Schneider Electric Sa

Welcome to the Schneider Electric's full year 2025 results with Oliver Bloom, Chief Executive Officer, Hilary Maxson, Chief Financial Officer, and Nathan Fast, Head of Investor Relations. Excuse me. Thank you for standing by. At this time, participants are in a listen-only mode until the dedicated question and answer session of today's conference. At any time, you may press star, then the number one on your phone to poll for a question. If you need to withdraw your question, press star and two. I'd like to inform all parties that today's conference is being recorded. If you have any objections, you may disconnect at this time. I will now hand it over to you, Mr. Nathan Fast.

Good. Good morning, everyone, and welcome to our full year 2025 results presentation and webcast. I'm joined in Paris today by our CEO, Olivier, and our CFO, Hilary. For the agenda, you already have the slides available. We'll go through them now and then make sure to have enough time for Q&A. As always, I want to remind everyone about the disclaimer on page two. And with that, Olivier, I hand it over to you.

Thank you very much, Nathan. extremely happy to be with all of you today look uh more than 15 months in the job the the first time i'm doing really this earning call with you for the full year 25 and i'm extremely excited to be with you to report on what happened in 25 and even more important what we see for the future as you know with the management team we did spend a lot of time in 25 to define the next cycle we were with many of you during our capital market day And we launched the new mission of Schneider Electric, which is to be your energy technology partner, to be the company which will be at the convergence of electrification, automation, digitalization in every single industry to drive efficiency and sustainability for all. That's what we call at Schneider Electric, advancing energy tech to the next level. And of course, I'm going to come back on that. The point I want to make here, it has really received a very, very good feedback. We got a very good feedback from the market, from our business analysts, from our customers, from our employees, from our partners. So that's really exciting for us to enter 26 with this new positioning, which is giving a lot of inspiration for all our stakeholders. So now let's turn to the most important part, of course, of this call, which are our results. I'm pleased to report a very strong Q4 revenues growth at 10.7%, 11 billion. And even more important for me, it's really the acceleration of the two businesses, the acceleration of energy management, but the acceleration, again, in industrial automation in Q4 with a growth of 8%. If you go look at the full year results, that's an important milestone for Schneider Electric. For the first time, we have exceeded 40 billion euros in terms of revenue with a 9% organic growth. So that's, as you can imagine, an important milestone for a company. And even more important is the acceleration that we have seen in our two businesses. I was just talking about industrial automation. We told you with Hillary a year ago that we will turn positive for industrial automation in 25. We did it and we delivered 7% growth in H2, which as a result has helped us to achieve 3% growth for industrial automation. As you know, energy management has been really the driving force from a growth standpoint for the past year, and it continues again to be the case in 2025 with a growth slightly above 10%. So all in all, again, a great year from a top-line standpoint, both businesses driving good contribution to the growth of the company and an important milestone, €40 billion. When you go a bit deeper in all our achievements, we are pleased to report that we have achieved a margin expansion of 50 BIPs, which is in line with the target we set up for us at the beginning of the year, which runs at an adjusted EBITDA growth of 12.3%, which is again within our guidance of 10 to 15%. Extremely important milestone also for Schneider Electric. a free cash flow of €4.6 billion with a conversion rate slightly above 110%, which shows again the strong financial health of the company overall. We are pleased to report that we are going to distribute a dividend of €4.2 per share, again in line with our progressive dividend policy, which has been the case for the past 16 years. And our TSR has grown by 89% for the past three years. So all those financials show really the solidity of Shutter Electric's strategy, but even more the solidity of our execution. And as you know, it's equally important for me and the team that we always look at our financial, our digital metrics, sorry, which are translated inside the digital flywheel. You know, it has been an important step. transformation for Schneider Electric in the past cycle. It will continue in the future. And the digital flywheel is giving us really the illustration of the execution of our portfolio strategy transformation. So we've reached 25 billion of our turnover with digital flywheel, which represents 62% of our overall revenue. And please report that it has achieved a growth of 15% last year. We continue to grow very fast on all the aspects of the digital flywheel. But very excited to see that we are now close to 20% of our total portfolio in services and software. And last but not least, it has been an important focus for us in the past year, not only the acquisition of Aveva, but the transformation of Aveva, the acquisition of OSI. And last year, we have achieved an outstanding performance with 12% growth in AR for Aveva. It's also important to mention that 25 was the last year of our sustainability program, the one we launched five years ago. You know that we have this culture at Schneider since 20 years to launch every three to five years a new program where we set up an ambition on where we want to take the company. And we are pleased to report that we have achieved overall our goal. I'm not going to go through all the metrics, but that's very, very important. And I'll talk later about when we speak about 26. The only thing I'd like to mention is when you look at all these metrics, if I just highlight some of them, extremely pleased to say that With the portfolio of Schneider, we have had to save and avoid 862 million tons of CO2, which is tremendous since we created that initiative in 2018. You will see later that we'll keep going in the next chapter. But that shows how the impact of the business of Schneider Electric. can support all our customers everywhere in the world. And we have embarked not only our customers, but our partners, our suppliers. Our suppliers have also achieved their goals. So we've divided by two the CO2 emissions of our suppliers that were part of that program. And we continue to have a very strong focus on access to green, clean energy to many people who don't have access to energy in the world. And we have achieved this milestone, which was super important for us. 50 million plus, actually, we have exceeded. reaching $61 million. And of course, all those achievements have been recognized multiple times in the past year. It's always great to be a leader in that domain. So if we wrap up 25 in short, as I said, record year in terms of revenue crossing $40 billion. All-time high level in terms of backlog. We'll come back to that with Hillary. Extremely strong performance in adjusted net income and free cash flow. And acceleration of the demand and profitability in H2, which is what we told you with Hillary when we were together in July. What is very important for me, and we told you that during our Capital Market Day, we are accelerating the transformation of the company. We have a plan. We are accelerating the transformation of the portfolio, making Schneider Electric the company which will advance energy tech to the next level. We are going to the next level of our digital portfolio, leveraging AI and bringing energy and industrial intelligence. We have reinforced our multi-hub strategy in a world which is very fragmented. We do believe that our regional model brings a lot of advantage. We have reinforced in particular in India for the international market with the acquisition of LMT last year, the completion, I should say, of the acquisition. And last but not the least, we spent a lot of time with the team last year to simplify the operating model to make sure we can generate more efficiency and create even faster execution. So now if I turn to 26, I'm not going to talk about the long term today. It was done during the CMD. But if I recap what we told you in London in December, we have three megatrends in front of us that have been the main driver of Schneider Electric growth in the past year. The evolution of the new energy landscape, electrification of usage everywhere in the world, digitalization going to the next level with AI, and of course, a world which is more and more multipolar, and we don't believe it's going to stop. So, for us, what is very important is to make sure we can leverage and accelerate everything we do at Schneider Electric to make the most of those three trends. And, of course, what we see, and I'm sure you see it as well, all those three trends are accelerating at the same time at a speed which is unprecedented, which impacts, of course, all our end market. Speaking about the end market, it's fairly positive for Schneider Electric. And we like always to go back to those end market growth and to tell you how we see the market. We continue to see a double digit opportunity plus in data center and network. Solid growth on buildings and industry. And we'll say a little bit more with Hilary also on that one. And we continue to see infrastructure growing fairly fast between 5% and 7%. What do you see? As a result of the past cycle, we continue to be a very, very balanced company in terms of exposure. We'll talk about geography, but balance in terms of a market. I think our three largest markets contributing all to one third of the revenue of Schneider Electric. And infrastructure, step by step, going also to the next level with close to 15% of our revenue. So, what's next for 26? We are basically going to execute our plan, our strategy plan, the one we present to you, which is really to advance energy tech to the next level of intelligence. We are going always to follow those three important transformations, which we have launched internally. We call that inside Schneider our company program. This is a vehicle we are using to align all the entities of Schneider Electric everywhere in the world. For me, what is very important is not only to define the North Star, advancing energy tech, defining those strategic priorities, but equally and even more important is how we align our teams everywhere in the world to make sure we execute faster the strategy of Schneider Electric. So, talking about energy and industrial intelligence, we want to reinforce our energy, our technology leadership. We've presented in detail our strategy in December, but I want to really recap what we told you. We have built a huge portfolio in the past, which is extremely differentiated, starting by our legacy product business, but going to the next level of age, control, starting to do more and more in digital and software and digital services everywhere in our portfolio. What makes Schneider Electric very, very different at the end of the day? We are combining a unique expertise in different domains. Those domains are the building domain, the power and IT domain, and the industrial automation domain. What we want, we don't want those domains to innovate in a parallel universe. We want to create a unified customer experience for our customers. Let's make it simple. Every time we sell solutions to our customer, we want to keep it simple for our customer to commission the asset, to be able to leverage all the software, to create a unique user experience. It means that, for instance, you need to have digital platforms which are the same. We need to create hubs which are the same. It's not only about creating the largest portfolio in our industry in those domains. It's to make sure we make it simple, easy for our customers to use all those offers of Schneider Electric. And what we want to do even more in the next cycle is to do it through their full life cycle. Schneider was known 10, 15 years ago as a company which was more at the capped stage when we built Schneider. We've moved big time in the past five years to make sure we are also at the design level. We can help our customer to design, to simulate, to create digital twin for their asset. And of course, when we have installed our solution, what we want to do even more through digital is how we can help them to operate efficiently, how we can help them to maintain efficiently, to extract data that will help them to manage the obsolescence of their asset, for instance. So all in all, this is what you see on this slide, which is a strategy of Shredder, I think. And what are we doing differently in this cycle? Now we've reached a level where most of our assets are connected. Again, keep in mind the digital flywheel, going step by