Heidelberg Materials Ag

Thank you, operator. Good morning. Good afternoon, everyone listening in to our Q3 earnings call. Pleased to report the numbers that we published this morning. As always, we have in the room Dominic, our CEO, Rene, our CFO, and from the IR team, Robert and Ozan, myself. So, you know, happy to receive your questions after the prepared remarks. And for those, I hand over to Dominic.

Chris, thanks a lot. Welcome, everybody. From our side, great to hear you and have you on the call. Let me just go through the presentation quickly, and then we get to your numbers. Good quarter for us. I think revenue up 1%, RCO up 5%, after currency impact even 7%. So I think that's good. Also operating EBITDA margin up by 65 basis points. I think that's a good quarter, driven also by the transformation accelerator, savings around 250 million. So we are basically halfway to where we need to go and want to go, although we've still got 15 months to go. So I think that's well on track from our perspective, if not even better. is on track to be finished by December at the latest. So I think that should be good. The second tranche, obviously, of the 1.2 billion. So fully on track to what we have communicated. Good news on the decarbonization side. We expand our leadership in that respect. I'm sure we get into your questions on this one. but we took the FID final investment decision for Pacewood CCS project. Construction will start this year. So that's good news. And on the back of that and on the back of Breivik performing well in terms of carbon, capturing the carbon and also putting it under the Norwegian sea, we are able now to sell the first Evo Zero products to the market. And we have already the first projects that are up for delivery. So in that respect, things are moving well. And on the back of all of that, we are confident to give you a positive outlook for the remainder of the year to end up at a narrowed range for the outcome of the RCO this year, which will now be 3.3 to 3.5 instead of 3.25 to 3.55, so I think that's also good news. ROIC will be around 10% and the CO2 emission will come slightly down. So overall, I think, fully on track. If you go to the page 3, You see again the numbers. I think that that's all going in the right direction. Revenues up, EBITDA up, EBITDA margin up, and EBIT up. I think that in difficult market environments, I think a very convincing performance. That same is true for the full year, everything green in terms of revenue, EBITDA, margin, and EBIT. So I think we don't need to go through the details. You can read them yourself. If you go to the Q3 bridge, page 5, 55 million, almost 55 million up, 5% on RCO. And you see, yes, there is still volume decline, so the net volume figure is still down. But the good news is price over cost is positive, and that's a very important measure for us. We told you all along that our clear target is to keep price overcost well in the positives throughout the year. And this is what we again delivered in Q3. And you see also on the left side, currency impact. There is a significant currency impact to my earlier remark. Also in the quarter, almost 30 million. And on the flip side, there is positive scope effect where the acquisitions start contributing. So in this case, 30 million up. If you look at the same picture on the nine-month figures, page six, you see that the net volume is minus 91. and the price of our cost is 202. If you want to read something positive into this, you see that the volume decline is slowing down because it's a big quarter, minus 24 million on the volume side compared to nine months, 91. You can do the math yourself. I think there is a little bit of a stabilization effect on the volume side coming, and then also if you go to the scope effect, Let's start with currency. If you see the currency, I think the currency impact is significant. So you see for the full nine year, 29 million, while for the quarter alone, 28 million. So you see the currency impact is significant. So it's the scope effect. Again, 29 million for the full quarter, but 48 million for the first nine months. Do the math. So I think it's moving in the right direction also on getting the effects from the acquisitions. If you turn to the transformation accelerator on page seven, we are absolutely confident that we will hit 500 million, if not more, on the transformation accelerator. We have 250 million in the books. on the three pillars that we are chasing. And it's really showing now also in terms of how we execute this internally, the advantage we have globally and to really push the global advantage of being very focused and pure play in our industry to really drive efficiencies along the platforms that we have described, decarbonization, digitalization, but also technical excellence. And the transformation accelerator is a fantastic tool to show also the contribution of that. Now, when we get to Europe, you know, from our perspective, not a great quarter in Europe. We say that very clearly. There were a couple of one-offs in there. René will maybe go through the details in a minute. but I think okay on a fairly high level, but we are an ambitious team, and I would say as good as Q2 was in Europe, I think Q3 was also driven by those not a fantastic exercise, but I think everything that we can see and what we can manage internally, both in terms of pricing, but also in terms of costs, I think that goes in the right direction. The market is the market to some extent, And obviously we are heavy weighted to some markets that are still under pressure, which is great news because if we do our homework right, then the upside potential out of this is substantial, if not substantially better than with any comparison. So in that respect, it moves in the right direction in general, but Q3 is nothing to over-celebrate on Europe. We are very honest about this. But for me, the more important message here is this is a quarterly impact. We do not see a Change in any positive trend from from the bottom up in Europe and we are doing consistently our homework Show you so I'm very confident that Europe will show its strength down the road Then we go to the next page, we moved to North America. Other than Europe, I think strong water from North America. Also the comms we can see. I think overall, I think there was a good development in North America. Overall, I would say revenues up, EBITDA up, RCO up, like for like in the higher single digit numbers. I think that is and also margins up, especially in aggregates, good performance, also in cement stable on a good level. So overall, I think a good quota from North America. Asia-Pacific, I think, splits into a couple of different messages. I think Asia, to be honest, is still in difficult territories. I think the hopes were higher, I'm being very honest with you, on the Asian performance. I think they're doing good homework again. I think there are markets and countries that are really performing above our expectations, but there are clearly also countries like China, Hong Kong, to some extent also Indonesia, that are clearly under our expectations. Again, upside for the time to come, but I think that's not where we wanted it to be. Maybe on Australia, René, you want to comment?

