Holcim Ltd

Good morning and welcome to the analyst and investor conference call for Holcim's first half 2026 results. My name is Bernd Pomrehn and I'm pleased to be joined by Miljan Gutovic, our CEO, and our CFO, Steffen Kindler. After their presentation of our results, you will have the opportunity to ask your questions. Sandra, may I ask you to share the technical details with us? Thank you.

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Thank you so much Sandra and with this I directly hand it over to Miljan. Miljan please.

Thank you Bernd. Good morning to you all and welcome to Holcim's 2026 Half Year Results and Analysts and Investors Conference. Stefan and I are pleased to be presenting our numbers to you today and of course we look forward to taking your questions afterwards. As you have seen, after a very strong start to the year, our momentum even accelerated in Q2. In net sales, our organic growth was 5.2% for H1 and 6.4% in Q2. There was an even stronger momentum in recurring EBIT, which grew 11.5% in H1 and by 13.1% in Q2. The drivers included increased customer demand for our sustainable offering, our strict cost discipline, and of course our operational excellence. In the first six months, we closed the two value-accretive strategic acquisitions of Xela and Pakasmajo. This we will discuss later on. And building on our strong first-half performance, we are upgrading our 2026 full-year guidance. Turning to the regional highlights now. In Europe, there were strong net sales accelerating in Q2, driven by Germany, Switzerland, Spain, Greece, and East Europe. Price over cost was positive, and our use of alternative fuels in the region went up again over 70% in H1. Future proving holds him from energy price exposure and market volatility. We completed the milestone acquisition of Xela on June 19, with this building solutions now already at 50% of net sales in the region. For the outlook, we expect the strong activity in infrastructure to continue, and this includes from roads, tunnels to the airports. Several projects have started, such as crossing the river in London, the Axenstrasse tunnel in Switzerland, and we are seeing major investments in railway in Eastern Europe, especially in Bulgaria. In residential, the recent increase in building permits is continuing with recent notable growth in France, Germany and also in Poland. In LATAM, we delivered 6.2% organic growth in net sales in H1. This was driven by Mexico, Ecuador, and Central America, with our recurring EBIT margin consistently above 30%. The strong performance of Pacas Mayor, the acquisition of which we completed in March, contributed to both net sales and also recurring EBIT. For the outlook, we expect government support for new homes and also infrastructure projects to accelerate growth in Mexico, in Peru, and also across the whole Central America. One large project that I would like to highlight which I recently visited was the region's biggest social housing project in Ecuador. This is a perfect example where customer demand for sustainable products is evident even in the emerging markets. They are building homes for 35 They are building 35,000 homes for more than 150,000 people. Our outstanding performance in Asia, Middle East and Africa continued with net sales up 8.5% and also over-proportional increase in EBIT nearly 24%. The margin rose 80 basis points from a year ago to nearly 26%. The drivers in this case were continued favourable demand trends in North Africa and Australia and we expect this to continue for the full year. One of the infrastructure projects in Australia is Western Parkland City, the Western Sydney International Airport. During my recent visit to Australia, I was quite impressed the amount of infrastructure projects we have happening. and we are investing heavily, we are commissioning the new high capacity concrete batching plant at Badgeris Creek that we'll be producing from September. Another example is the upcoming Olympic Games in Brisbane where we are seeing a lot of construction activity already starting or in the tender stage. With that, I would like to hand it over to Steffen to talk through the financials in more details. Steffen.