step to 70% of the digital flywheel. So it's about extracting all those data. at all level layer of our digital stack, extracting external data, federating, structuring those data in the data cube to make sure thanks to AI we can amplify what we give to our customer and deliver more intelligence. So it's about building the foundational model in AI in energy and industry that will create more value for our customer in the future. And it's not something that we are dreaming to do in five, ten years from now. It's something we do already. If you take just one example of the data center, which is a place where we have invested, as you know, a lot in the past years, we are, of course, in the middle, as you can see, present at the build stage historically. We have reinforced our portfolio, for instance, with the acquisition of Motivea and Liquid Cooling. But what is equally important is being able to work with NVIDIA, with our customer, the large hyperscaler, on how you can design and simulate, how you can work in the universe of NVIDIA, on how we'll behave digital and electrical infrastructure in the future based on the next generation of GPU that NVIDIA will launch in the future. And then we can move to a stage where we are working with our customer to design their own AI factory, we can build, we can execute with them, and we can also extract data at the end of the cycle to make sure we give more to those customers. So that's really a typical illustration of what we mean going to the next level of energy intelligence, unique customer experience, leveraging all the portfolio of Schneider and being able to do it through the portfolio, through the full life cycle of our customer. Now, we have multiple proof points and other examples we are doing. We are launching for instance, EcoStruxure Foresight operation, which is basically the convergence of power and building management in one software, amplified with AI, that can give a lot of opportunity for our customer to improve the efficiency of our building. And I'm not going to cover all the experts, but we have also what we presented to you in December, what we are doing in industrial automation with EAE, EcoStruxure Automation Expert, which is taking automation to the next level. So all in all, just as a recap, we are investing a lot in R&D. We are growing progressively to the next level of our journey in R&D with 7% approximately of our turnover, and having always in mind those end targets, which is keeping on increasing the part of our portfolio which will be more digital, more than 70% at 2030, accelerating everything we do in software and services, so going step-by-step to 25% of our total revenue, and all of that helping you to multiply by two our recurring revenue as part of the turnover of Schneider. The second chapter, which is very, very important for me, and I'm passionate by technology. I strongly believe in innovation. I strongly believe that's what will make Schoenal Electric very different. But I'm equally passionate on how we are going to differentiate in front of our customer. You know it, but we have decided to go to the next level of the regionalization of Schneider Electric. So it's basically how we structure the company in terms of innovation, in terms of supply, but also in terms of sales, and making sure that we are creating four regional loops. in North America, Europe, China, East Asia, and South East Asia and international to create agility and speed. So what does this mean in simple terms? You identify needs in one of those regions. You can speak to R&D people who are very, very close to you. You can speak to the supply chain people. And you can execute projects very, very, very fast. And you don't need always to go back to the top of the company. Now, it doesn't mean that we want to catch Schneider Electric in four pieces. All of that is supported by a global governance where we define very clearly where we want to go in terms of R&D. For instance, what are the platforms we want to develop, what are the choices we want to make in terms of electronics. Also, the way we want to design our supply chain. But when this global framework has been defined, we want to empower our four regions to go much faster. And what we are doing also in terms of operating model evolution is how we go to the next level of engagement with our global customer, which, as you know, will represent a growing part of ourselves. When we go, for instance, to cloud and service providers, to utilities in all the segments, we are going to the next level also of engagement with our global customer. So on this slide, you have a couple, again, of proof points of what we are doing to make it happen. I'm just doing... To give you a few examples, you know we want to have 90% of our sales to be manufactured in each region. Manufacture means both what we buy from outside, but also the cost, the labor cost that we have for manufacturing. So for us, it's important that we keep investing in all the region. I said it, we've completed the acquisition of Lewis & Nixon in India, which create a very, very strong India hub to support the international market. We continue to invest in the US, in North America, for North America, especially to support the growth of our data center business, both in low voltage UPS, but also in liquid cooling with the acquisition of Motiver. Talking about Motiver, we have decided to open a new factory in India. Actually, we announced last week to accelerate the expansion of MotivAir outside of North America. And we continue to leverage, for instance, China as one very important hub for us in terms of power electronics, but also localizing offer like GVXL to make sure we are more competitive in the Chinese market. And we continue also to invest in Europe. New factory we are launching in Macon and taking our John Venture Schneider E-Start to the next level for electrical vehicle. So, the last pillar of that transformation is operational excellence. Also, extremely important for me, we've been very, very vocal with Ilari and the management team in December that we want to innovate in technology, we want to accelerate the growth of the company, but all of that has to translate in a very strong operating margin, strong return for our shareholders, and that's why we decided we need to accelerate all our plans when it comes to cost competitiveness and scalability. Cost competitiveness on one side because I want to make sure we always stay competitive in everything we do. The design of our product, the cost of our product, the cost of our solution for our customer. How we do a better job to collaborate with our supplier to deliver innovation, cost and time to market, which is very important for me. And having a very strong machine where we deliver strong industrial productivity every year. At the same time, I want Schneider Electric to be extremely scalable. We just sell it, 40 billion, huge milestone. For a person like me who joined the company more than 32 years, which was, I think, 5 billion at that point of time, I mean, it's just an impressive milestone. But if we want to go to the next level of our ambition, 7-10% growth every year, that's super important that we always work on the fundamental of the company. our IT system, our supply chain, and so on and so forth. And I do believe we have a huge opportunity to leverage AI to keep really a strong level of scalability, but also efficiency at the same time. And I said it, I will go very, very fast. We are also working a lot with the management team on how we keep simplifying Schneider Electric year after year to make it easier for our people to execute. Here again, a certain number of proof points on how we want to collaborate more with partners, suppliers, companies like Infineon for instance. I mentioned going to the next level of flexibility in capacity also, working strongly with companies like Samsung and Foxconn for instance, where we believe it will give us an opportunity to accelerate really our capacity everywhere in the world, accelerate our competitiveness. And an absolute obsession on at-cost by design in order to contribute to a very strong improvement of our gross margin. So a couple of examples that you have on that slide, but I remind you on the right-hand side of the slide, those operational metrics we've defined with Ilari during the Capital Market Day, which are absolutely essential for us. Well, we want to grow very fast. We want to stay very, very healthy at the gross margin level. Always focus on the efficiency of the company. And last but not least, always working also on our portfolio to make our portfolio more efficient. So these are really the three main chapters that we presented to you on which we will give you an update every year, every half year on how we are progressing. But of course, I would not be complete if I would not speak about what makes Schneider, I think, extremely different in the market. people and sustainability-centric company. I said it, we've completed successfully the past cycle when it comes to our sustainability achievement. We presented that to you already, so I'm not going to go one by one, but we have launched our new program when it comes to what are the next with transformation we want to deliver, with a very, very strong belief that as a company we can have a lot of impact, but we believe that advancing energy tech will bring progress to all everywhere in the world. So there are a couple of metrics that we have kept from the past program. Again, saved and avoided emission, going to the next level. I told you 800 million tons plus we want to achieve 1.5 gigatons by the end of 2030. But new metrics we are building right now on how we can build train more electricians in the world to support that big trend on electrification. And of course, always covering all the aspects of ESG and trying to impact our entire ecosystem, including suppliers, partners, everywhere in the world. When it comes to people, we continue to invest a lot. Super important for me that, one, we keep our employees engaged in the transformation of Schneider. We are moving very, very fast, so we want to keep our employees along with us to keep the management, and we want to make sure they are motivated and engaged to work with Schneider Electric. And at the same time, what is super important for me, we are moving really to this tech world, which require new competencies. So training our people in digital, in AI, in those new energy landscape technology is extremely important. And last but not the least, the second metric for us in terms of engagement is always offering the possibility of our employees to become shareholders of Schneider Electric. I'm extremely pleased to tell you that 63% of our employees have invested in our worldwide plan last year, with some countries going above 80% of employees. So you imagine that's a demonstration of the commitment of our employees. And we've been this multi-model, going to the next level of regionalization. You know, we have a unique model of management where we want to have a very decentralized leadership, not only for the regional team, but also for the global people who are managing China Electric. Why? Because I believe that in a world which is going to be more and more fragmented, that will make China Electric much more agile and much faster to make the right decision. So to wrap up on the priority for me as a CEO of the company in 26, definitely first and foremost, delivering a very strong performance. We'll come back to that with Hilarie in a couple of minutes. But again, accelerating everything we do on the technology leadership side. being the absolute leader in the new energy landscape. We are the worldwide leader in electrification. We know the energy landscape is changing. It's bringing even more electrification, more change in our industry. We want to keep and reinforce that leadership, going to the next level, leveraging NI and creating energy and industrial intelligence for our customers. And of course, with the data center market, which is growing fast, Keeping an absolute leadership and making the most of this growth opportunity. Going to next level of regionalization to satisfy even more our customer, local, regional and global. We see strong demand everywhere in the market. Most of the geography, all key geography will contribute positively in 26. So let's make the most of the growth everywhere in the world. And of course, executing seamlessly the record high backlog that we delivered last year. Last but not the least, I said it, huge focus on operational excellence, gross margin improvement means strong focus on cost, productivity, pricing, margin obsession. This is very high in my agenda, very high in the agenda of the management team. And, of course, we want to continue to bring the next level of scalability for Schneider Electric and, in particular, levering AI. So this is about really what we plan to do in 26. But before going more in detail on how it translates in terms of financial ambition, I would like to hand over to Hilary, our chief financial officer, to tell you more about our 25 financial performance.

