divestments or available debt capacity can be used for large strategic M&A or to opportunistically execute share buybacks. We believe that our growth-focused capital allocation will further accelerate profitable growth while delivering attractive returns to shareholders. And with that, I'll close, and I'd like to hand it back over to Miriam.

Thank you, Stefan. So, for NextGen Growth 2030... As you have seen, we are delivering superior performance and margin expansion focused on five pillars. We are scaling up our sustainable offering powered by our premium brands. We are accelerating initiatives for decarbonization and circular construction, driving profitable growth. A key part of NextGen Growth 2030 is expanding our high-value building solutions. With our impeccable track record of value-accretive M&A, we are focusing on the most attractive markets. And all of this, this is all driven by our deeply embedded performance culture, which we are proud to have at Holcim. Let's look more closely at some of these priorities. Customer demand for premium brands Ecopact and Ecoplanet continues to grow. These are being used at scale in large projects like the City Wave in Italy, which was built with Ecopact, made from Ecoplanet, that is even more sustainable because we use calcined clay. And Mohamed Tower in Morocco, which was built with our EcoPlanet low-carbon cement and our insulation form aero. We're also seeing a strong growth in EcoCycle, our circular technology that is being used to recycle construction and demolition materials and put it back into our products. A recent project completed using EcoPact and EcoCycle was this housing project on the outskirts of Paris in France, which consists of 220 social housing units. This is the first and first in the world 100% recycled concrete building, in which all the components used, cement, concrete, even water, are 100% recycled. Overall, this concrete with EcoCycle saved more than 6,000 tons of primary materials. It is a demonstration of what we can achieve by partnering with forward-looking cities to evolve building standards and building norms. We are advancing circular construction to build cities from cities and also to drive profitable growth. In 2025, we made three acquisitions and we also invested organically to grow our circular construction hubs. We are establishing them in all the major metropolitan areas in which we operate to a total of 109. Over the same period, we grew our net sales from circular construction to close to 500 million Swiss francs. And as you can see, we are well on the way to hit 800 million Swiss francs by 2030. Organic investments make up an important part of our broad focus capital allocation, and Stefan also mentioned this. And in 2025, our capital expenditure amounted to around 400 million Swiss francs. You can see some recent examples on this slide across different geographies. They give you some idea of our priorities, grinding investment, Kaltstein-Klein production, or expanding our building solutions in Australia. You will see in our press release that we have signed an agreement with Air Liquide to deepen our collaboration on one of our flagship projects, Go4Zero, for carbon capture and storage in Oberg, Belgium. We are in full execution of the first phase of this upgrade, which will make Oberg a really state-of-the-art plant, not only in Holcimworld, but globally. And all these growth investments have very attractive returns and very attractive paybacks. Next, M&A. We closed 21 value-accretive transactions in 2025, of which 18 were acquisitions and three were divestments. We made nine acquisitions in building materials and also nine acquisitions in building solutions. We also have closed divestments of Jordan, Nigeria, and we sold our Karbala plant in Iraq. Just a reminder that we signed in October an agreement to buy Xela, a growth platform in a highly attractive European rolling market. It brings us sustainable and energy-efficient solutions powered by their premium brands that are really great fit to Holdsim's existing product portfolio. It will also help us to accelerate the expansion of Holcim's high-value building solutions, which is in line with our next-gen growth strategy. This transaction is subject to customary conditions and approvals and is expected to close in H2 this year. In December, we also signed the agreement to acquire a majority stake in Pacasmayo. The company is a leading producer of building materials in Peru, and this transaction will probably close, of course, subject to all the regulatory approvals in H1 this year. Finally, a note too on our deeply embedded performance culture. You can see on this slide statistics, but our results are not down to statistics. Our results are thanks to our people that work at Holcim. We want Holcim to be the best workplace where talent is nurtured, where performance is awarded, and where innovation is encouraged. Our commitment to this vision has been reflected in Holcim being recognized as a global top employer by the Top Employers Institute. And through Holcim University, which is our in-house business school, we are providing our people with really best-in-class trainings. With our focus on accountability and also empowerment through Holcim Spirit, our more than 45,000 of employees are delivering value across all economical cycles and across all market conditions. And now to the outlook. Well, net sales and recurring EBIT growth fully in line with our next-gen growth 2030 targets. Net sales 3% to 5%. And as mentioned by Stefan, we are moving to organic growth. Also EBIT 8% to 10% organic EBIT growth. We are committing to further increase of recurring EBIT margin. We estimate cash flow to be around $2 billion. And of course, we will continue to invest in circular construction with 20 plus percent volume growth in 2026. Then you can now open it for questions.