Thank you, Miljan. And a warm welcome to all of you also from my side. It's always a pleasure to be here with you today. Turning first to the net sales bridge, you can see that we had a strong organic growth of 5.2%, representing almost 390 million Swiss francs. Total sales are also up as the strong OG offsets impacts from net M&A, here mainly the divestment of Nigeria, and foreign exchange translation effects. The foreign exchange translation effect of 3.4% year-to-date is a mixture of mature and emerging markets currency devaluation versus the Swiss franc. It's notable that this softened in the second quarter to 1.5% while it was still at 5.5% in Q1. For recurring EBIT, we delivered double-digit organic growth of 11.5%. There were foreign exchange translation effects of 40 million Swiss francs, or 2.8%, and a 112 million Swiss franc impact from divestments, as mentioned already in the sales chart. Here, as well, net M&A is mainly driven by Nigeria and other divestments, partially offset by Pakasmayo. Also here, the foreign exchange translation effect softened to 1.4% in the second quarter. EBIT growth was driven by strong commercial execution, operational excellence and disciplined cost management in the countries and at corporate level. And I want to underline that once again, we delivered positive price overcost in all our regions. This is now the 17th consecutive quarter with positive price overcost for Holcim. Next, let's look at the progression of our recurring EBIT and recurring EBIT margin on a rolling 12-month basis. This graph shows our continuing margin expansion, again driven by our strong commercial execution, operational excellence, and disciplined cost management, also underlined with our AI initiatives. The group margin for the second quarter was flat compared to the same period a year ago, mainly due to divestments. We are committed to further margin expansion for the full year 2026 and expect to be broadly flat for the first nine months before seeing expansion for the full year. Next, let's look at the regional performance. Organic growth in net sales was strong in each of LATAM and EMEA, and in Europe there was a significant acceleration in the second quarter. In Asia, Middle East and Africa, there was excellent organic growth in recurring EBIT in H1 at almost 24%, with an 80 basis points increase in margin, while we keep achieving a recurring EBIT margin of above 30% in Latin America. Europe saw good margin development and, as mentioned before, good cost development on the corporate level continued. Our performance culture and disciplined financial management ultimately drives the growth of our earnings per share, EPS, which is up 7.4% in Swiss francs from a year ago. This shows that we pay equal attention to operational performance and financial discipline in the lines below recurring EBIT and that we are producing superior profitable growth. Next, you can see the development of our free cash flow in the first half of the year. The headline number incorporates some capex phasing, a seasonally strong June that impacted H1 working capital, and the large divestment of Nigeria in the second half of 2025. Taking these things into account, we are fully on track to meet a full year guidance of around 2 billion Swiss francs. Looking now at our strong investment grade balance sheet, as well as accounting for dividend payments, our M&A, principally the acquisition of Cementos, Pagas, Maya and Xela, has increased our financial debt. Given the seasonality of our cash flow, we expect our leverage ratio to be back to around 1.6 times by year-end, so close to our 1.5 target level, even after closing our announced acquisition and expansion in Colombia and our usual run rate of around half a billion Swiss francs on bolt-on acquisitions. And with that, I'm pleased to hand you back over, Miljan. Thank you, Steffen.