Australia had a very strong quarter for us. August, September was very good. Also, October was very good. So, Australia is slightly coming back, which was very good cost-based. Now, the volumes can deliver good margins. So, Australia is in very good shape, was very good shape in Q3.

Yep. Okay, and then I think in a global portfolio, you have always movements, but I think the good news is that AMVA is continuing to clogging along on a very high level, I would say. So revenues up 6%, like for like reported even 13 because of the estimate acquisition. Then we have the EBITDA up 23% reported. I would say that's a very strong growth. unparalleled and then like for like even up 15% so underlying performance and acquisition works very well in Africa and the same is true on RCO look at the EBITDA margin development 250 basis points up guys in cement I have to say kudos to our team in AMVA that is really doing a fantastic job in difficult circumstances you know I think let's not assume that this is all easy But it's our duty as a global company to manage the volatilities and I think the African team is doing a fantastic job. Good news also on sustainability. A lot of good news, I would say. First of all, Evo Zero is now finally hitting the market. We've started the first projects with the underground station in Oslo, for example, and also a 3D printed house here in the vicinity of our headquarter here in Heidelberg. I've been on the site myself. That's quite energizing to see how you combine a 3D printing technology with near-zero carbon products. I think that really moves in the right direction. It shows how applicable this product is and how much value we can drive for the end customer with this product. So I have high hopes that this is really our future and this works well. Final investment decision in Pacewood. I think, why do we make a significant fuss about this? Because the final investment decision, guys, is an important milestone and i think the market is underestimating this milestone i have to tell you there are project portfolios all over the place uh by the way also in continental europe but there's in continental europe guys not one project not one project that has even taken a final investment decision and just to be very clear a the hurdle to take a final investment decision from a project stage is massive massive uh and secondly to then deliver the project Sorry guys, somehow the line broke down. So let's go back to the sustainability side of things. In the end, I think good news is that Evo Zero now finally hits the market, and we have a couple of exciting projects. I think you used to capture that. What is important is the FID, so the final investment decision that we took now on Pacewood is, I think, vastly underestimated by the market. A final investment decision is a very important milestone and a difficult milestone to hit, even if you have a lot of projects that you are chasing. To get to a final investment decision is a major hurdle and I think should not be underestimated. And then once you've made the final investment decision, you still have to execute the project. You have to capture the carbon. You have to store the carbon. And again, this takes three to five years before you get there. So I am convinced we have as hydrogen materials here a huge competitive edge. And we will rest assured we will build on this. If there are questions later on, I'm happy to make that point. But I think let's just be clear that this is a significant edge that we do have in that respect. And again, we are clearly going to build on it. Talking about building on it, I think it's clear that the latest news from this week about the EU Innovation Fund decisions is just another proof point that we are on the right track. And also the EU government has understood that there are companies that are delivering on what they are promising. So in that respect, I think we have all four of our applied projects basically got green-lighted. The one in Belgium, Antemis, the one in France, the one in Italy, in Rezato and then the pilot project in Gorazde in Poland, next to the ones we already had, G0 and Anraf. For the four of this week, we alone got 520 million of Carbon Contracts for Difference, or in this case, EU Innovation Fund money, and we need to complement and want to complement this now with local supports, and let's wait and see how we get there. And when we get there, but overall, this was very encouraging news and a clear sign that the EU has understood who is leading the game here. In that respect, I would move over to the financials, Rene, and you want to take over?