Thank you so much, Mirjam. Thank you so much, Stefan. With this, we're starting our Q&A session. The first question is coming in from Martin Huisler, who is joining us here in Zurich. Please wait until you get the microphone, please.

Good morning, Martin. I have two questions. Maybe first, coming back to the ETS rumors scheme, and thanks for your elaboration so far, but maybe how much have you already invested, let's say, for example, in CCUS projects, which might stand at risk if CO2 prices came down below 50 Euros over the next couple of years. So just an indication on what's here at stake. And what would it mean if you start to delay CCUS projects for your capex for the next couple of years? That's the first question.

Thank you, Martin, and thank you for your question. So on ETS, the answer is negligible investment so far. I mean, we are, for instance, in Oberg, we are building a brand new plant, but we would do that without CCS. This will be the state-of-the-art plan, best in class when it comes to cost efficiency and also when it comes to the sustainability KPIs. We talk here about few million across the projects, so investment so far negligible. If the projects are delayed, and I did discuss what happens after 2030, I think if there is a delay, we will have more time to find more cost-competitive solutions for these projects. I'll give you a perfect example. Three years ago, most of these carbon capture projects were based on offshore storage, means we take capture CO2, we take it somewhere in the sea. Now the momentum, especially in the last year, year and a half, has accelerated to move from offshore to onshore. So the cost advantage is enormous. So even if nothing happens on EU ETS, CO2 prices continue to go up, I might delay a project six to 12 months in order to move from offshore to onshore storage, because cost advantage, as I said, is enormous. So when it comes to these CCUS projects, what we do at Holcim, and this is DNA, it's the discipline, regardless, cost discipline on pricing, on cost, and cost discipline on M&A and also CapEx projects.

Thank you. And the second question, because you face some integration costs you mentioned for Latin America, for example. Now, thinking... about the acquisitions that you announced, Pacos Mayo, Xela, et cetera, which roughly add 10% to group sales on an annual base. How much, as a ballpark number, how much EBIT contribution could that be? I mean, could EBIT also be impacted by integration costs, just 10 on sales, and how much is this roughly on EBIT?

I'll start, and then maybe Stefan can continue. These two acquisitions in Latam, they were different than Pakasmayo, let's say. Pakasmayo will run as a standalone company, so integration costs, they're always integration costs. Are we synchronizing ERP system? We will definitely invest in health and safety because this is the core of what we do. But I would expect negligible impact. And the same applies for Xela. On Xela, I think I would even like to spend more to accelerate this cross-selling between us, to invest, for instance, in additional sales force so we can move faster on specification selling. So I would not expect significant impact on these two areas. on these two deals on the integration cost.

You're completely right, Miljan. Just to give you a feeling, the scope in for these large acquisitions, XANA, PAKAS, Mayo, and Alkern for this year is going to be in the range of $120 to $150 million on EBIT level. But the difference to a smaller acquisition, in a smaller acquisition you often need to go in and change a lot of things to bring it up to a wholesome standard. From safety to IT to accounting, here we're acquiring very mature companies and so the initial cost to bring them to our standards is much, much slower. We can basically use almost everything they have and then we change the accounting standards to completely communicate with ours. But the cost and the effort we have to do is much lower.

The next question comes from Lothar Lubinetsky from Octavian. Good morning, Lothar.

Good morning, Pat. Let me follow up on the CO2 issue. What is more important for your margin progression, price or mix? And with regard to price, what is the current premium you are getting for Ecopac and Ecoplanic in Europe and Latin?

