Rexel Sa Unsp/Adr

Good evening, everyone, and thank you for joining us today for our full year 2025 results presentation. I'm with Laurent Delabarre, our Group CFO, who will take you through the financials and the detail numbers in a few minutes. And before that, let me briefly set the scene and share the key messages. 2025 was another year of market outperformance and margin resilience, and this is a particularly remarkable outcome as it was delivered in a mixed environment. It also clearly demonstrates the transformation of Rexel's model that is underway and gathering pace. Beyond the results, an additional element of satisfaction is that behind the scenes, we continue to take initiatives to strengthen the group for the next phase. Building momentum in high growth verticals, such as data centers, actively managing the portfolio, and accelerating our transformation through digital, AI, and productivity initiatives. which supports our confidence in our mid-term ambition. With that, let's get started. And let me begin with a quick overview of the key highlights of the year. First of all, as I mentioned, our sales and margin performance offers an important proof point that Rexel's transformed business model is working, not only in favorable macro conditions, but also in a more mixed environment. Second, we adapted quickly to a very different environment in Europe and North America. As conditions evolved through the year, we stayed close to our customers and we accelerated execution progressively, adjusting priorities and protecting performance. And third, as I said, we stepped up self-help actions through our Accelerate 20H strategic plan. These initiatives are very operational and concrete. strengthening discipline, improving efficiency, and ensuring we continue to build the foundations for future performance. So overall, resilient results today, rapid adaptation throughout the year, and action plans that support the next steps of our journey to reach our mid-term ambition. With that, let's move on and take a look at the year in more detail. And turning to our full year achievements on slide four, we met or exceeded the guidance we set for the year on all KPIs. First, on top line, we achieved plus 2.5% same-day sales growth above the initial guidance that we had raised in October. Second, profitability remained very solid. We delivered a current adjusted EBITDA margin of 6%, fully in line with our guidance, again, illustrating the resilience of our margins in a challenging environment. And third, cash generation was strong. Our free cash flow conversion before interest and tax reached 76%, well above our guidance of above 65%, when excluding the impact of the 124 million euros French antitrust fine. So overall, we delivered growth, we maintained margin, and generated strong cash, providing a solid base as we move into the next year and execute our priorities. Let me then take a step back on the backdrop. It was not a particularly easy environment. Europe stayed weak, notably in residential. North America was impacted by uncertainty and a delayed recovery in industrial automation, and Asia-Pacific remained subdued. The clear area of strength was AI-driven data center investment and favorable pricing in the U.S., supported by trade tariffs. In that context, Rexel did what we set out to do. We outperformed and gained share across our key markets. We are seeing a real payoff from the work we've been doing over the last several years on Salesforce excellence, higher digital penetration, and the ramp-up of advanced services. We also leaned into data centers and broadband infrastructure, particularly in the U.S., with dedicated teams and branches, and we further strengthened our position in the telecom space with the teleacquisition. In addition, we stayed agile on the portfolio with five acquisitions and two disposals. Overall, tough markets, but strong execution, and we've continued to build momentum in the right growth areas. From a geographical standpoint, the year really comes down to how we manage the two main engines of the group, North America and Europe. In North America, the focus was on managing profitable growth. We captured the trends in higher growth segments, and at the same time, we managed the tariff situation in a disciplined way. And importantly, we kept tight control of the cost base, delivering growth while operating with a broadly similar FTE level. In Europe, the environment was more muted with negative volumes and flat pricing, so we moved fast on costs. We rapidly implemented adaptation plans, leading to a workforce reduction of around 4%, about 600 FTEs in 2025, while keeping a strong focus on margins. Taken together, this is what drove improved margin resilience versus previous cycle downturns. Let me now focus on data centers in North America on slide seven. What began three years ago as a targeted initiative is now achieving scale to become one of our most attractive growth