Thanks, Dominik. Hello, everyone as well from my side. So what you see here on one One page is a rough overview about our key financial metrics, adjusted earnings per share 4% up, and even if you would take the reported earnings per share, it's even 11% up. So if we take the AOR out, it's only 4% because last year we had the impairments of the European Master Plan part of it in our numbers. So last 12 months, the cash flow is at 2.3 billion. That's 150 million higher than the last 12 months, December 24. I think that's a pretty good result. And the final outcome will depend on working capital in and outflow at the end. So let's say we have inflow, but let's see how much. But the clear target is to be on 2.2 to 2.3 billion. So that should flow in. And then leverage, you know, that seasonal one and a half right now, which will go down by year end, will probably be between 1.2 and 1.3, depending on, as I said, working capital. But I guess it is showing the healthiness of our balance sheet. And then regarding M&A, Dominic alluded to it, we have closed us, Mente, Timara and Morocco, a very good acquisition for us. And then also in Australia, The Buckridge Group of Companies is closed and already in October it will be in our numbers. So that is a very, very, very good acquisition. And then the second round of the Schermer Bank, as Dominic said, we will finalize by mid-December latest. Dominik, I hand over to you for the outlook.

Okay, then we have just the outlook. I think I mentioned that already. We have specified the outlook and narrowed the range to 3.3 to 3.5 billion on the RCO. ROIC will be above 10%. That's the clear target. We have slight reductions on CO2 emissions. CapEx will stay at the promised level, around 1.2 billion, and then the leverage will be around 1.5. We are quite confident that it will come in even below that, or better than that. that also indicates that there is a clear opportunity to continue our growth on the organic side, but also on the acquisition side. So in that respect, all lights on green. Thanks a lot. And with that, I would say let's turn to your questions.

Operator, do you want to start the Q&A process, please?

We will now begin the question and answer session. Anyone who has a question may press star and one on their telephone. You will be returned to confirm that you have entered the queue. If you wish to remove yourself from the question queue, you may press star and two. Questions on the phone are requested to disable the loudspeaker mode while asking a question. Anyone who has a question may press star and one at this time.

Okay, I see a very full line of questions, so please We'll take your questions two at a time, as always. The first question comes from Louis Prieto from Kepler. Hello.

Thanks a lot for taking my questions. I had a couple of them, hopefully very quick. The first one is, if you could please provide us with some sense of what the percentage level of subsidy obtained from the EU Innovation Fund for the plants in France, Italy and Belgium. You mentioned 520 for the award, but I'm not sure what the total capex for the three plants was. So that would be useful. And if you have any updated timing for the projects. And then the second question, this might be a bit difficult, but a close peer of yours has stated that they see U.S. residential subdued next year, I assume in the U.S. Do you have any commentary on what you're seeing for next year in this particular part of the market? Thank you.

Okay, Luis, thanks a lot. Look, on the subsidies, there is no number we can disclose at this point because, A, the investment level is still obviously under scrutiny. Yes, there is a hand-in that you put into the application process, but this is a moving target, so it's far too early to make a final conclusion because, you know, keep in mind, we continue to learn from Breivik, we continue to learn from Pacewood, and that obviously goes into the budget, so we're not going to throw out any inflated number. We do our homework. Secondly, I don't think that the EU Innovation Fund is the end of the subsidy game. You know, there is carbon contracts for difference that are, for example, available in Germany, and the process is still ongoing. So I don't want to jump to any early conclusions on this. So I ask for your understanding that, rest assured, we will only greenlight carbon capture projects if we have a very convincing business case. As we always said, Breivik and Pacewood are performing above the average return on invested capital compared to the total group, and that will stay the goalpost for any additional investments we do into carbon capture and storage. On the U.S. residential side, you know, it's very hard to read 2026 is still a couple of months to go the situation in the us on the interest side interest rate side is volatile you know there is discussions going on the good news is that you know the turning point seems to be reached so the interest rates are coming down but you remember there is an interest rate and there is a mortgage rate and there are historical Hurdle rates, where the mortgage rates need to sit at certain levels when you then see things coming back. Pinned-up demand is absolutely there, but I think some additional movement down on the mortgage rate side would still help. I'm quite confident. Do we see this in January 1? I don't think so, but throughout 2026, would we see some upside potential on the residential side from today's viewpoint? Absolutely. Thank you, Louis. Super clear. Super clear. Thank you.