So everything is important, don't get me wrong, but what's driving our margin expansion is our whole high-value strategy, where pricing is important to offset the cost inflation. But margin expansion is coming from sustainable offering. I'll come to that later. It's coming from our incentives, initiatives in decarbonization and circular construction. And you saw the slide on Europe, 66 acquisitions in the last five years at multiples of 5.3 after synergies. And so all of this is driving margin expansion. Now on sustainable offering. This is something that I'm really proud the way we handled the whole launch of these products and where we are today. We do have a modest price premium on EcoPact, EcoPlanet. And this could be between low to mid-single digits. Probably in some countries we are closer to 5%. In some countries we are between 1% and 2%. But, as I said this before, these products, we have a cost upside. Thanks to Holcim's innovation, our production know-how, our formulation know-how, on these products, we are reducing cost. We are replacing expensive raw materials with less expensive. For instance, you saw that we are now scaling up calcined clay production, even in Latam. This is exactly the point. By doing this, we will be replacing clinker with calcined clay. Calcium clay has lower CO2, but also has a lower cost. So the story was about Europe, but a few weeks ago I had the privilege to visit Egypt. I mean country emerging market where the team took me to a project, National Grand Museum of Cairo. Quite impressive, the whole development. And what was specified, architects specified Ecoplanet. They demanded low-carbon cement and concrete solutions on these products. And this is a project in Egypt, not in Zurich or Hamburg or London. So potential for these products is increasing, and we are seeing more and more demand even in the developing markets. Another great example that you find might be published is actually two quarters, Ecuador. By far, I think it's the biggest residential development complex in the whole Latin America. Houses for 180,000 people, all done with EcoPlanet and EcoPact.

And has, in terms of recycling CDM, I think you reached 8 million tons this year. Is there anybody else in the industry who is even getting close to that number?

So just to clarify, this market is big. What we're currently seeing that this market is fragmented. So the many players, for us, where our advantage is, we are focusing on metropolitan cities, big cities, from Zurich to London to Paris, Lyon, where we have a strong market. Holcim footprint. Buying these companies or building recycling hubs from scratch, we have excellent synergies. That's why we are faster than the others. I'm being modest.

Thank you, Lothar. One more question from the room. It's Remo Rosenau from Helvetische Bank. Remo.

Thank you. Good morning. What kind of price increases did you already announce? in Europe ahead of all these certificate discussions? And when should they take effect? It varies by region, so probably the most important regions, you know.

So we talk about Europe, Remo. Thank you for the question. I know the pricing question always comes at some stage. First of all, very pleased with the pricing dynamic in Europe this year. We had an excellent exit price in December, and I think from what I have seen and I have spent a lot of time with my dear colleagues at the back on pricing topic, we do have a very healthy momentum. I may be too early to say, but it depends from market to market. Maybe we are talking about mid-single digits.

In percentage points. Yes. Okay.

However. And this will stick before or after all of this.

Well, that's the question, how much of that will stick, you know, because the announcement is one thing and then the reality is the other one, and this is the slow season, so it only comes really, I mean, the proof of the pudding will be in March, April, right?

Once again, depending from market to market, we are already seeing something, some contracts have been secured. I am optimistic and positive that we will get there.

Okay. Well, we stay tuned. Thank you.

Thank you. Thank you, Remo. We are now switching to questions from the webcast. The first one is Julian Radlinger from UBS. Good morning, Julian.

Yeah, good morning, Bernd, Emilian, Steffen. Thanks for your time today. So a couple for me. So first of all, the So you're guiding to 8% to 10% organic EBIT growth, which is higher than what you guided to last year, and last year you delivered, I think, 12%. So I'm not going to ask whether or not you think you could do even better than 10%, but if that were to happen, what would the drivers for that be? What's likely to be different in 2026 versus 2025 in your mind in terms of demand, volumes, price, or costs? And then... And then secondly, and I'm really sorry to ask this, but I think a lot of investors right now are really nervous about this topic, obviously. In a scenario in which something really draconian were to happen to this whole ETS mechanism, let's just hypothetically say they actually pushed the whole thing to the right or they capped CO2 prices on a very low level, what do you think happens to cement pricing dynamics in Europe or the level of competition? How would you think about that? Thank you.