platforms. In the US, we are reinforcing our position. We continue to significantly outperform the market with very strong momentum in Q4 and across the year, and data center already represents a meaningful share of ourselves. To support that growth, we expanded our footprint and capabilities close to project size, adding, for example, around 200,000 square feet of storage capacity in key locations like Atlanta, Mesa, and Reno, with further potential to scale. Our model is simple, local branches and resources backed by national coordination. That allows us to be close to customers on execution while still bringing the breadth of Rexel expertise, availability, and consistency across multiple sites. We also broadened our offering into new product categories that matter for data centers built, and we are continuing to add dedicated resources and expertise to capture this next wave of projects. In Canada also, we are off to a promising start. Here, the activity for us is concentrated in the Western region. We are active in the gray room offering from UPS to panels and data comm accessories. And we have a strong backlog that supports continued momentum for 2026. So the key takeaway here is that our scale, logistics capabilities, and technical expertise give us a clear advantage in these segments. We are well positioned with true momentum ahead of us. I am now on slide eight. Portfolio management remains a key level of our strategy. 2025 was another year of active portfolio management with four acquisitions completed and two disposals, further sharpening the group's footprint and profitability profile. We've strengthened our footprint through the additions of Warshower and Schwing in the US. In Canada and Italy, we've expanded into adjacent higher margin businesses with Jack Ma and euros of turnover, while completing around 2 billion euros net of disposals. And in total, we've closed 21 acquisitions over that period, including four in 2025. And what I would like to stress is the quality and the direction of this M&A. Around 60% is in our core electrical distribution business, around 40% in adjacencies, where we see attractive structural growth and higher value-added opportunities. We have been particularly focused on North America, with 14 acquisitions representing more than 70% of acquired sales, including about half a billion euros in adjustment. And this is clear value creation. On average, we see value creation from year two, earlier than initially targeted. And our combined 2025 performance implies roughly seven times easy to ABDA multiple after synergies, below Rexel valuation multiple. And we also move forward on the other side of the portfolio with two targeted divestments completed in 2025. And these actions reinforce the robustness of our balance sheet and provide flexibility to continue investing in growth. Moving to slide nine, digital is a very tangible differentiator for Rexel, and it continues to gain traction. Today, we are a B2B leader in digital with more than one third of all sales going through digital channels. And this is not slowing down. Digital penetration has been progressing by between 200 and 300 basis points per year over the last 15 years. What's driving it is a mix of constant improvement in the customer experience with more tailor-made features, including AI-powered capabilities, plus continuous data enrichment, and also, frankly, a generational shift in how customers want to buy and interact. The benefits of this long-term effort are very concrete, and I believe this is one also of the explanation of our good set of results recently. Digital increases customer stickiness and share of wallet. It widens the service gap versus smaller competitors who have increasing difficulties following the pace of the race to more data and more features. And finally, it also improves the efficiency and productivity of our teams, which is critical to our business model. We know it's a key engine of differentiation in performance for Excel. Beyond the short-term environment, we are accelerating a set of deeper transformation to pave the way for future performance as shown on slide 10. First, we are boosting Salesforce productivity through organizational changes and increasing adoption of AI-based tools to help our team spend more time selling and improve the quality of execution. We're optimizing the supply chain through more automation, stronger internal synergies, and AI, improving service levels while taking structural costs out. Third, we are resetting parts of the cost base in lower profitability countries. This is about staying disciplined, adapting the model to the reality of the market, and protecting margins. Fourth, we are leveraging our full offering, expanding in adjustment for the categories and services where we can create more value for customers and capture more of their spend. And finally, we continue to roll out smart pricing programs that leverage data to improve consistency