Thanks. The next question comes from Goldman Sachs, Ben Ranamati. Hi, Ben.

Hi, Ben. Great. Good afternoon, Dominic and Rene. Thanks for the time today. I've had two pleas, and both were on the European cement business. I guess, firstly, Dominic, you mentioned some one-offs within the quarter. I was wondering, could you quantify some of those and, I guess, the expectations that they won't be recurring going forward And then second, on the European cement business, on pricing in 2026, we've got some pretty significant regulatory changes when we look at the ETS benchmark, the phase-out of allowances, CBAM. I'd be interested, what kind of pricing do you expect on European cement in 2026? Is it right to think that the contribution will likely be larger than what we've seen in 2025? Thank you.

Thanks, Ben. Let's really take the first one and then I'll do the second.

Regarding the one-offs in the quarter, we had some major inventory impacts, roughly 10 to 15 million due to, let's say, phasing of production in some big European plants. And then we had some, as well, our other operating income was probably 10 to 15 million lower than it was last quarter due to timing of some It's small as it says here and there. It's really small stuff. But if you had 10 times 1 million or something, then it's up. That's what we had last year. So the inventory, that should come back. And then the timing of the assets or other operated income, there's some other incomes there that should come back.

Okay. Okay. And then on the European question around, you know, CBAM, EOATS, I think it's true that in the last couple of weeks there was a little bit of noise about what's going on there. You saw probably that yesterday the EU has then agreed now on a framework how to adjust some of the climate targets. from all what we see, no significant change to what is relevant for us. I think CDAM is there to stay, EOATS 1 is there to stay, Is there a discussion around what happens in 2034 and 2039? Maybe, but that's way out, guys. For us, you know, it's clear that you look at the carbon price right now, it's 82 or whatever it is. So the significant price moves further up. Our strategy does not change. We are fastly, on a fast pace, decarbonizing our assets in Europe. and become not only the cost leader but also we are clearly from our side pushing value over volume and that strategy is absolutely not changed. And to your specific question, Ben, do we expect for our company a better pricing performance in Europe in 26 than in 25? Yes.

Great, thanks very much.

Thank you, Ben. The next one comes from Elodie Rowe from KPMorgan. Elodie. Elodie, hello.

Yeah, hi, good morning, good afternoon. Thanks for taking my questions. Just first, it's not really a question since it's a follow-up from the previous question. Did you say that the one-offs were 25 million, more or less, in Europe? If you can just confirm that. And then second, on North America, Margins in cement also went down, I think 113 bps in Q3. Revenues was up 2.5% on the like-for-like basis. So can you give us a bit of color as well of what's going on there from a margin perspective and what kind of pricing environment are you seeing and expecting going forward as well in the US? Thanks very much.

Only 20 to 25 million is the number. for your question number one.

Okay. And then, Elodie, on the second question, on the U.S. cement margins, the picture is quite different, you know, in different markets of the U.S. And personally, Elodie, I think there's also some some tariff impact left or right, not on our side, but when it comes to the competitive situation in some of the different markets in the US. I think overall, the performance in North America in Q3 was good. That's true for the volume side. Would we have hoped for even better pricing dynamics in the U.S. on cement? Yes, I'm with you. But a similar answer, maybe not with the same amount because historically the performance on cement pricing was even better in the U.S. than it was in Europe. I think there is upside potential to the cement price development going into 2026 compared to 2025.

Thanks, Elodie, for your questions. Next in line is Tom Tan from Barclays.