Good morning, Julian. Thank you for your question. I'll go to the second and maybe you can answer the first one. We already addressed it on the guidance. So, first of all, europe slide is there julian you can see what we have done in the last five years and this is across some really challenging market conditions uh we had covered we had to remember in 2022 we had uh high energy prices going uh three five hundred percent overnight and so on Pricing was disciplined in Europe, and that helped us offset all these costs. So I do not perceive any significant impact on the pricing. Dynamic will remain positive and healthy. There is more discipline. And Holcim, this is where we differentiate. We will continue with our pillars of our high-value strategy, sustainable offering, decarbonization, circular construction, M&A, and so on, too. continue with margin expansion. So regarding just one on these big projects that I would like, there are de-risking mechanisms already in place in some countries that can help us mitigate the CO2 price volatility so these projects on carbon capture can go ahead.

Morning, Julian. Also from my side, hello. Look, we simply narrowed the guidance, right, from 6 to 10 to 8 to 10, which is a sign of our confidence that we're really going to sit again at the upper end of that frame that we gave at the capital markets day. So you should interpret that as a sign of confidence. Last year, we had above 12%, and again, we're aiming for the upper end of this guidance. Now, what drives it? Leverage through a bit volume, as Milian described before, operating leverage. And we're still on the journey to reduce our corporate costs, as you know, and to readapt to the regional footprint also after the spin-off. We're going to have positive price-over costs. We have good contribution from our JVs, a bit offset through the Nigeria divestment. And I would also say the margin progress and the EBIT growth progress is probably a bit back-end loaded, given the volume recovery pattern. But it's a sign of confidence, I would say, that we narrowed this guidance to the upper end.

Maybe one I mentioned in the presentation, Switzerland. So we are a Swiss company, proud to be a Swiss company. The amount of infrastructure projects we have in Switzerland today – is significantly higher than versus three years ago. I mentioned Gotthard, okay, but this new one, Action Strasse connecting Swiss and Uri, this is a new project that will go on for years, and has secured the contract to supply. Also, once again, I would like to reiterate, residential sector was hardest hit in the last few years. For the first time, we are seeing bottoming down. Maybe it will not go skyrocketing, but we are seeing positive signs in this market segment where we took the hardest hit.

Thank you very much, guys. Perfect. The next one on the line is Ben Radamartin from Goldman Sachs. Good morning, Ben.

Great. Good morning, Millian, Stefan and Bert. Thanks very much for the questions this morning. My first is on the 2026 free cash flow guidance. Your comments around, I guess, expecting $2 billion in 2026 versus the $2.15 you did in 2025, despite some really strong earnings growth in terms of EBIT. Can you talk through, I guess, what would bring you down towards the $2 billion mark, is it capex, tax, any working capital impacts, just so we can understand some of the key buckets. And then the second would just be on carbon capture. You know, it's worth noting some headlines around potentially a Belgium project moving beyond 2030. Would you be able to touch on how you see the other project timelines within the next few years and how much you expect to be online before the end of the decade? Thank you.

Thank you for your question, and thank you for joining us. I'll go with the second question, and then Stefan can address the first on cash flow. So this morning, Air Liquide has made the announcement that we entered into partnership for the second phase of this project, Oberg, carbon capture. So as you can imagine, we have been dealing with the media recently a lot. Nothing to do with us. Phase one is progressing well. I had the opportunity to bring our board members to see how the state of the art project will look like when it's commissioned in H1 next year. Very happy with the development on that front. Once we complete commissioning in H1 next year, we will start working on phase two, which is carbon capture with air liquid.

Hey, Ben, good morning. Good to talk to you. On the cash flow guidance, look, over the last couple of years, also before the spin-off, Wholesome has always delivered an above 50% cash conversion, and we've always had a very conservative cash flow guidance. Now, why is that? because cash flow is a time frame number, but it's also a snapshot number at the end of the year, depending on the fall of certain payments at the end of December or the beginning of January. This is why we give ourselves some flexibility here with this number. But you shouldn't read a message that we're reducing cash flow, that the strength of our cash conversion is weakening at any degree. It's just we give ourselves some flexibility in order not to be pushed into unsustainable measures at the year end. That's it.

Very clear. Thanks very much.