and value capture. Those topics are not all new to Rexel, obviously, as we constantly try to improve. But 2025 was a year of clear acceleration. First of all, because the business environment pushed us to move faster and sometimes think out of the box. And secondly, because we launched our new strategic plan, Accelerate 28. And most of those plans we are talking about are multi-year efforts, which means that you will see them progressively delivering benefits to our P&R. Focusing on the next slide on AI, AI is another area where we are moving fast, and it's not just, and I'm on slide 11, and it's not just running pilots, but now scaling real use cases into day-to-day operations. On the left of the slide, you see the main areas where we had identified clear AI opportunities. Tools to speed up RFQs, smart automation for order entry, automatic data enrichment, an internal category expert capability, customer-facing chatbots. And on the right, you see where we are today, not in terms of shiny proof-of-concept demos, but in terms of real adoption by the teams and real-life industrial life tools. In the U.S., more than 50% of the quoting teams, for example, are already using the new quotation tools. In France, around 25% of email quotes are handled through AI tools. And on order entry, we now have over 65% of U.S. teams and more than 70% of French teams using AI-powered tools. We're also rolling out internal expert capabilities by category, deploying customer-facing chatbots across additional countries. So the message here is simple. AI is already improving speed, quality, and productivity, and we're scaling it pragmatically, use case by use case. And slide 12 is about productivity, a major KPI for us. The message here is that over the last five years, we have lifted the baseline of what we are able to deliver in terms of productivity every year. What differentiates this cycle from previous downturns is the speed and depth of our cost adaptation. Through workforce adjustments, productivity initiatives, tighter cost control, we protected margins despite lower volumes, reinforcing the resilience of our operating model. Historically, between 2016 and 2021, our productivity ratio averaged around 0.9%. Over the last few years, it has stepped up, and in 2025, it reached 2.8%. This improvement is not coming from one single level. It's a combination of structural initiatives that I just presented, including the ramp-up of digital and the early impact of AI tools, together with rapid cost adaptation in more challenging markets. 2025 was another demonstration of Rexel's resilience at the bottom of the cycle. The key takeaway is that we are not just managing through the cycle, we are structurally improving how efficiently the group operates, which supports margin resilience and future performance. With that, let me now hand over to Laurent, who will take you through the detailed 2025 numbers, and I will come back for the guidance. Thank you, Guillaume, and good morning to all of you. Evening. Good evening, sorry. On this slide 14, you can see how momentum improves throughout the year 2024 and 2025. with a quarterly same-day sales growth trend at group level and the regional breakdown. We moved from minus 4.6 in Q1 2024 to a progressively better trend quarter after quarter, and we closed 2025 with plus 3.8% in Q4. That's a very clear reflection of better momentum, disciplined execution in the field, and better pricing management. First, selling prices contributed positively in Q4 2025, for 1.7%, improving compared to Q3-25. And more specifically, non-cable pricing were unchanged in Q4-25 at 0.9%, with improving trends in North America, mainly offset by China. Selling price on cable improved to plus 0.8, notably thanks to Europe. And briefly on geography that I will highlight in the next two slides, North America remains the main growth engine, growth accelerated through the year, and it did at plus 7.9% in Q4-25. And Europe remained difficult, but the trend improved sequentially, and we are back to flat sales evolution in Q4-25. And more specifically for Asia Pacific, accounting for 6% of group revenue, China was up 3.1%, supported by industrial automation project in a better environment, while selling price were just back to flat in Q4-25. In Australia, sales growth accelerated in the quarter, notably boosted by solar activity, further supported by subsidies on batteries. Lastly, India, which is small, but sales increased by plus 16.9%, driven by strong growth in our industrial automation activities. I'll now go into more detail in the next two slides on Europe and North America. So moving to slide 15, Europe remained impacted by a new construction environment and delayed electrification trends. Despite this, Rexel gained market share in its most important countries and delivered a resilient performance. 