Hey, Tom. Hi. Hi, both. Thanks very much for taking the questions. First one. So you mentioned in the remarks, you know, you're over indexed to some of the more, I guess, sluggish or weaker markets in Europe. Could you maybe expand on that a little bit more? Maybe you're sort of talking about Central Europe, Germany, and in particular, if you're seeing any changes in the competitive dynamic there as we go into 2026? And then the second question, just around capital allocation. So you mentioned the second tranche of the buyback. We're close to finishing, but I see you haven't bought back really any shares for the last month. So if the balance sheet is looking at 1.2 to 1.3 times leverage, maybe a bit of a slowdown in M&A in this quarter at least, what are the hurdles to just starting tranche three early and maybe committing more capital to buybacks? Thank you.

Thanks, Tom. Let me start the first one, then René takes the second one. Now, in Europe, you know, I think Europe has a large footprint. And the question is, you know, are all markets performing on the same level? The answer is clearly no. And I think it's no secret that Eastern Europe is in general performing well. And if you look to our exposure in Eastern Europe compared to others and our exposure in Northern Europe and in Western Europe, I think you will see some difference. And my comment was going towards the point that our markets Stronghold markets, they are very much next to Eastern Europe. They are very much also tweaked to Northern and Western Europe. So for us, obviously, markets like Norway, especially Sweden, the UK, Benelux, france germany they are significant significant stronghold for us and guess what those markets are volume wise have clearly underperformed in the last two or three years compared to the and you are now on levels far from the peak going back to the 50s of last of the last century so the upside potential in those markets you know is fundamental, to say the least, and that's why I think we are doing our homework, trimming the asset base, trimming the cost base, and with that should have a significant upside potential as those markets come back up. That was the reason of my comment.

So, Tom, regarding capital allocation, regarding the share buyback, that's correct. The last two, three weeks, we did not buy a lot of shares, but the process is in the hands of the banks and they steer let's say the purchase and that's what I can tell you and as well I can tell you that we want to the deadline is mid of December that we want to finish this so that's all on track and then regarding the third and last tranche of the second program for next year you know we want to keep the same We want to keep the same rhythm as we had it. And rest assured, we stick to what we have said. We will finish the shell back in next year. And that's it. And then we see, you know, when we have announced it or when it's finalized, we see what else we do. That depends as well on M&A opportunities or whatever and how our cash flow goes. So we keep you informed when the time is ready for this.

Yeah.

Thank you, Tom, for your questions. Next one comes from Puchori Gosh from Bernstein.

Hi. Thanks for taking my questions. So if we look at EMEA and APAC, we're seeing a significant margin expansion. So could you talk a little bit about what's driving that? Is it pricing? Maybe volume growth leading to operating leverage or cost efficiencies? And my second question is on Germany. So we know that volumes haven't materialized as maybe we were hoping for at the start of the year. But on the pricing side, what are you seeing? And have you started talking to your customers about pricing for the next year? And what should we expect on German pricing in 2026?

Yeah. Okay. Let me comment on your two questions. First of all, I think if you look at APEC, I think it's clear that Danny was making the point that Australia, I think, is moving in the right direction and that is very much driven also by cost management, disciplined cost management. and also stable pricing and good pricing, I think overall in Australia. But then clearly, I think the team in Asia is doing their homework. So we are massively looking at our costs. So the majority, I'm looking a bit to Rene, but the majority of the improvement on the margin side does not come from the pricing. It comes clearly from our cost management. And that's the name of the game right now in Asia. uh which which i think is also the right thing to do on germany uh please um allow that i'm not commenting on pricing for competitive reasons on certain markets we've never done this and cannot do it for for legal restrictions uh overall i think i go back to my earlier comment i'm absolutely uh for us uh it's it's a clear focus to um focus on value over volume and see a significantly better pricing performance for our operations in 26 in Europe than in 25. And that obviously also includes Germany.

Thank you. Thank you. Next question comes from Julian Ratlinger from UBS.

Hey, Julian. Hey, guys. Thanks a lot, Dominik, René, Christoph. Two questions actually on CO2 for me today. So first of all, you just got another four sets of subsidies on these projects. We're seeing quite a little activity in that area from most of your smaller competitors. And of course, you're doing a lot of other things to reduce your carbon intensity and clinker factor and so on as well. Where do you think you are on the CO2 cost curve today? You're very low end, bottom half, or put differently, do you have a view on what portion of your cement plants in Europe might make it into the benchmark, the top 10 cleanest plants? That's my first question. And then secondly, so you mentioned earlier the CO2 price in Europe is now above 80. That's up from 65 or so a year ago. Any good explanation why you think that might be happening? Thank you.