Thanks very much, Olivier. And good morning, everyone. Happy to be here with you all today. I'll start with our key financial highlights for the full year, some of which Olivier has already mentioned. Starting with revenues, and Olivier mentioned a few times, we're excited to show revenues of more than 40 billion for the first time, finishing the year at 40.2 billion euros in revenues, up 9% organic. In gross margin, as expected, we finished the year slightly negative. Despite this, we did continue to see a step up in our adjusted EBITDA margin, which improved by 50 basis points organic, supported by strong cost control and the simplification actions we started in 2025. Our free cash flow was above €4 billion for the third year in a row, a bit higher than our expectations, driven by strong operating cash flow and working capital improvements. In terms of net income, we were slightly negative at minus 2%, with our adjusted net income up 4% recorded. And lastly, we did see a step up in our ROCE to greater than 15% for the first time, reflective of our strong operating results. To get into a bit more detail, both businesses contributed to our overall growth in revenues of plus 9% organic, with energy management up double digit for the fifth year in a row at plus 10%, and industrial automation back to full year growth at plus 3%. And while it's not on this slide, I'll mention that all four of our geographies finished with positive full-year organic growth in revenues in both businesses, a reflection of our strong portfolio positioning across our hubs. The positive contribution from Scope is from Motivair and PlanOn, and we did finish the year with a negative impact from FX, as anticipated, primarily due to the depreciation of the U.S. dollar and U.S. dollar-impacted currencies. Based on current rates in 2026, we'd expect this negative FX impact to continue with minus 850 to minus 950 million euros impact on full year revenues and minus 10 basis points impact on adjusted EBITDA margin. Of course, FX rates are not easy to predict, so to support your modeling efforts, we've updated our FX sensitivities to key currencies in the appendix of this presentation tied with the 2026 guidance we're giving today. Olivier already mentioned the 15% growth in our digital flywheel, which we use to track the progress of our transformation towards more digital and more recurring revenues. The only additional points I'll mention here is that you can see we're now at 79% recurring revenues in our agnostic software business. This recurring revenue profile supports greater visibility and margin and cash flow resilience over time, and it remains a central pillar of our value creation strategy. Turning now to our backlog at the end of 2025. We exit full year 2025 with a record backlog of more than 25 billion euros and a growth of 18%. And just to note, that 18% is not in constant currency, so it reflects a similar drag from FX as we saw in our 2025 revenues. A couple of points I'll make here. First, this strong backlog will obviously support our sales in 2026 and into 2027. And more importantly, it gives us very good visibility, particularly in our data center business, for the next 18 to 24 months. Second point, we did see a clear acceleration in orders in the fourth quarter, driven by data center, but not only. We also saw a good pickup in demand in infrastructure and in industry, including process and hybrid in the Q4. Moving now to Q4 revenues, which was a record high quarter for us, all four geographies contributed to our strong finish to the year, driving sales to 11 billion euros or plus 11% organic. And both businesses also contributed strongly. The positive scope is from MotivAir. The first year there was very strong, better than business plan, and we saw a negative impact in FX and Q4, tied to the depreciation of the U.S. dollar and dollar-impacted currencies. In terms of business models, we were up plus 4% in products, with around half of that due to price, as we ramped up our pricing to offset tariffs and inflation, particularly in North America. Our systems business grew very strongly, plus 19%, with growth led by data center, with strong growth in industrial automation as well. Software and services was back to double-digit growth, plus 10% organic growth for the quarter, driven by double-digit growth in revenues in Aviva and digital services. Turning to the two businesses, energy management was up 11% for the quarter, with North America at plus 19%, driven by growth in data center as well as industry and infrastructure. We did still see negative growth in residential in the U.S. and in Canada, with some early signs, maybe wishful thinking, of stabilization of demand in terms of orders in the U.S. In Western Europe, up 5% organic, the growth was led by data center with solid contribution from residential buildings. Asia Pacific was up 5%, with China up low single digit, driven by continued demand in data center, with the building and construction markets still subdued. India was up double digit, with strong growth in both products and systems. And rest of world was up 9% organic, with continued double digit growth in Middle East and Africa. Industrial automation was up 8% for the quarter, with North America turning to growth, up 5% organic, driven by discrete automation in the U.S., supported by the market, as well as some investments we've made in the commercial organization there, and with double-digit growth in both discrete and process and hybrid in Canada. Western Europe was up 8%, with growth led by Aviva, with solid growth in discrete and process and hybrid. Asia Pacific was up 7%, supported by sales at Aviva, with solid growth in discrete and process in hybrid. China was up low single digit, and India was up double digit, both driven by continued growth in discrete. Rest of the world was up 14%, with strong growth across most of the region. Turning now to our P&L, we finished the year with adjusted EBITDA of 7.5 billion euros, up 12% organic, and we continued with another year of progression in our adjusted EBITDA margin, up 50 basis points organic. This was driven by our strong organic revenue growth as well as strong leverage on our operating costs as we focused on cost control and started the implementation of our simplification program. These actions translated into our SFC to sales ratio, which stepped down almost a point to 23.3%. At the same time, we continue to support investments for the future in technology leadership and in customer differentiation, and you can see our R&D as a percentage of sales remain flat at close to 6% for the year. Our gross margin was negatively impacted by inflation, tariffs, and by mix, partly offset by a strong acceleration in productivity in H2, and I'll speak more to that in a moment. Energy management finished the year with adjusted EBITDA margin of 21.8%, flat to 2024, impacted by the same negative trends in gross margin as the group, offset by operating leverage. Industrial automation finished with adjusted EBITDA margin of 14.2%, an improvement of 10 basis points organic, driven by improvements in gross margin, mostly offset by a deleverage in operating costs in the first half of 2025. Gross margin at the group level came in at 42.1%, down 40 basis points organic. And you can see the details quite clearly in the bridge. We did see a pickup in product pricing in H2, but not yet enough to offset headwinds from tariffs and raw materials as expected. Mix continued negative for the full year, also as expected, due to the higher growth in our systems business. And we did see a strong pickup in productivity in the H2, supporting a stronger gross margin evolution in the second half of the year. Now, Olivier will speak to more details in the trends we expect for 2026 in a few minutes, but we do expect a continued pickup in pricing throughout 2026, which alongside the other drivers of our gross margin that we presented at our Capital Markets Day, should support a positive evolution of our gross margin in full year 2026. However, the timing of that ramp up in price, as well as the timing in RMI and tariffs, will likely mean we continue with flat to negative gross margin progression in the first half 2026, and tariffs being a bit difficult to predict at the moment. I mentioned the strong operating leverage we drove in our operating costs, or what we call our support function costs, in 2025 through both cost control as well as the kickoff of our simplification program. You can see we drove $349 million in cost savings in 2025, more than offsetting inflation and allowing for investments in R&D, in commercial initiatives, and in our digital backbone, including AI. Turning now to net income, including scope and FX, our adjusted EBITDA is up 6%. As I mentioned in December at our Capital Markets Day, our restructuring costs did tick up to close to 300 million euros, tied to the simplification program that we kicked off this year. And in support of the additional minus 1.5 to minus 2 points, we expect to drive in our SFC to sales ratio between 26 and 2030, including our – sorry, and that excludes R&D. The only other item I would note is we did have an additional around 100 million impairment in H2 tied to some equity method investments in the U.S. Alongside as anticipated increases in financing costs and PPA accounting, we did see a negative evolution of our net income of minus 2%, with our adjusted net income, which excludes restructuring and impairments, of 4.8 billion euros, up 4% reported, or plus 14% organic, better reflecting our strong operating results. Free cash flow came in at a strong 4.6 billion euros, a bit better than we expected, with strong operating cash flows up 7% and strong working capital improvements in inventory and day sales outstanding, driving a free cash flow conversion ratio of 106% or 111%, including those non-cash impairments. As I mentioned in our Capital Markets Day, we'd anticipate our cash conversion ratio to be around 100% over the next years, despite the capital investments we're making to support our growth, bolstered by structural working capital plans. And I'll finish with a slide on our balance sheet and ROCE. We did close the India transaction at the end of 2025, so you can see a small uptick in our net debt to adjusted EBITDA ratio. But overall, our balance sheet remains strong, well supportive of the A-level credit ratings we committed to at our capital markets day. And I'm pleased to see our ROCE surpassed 15% at the end of 2025, reflecting our strong operating results. With that, I'll hand back to Olivier to cover our 2026 expectations.