For NextGrow 2030, we are delivering superior performance and margin expansion focused on the five key drivers. Firstly, 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 next gen growth is expanding high value building solution and with our impeccable track record of value accretive M&A, we are focusing on the most attractive markets and the most attractive businesses. And all of this is driven by our deeply embedded performance culture. Now let's look more closely at some of these drivers. Our sustainable offering, driven by our premium brands, EcoPact, EcoPlanet and EcoCycle, continues to be in demand. These premium brands are being used at scale in large-scale projects. One example here, which you can see on the slide, is the library in Australia, which is built with EcoPact and Geostone, our modern decorative concrete inside. The library in Geelong and in Melbourne is a Landmark and Community Hub that reflects Aboriginal heritage and it was also awarded a five-star Green Star rating from the Green Building Council of Australia. During the first half, we increased the volume of recycled construction and demolition materials by 36%, accelerating also our circular construction technology eco-cycle. Circular construction more broadly continues to be a driver of profitable growth. And as you can see on this slide, the contribution from our acquisition of Xela, for example, with its additional 22 circular construction hubs, we are now close to 150 in total. We also closed seven value accretive transactions in the first half of the year, of which six were acquisition and one was divestment. To reinforce building materials, Holsi made acquisition in Romania as well as Pacasmaio in Peru. Building solution expanded with four strategic acquisitions in Belgium, Germany, and New Zealand, as well as the acquisition of Xela. We also made one divestment. The two strategic acquisitions we closed in H1 will definitely help us accelerate our next-gen growth 2030 strategy. Xela, which is a leader in the attractive 12 billion plus euro walling market, brings around 900 million Swiss francs in projected 2026 sales, as well as more than 50 production facilities. At the same time, Pacas Mayo, a leading player in Peru of building materials and also building solution, brings additional 500 million Swiss Francs of projected 2026 net sales, as well as three integrated cement plants and 28 ready-mix and precast plants. On the next slide, you can see how addition of premium Xela brands enhances our integrated end-to-end building solutions, offering our customers from foundation and flooring to walling and roofing. For walling, our customer offering now includes etonc as well as silica and multipore mineral insulation. For roofing, we now offer a large format hubbell panels. To conclude this section on Xela, I wanted to emphasize how delighted I am to welcome Xela's 4,000 employees to Holcim family. Last quarter, we explained to you how AI is unlocking incremental value and growth for Holcim, improving performance and also driving customer-centric services. And to reinforce, we expect benefits from AI of around 200 million Swiss francs by 2028, reflecting both cost savings and also cost avoidance. We think this will entail growth investments of around 20 million Swiss francs a year. and we have around 40 initiatives across these four areas of production, logistics, commercial and administration. Let's look next at some of the initiatives we are scaling up. So on this side, we have initiatives related to production. We have AI-powered Holcim Predict family of initiatives. Mpredict is for maintenance where we are using AI models correlating smart sensors to predict maintenance of critical machines. The other one is Qpredict, which is for quality. Using models, it allows us to optimize cement formulations while reducing clinker factor and so far we have tested more than 7,000 different cement formulations since its launch. For M and Q predict, we have made excellent progress. The next big initiative is P predict, which uses AI for real-time kiln process control, allowing us to optimize our energy mix, and this will include increased usage of alternative fuels. Now, turning to the rest of the year, We are upgrading our 2026 full year guidance after this very strong first half. Net sales and recurring EBIT growth at high end of our next-gen growth 2030 targets. 5% organic net sales growth and 10% organic recurring EBIT growth. further increase in our recurring EBIT margin, free cash flow around 2 billion and we want to continue to over proportionally grow in recycled construction and demolition materials. Bernd, you can now open it for questions.

Thank you, Miljan. Thank you, Steffen. With this, we open the line for questions. The first question came in from Ben Radamartin from Goldman Sachs. Good morning, Ben.

Excellent, thanks very much Miljan, Steffen and Bernd. Thanks for the questions today. My first question was on, I guess, the ETS changes we've seen in the last few weeks. I'd be interested in how that affects your European decarbonisation strategy at all. Are there any business cases that you think are stronger under the proposed changes or any that you might look to revisit? and then the second question is around Europe cement pricing. I wonder if you could provide an update on your ambitions as we get into the second half of this year and as we think about 2027 with the backdrop of more energy inflation, is it right to think that the contribution for pricing into next year could be a similar magnitude or even larger than what we saw in 2026? Thank you.

Good morning, Ben. Thank you for your question. I'll start with ETS. So it's been almost two weeks, Ben, since we saw the EU ETS proposal for reforms. First reaction from my side was this actually once again confirms that ETS will remain the key pillar of European climate and industrial policy. After analyzing it, we found that it is positive for Holcim and it will open additional opportunity for us. Starting with this industrial decarbonization bank, 100 billion of investments, we definitely want to participate in this. Free allowances phasing out, I see this as a positive sign because Thank you very much. and many others. Thank you very much. We want to, working with our partners of course, we want to use the captured CO2 to sell it, to be used to produce sustainable aviation fuel. So in my view, very positive and for Holcim being the leader in the decarbonization, this will definitely open the new opportunities. Now on the pricing, very happy so far. At the beginning of the year, we did aim for mid-single digits. This is where we are. There were some very pleasant upsides, for instance Mexico. So for the second half of the year, I do believe there are pockets of opportunities. Steffen said it, 17 quarters of positive price over cost. So next time when we talk, Ben, I will report another 18th quarter of positive price over cost. So that's the goal for the rest of the year.