Julian, good questions, but maybe we're not the right ones to answer that. I think, first of all, on the benchmark glance, you know that this benchmark is run by the EU in a secretive process. You know, there is very little transparency around this. We have our own assumptions, but please understand that we cannot, I'm not starting to speculate. But as a general mark, it's clear that we want to be at the very top of that, or if you wish to say the other way around, at the very bottom of the cost curve, especially if you include the CO2 price. That's the whole game for driving this decarbonization agenda. that in the end, you know, we want to have the majority of our plants sitting in the benchmark, top 10. So I think in that respect, that's the clear aim, but I can't comment on any specifics of the running process. And then... On the 82 euros, you know, there is only speculation. It's very difficult to judge what's driving that price. If it would be easy, you know, we would all speculate in CO2 certificates, but I don't. So I think in that respect, hard to predict. But obviously, the higher the price moves, the better it is for us if we are the decarbonization leader. For us, that's absolutely okay. We have no problem with that. So we are in the camp of saying, hey, this has been the agreed system. This is how it works. And whether the price hits at 80 or 120 or 150, we are able to cope with everything given our strategy. And in that respect, we are also fine with 82.

Very good. Thank you very much.

Thank you again. Next question comes from Sida Ekblom from Morgan Stanley. Sida, hello.

Hello. Just a question back on pricing. I appreciate you won't give any specifics around how you're thinking about the pricing potential into next year in Europe. I do think it's interesting that some of your peers are willing to give more specific commentary, but I won't push you on that. What I do want to know is, Is there any reason why you would not follow a supply leader in the market if that supply leader was going for quite large price increases? Is there a reason why you would try and maybe be a little bit more commercial and be undercutting or looking at volumes? I'd like to just hear more around the commercial strategy if you won't talk to specific potential price increases. That would be helpful. Thank you.

Yeah, thanks a lot, Sida. First of all, there's only one reason why we don't follow. There's only one single reason why we don't follow because we take our decisions independently. I don't care what others do. In this respect, we take independent decisions and especially on pricing, this is a completely independent process and I don't care what others do. Of course, we are competing in the market, but our pricing decisions we take absolutely independently. I think that's the first point. The second point is I think we have taken you along over the years what the transformation of the company is all about. I'm very thankful for your question, Sida, because You know, while for decades, if not centuries, we were a very production-focused company, you know, trying to build our assets in a competitive way, this transformation now moves very much. And Evo Zero is just one prominent example towards the commercialization things. And we are just scratching the surface in that respect. But that's why I keep telling everybody internally it's value over volume. You know, I think it's clear we need to drive the best value for our customers. And if we drive the best value for our customers, we also demand the right price points for that. That's the name of the game. That's how we run the internal incentives. That's what we focus on as the leadership in the company. It's all about doing the top job in our countries with our customers and our commercial teams. And I think, as I said, we are probably just scratching the surface in that respect, but that's our clear strategy, Sida. Thanks for the question. Very important topic for us.

Thank you, Sida. The next one comes from Anna Schumacher from B&B Paribas. Hey, Anna.

Hi, everyone. Thanks for taking my questions. I'm on for Paul Roger today, so I have two. The first one, now that EVO Zero is on the market, do you have a better idea of the green premium for net zero cements? And is it possible to quantify it and compare to either build low CO2 cements? And secondly, how could the U.S. shutdown impact demand if it isn't resolved soon? Does the potential stalemate in Washington make a new infrastructure bill less likely next year?

Thank you. Just to show, I'm sure I got your second question because some of the line is not very good, at least maybe it's our fault. Are you asking about the U.S. infrastructure spending or?

Yeah.

You are talking about the shutdown in the U.S., no?

Yeah. So whether the shutdown in the U S like, does it, um, is there a risk that the infrastructure bill might, it might be less like it will less likely happen next year.