10% in Europe were flat in Q4, improving from minus 0.5% in Q3. Volume were broadly stable despite the political and macro uncertainties, and we also saw a sequential improvement in pricing in Q4 versus Q3, mainly driven by cable. And to put the underlying trend in perspective, our growth excluding solar, which represents about 4% of our sales in Europe, was up plus 0.5%. By end market, residential was flat excluding solar, which first sign of recovery in a few countries, notably Sweden and the Netherlands. Non-residential was broadly flat, and we saw slight improvement in industry. Let me highlight the main country dynamics in the quarter. France was up plus 3%, despite a challenging environment, with world-based market share gains and strong HVAC contribution. Benelux was up plus 2.6%, driven by electrical distribution activity in the Netherlands and the acceleration of solar growth in Belgium. DACH was a key offset, deteriorating sequentially on business selectivity in a difficult macro environment, although we continued to take market share in Austria. Sweden was flat, with a sequential improvement driven by industrial segment, and supported by a smaller drag from solar in Q4 compared to Q3. And finally, UK Ireland was down minus 6.7%. Ireland remained positive with a favorable industrial market, but the UK market stayed tough, with London showing the first sign of a recent investment. So overall, still a soft market, but improving trends through Q4 and continued market share gains in several countries. In this context, productivity initiatives help mitigate the impact of lower activity, and this position well to benefit from any market recovery, particularly as leading indicators in some countries begin to stabilize. On slide 16, we turn to North America, which remains the growth engine in Q4, driven by both volume and pricing, where we saw improvement in non-cable, mainly driven by piping and conduit families. First, same-day sales were up strongly in the quarter, with Canada driven the acceleration of Q3 2025, specifically in data center project as presented by Guillaume. We also benefited from strong continued market share gains and positive contribution in Datacom. And second, the U.S. continued to be driven by high growth verticals, particularly data center and broadband infrastructure, which represent more than 55% of the growth in the quarter. We also saw strong activity in solar and EV charging. By end markets, all three markets were positive, with non-residential clearly driving the acceleration and the industrial automation at 8%. Lastly, the backlog remains solid, representing 2.7 months of activity at the end of December. Moving now to the full year picture. I'll start on slide 17 with the bridge of our full year sales, showing how growth was built between scope, organic, ethics, and calendar. We delivered a full year 25 sales of 19.4 billion, up 0.7% on a reported basis. Organic performance was the main driver. As we saw, same day sales growth was plus 2.5% for the year. with volume contributing plus 1.2% and pricing adding plus 0.6 in non-cable and plus 0.7 in cable. So a solid volume contribution plus disciplined pricing across both cable and non-cable. M&A also contributes meaningfully. Acquisition added plus 1.8%, more than offsetting the minus 0.9% impact from disposals. These positives were partly offset by external factors. First, the FX was a headwind of minus 2.2%, mainly from weakening of the US and Canadian dollar, as well as a calendar impact of minus 0.5%. That was the sell bridge for the year, and we'll now move to profitability and margin performance. In this slide 18, we bridge our adjusted EBITDA margin year-on-year, and the key message is simple. Record productivity more than compensate what we call the delta inflation headwind. Adjusted EBITDA margin increased from 5.9 if we are 24 to 6% if we are 25. First, portfolio and ethics were positive, contributing 11 basis points, while the calendar effect was a drag of minus 5 basis points. Second, you see the operating leverage slightly negative, mainly due to the mute European environment and the under-absorption of fixed costs, notably in underperforming countries, mitigated by positive operating leverage in North America. Third, the main headwinds in the year was what we call the delta inflation, which represents the gap between selling price increase and OPEX inflation, a 19 basis point headwinds, in line with our expectations. First, inflation was around plus 2.2 in the year 2025, while selling price increases were up 1.3%. And this headwind was more than offset by the two following actions. First, the gross margin improvement, adding nine basis points supported by pricing initiatives. And second, our action plan delivered a further 33 basis points, in line with the expectation and already illustrated by Guillaume in the slide dedicated to productivity. Let me remind you that FT were down 2.3%, while volume contribution to sales were up 0.7% in actual days. That operating discipline is what allows us to protect and slightly expand despite inflationary pressure. Lastly, and we are further investing in the business, notably through digital and footprint investment that impact our EBITDA margin by 11 basis points. On slide 19, we look at the bottom line part of our P&L with a zoom on other income and expense, financial expense, tax rate, and recurring net income. Other income and expense to that 56 million euros, notably including Minus 41.1 million euros in restructuring, mainly in Europe. More than last year in order to accelerate adaptation to a tougher environment, notably in UK and Germany. 