Thank you very much, Hilary. Indeed, let's close the first part of our call with what we see as a key trend in 26. It's going to be a summary because we've covered already a lot. But in short, what we see is a continuous strong market demand, which will help us to drive growth and with positive contribution for all our iron markets. Obviously, data center and market will lead the growth based on the growth demand, the strong demand we've seen in 25, and we see that to continue in the future. What is very, very important for me is why we like and we love really taking the most of that opportunity. We will continue to position Schneider Electric strongly in industry and infrastructure, and we see great opportunity to accelerate the growth and buildings to improve its contribution progressively, also aligned with the microeconomic trends. System will continue to lead our growth, but we see also some improvement on our product business, which will have a positive contribution this year, and in particular, but not only, in discrete automation, which has also been a very important point of focus last year. We'll keep growing in software and services. This is a translation of our energy intelligence story, with a very, very strong focus at the end of the day to drive more recurring revenues in all part of our business. The good news, all four regions will contribute to the growth from North America, Europe, China, Southeast Asia and international. Of course, led still by U.S. first and India probably second. But the good news is all markets will contribute positively. It's very, very important. We said it several times. What makes Schneider Electric very, very different, it's a balanced exposure by a market. by business model, also by geography, and we will read it in 26 to continue to have this balance exposure and to make sure we always make the most of this market opportunity and always building strong muscle for the future in case some part of the market might be less exciting in the future. So, as a result of that, we are also putting a lot of action on price. Hilary said it. We want to be net price positive in value. to be able to offset raw material impact and tariffs ramping up throughout the year. And as Hilary said, bringing and turning our gross margin positive during the year 2026. So the group expect the other driver of adjusted EBITDA margin expansion to be aligned with what we shared with you during the capital market day. As a result of that, we have set up the following target for 2026. So an adjusted EBITDA grows between 10 and 15%, which is supported on one side by a revenue growth of 10 to 10% organic. I insist organic is really an important point for us. We see massive opportunity in the market. And at the same time, we'll keep on increasing our adjusted EBITDA margin between 50 and 80 BIPs organically in 2026. So all of that will translate our adjusted EBITDA margin in a bracket of around 19.1% to 19.1% for the full year 2026. So exciting year in front of us. We are ready. We have a plan. And definitely, we plan to accelerate the overall execution of that strategy in 26. So before we hand over to you for Q&A, today is an important also day. We made the announcement this morning that will be your last earning calls, Hilary. Hilary has been with us for nine years. She has been the CFO for the past six years. She's going to take the next assessment in the United States that will be announced later. And she will be replaced by Nathan Fass, which is actually on my left. So, Nathan has been in the company for almost 20 years. I've been doing a lot of different jobs in different parts of Schneider Electric, the last one being investor relationships. So, very pleased to have you, Nathan, in this new role, and I'm sure you will build on the strong legacy that has been built by Hilary in the finance, and you will help us to execute that plan very, very fast and to drive strong shareholder return. Hilary, I want to thank you for the partnership. It has been a great journey the past 10 years, but in particular in the past 15 months, the two of us, you have been a fantastic support for me to become the CEO of Schneider Electric. So I want to thank you on behalf of the team here at Schneider Electric and wishing you all the best in your next chapter.