Excellent. And I guess just to come back on pricing, conscious they're a little bit early for 2027, but given the energy inflation backdrop in Europe, do you expect pricing to be a bigger contributor next year than what we've seen this year or similar magnitude or is it too early to say?

I would not like to comment on this at this stage. It's too early. Probably we should talk more about this in Q3 or towards the end of the year.

Excellent. Thank you very much.

Thank you Ben. Thank you Ben. The next one on the line is Julian Radlinger from UBS. Good morning Julian.

Hey, good morning, guys. So a couple of questions. The first one is, can we dig a little bit deeper into Europe? So you finally turned the corner there on volumes. And of course, you're not the only company, construction company, to have done so. But so could you paint us a bit of a picture of which countries are growing, which ones aren't yet? And I'm also really curious about, is this more infrastructure driven? or is residential coming back in a clear way somewhere? And by that I mean not just permits that you're seeing, but actual activity. Thank you.

Good morning, Julian. Thank you for the question. On Europe. Very pleased with the momentum in H1, especially acceleration in Q2. As you have seen, we did very well in Europe. So, all in all, infrastructure backlog is extremely healthy across the whole Europe. On the residential sector, I would like to say that Eastern Europe is doing well. But we are seeing soft recovery in Germany and also in France. At the same time, Spain and Greece are doing really, really well. So the only soft market in H1 was UK, and we expect that these big projects such as a river crossing in London, a sizeable sea, a few others where we are participating, tendering, This will create a much better momentum in H2, but unlike Germany and France, residential in UK is still soft.

Okay, great. And then sort of the same question for Latin America. So here your volumes were slightly negative, I think, in Q2. They looked a little bit better in the prior quarter. And if I look at all sorts of construction data and what some of your peers reported for Mexico, etc., I would have actually expected a bit of volume growth in Latin America. Can you help us understand what drove that sort of volume setback in Q2 and will that change in the second half of the year? Thank you.

On LATAM, Julian, it was a country mix, but countries that we are seeing a strong performance, Mexico, Ecuador, the whole Central America, and especially Peru. You saw what Paca Smile reported for Q2, net sales up more than 15%, and EBITDA up 30-plus percent. Argentina is softer than we expected, and in Colombia we had the election, so that probably had an impact on the whole volumes. Regarding Mexico, we are pleased with the performance. We are still talking about even higher EBITDA margins. and more than 45%. We maintained our market share. I know there was a shift in the volumes in central region of Mexico but this was nothing to do with Holcim. So for the H2, I believe that we will see significantly better momentum. Thank you very much. Thank you.

Thank you, Julian. Then we take three questions from Paul Rocha from BNP Paribas. He sent us the questions by email. First question from Paul, are the margins in LATAM likely to be relatively stable sequentially, around 30% in the future, which would actually imply a big expansion year over year in the third quarter?

I would turn it over to Steffen. Yeah, hey, Paul, good question. Look, I would say what we've been saying all along, that LATAM, for us, we manage just like a portfolio, and LATAM has always been above 30%. We have some countries every year that are a bit stronger, that are going through other periods, so we manage this as a portfolio, and we always say between 30% and 35%, this margin will swing year by year. which is great for us because the region is growing in sales and so the mix into our overall portfolio and into our results is positive from this high margin growth. So every year we expect this to be above 30% with some wiggle room depending on the country mix and the specific projects that we're doing. So yes, we confirm that it's above 30%.

The second question from Paul is on our corporate costs. He is writing, is there upside risk to your previous targets for reducing central costs given the good performance in the second quarter?