36 million of capital gains on disposal. Minus 29.7 million in asset impairment in the UK. Minus 20 million in others, including integration costs and pension settlements in Canada. Financial expense stood at €214 million, slightly above last year, with a rise in gross debt offsetting the lower cost of debt now at 4% versus 4.4% last year. It includes €72 million of interest on lease liabilities and pure financial costs of €142 million. And for 26, we anticipate financial expense of circa €215 million, including less than €70 million of interest on liabilities and around €145 million of pure financial expense, excluding one-offs, and assuming current interest rate conditions remain unchanged. Our income tax rates stood at 30.2% due to the impact of the exceptional tax in France, And going forward, we anticipate the tax rate to be at circa 30% in 26, taking into consideration the additional tax in France that will apply for the second year. And for 27 onwards, we anticipate then the tax rate to go back to circa 27% in the absence of exceptional tax renewal in France. And as a result, net income increased by 73%. and recurring net incomes to that €308 million, up 2.4%. Moving to slide 20, we generated robust cash flow for interest and tax, reaching a high level of €938 million, implying a free cash flow conversion rate of 76%, well above last four years' average, that's 2.69%. This is excluding the 124 million fine imposed by French tax authorities and paid in April 25. The trade working capital as a percentage of the last 12 months of sales increased to 15% versus 14.6% last year, mainly related to the sales growth acceleration in H2 and mainly Q4. In number of days, embedding the last three months of sales, both inventory and receivables improved, and were partially offset by lower payables. Indeed, the DOI and DSO decreased by respectively 1.5 and 1 days, and DPO was down two days. Non-trade working capital was on the inflow of 24 million, or an outflow of 100 million, including the payment of the 124 million fine. CapEx remained disciplined at 136 million, with growth CapEx representing 0.7% of sales, stable versus last year. So overall, we converted earnings into cash at a very strong rate, supported by tight working capital and disciplined investment levels. On slide 21, I want to come back to free cash flow conversion profile over the last five years, a key proof point of the quality of our execution. As you can see, we delivered a record level again, above 70% for the third consecutive year. The 7.6% conversion rate is at the top end of what we had delivered in recent years, and clearly above our full-year guidance of above 65% and our mid-term ambition. And this performance is a result of two very disciplined executions. First, a well-balanced investment approach, with roughly 55% of our capex in digital and about 45% in network and supply chain modernization. Second, active working capital management, as we have seen, especially the quality and structure of inventory and receivables. Overall, this strong cash generation built on repeatable levels supports our financial flexibility going forward. As shown on slide 24, our capital allocation focused on both acquisition and return to shareholders. Overall, net debt slightly increased by 147 million euros, mainly resulting from two factors. First, the 227 million euro impact from net financial investments, mainly the acquisition of Sparshower, Schwing, Jacquemart, and Technobi mentioned earlier by Guillaume. Second, the dividend payment related to the 2024 performance for €355 million, corresponding to €1.20 per share. Lastly, we also bought back shares for €100 million, in line with our mid-term objectives. And since mid-2022, we bought back €400 million and reduced the number of outstanding shares to €296 million. All this leads to net debt close to 2.6 billion, including earn-out for SICA 30 million, and the indebtedness ratio stands at two times, representing a strong achievement. In short, we continue to invest in value-creating growth while maintaining healthy balance sheet and a consistent return to shareholder. Let's turn now on slide 23 to the breakdown of our main debt maturity and liquidity. 