Yeah, thanks, Olivier. Schneider's obviously been a huge piece of my life and my career, and I'm extremely grateful to the board, to yourself, the CEOs and colleagues with whom I've worked over these past nine years, and for the trust and support they've given me. And in particular, you mentioned I'm excited on the work we've done together over the past 15 months to put the company on the trajectory we described in our Capital Markets Day and reiterated today. I'm certain I'm leaving at a time when the company's on a great trajectory, and I'm really pleased we've been able to prepare a great successor with Nathan over the past few years. I'm confident that he'll hit the ground running. And then just for those curious, my next role will be announced closer to the date of my departure. So, Olivier, back to you.

All the best, Hilary, and we will work together, you, Nathan and I, in the coming weeks to do a very smooth transition and starting next week, by the way, with all our investor rituals. So we'll continue to have fun together for a couple of weeks. Nathan, back to you for the next part.

Okay. Olivia, maybe I can say a couple words as well. First, I'd really like to thank Hillary, right, first for her leadership across the finance function, but also the opportunity to have learned many, many things, Hillary, over the last nine years working extremely closely together. And then I guess, Olivier, also maybe a bit to you. Thank you for the trust. I, of course, take the position with humility and determination to succeed together with you and your leadership team. So thank you for that. I'll make the transition then to the Q&A, of course. And thank you both for the presentations. We have around 20, 25 minutes. I'm sure there's a lot of questions, and I want to make sure we get to every analyst with a question. So if you can please just stick to one question, that would be great. And with that, operator, let's go to you for the first question, please.

Thank you, sir. Just as a reminder, please press star and 1 for questions. The first question is from Phil Buller of J.P. Morgan.