Yeah, look, very good question. So please be mindful that at the half year, the corporate costs we show, you cannot simply multiply that by two to get to the full year number because we have some backloaded impacts, like, for example, insurance payments, clearing out the insurance from our internal captive. So these are things that hit in the fourth quarter. This is why you cannot put a straight line from... Thank you very much. We will see then in the full year how we manage the late sequencing of those costs. But for so far, there's certainly no risk that it could be worse.

And the third question from Paul, he's asking, are there any green shoots in the UK? Any positive signs, first leading indicators?

Look, I did mention this previously, that in H1, UK has been relatively soft. We are seeing that all these big infrastructure projects have started. We are supplying. Thank you very much. So it is moving. Probably the delay in H1 was due to the political uncertainty. I would expect much better and stronger momentum later in Q3. And hopefully the residential will start coming back through some government incentives.

Thank you, Miljan. The next one in the line is Elodie Roll from JP Morgan. Good morning, Elodie.

Hi, good morning. Thanks for taking my questions. I'll have three, if I may. First of all, on your guidance, I think it implies in H2 some deceleration, right? In H2, a bit like for like, given the delivered 11.5% in H1 and your guidance around 10% for the year. So what is that? We see some easy comps, I think, in Q4 from corporate costs. What's keeping you from being a bit more optimistic there? Second, in terms of price-cost spread, sorry to come back on that, but can you confirm that it was positive in Q2 and give us some color by region? I think you mentioned 17 quarters of positive price-cost spread, but was it just for Europe? I didn't quite catch that. And lastly, just maybe a bit of out-of-the-box question, but you're selling your emerging market exposure. You just sold Nigeria, but you sold that to Huaqin, and you have a 41% stake as part of your JV in Huaqin. So I was trying to understand what the long-term rationale is here with regard to your strategy and your JV. Thank you.

Good morning Elodie, thank you for your question. On the guidance we decided to go to the upper end because it's H1. We usually revisit guidance in Q3 but we were feeling comfortable with the performance in H1 so we decided to go up to the upper level. It doesn't mean anything for H2 that there will be a slowdown. I can tell you that July is looking good, equally good as June across all our markets. Some markets are even better in July than in June. And then Q4, it will be better in December. But I would not expect any slowdown or deacceleration in H2. We can revisit our guidance again at the end of Q3. Regarding Washington, yes, we did divest Nigeria because we believe that Washington is a better owner of this business. We did even before some other positions. With us, we like our participation in Washington. It's a It's a healthy, very healthy relationship and it does not contradict with our strategy in the long term. On the price over cost, I would like to hand it over to Stefan.

Hi Elodie, good morning from my side as well. Correct, 17th quarter of positive price over cost. In all regions, so to give you a bit more insight, you can do your math. Positive price over cost was to the tune of, let's say, 90 million. And you can probably parcel this in equal thirds to the three regions. With Europe in the sequence, Europe, EMEA, LATAM, that gives you a good indication. But roughly a third, all of those.

Emerging market strategy, she asked.

Emerging market strategy, so far Europe represents around 55% of our total net sales and the rest is Latam, North Africa and other positions we are. I believe this is a good mix. There could be some additional potential divestments just on the smaller scale and we We are constantly reassessing our position and we will continue to invest in the most attractive markets and most attractive businesses. For instance, Latam is considered as a developing market. This is a market where we have the highest margins. This is a market where we have made some significant investments. I mentioned Pacas Mayo. The other, we signed a Thank you very much. Thank you. Thank you, Elodie. The next caller is Pooja Rinigos from Bernstein. Good morning, Pooja.

Hi, thanks for taking my questions. So my first question is on the margin expectation for the year. And while we've been speaking over the last few months, the impression I had was that through pricing, you are trying to offset the absolute increase in costs because of the energy and raw material cost inflation. Thank you very much. What has been better than expectations in terms of pricing? I mean, you did mention Mexico, but anything else you're seeing maybe better uptake or reception from your customers? And how should we think about this going into H2? Are you still continuing to pass pricing? And this guidance upgrade, how much of that comes from better pricing expectations?