Okay, Anna, let me get to your two questions. Again, the near-zero products, from our perspective, is not a question around the premium. When it comes to EVO Zero, it's a unique product in the market, and it will demand a unique price point because it has unique value we can drive for the customer. And that's what we are very focused on. To my earlier remark to SIDA, that's what we are very focused on. So we're not talking about any premium because it is a completely different product that can't compete with any. You can say it that way or the other way. There is no competition for this specific product. And that obviously comes with a sound commercial strategy and a sound value strategy for those customers that are buying those products. And that's, for us, the clear focus. And it's clear for us that this uniqueness will also turn into a good pricing and margin performance, if not to say very good pricing and margin performance for those products. On the shutdown, Anna, I think, so hopefully we're back. I'm not sure where we paid the bill for the telecom provider. So, sorry, let's get back to your question, Anna. I think, I don't want to speculate on the shutdown in the U.S., you know. There is a lot of volatility around this. At this point, there's also a lot of political rhetoric going on. Hopefully, it will come to an end rather sooner than later, but it's difficult for us to speculate on infrastructure. I don't think that there will be a significant impact. You know that the current administration is up for some re-election November next year, and if you would scrap infrastructure stuff, that doesn't go down well with the voters. So I do have significant hopes that they're not going to play around with this. And with that, I'm quite positive for the infrastructure situation in 2026.

Thanks, Arnaud, for your questions. Welcome back, Arnaud Lehmann. You're the next to follow.

Arnaud. Good afternoon, gentlemen. Thank you for taking my questions. Just a couple then. Can we talk about Africa? It's been quite strong for a while, but I think in the quarter, the margin was at EBITDA level above 30% for the first time, maybe ever, or at least for a very long time. Could you please give us a bit of granularity in terms of which countries have performed better than expected? And heading into next year, do you think this performance is sustainable for the Africa region? That's my first question. And my second question is on the cost outlook. Have you seen raw materials energy moving a little bit higher, including coal? And does that give you ideas around price increase in the kind of Asia and Africa regions for next year? Thank you.

Okay, Arno. Let me do the first and then René takes the second one. Because he can then also comment on Australia maybe a little bit, because that's an important part of Asia Pacific. On Africa, we've always said it's not about one country. Africa is a portfolio of countries, and it would be far too volatile and risky to run Africa on just one, a bet on one horse. That's why also it doesn't make much sense to comment on single countries there because things go up and down. But what I recommend, Arno, is to look at the past five years and our AMBA performance so everybody gets excited that things are moving forward. right now in the right direction. But if you take the trajectory of our AMBA portfolio and its performance over the last five years, I would say there is almost a straight line in only one direction and that's up. So that has to do with good management, but it has to do also with acquisitions and everything. But I think overall, I think this is our task as a management team to deliver consistently a good performance. Now, is this somewhat volatile within the different countries? Absolutely. But overall, as the AMBA portfolio proves over that timeframe, and I think that's a meaningful period, I'm actually quite confident. Now, can we guarantee you for the future? For nothing there is a guarantee for the future. But are we working very hard to keep the trajectory moving in the right direction? Absolutely. And we have a fantastic management team in place that has shown that it can perform on a very high level. And I have no reason to believe that that can't continue.

More regarding your question regarding cost outlook and energy raw materials. So... we have our budget meeting still to come but obviously we have a view and for next year energy I don't expect that we get a lot of headwinds here from energy and if you just look if we increase our alternative fuel rate like we do this year there will be obviously fuel cost relief and from the power also it should be at least flat maybe it's even a little bit lower than this year. So energy is not currently, start of the day, not a big concern. And then raw materials and other items as well, you know, the world economies are not booming. So there should be as well some cost relief in certain categories over there. And as you know, with our Thai program, we have changed our procurement organization where we now try to organizationally do much more here centrally to get leverage. also and that is really you will see in our numbers so i think that's okay and then asia outlook you know that's as dominic said right now it's not not booming it's not great um and let's see how the political situations in these countries go but if we have australia working that is half of the result in in asia and as i said to you q3 was good october was very good And the outlook for Australia 26, 27 is pretty good. So fingers crossed that this will come, like I just said.

Sure. Thank you very much. Thanks, Arnaud. Moving on to another, Arnaud Pinatel from Onfield.