Oh, hi. Good morning. Thank you. And just to follow up on that CFO transition topic, if I can, to start, obviously, Thanks, Hilary. Very best wishes for the next chapter and congrats, Nathan, of course. The question is on timing. I've had a few investors asking about that today. It obviously sounds very smooth. But it's obviously also been announced shortly after a major CMD. So if you could just share some additional color as to the genesis of this, Olivier, perhaps. Is this something that you were envisaging during the CMD buildup as you built those 2030 objectives together as a team? How involved was Nathan in particular involved? in that process and has anything changed. One of the data points offered at the CMD was in relation to the Aviva margin expansion. And obviously there's a question at the moment about software more broadly. So just a little bit more color about the genesis and the timeline and if anything has changed in terms of the assumptions even in that relatively short period since the CMD piece. Thanks.

Yeah, sure, sure, sure, sure. Well, look, as we said, and I'm sure you can feel it today, this is a very smooth transition that we are managing with Hillary. Just want to tell you that, you know, Schneider Electric is not a one man or two people show. What we've presented to all of you at the CMD, it's the work of the entire executive committee. They have been associated to the building of this next cycle. I told you many, many times in 25 that it was time for Schneider Electric to build this next cycle, inventing what advancing energy tech. And we're actually more executive last year than we have usually to work all together as a team. And Nathan has been associated in the later part of last year, of course, as a new IR of the company in the building of that plan. So I understand that a change of leadership always raises questions. But again, we respect, first of all, the choice of Ilari to take a new role and to have a next chapter in our career life. But what is very, very important at the same time, we are a very, very solid team behind this plan. I've been now the CEO for 15 years, for 15 months. Before that, I was in Schneider again for more than 32 years. So I think what is super important, and Ilari has helped me a lot to build this very strong plan for the next cycle, whatever we presented to you in the CMD in terms of assumption, driver, and how we want to accelerate the performance of Schneider Electric remain absolutely valid. And as I are, Nathan has been associated to this plan from day one. So feel confident that we will manage this transition smoothly, and we are fully ready this year to execute our plan extremely fast. Thank you very much.

Yeah, thanks, Phil. Operator, maybe the next question?

Yes, sir. The next question is from Alistair Leslie of Bernstein.

Oh, yeah, thank you. Good morning, everyone. So, question on pricing. I mean, obviously, if we look at that EBITDA bridge, it does look like the gross pricing is still relatively muted in H2, but obviously, you're flagging an acceleration in Q4. I was just wondering if you could talk a little bit more about those kind of pricing exit trends, any price increases you've already put for a year today. And then I was actually wondering if you could comment specifically on the pricing environment in China. Have you seen any stabilization or improvement in the deflationary environment there? It's a market, I think you said recently, the CMD, that you were working on pricing as well. So what's the problem is this for 2026 and our margins generally in China? still holding up at high levels. Thank you.

Yeah, absolutely. Thank you very much for the question. I'll start and over to you, Hilary, to complete. Look, we told you last year in H2 with Hilary that definitely we were ramping up step-by-step more pricing everywhere in the world, and in particular... In North America, we know with the impact of the tariffs. Last year, as you know, was a complicated year where we had up and down on tariff. It kept changing, so it was not always easy really to plan what would happen. Last year in Q4, we put a very solid plan to accelerate pricing. What happened since Q4, we have seen also huge increase of raw material. So, there was on one hand the need to implement what we decided last year, but also to accelerate everything we plan in pricing to compensate the impact of raw material. You know, we have a lot of silver and copper in all our products. So, I think the good news this time, we were ready with the initial plan of Q4, and it was just about how we accelerate to add on top of that the compensation of raw materials. I'll let you complete maybe on the second part of the question on China and so on.

Yeah, sure. Indeed. So we did see an acceleration in 2025 in the Q4 in pricing generally. Of course, in particular in North America, that's where we have the tariff impacts in front of us. China for 2025 definitely remained deflationary. So those low single digit numbers that we're talking about in China would be higher without that deflationary. They're higher in volume. We would expect China, you know, it's not always easy to call. The government is trying to combat deflation. But in general, we'd expect China to remain deflationary in 2025. That said, with the uptick of raw material prices, which impacts far more beyond just our industry and our own competitors, we did start to see pricing and price increases, including with all kinds of local competitors across industries increasing. in this Q1 in China. So we expect there to be a bit of a turn there as well. And I'll just mention that we did update in the appendix of this presentation a slide we gave a few years ago with the breakdown of copper and silver for us in terms of raw materials in 2025. So you can see all of the information. And like Olivier mentioned, 26, we expect that we'll continue that ramp up that we already talked about in the second half of last year.

Thanks, Alistair. Operator, next question.

The next question is from Andre Cookman of UBS.

Yes, good morning. Thank you very much for taking my question. I'll focus on data centers, please. Historically, you gave us very helpful disclosure on how much of your backlog is from data centers and distributed IT and how much about pure data centers and hyperscalers within that. Could you please give us those details for 2025? And the bigger question, really, I wanted to get your view on how you're positioned for the 800-volt direct current architecture transition, and in particular, what are your state of offering at the moment in solid-state transformer and solid-state breaking? Thank you.

Absolutely. Look, it's a very important question. Maybe I can start by the second part of the question, Ilari, and then go back to you for the first part and backlog. Indeed, when you look at the evolution of data center, the type of AI factory you will have to build in the future to support the next generation of GPU of NVIDIA like Robin Ultra or Feynman, that will require at one point of time a different type of infrastructure. So that's why there is so much buzz on 800 volt DC. We see that it will be an important trend. It's very difficult to say by 2030 when you look at all the data, we say 200 gigawatts to be built in the world. We estimate all reports in the market, estimate 15-25% of the demand could be impacted by 2030. What is super important, you are talking about an evolution of the electric coal infrastructure, which is again where Schneider Electric has a very strong leadership. So we are developing one, what we call, as you know, the sidecar concept, which can be available immediately, which is a minor evolution of the infrastructure. But we are developing those full, definitely, architecture that could be ready by 2028, when the market will start to grow. And we are leveraging here a lot of competency we have in-house, in particular in China. but also we're working with partners. So again, that's a domain that we know very well because it's touching the core of the electrical infrastructure. That creates actually also opportunity for Schneider Electric to stay extremely differentiated in the market in the future. And as I said, we have to get ready for a transition that will be slow, that will take time, but that's super important that As a worldwide leader in electrical distribution, Schneider Electric is the first one we need to offer the most innovative solutions. So, again, you are absolutely right. That's an important trend. We are extremely well positioned. We have accelerated our investment in 2025 to develop concepts. A bit too early to say because the demand is just about to start, but we are fully ready to face this new trend, which, again, will impact our market step-by-step between probably 2028 and 2030. Hilary?