Thank you for your question, Pujarini. I just want to go back to history and I'll take an example of Europe. From 21 to 25, markets were challenging in Europe. The construction activity was soft and residential dropped. During this time, Holcim Europe has increased the sales, increased the EBIT, but also we have managed to have a margin expansion of more than 400 basis points. So why am I telling you all of this? Pricing is definitely something that what we are focusing on, what we are driving is. But margin expansion is driven also by other factors. We are scaling up our sustainable offering. You saw it at EcoPact, EcoPlanet, now EcoCycle. On these products we do have a modest price premium, but we also have some cost upsides. So it's a double dipping. You have a small premium, you have a reduced cost, and you do... End up with the margin expansion. And these products are now representing one third of our sales. Secondly, decarbonization and circular construction. These initiatives we have on alternative fuels, on clinker factor reduction, on recycling of construction and demolition materials, all of this is driving profitable growth and all of this is actually helping us when it comes to margin expansion. And the third big topic is M&A. We have a great track record of value accretive M&As where we are divesting less attractive markets and at the same time we are focusing, we are investing in the more attractive markets. Perfect example is the latest PacaSmile. where the EBITDA margin in this year has been well above 30%. But we have divested some less attractive position. So it is the product mix, it's the sustainability driven initiatives plus value accretive M&A and when you combine all of this, this will continue to lead to margin expansion this year and also in the years to come. Stefan, maybe on the guidance for margin for the rest of the year?

Yes, look, our guidance for margin for the rest of the year is that we will increase further. I said previously that we have a sequential improvement. We were still slightly down in the first quarter. Drivers for that were, of course, the weather in the first quarter. We are flat in the second quarter. Very good performance on price over cost. Very good performance on our pricing and on our cost performance. But there's an impact from divestments. So there's just a mixed impact. And that has kept us flat for the second quarter, predominantly in Nigeria. They had a very high margin last year. But that is fading out now. So the Nigeria divestment happened in August. So we're going into more like-for-like basis on that for the second half. And then all the other things will continue. And so we expect probably to be year-to-date nine months flat and then full year positive, which means two good margin quarters to come.

So going back to pricing, Poggiarini, so happy with what we have achieved so far for the rest of the year. Nothing extraordinary, but I do see some pockets of potential price increases in Europe, but more in Latin America.

Okay, thank you. Thank you, Puja. Then we take a question from Luis Prieto from Kepler Chevrolet. Good morning, Luis.

Morning. Thanks a lot for taking my questions. Just two left for me. Would you be able to break down the organic growth building block of your Q2 2026 recurring EBIT bridge between price over cost and volume to get a better idea? And then the second one, following up on Elvie's question, if I recall correctly, you mentioned in Q1 that in order to achieve the top end of the guidance, there would need to be geopolitical stability. I understand that there was strength in Q2, but wouldn't it have been more advisable to wait until nine months that you mentioned earlier to have more visibility on the geopolitical front? Thank you.

Thank you for your question, Louise. I'll take the second one and Stefan can go with the first one. Yes, geopolitical sector is always a risk, but as I said, we had such a great momentum in H1. We started well in Q1 despite the weather impact. Thank you very much. The business model that Holcim has is resilient across all market conditions, economical cycles, and we can overcome geopolitical uncertainty as well.

For price over cost, I answer to Elodie before the price over cost in the second quarter was to the tune of some 90 million. I would say Let's say 20, 15 to 20 of that was volume. Then there was some positive contribution of JVs to a tune of 10 to 15. And the rest is pricing.

Thank you.

Perfect. Thank you so much, Luis. The next caller is Martin Hüsler from ZKB. Good morning, Martin.

Good morning, everyone. I hope you can hear me. Perfect. Thanks. So as a question regarding this margin guidance you just alluded to, I was wondering whether the margin improvement in the second pass does also include Xela or is it only on recurring basis? That's the first question.