Thank you, Ben. And the next one on the line is Luis Prieto from Kepler Chevrolet. Good morning, Luis.

Good morning, everyone. Thanks for taking my questions. A couple of them for me. The first one is I would like to come back again for a moment to the European Commission's overhaul of the EU ETS. The significant amount of noise around the subject has taken the CO2 price down, if I'm not mistaken, by almost 25% over the last six weeks. Can you provide us with a rough idea of what is the minimum price for the average project in your CCUS pipeline to be economically viable? To understand a bit better. And second one is from a conceptual perspective only. What could be a reasonable assumption for medium-term volume growth in Europe if the German infrastructure, defense investments, residential recovery, and data center themes pan out as expected? In other words, if all these things fire on all cylinders.

Good morning, Lewis. Thank you for your question. On the volume, I'll start with the volumes just to shake it up a little bit. On the volumes, we do not comment on the volumes, but I would say that construction activity can increase mid-single digit if all of this happens. On the ETS, well, the The price can be even 50, 60 if you have de-risking mechanisms in place. For instance, Germany has CCFD, which is a carbon contract for difference, where they are helping the companies to offset the CO2 price volatility. So, if we have that in place, then these projects can go ahead regardless of the CO2 cost. However, for us to be comfortable has to be 100 plus euros per ton.

Super clear. Thank you.

Thank you so much, Luis. The next one on the line is Elodie Roll from JP Morgan. Good morning, Elodie.

Hi. Hi. Good morning. Thanks for taking my questions. So first of all, on LATAM, to change a bit from Europe, we see margin down 320 bits. I think you mentioned impact from integration of recent acquisitions. What kind of margin direction should we expect there for 2016? We can get that back as soon as this year. Second question is on FX. Sorry, but could you give us your expectations for FX on top line and EBIT? And last question is on your view on capacity consolidation in Europe. Is there any update on this? I mean, you were talking previously about further consolidation likely to happen by 2030. So has anything changed in particular with the potential for ETS reform? Thank you.

Good morning, Elodie. Thank you for the question on the capacity consolidation. We are not seeing any significant changes. I still believe that even this year we might see some opportunities. As I said last time, we are interested. However, there are markets where we will not be able to participate. But overall, if there is a possibility, definitely we would be interested in capacity consolidation. For us, I said this also in the past, there could be a possibility that in the next few years some of our existing clinker producing plants will be converted to produce something else, for instance, calcined clay. And the teams are working on this and we already have a few of these projects underway. On LATAM, I think I am expecting margin expansion this year. I will not put the number, but all the signs, positive signs, are in place all the way from Mexico to Argentina. We are seeing a positive, strong momentum in some of the countries in Central America, so I am expecting margin expansion in Latin.

FX? Yep. Look, hi, Elodie. Good morning, first of all. We expect headwinds to normalize from FX at around... Number one, first I have to say, I don't have the crystal ball. This is a disclaimer. And then after that, we expect... to normalize as of the second quarter. The first quarter will still be a bit challenging, but if you have to put my best guess for this year, you have an FX headwind on sales of around 3% and an FX headwind on profit of around 4% to 5%, with big disclaimer marks all around this information.

Thank you very much.

Thank you so much, Elodie. The next one in the line is Arno Lehmann from Bank of America. Good morning, Arno.

Good morning. Thank you very much. I have three questions, if I may. Just to follow up on Latin America and Mexico in particular, there's been a bit of unrest. Can you confirm that there wasn't any major disruption to your operations so far? And if you don't mind commenting a bit more on the volume outlook and pricing outlook for Mexico for 2026? That's my first question. My second is on North Africa. I believe the momentum was pretty good in Morocco, Egypt, et cetera. Do you see a continuation of the positive momentum? And lastly, U.N. 2025 with a very strong balance sheet. The share price has been a bit more volatile, and I hope the share comes back down a little bit recently due to opportunities for buyback.