2024 was a very active year in terms of refinancing. In addition to all operations presented in H1, the second half was also intense, and we further extended our debt maturity profile. As a reminder, we have first issued a new €100 million shulchan in July with a 29% maturity, second issue of €400 million senior notes with a 4% coupon maturing 2030, So they extended two securitization programs for more than 800 million from 25 to 28. And finally, we increased our senior credit agreement by 200 million to 900 million and extended it to 2031. So overall, we have a well-balanced funding structure, extending maturities, and comfortable liquidity. And we can stay focused on executing the strategy. As always, we are evaluating market opportunities in these volatile debt market environments. Moving to the next slide, we summarize our shareholder return through the dividend. For the year, the Board will propose a dividend of €1.20 per share, maintaining our strong track record. This implies a payout ratio of 52%. which is at the high end of our guidance and reflect our confidence in the resilience of the business model and in our cash generation. Subject to the General Assembly approval in April 22nd, 2026, the dividend will be payable in cash on May 13th. So overall, we remain fully committed to a disciplined capital allocation policy, combining value creation growth investments and an attractive return to shareholders. Let me hand back to Guillaume before we move on to your question. Thank you, Laurent. And let me now turn to our outlook for 2026, and let me go to slide 26. It's a busy slide, but it illustrates also well the way we see the short-term future. Many moving parts, a good level of uncertainty, but probably overall more encouraging trends than the opposites. Starting with North America, prospects are clearer, and we continue to expect further growth. Of course, there are still macro uncertainties, including around tariffs, and we see less traction in some electrification solutions. But structurally, the key growth engines remain in place. We expect continued progression in data centers, and we are also seeing more positive signals in industrial automation, supported by reshoring and the One Beautiful Belt. In Europe, the environment is still challenging. Construction remains near the trough, and confidence is not yet back. That said, we see more and more encouraging early indicators, and we do expect improving trends, especially in the back part of the year. The comparison base becomes easier for electrification. The lower interest rate environment is starting to improve. And as I said, we see leading indicators in residential improving. And in Germany, finally, the infrastructure plan could begin to materialize later in the year. On pricing and inflation, we still expect OPEX inflation to remain slightly higher than selling price increases. At the same time, we should benefit from the carryover of 2025 pricing in the U.S. We may also see additional price increases reflecting the recent rise in copper and silver, but it is a little bit too early to tell with certainty. And finally, self-help remains a very important part of the equation. We will benefit from the carryover of actions already launched, and we have also new initiatives to implement in 2026. So overall, North America should remain solid and supportive. Europe should gradually improve. And in all cases, we stay focused on execution and self-help to deliver in an uncertain environment. Which brings us to our full year 2026 guidance on slide 27. On the top line, we expect same-day sales growth of 3 to 5%. On profitability, we guide for a current adjusted EBITDA margin of around 6.2%. At this stage, we still expect a slightly negative inflation gap with cost inflation running ahead of selling price increases, although improving compared to 2025. And that will be offset by a clear set of costs and productivity initiatives, including the continued rollout of digital and AI tools. In addition, copper price rose sharply recently. Of course, as a distributor, we will pass the price increases from suppliers. We don't know yet how much price increase will be passed by those suppliers. And we believe that the situation may vary by country, by suppliers, leading to progressive price increases. We prefer to be cautious that it is very early in the year, which means that we took the equivalent in terms of copper of an $11,000 per ton price of copper to design this guidance. And we will adjust during the year, depending on the evolution of the situation. And finally, on cash, we are guiding for free cash flow conversion now above 65%, reflecting our discipline CapEx policy and continued focus on working capital. So overall, our 2026 guidance reflects continued growth, resilience margin through self-help, and strong cash generation in a global environment that remains marked by a little bit of uncertainty. Turning to slide 28, before we conclude, I think it's worth taking a step back to consider how Rexel's ongoing transformation has taken root over time and is still ramping up. Building on foundations laid in 2010 to 