Hey, Martin. Good morning. Our margin is calculated on all sales and all EBIT. So it's not an organic margin. It's a full margin. Organic is just for everybody on the call to make this very clear. Sales growth is organic. EBIT growth is organic. The margin is a full margin. Cash flow is a full cash flow. And EPS growth is a full EPS growth. Okay, so the only two organic KPIs that we have in our reporting and guidance is sales growth and EBIT growth.

Okay, so that's a rather strong message, I guess, because I would expect Xella, obviously, On recurring base to be a bit margin diluted and then obviously you have some consolidation effects in the second half probably as well. Maybe can you share what maybe margin or let's say what EBIT contribution we could expect from Xela in the second half? Obviously you mentioned the sales side but maybe on EBIT side as well?

I said it before that the impact of M&A on our margin in the first half was rather one of divestments. So we divested Nigeria, which had a margin impact in the first half because that was a business with a very high margin. The inclusion of new businesses... and many more. Thank you very much.

Thank you, that's very helpful. The second question I have, maybe a bit housekeeping, but the delta between adjusted operating profit and operating profit was rather a bit higher than what I was expecting, so maybe in the tune of 150 million. What should we expect for the full year here?

Alfonso Paradinas, Martin Kriegner, Oliver Osswald We would expect that for the full year, the best guidance we can give you go with run rates of the past. So we manage these below the recurring EBIT lines. We always manage them with big care and we try to always keep them within the framework of what we're used to. Just so that you know, I personally approve every item that's booked below recurring EBIT. So we're managing these lines very closely and the best assumption you can take is previous years.

Thanks a lot.

Thank you very much. You know, just over a times of EBITDA in terms of leverage and given a billion of dividends and half a billion of bolt-ons, that still kind of leaves you close to two and a half, three billion of balance sheet firepower for sizable acquisitions in the next 12 months. Would that be a fair characterization of Thank you very much. Your margin was lower by just over 200 basis points, I suppose because of Pakas Mayo. Could you help us quantify that margin dilution percentage? Thank you.

So, Ephraim, very good on the balance sheet. If you're looking for a job in Treasury, we're happy to have you. That was spot on. We have... About 1.6 times leverage by year's end after we paid for all the acquisitions. Remember, we still want to do a mandatory tender offer for Pagas Mayu. We still have the Colombian acquisition to close probably this year. So all of these things together will lead us to a debt leverage of around 1.6 by the end of the year. and you said it absolutely right. If we want to stay with our, let's say, 1.5 guidance for next year, then come back to that, we have more than one bill on top of hold-ons of 400 to 500 million. We have another billion of firepower available. If we were to increase the debt leverage any further, we would even have more money available, which we could do for a short period of time. So your estimates there were not bad. But maybe the simplest way to go about it, if we keep on doing bold-ons, if we want to go back to 1.5, we have more than 1.1, 1.2 billion Swiss francs available still for next year to spend.

On the LATAM margins?

So that had a mixed effect and the onboarding costs of Pakasmajo. Those were the main drivers, plus some other M&A we did there, some other onboarding costs. Those were the main drivers for margin in Latin America. But again, as I said before, we expect margin in Latin America to be above 30% and to always be above 30% because this is how we're managing the region. A bit like and many more.

Just to add on M&A, what Stefan said, look, yes, we did close Pakasmayo, Xela, teams are working to close Colombia at the end of the year, beginning of next year, but we are not stopping. Pipeline is very healthy, we are seeing some promising targets, we are working on some very good deals, so we do have, thanks to our very healthy balance sheet, Thank you. Very clear. Perfect. The next question is from Arno Lehmann from Bank of America. Good morning, Arno.