Thank you. I'll go Latam, Mexico, and North Africa, and you address share buyback. We are monitoring situation. There have been unrest in 20 out of 32 states in Mexico. Today, we still have some tension in four states, but Holcim operations have not been affected. And other than these four states, most of the states are back to normal. On the whole Mexico volumes and the trends, so as I said last year, probably we were expecting these big infrastructure projects to start earlier. They started late in Q3 and they continued in Q4, so I expect good momentum on infrastructure projects this year. And I already mentioned it on the slide that The first wave of social housing projects, 180,000 homes out of 1.8 million have started. So I'm optimistic about Mexico. On the North Africa, really, really strong momentum in 25. I am very happy what I am seeing here. This year, what we have in the pipeline, you mentioned Morocco and Egypt. I would like to add Algeria. These three countries' margins are now even higher than what we have in Latin America. Momentum is strong. Probably, we are expecting even better year than 2025 in these markets.

Share buyback. Morning, Arnold. Maybe take a little step back to answer your question. We announced the deals of Xela and Pacas Mayo, which we will close in 2026. So the cash out will be in this year. We announced the dividend. And then there's some smaller portions that we do. We do bold ons again and so on and so on. So we will end up with the debt leverage of below 1.5 again as we announced at our capital markets day. We're going to move a bit closer to that number in 2026. Now, also as we've shown on our chart before, capital allocation until the year 2030, we have a clear priority of the dividend, the M&A, the CapEx, and we always said that share buyback is something we do in exceptional opportunistic cases with excess cash. If you look at what I said before, we still have so many opportunities to do M&A on top also of Xela and Pakas Mayo. There are still a lot of interesting opportunities out there for us in 2026 that you might hear as we go through the year so that we, for this year, we don't announce a share buyback. But as we also said in our capital allocation, in a year where we don't have so many opportunities to drive very good returns with M&A, then we might also revert to a share buyback as a means to deploy our cash.

Very clear. Thank you very much.

Thank you, Arnold. The next one in the line is Ephraim Ravi from Citi. Good morning, Ephraim.

Thank you. Again, only two questions left. The Asia, Middle East and Africa obviously seeing some of the strongest EBIT growth in local currency of all your regions. But it feels to me from the commentary that's almost entirely North Africa and maybe a little bit of Australia. Is it possible to unpack that region a little bit more in terms of what proportion of the growth in EBIT is coming from Morocco, Algeria, and Egypt, and maybe even Australia compared to, you know, Bangladesh, Philippines, et cetera, which is probably break-even, and obviously, Washington, we can look from public figures. Second question on the carbon, I'm sorry for that. Is there any opportunity for you with lower carbon prices, i.e., you know, can you sort of sell some credits before, you know, prices come down in the future if the rate of, you know, allowance is given? is going to be higher than expected in the future? And secondly, are you looking at hedging mechanisms on carbon? Because obviously you could hedge currency and energy, but I haven't heard much about hedging carbon costs in the future because I suppose it was all seen as a one-way trade-off. But now that it's more volatile and range-bound, is that something that you would be considering? Thank you.

I'll tackle a Mia and you tackle second one FM. Thank you for your question. Yes a Mia Outstanding margin expansion, very good growth, and most of it is coming from North Africa, Australia, and GCC. We didn't mention it's a small position, but UAE is booming. Our position in Philippine, Bangladesh, it's relatively small. Philippines, if I can say one market where there are really – challenging market condition, that's Philippines, but relatively small position in the grand scheme, so it's not impacting. As I said, most of the margin, most of the contribution comes from North Africa, GCC, and Australia. Having said that, Australia in H1 last year was a little bit softer, but we have seen a very good momentum starting in Q3 and continuing in Q4.

Carbon, Efrem, we do not usually comment on that, of what positions we take or don't take. It's highly sensitive, but we can be opportunistic in certain cases. We can look out into the future. We can make estimations that in certain years the allowances we have will not cover our needs, and then we might take positions at low markets. But be aware. Well, it's very important to understand we always view this as an industrial company. We never view this from a point of view of a trader who's trying to make a benefit on the carbon trades. We deal with the CO2 market like a raw material, okay, and not as a tool to make an additional gain with hedge positions. I think this is very important to understand.

So my view is even simpler. If I have a million to invest, would I go and buy CO2 credits or would I invest in the circular hub or decarbonization initiative? Definitely. I would invest in a project where I can reduce the CO2. So as you said, we are not in the trading business. Thank you.