Thanks, Olivia. In terms of the backlog, you're right, we didn't give a backlog breakdown by end markets. And I don't think we would intend to do that. But what we are doing, and you can see we've updated the exposure in terms of our 2025 orders across our end markets. So now we're doing that annually. I think you can infer generally the orders growth that we've seen there, and you can infer from that probably some component of data center and networks. Of course, out of the energy management piece of the backlog, which we showed, a good portion of that is data center and network, but not only. So we also had good growth in the rest of the end markets.

Thank you, Andre.

Next question, please. The next question is from Jonathan Mouncey of BNP Paribas.

Hi. Good morning. And may I just also say I'm sorry to see you go, Hilary, but welcome, Nathan. In terms of my question, the intake so far in Q1, I mean, obviously there was a big step up in DC intake in Q4, I think probably for all the players, and you confirmed that again today. Just wondering whether that's really continued into 2026. And also... With the order intake where it is and with your comment around, you know, it gives you visibility through for the next 18 months, are we saying now that kind of revenue growth in data centers is capped this year and what we're booking now is really for 2027?

You want to start, Hilary? Sure. So in terms of intake and Q1, well, we've said quite a few times before, and we're not quite done with the Q1 yet, that we don't consistently look at orders as the right way to look at data center and network. But what I would definitely say is that Demand for data center accelerated in the Q4, and we don't see a different change in trend in the Q1, if that's what you mean. That's the first part of your question. Visibility, indeed, we have good visibility. We've talked about it for some time, and you can see it even in orders in the backlog now, 18 to 24 months in terms of data center demand. In general, those projects now are being planned probably mostly in those later two years. That's what the hyperscalers and the others are doing. So, yes, we would have a decent visibility on 2026 revenues associated with data center at this time. Exactly.

Thanks, John. Next question.

The next question is from Gail DeGray of Deutsche Bank.

Well, thanks very much. Good morning, everybody. So just to follow up on this, I mean, you obviously finished the year with a very strong backlog now exceeding 25 billion euros. So can you... Help us understand how we should think about the timing of conversion, you know, specifically for 2026 and 2027. And what are the potential bottlenecks you may have to solve to convert that backlog into revenues?

Thank you for the question. First of all, I'd like to remind and probably what Hilary said. In the way we operate in that market, and in particular with the large hyperscalers, we work with them on the design. We freeze the design. We look at the planning they need in terms of capacity, and it helps us to adjust our capacity. So the combination of this work we are doing on design agreement we are making with them is helping us really to have a good visibility, as Ilari said, 18, 24 months on what's going to happen. To answer more specifically your question, in the acceleration of Q4, a large part of what we booked in Q4 will be executed more in 27, but that will impact a little bit in 26. And the second part is definitely we see an acceleration in demand of those AI factory everywhere in the world. We see that in North America, but I was just in India last week, for instance, for the AI summit. We see also that India is accelerating. So that gives us the confidence that we can predict pretty well what's going to happen because we are really very well connected First with hyperscaler, we are operating in those key geography. And you know, for a company like Schneider Electric, if we have a kind of two years visibility on the demand, we can react on capacity. We can do it by ourselves. by building extra capacity, but we are also working more and more with different partners. I was mentioning Foxconn, but regional partners everywhere in the world to adjust capacity plus minus if needed. So the only change, you know, for a company like us, probably a couple of years ago, we were looking at overall capacity every two to three years, and then we moved to one year. Now it's a very dynamic process where every quarter we revisit the demand for the next three years, and we adjust eventually the capacity we need. keeping in mind that we want to stay very balanced so it's only about building capacity in nam for north america but also making sure we are building capacity in the other part of the world that's why i was saying you for instance before that we decided last year to invest in a new factory for liquid cooling in india because we see the demand for ai factory in india also coming and that's why we have accelerated the execution of the plan so that's how we are managing They will be opened on, of course, we'll continue to adjust, but I think we are fairly confident with the visibility that we have in the pipeline, the way we are working with all those key stakeholders and adjusting permanently our capacity.

And we do give a breakdown of the backlog between less than one year and more than one year. We would intend to meet the customer commitments we have. So all that backlog you see in less than one year, we'd obviously expect to accomplish in 2026.

Thanks, Gail. Next question, please. The next question is from James Moore of Redburn Atlantic.

Yes, morning, everyone, and thanks for the time. And, Hilary, thank you for all your help and best of luck. And Nathan Chapeau. Could I ask about software and AI and the disruption risk in sort of three dimensions? I think we're talking increasingly about software being made up of a kind of UI SaaS application layer that is going to be fully disrupted by agents. But under that, a system of record and a database with more of a moat. And I would argue that your AEC business does have some of that top UI layer that could be disintermediated. Have you done any work on what proportion of revenue you think that is at risk and what proportion you think is safe from AI directly substituting you? And secondly, as customers increasingly use AI to increase their workflow productivity, presumably if you continue to price on a seat-based monetization model, you're going to see a decline in revenue. How quickly? And are you planning to pivot to tokens or to another form of usage, and how quickly do you think you can do that? And I guess the third dimension is you're going to be trying to increase the degree of AI in your own software products to add compute and value. Are you worried that that aspect of AI uplift can also be disintermediated by others taking that aspect of the productivity improvement work? There's sort of quite a lot bundled into that, but Olivia, I'd be very interested in your thoughts.

Thank you. It's an excellent question and indeed a very complete question. Let me start. Of course, we are doing analysis permanently. And I tell you why. Because when we really started to see even end of 24, the acceleration of AI, we discovered that it was a massive opportunity for Schneider. You know, we've been quite vocal with you for the past two years on what we do in digital services. Digital services is basically a business where we extract data coming from all the assets that we make more connectable. We built this offer that we call EcoCare. AI has helped us to go much faster, actually, in creating more value for our customers. So, obviously, when we realize that it will help us to go much faster... and to deliver more value, and you don't need to go through a very complex software in the middle. Immediately, what we've done with Kaspar, the CEO of Aveva, was really to look at our own portfolio and to check if it could be disrupted. Now, I don't want to oversimplify, but what AI brings is when you have simple, repetitive tasks, a lot of information that you need to capture, and when you look at the portfolio of Aveva, I don't want to say that we have zero risk, but a large part of what we are doing is about leveraging extremely complex data that come from industrial infrastructure, working on very complex and critical installation, where cybersecurity, by the way, on top of that is extremely important. So I see that there is still a space for huge growth for all those complex software because we are solving complex problems for our customers. And here, as you said in one of your questions, AI is also an opportunity to amplify what we have been doing with AVEVA with the agent to go to the next level. So at that point of time, I don't want to say we are not worried. But we believe a large part of what we are doing in our software portfolio is not impacted negatively, but more positively. I'll just give you a last example, maybe before I hand over to Ilari on the pricing side. You take what we have been doing with ETAP. ETAP is about building a software to design electrical infrastructure for the future, where you have to simulate a lot of assets, which are extremely complex assets. That's what we are doing in the Omniverse, for instance, with NVIDIA. We don't see AI at all being able to disrupt that kind of software. Now, again, building an AI agent on top of our software to make it even easier for our customer to use it, of course, why not? So, all in all, we believe we are in a good place. We will be attentive. And at the same time, wherever we don't have a strong software business, we believe it will help us to accelerate some part of our portfolio for simple implications that we can deliver to our customer.