Good morning, and thank you for taking my question. Just a couple of follow-ups, if I may, on cash flow. The cash flow guidance is unchanged, despite the small upgrade in the EBIT guidance. I appreciate there's a lot of moving parts, and you've given us a net debt to EBITDA target as well. But can you help me even further, and do you have a view on working capital effects and CAPEX For the full year, because I'm actually struggling to get to 1.6. You know, naturally, it would go a little bit lower than that. My second question is just on Gvilla. You report 458 million Swiss francs of sales. for the first half. If I multiply that by two, that's about 920, which I believe was more or less what was delivered in 2025. So can you confirm that for now, Xela's sales have been broadly stable this year? And do you believe the business can start growing even without a meaningful recovery in German housing activity? Thank you.

Good morning and thank you for the question, Arno. I'll start and then I'll hand it over to Stefan. First of all, on Xela, look, Q1 was tough for Xela. Yes, mainly weather-related conditions, especially in Western Europe. Thank you very much. Holcim and Xela, we will be able to accelerate these activities on cross-selling, on specification selling and also on system selling. So I believe they can and they will grow. On the first question, I'll start with the capex, then I'll hand it over to Stefan. So we talk always more about We talk about M&As, but the fact is we are investing heavily in value-accretive capex projects. And yes, this year we have invested heavily. There is a brand-new flagship plant for us in Belgium. that will be commissioned in H1, and most of the payments is due this year. We're also building the new grinding station hub in London, Tilbury. We have made some heavy investments in alternative fuels in Europe, but also in Latin America. I mentioned some of the investments we made in Australia. So we are investing also in organic growth, and all these CAPEX projects that we have, they have very attractive ROIC, which is well above, currently above our current company, ROIC. I'll stop here and hand it over to you.

Thanks, Miljan. Hey, Anu, good morning. To deconstruct the components a little bit, good EBDA growth. Also, you saw a slight softening of the FX headwind that of course helps, which is not even part of the calculation really. A bit of higher working capital, maybe to the tune of 100 million because of good business development. Remember, our working capital is negative in most of our countries, so there's not so much room to improve further. But that will be totally compensated by the cash flow coming in with new acquisitions. Nothing to be said on taxes. So when you put all these things together, we're quite confident around the 2 billion. And why do we not narrow this down much more? I always say... Thank you very much. Thank you very much. Thank you, Arno. And the last question today comes from Harry Dow from Rothschild, obviously.

Good morning, everybody. Just two questions from me. Firstly, just on the AI savings, I wonder if you could tell us whether any of that was booked in the first half and maybe just some phasing around. You might have given us before, which reminded us the phasing for this year and next through to 2028 of those savings. And then secondly, just on the strategy on European roofing, I think you mentioned that there was a launch of a new roofing panel product. Just some more colour on the strategy there. Should we expect more organic development or M&A led? And also, I'm assuming that was sort of an insulated panel. Does that mean potentially there could be a future of insulated panels for walling solutions as well? Thank you.

Good morning, Harry, and thank you for your question. On AI, the total target, we communicated 200 million net benefit by 2028. This includes approximately 20 million investments per year. We did not say the target for 2026, but I would expect... Thank you very much. It started three and a half, four years ago. I was in my previous role. And the whole momentum, once we set up the team, the scaling up, today we have more than 1,500 machines already on AI platform. It's quite impressive. So the speed, the scale, acceleration, what we saw in production, We want to replicate in commercial, in logistics, and to some extent even in admin. On the roofing, well, roofing is relatively small business, few hundred million. We did make some acquisitions from, if you recall, Zinco Green Roof. With Xela, we do have the opportunity to provide the system through our Hebel brand, but it could be more organically... Thank you for your attention.

Perfect. Thank you so much, Miljan. This concludes today's conference call. Thank you so much for your interest in Holcim and your very active participation. Obviously, the investor relations team is more than happy to help you if there are any further questions. So please stay tuned. Have a wonderful summer. And with this, I hand over to Miljan for some closing remarks.

Once again, thank you all for joining us this morning. We were very proud to share with you our extraordinary performance in H1 and especially in Q2. We will continue to focus on our key strategic goals Thank you very much.