Doing something good for shareholders and the planet. Yeah. Thank you so much. We've got a couple of written questions. The first one is from . From Bernstein, she's asking, have you seen any change to the demand or willingness to pay a slight premium for your decarbonized products because of the ETS noise?

The answer is no, and not only in Europe, but outside Europe as well.

Very simple. And the second question from Pooja is could you split the LATAM margin decline between what is driven by acquisition integration costs and how much could be operating leverage and underlying business impact?

A couple of drivers here. Number one, we said that there were some onboarding costs for acquisitions. There was a big mix effect also. Some countries that are very high profitability were a bit softer. Then we went through a bit of a slump in volumes also in 2025, in the second quarter especially. And naturally, it takes a few months until you adapt your fixed cost structures. And then lastly, we did a lot of maintenance, as I said, in the third quarter. So all of these things, as Miljan said before, we're quite positive that this is behind us. And for the full year 2026, we plan a very nice margin progression back to the levels of where we've been before. We're not guiding margin on one region specifically, but you can expect that the margin will come back up because there's nothing fundamentally that drove this where we are today. It was a couple of instances.

And we've got three questions from Paul Rogers from Exxon BNP Paribas. The first one, are you now happy with your portfolio in Latin America, or are there still either new countries to enter or big gaps to fill?

I would simply, last one was Peru. Peru now with Pacas Mayo, we are gaining market leadership and that would be it. LATAM story will be on Bolton, especially on building solution side, and the full, full acceleration in increasing number of sales points, number of the sensor stores.

Second question from Paul is how much debt capacity is left for larger M&A this year after Xela and Pacas Mario?

Hey, Paul. Same question I gave to Arnaud before. We're going to close the deals on Xela. We're going to close the deal on Pacas Mayo. We're going to pay a dividend that leaves us at the end of the year roughly below 1.5. This is a long-term commitment. Now what we can do in order to maintain our credit rating We can go up to up to two for a certain period of time. So there's a lot of debt capacity still left for us if we find it opportunistic to do other M&A. So financing will not hold us back.

And then he asked a third question. I think more or less we tackled this one. It's again an update on UBURG modernization and CCS. Are there other big capital projects proceeding to plan?

All in all, I mentioned already phase one commission in H1. It's a really state-of-the-art plant, and I hope that once we are up and running, I will be able to send invitation for you to come and see the plant with the latest technology advances in cement industry.

Perfect. The next set of questions came also in by email from Ibrahim Homani from CIC. Latin America, we already also tackled that one I think more or less. Is it possible again to reach the 2024 level in Latin America in the future? Yes. Very simple. Then the second question, weather conditions are currently bad in Europe since the beginning of the year. Not today in Zurich, but okay. What's the impact on the expected organic growth for this year?

Look, Q1 is the smallest quarter in the year. January and February are the smallest months in the year. I say I cannot control the weather, but... For me, what's important in January and February, Remo, this is what we discussed, pricing momentum. So in the meetings these days, when it comes to activity, we only talk about pricing momentum. So even January was cold, February was wet, but this is only start of the year.

Perfect. The next question came in from Harry Goat from . Do you expect to see positive organic volume growth in France and Germany this year?

To be highly conservative, I would say flattish. I would not commit to growth.

I think we demonstrated last year that we can achieve a growing EBIT even in weak volume environments.

Well, the slide on Europe is suggesting activity was going down and margin extension was going up.

A somewhat related question from Stefano Donati from BlackRock. In your guidance, what volume assumptions are you using for Europe? And how much of the German infrastructure stimulus is in them?

Volume? Look, we are flat probably on two very large countries. And then up in Eastern Europe, I would say we have a low to mid single digit volume guidance in Europe positively.

On infrastructure in Germany, I would not expect anything in H1. We might see some positive signs in Q3, but I would not bet on anything big from German infrastructure spend.

Perfect. Then we are switching again to live questions from the webcast. The next one in the line is Harry Doe from Rothschild. Harry?

yeah thank you morning everybody just I think two questions left for me I think firstly on the cost picture for 2026 and then maybe you could take us through some of the assumptions around the raw materials energy employees sort of wage inflation sort of thinking about maybe And then also just back on Northern Africa, I was wondering how much sort of spare capacity there is left in some of those markets for the volume growth, or is it more sort of around pricing gains beyond sort of this year?