Good afternoon, gentlemen. Thank you for taking my two questions. The first one is on EVO Zero. You are telling us that we should integrate much more of your decarbonisation benefits. Could you help us by giving us a little bit more granularity on what tonnage you have already sold on EVO Zero? And is it fair to say that we have not seen in Q3 any real contribution of EVO Zero in Europe in your EBITDA? That will be my first question. My second question is on the US. One of your competitors highlighted this morning that they are announcing a $12 per ton price increase in the US for 2026 across Europe. their markets. They are mainly on the East Coast. It would imply a mid to high single-digit increase for the U.S., a market where we have not seen any momentum in H2 2025. Could you please help us to understand if such price increases are possible, taking into account the impact of the tariff and other parameters of the equation?

yeah I know thanks a lot for your questions let me comment on on both when it comes to evil zero you know that we are disclosing too many specifics around this but I think to just draw the line it's absolutely right your assumption that there is no meaningful EBITDA contribution at this point as you know we have just You know, we told you that we can only and won't only start selling this project when the whole supply chain is robustly working. And that means that the CO2 is really stored. We are on track. The carbon capture is working. In fact, I get it every morning. I get the capture rate on my mobile phone. And the carbon bank is filling, so there are CO2 is being stored. And that means that we can now sell Evo Zero. But we are very, very focused on what we want to achieve. Again, value over volume. We're just running out there selling everything of CO2 just to chase something. We chase the best value from our side. And the good news is we have time to do so. And we will get the EBITDA contribution for sure. But you are right. Come Q3, there is basically nothing in there from Evo Zero at this point. This is ramping up as we go through the next quarters.

And you cannot quantify tonnage? Just an order of magnitude of...

We said at the capital market it's a couple of hundred thousand tons for next year, cement. So I think that's a little bit the target. I think that's what we communicated also in Breivik. But again, that's cement. I was earlier talking about the CO2 being captured and that turns into higher volumes of cement. Just for you to understand, the capturing of CO2 is then multiplied with something in order to end up in a cement tonnage. Pricing in the U.S., I ask for your understanding that I cannot comment on any announcements that others make. We don't make any announcements around this, and you will also not hear this from me. I'm going back to my earlier remark, where I did say that for us, we expect a significantly better pricing performance in 26 than we have seen in 25. And that's true for the U.S. as well. And that's all I can say. I cannot comment on what others do.

Okay. Thank you very much.

Thank you, Arno.

And then the last question comes from Sven Edelfeld from Otto.

Hey, Sven.

Hello.

Hello, good afternoon, gentlemen. Thank you for taking my question. I apologize if it has already been answered. My line was cut several times. So the first question is on the Europe margin. The Europe margin is down in Q3. So can you perhaps tell us more about the price over cost specifically on this region? Is it volume driven, the decline in the margin? Has there been any unusual maintenance? So that's the first question. And my second one would be on the EU ETS. Can you maybe elaborate on the benchmark? I understand it might be lowered by roughly 50 kilos of CO2 going into next year. And I would be interested to better understand, if you can specify, what is driving this. I would be interested to know what is really linked to the benchmark and what is linked to the inclusion of calcium nitrate clay on alumina. Thank you.

Sven, thanks a lot. Let's really start with the first one and then I make a comment on the second one.

Sven, regarding European margin, I said it earlier in the call, we had roughly 20 to 25 million one-offs in there, which should roughly come back. And then, you know, you asked about price over cost. We have price over cost in the quarter for Europe positive. and just volume slightly down. So that's a little bit what to answer your question.

Okay, and then on the EOATS benchmark, again, as I said, it's a fairly transparent process. There is a lot of discussion around what's in, what's out. I also hear the speculation that the benchmark should come down, but I would be very surprised if it doesn't, because then what would be the message? There is no decarbonization going on. So for us, again, if the benchmark comes down, we'll deal with it. We absolutely expect it to come down by how much? Difficult to say, but for us as the market leader in Europe, I think it's clear that we want to be at the best end of the cost curve in that respect. And whether a case on clay or aluminium is in or out, I think I understand there is a constant discussion with the officials in EU what's in, what's out. They certainly have an interest to drive down the benchmark, but I think it's clear that this benchmark needs to be realistic and not driven by some specific setups that have nothing to do with the main market in Europe. So let's wait and see when the benchmark comes out what will be the final result, and we'll deal with it.

Okay, that concludes our Q&A for today. Thank you very much for your questions, and that concludes also our call. We will be on the road even today in London, and then tomorrow seeing some of you guys, and then next week attending some of the conferences in London, and also US, Zurich, Paris, and many, many more locations. We look forward to seeing you there. Thanks for joining.

Thanks, everybody. Thank you.