2019, particularly when it comes to digital penetration, we have been broadening and accelerating our transformation since 2020 to more dimensions of our operating model. We have raised the bar on operational excellence with more standardization, automation, discipline and execution. We have also made portfolio management much more active, using bolt-on M&A and selective disposals to improve the quality of the group. In parallel, we have scaled advanced services and focused more on the markets where we see structural acceleration, electrification, energy efficiency, and of course, data centers and datacom. And now we are entering a new phase where AI-boosted tools are becoming a real game changer in customer experience and productivity level, not a concept. What matters is that these levers reinforce each other. Stronger digital, better operations, a sharper portfolio, more value-added services, and higher productivity. So when we talk about Accelerate 2028 and our medium-term ambitions, it's the continuation and acceleration of a transformation that has been underway for years. The Accelerate 2028 plan is now fully underway, and as I said at the beginning of the presentation, 2025 was a very busy year in number of new initiatives launched. This gives us great confidence in our ability to deliver on our mid-term ambitions, even in a less supportive market environment than I am now on slide 29. Since 2024, when we issued our mid-term guidance at our Capital Market Day, What has first changed is the market backdrop. The macro cycle recovery has been delayed. We faced a delta inflation headwind in 2024 and 2025, and electrification markets in Europe have been a little bit more muted than expected. But on the other hand, several factors are moving in the right direction, with some of them, many of them, being in our control. So first, we are leaning even more into high-growth verticals, especially data centers. Second, the adoption of GenAI is accelerating faster than we initially anticipated, and this will prove clearly beneficial to our business model. Third, we have reinforced our focus on cost initiatives and productivity across the group. And finally, pricing is more supportive in 2025 and 2026, with higher selling price increases coming from U.S. tariffs, pricing programs, and potential impacts from copper. So when you put all of that together, there are pluses and minuses, but the combination of that allows us to confirm our medium-term objectives. There's growth of 5% to 8%, including 2% to 3% from acquisition, an adjusted EBITDA margin above 7%, and cash conversion of 65%. In other words, the market is certainly not giving us a free ride, but the strategy and the self-help levels are stronger, and this is why we are confident in our mid-term ambition. And in a way, the fact that we now rely more and more on our own efforts on what is in our hands than on the market is an element of security that is good news for the future. So let me close this presentation with four key messages before we open the call for Q&A. First, 2026-2025 was another clear demonstration of Rexel's resilience through the bottom of the cycle, proof that our transform model is working. Second, The momentum we saw in Q4 in both Europe and North America that we continue to see in January has carried into early 2026, which gives us a very good starting point. Third, with the launch of Accelerate 2028, we are accelerating transformational change across the group from productivity and cost efficiency to digital and AI adoption to unlock our next phase of performance. And despite slightly less market support, we are keeping a high level of ambition and we remain fully committed to reaching our mid-term guidance. Finally, I'd like to finish by saying our teams have once again shown remarkable commitment and agility in 2025, and I would like to thank our employees, customers, and partners for their continued trust. Thank you for your time and attention, and now Laurent and I are happy to take your questions.

Thank you. This is the conference operator. We will now begin the question and answer session. Anyone who wishes to ask a question may press star N1 on the touch-tone telephone. To remove yourself from the question queue, please press star N2. Please pick up the receiver when asking questions. Anyone who has a question may press star N1 at this time. First question is from Daniela Costa, Goldman Sachs.

Hi, good afternoon. I have two questions, if possible, I'll ask them one at a time. But the first one is regarding the free cash flow. As you mentioned on the presentation, you've beaten your targets on free cash flow for a few years there. But you're once again guiding for around 65% on the conversion. Can you talk why you don't upgrade that target? and what would drive you back down to a weaker cash conversion than what you have had, for example, this year, excluding the charge. That's number one, and then I'll ask the other one.