Thank you. What was the second question? Can you please repeat the second question? I didn't hear it well.

Yes, it was just on North Africa. Again, just coming back on that. I was wondering how much spare capacity there was in that market for more volume growth from here in terms of main capacity.

I'll go to North Africa. You tackled the cost topic. So North Africa, there is excess capacity in all of these countries, especially in Algeria. But these countries are also export hubs. I mean, Algeria, currently we are producing products to export to Europe, West Africa, and also North America. Similar situation is with Egypt. There is a capacity. Capacity, if local demand is increasing, then exports will start reducing.

On cost look, I would say energy, low single-digit impact, but we're always guiding carefully on energy. And then what non-volume-related costs, we're definitely going to go down this year. I said this before, we are still working on the fine-tuning of organization, which we do all the time. It's an ongoing topic at Holcim. We never have a big restructuring program or give it any name, but we're always working down on our structure. So this will continue here. We see positive impacts. Distribution. Hard to say, maybe a bit up by also low to mid single digit. And then most importantly, I think, what we said before, for you to take into account, there will be positive price over cost. This is for us, it's the main topic. There will be positive price over cost and there will be margin progress. Perfect.

The next one on the line is Isaac Ocho from Onfield Investment Research. Good morning, Isaac. Hi.

Good morning. Thanks for the presentation after taking my question. So first one, so I have two. The first one would be, so in Asia, what additional EBDA could you expect from Huaxin in China after they acquired Nigeria? And second question, so in Europe and Mexico, we're seeing mid to high single-digit price increases successfully sticking. CEMEX announced 10% hoping to get mid-single-digit in Mexico, and it looks like we could see some better volumes on top of that. So given the relatively limited cost inflation on the energy side, how much potential do you see for organic EBIT growth to really exceed the high end of your guide as the price costs expand? Thank you.

Thank you for the question.

Look, we probably go a little granular if we want to now break the Nigeria impact into Huajin. I don't know, maybe 10% more, conservatively, 10% more contribution from Huajin. And then Mexico, how much potential for organic growth? Well, double digit.

Okay, thanks.

And the last question today in the line is an add-on question from Julian Radlinger from UBS. Julian, go ahead.

Yeah, thanks for taking me one more time. I just wanted to ask, so judging from the slides, it looks like the eco-plant mix has kept growing about a percent per half-year to 25%. But EcoPact has stayed at 31% of ReadyMix sales since last summer. And obviously, as you explained, the increasing mix of these products has been a consistent price and margin driver for you guys. So I know you have targets for that for 2030, but how should we think about that going forward? Are both of those products going to keep increasing? Thank you.

Julian, very simply, it's not a linear relationship. For instance, I believe Ecoplanet will accelerate now because we are seeing a huge momentum in countries like Egypt, Morocco, all the way to Mexico and Argentina. So probably the Ecoplanet will start increasing over proportionally versus Ecopact. And Ecopact, this is more in mature market. We are seeing a growing demand across all market, but at a slower rate. Anyhow, we do have a commitment by 2030. We are sticking to this commitment. I would say that probably Ecoplanet will be above that.

Excellent. Thank you so much.

Perfect. Thank you, Julian. So with this, we are finished. Thank you so much for joining us today. If there are any further questions, obviously, the investor relations team is more than happy to support you. Everyone who is joining us in Zurich today, we are happy to invite you for a small lunch. And the analysts which were not able to join us today and investors, we hope to see you soon in the coming weeks when we are going on roadshow. And with this, I hand it back to Emilian for some closing remarks.

Thank you. Thank you all for joining us. Really a pleasure this morning to present these outstanding results. I can assure you that we are at full speed. Our performance, culture... delivered and will continue to deliver outstanding results. This performance culture, if I can use one word, that word is discipline. continue to exercise strong cost discipline, pricing discipline, discipline when it comes to M&A, discipline when it comes to CAPEX project, and I'm looking for another successful year in 2026. One big thank you to all Holcim employees, 45,000 of them, for your outstanding efforts.