And in terms of your question about the seat-based model or pricing in the software business, as part of the Aviva transition to subscription, and we did a lot there. It's not just changing contracts and things like that. But you may recall that we've talked about the flex pricing model that we've been invoking at Aviva more and more. tied with Connect, but not only, with most of the services of Aviva and into OSI. That's the pricing model that we've been moving to over the past few years. And that's effectively token-based. So we didn't do that because of, you know, foresight on AI, agentic AI, but that is the model that we've started to move to and that I feel comfortable will be sort of the model of the future for this type of software.

Thanks, James. We probably have about five minutes left, so if you can make the questions pretty concise, then we can maybe fit in a couple more. Operator, next question.

Thank you. So the next question is from Ben Uglow of Oxcap.

Yeah, morning, everyone, and thank you for taking the question. I will keep it brief. It's really just on industrial automation and the margins. I have to be honest, I am surprised to see your margins still below 15%. And I guess it's two things. One is why aren't we seeing a little bit more operating leverage? And certainly that's what we have seen in some of your peers. And secondly, just in absolute terms, why are we so low? Is this to do with, you know, China and country mix? how much is to do with process, how much is to do with SaaS transition. If you can just give us a sense of what part of the business is keeping the margins so low, that would be helpful. Thank you.

Sure. So with industrial automation, indeed, we did finish below 15%. I mentioned that on the positive side, we do start to see those improvements in gross margin in the business, which is exactly what we expected as we moved into the second half. So the big detractor, I would say, in 2025 is that we did continue to have negative operating leverage in the first half. So what's driving – and I'll talk to that in a second – but what's driving those lower margins? We've mentioned it a couple of times. A big component of it for us has been mix leverage. The mix between process and hybrid and discrete. We saw discrete start to come back in the second half. That's been a big component of the mix return for us, and we'd expect that to move forward in future. Second, Aviva and that transition to subscription we shared in the Capital Markets Day. that we're going to be moving our adjusted EBITDA margins up there now more swiftly over the next couple of years. So that's been a bit of a detractor, although it was an improver, obviously, in gross margin in the second half in terms of mixed contribution. And then we have had a real drag in terms of operating leverage at the business. We have Gwinell, our new leader there in industrial automation, that spoke about the changes that she's making in not just 2026 but going forward. But we would expect all of that to be operating in the right direction on all cylinders in 2026. So we'll have some more improvement in mix. normal productivity. And Aviva, we're almost done with that transition to subscriptions, so we'll start to see more and more contribution at the level of adjusted EBITDA as well. So yes, not exactly where we would have liked to be in 2025, but I think all the levers are there for 26 and beyond. And we gave a little bit of an idea of that margin journey in the capital markets day to 18% and perhaps even a bit better by 2028.

Thanks, Ben. Maybe one last question, and we can try to go quick on this one. Operator, next question?

Yes. Yes, excuse me. The next question is from Martin Wilkie of Citi.

Yeah, thank you. Good morning. First, really thanks for all the debates and interactions over the years, and good luck for the future. My question was just on the seasonality and the implications for the profit uplift in the second half. I know you've not guided explicitly, but if gross margins are lower, In the first half, presumably, organic EBITDA margin expansion is sort of clearly less than 50 basis points. As we think about the implication for the second half and the upper end of the range, it would have to be more than 100 basis points up in H2. Is that all driven by price-cost, or is the leverage from industrial automation coming back and the volume effect from that, or is it a VIVA timing? What would drive that quite large uplift in profitability in the second half? Thanks.

So in terms of seasonality, you know, we have two pieces of seasonality in my mind. One, something that is completely out of our control, which is raw materials, and then the pricing that we do beyond that. The pricing is obviously in our control. That can pull our seasonality one way or another. we'd seen in 2022, 2023, that seasonality going in different directions being pulled by that. And here, when I talked about that negative gross margin potential in the first half, that's a lot driven by that uptick in pricing. And for example, with tariffs, We don't have any baseline of tariffs in the first half, whereas we do in the second half. So there's timing there. The other component of seasonality that we generally always see in our business is just associated with volumes. We have stronger volumes in the second half than the first half. That's been a seasonality for a long time across the business. So we have stronger leverage and we have stronger productivity, usually in the first half. So in 2026 in particular, we would have better baseline on RMIN tariffs, the pricing, plus productivity and volumes and operating leverage, which is those differences you'll see between the H-1 and the H-2.

And I just like to complete, indeed, there are a couple of drivers which are very specific to what's going to happen in 26. But as we said multiple times, in the plan we built last year, we have the ambition to work on all the cylinders of the gross margin. So, of course, this year we have a very strong focus on pricing and we'll keep on going, and especially with raw material. It's pricing of product, it's also how we price our services business, how we bring the right level of selectivity in our system business. It's also working on the portfolio. We have historically some activity which are more dilutive than the others. You've seen in the CMD that We want to take out 1 to 1.5 billion. So since last year, we've built this very strong plan that we call gross margin obsession, making sure we work on all the drivers. But indeed, as Hilary said, there are some specific drivers for this year. But it's a short-term and long-term because we want really to make sure that we have an extremely solid gross margin, which is, for me, the best reflection of the health of the business of Schneider Electric.

Okay, thanks, Martin, for the question. Olivier, you have one word, and then we... We're done with the question, I guess.

Yes, we're done with the Q&A. So, again, I want to thank you for spending time with us today. We are closing the chapter of 25. You can feel that we've been excited. $40 billion, $4.6 billion of cash flow generation. It has been the great year, but it's closed. We have a plan. Now our focus is really to make the most on 26th. and make sure we can continue to drive a strong shareholder return. So we will be excited, of course, in the coming days, coming weeks, to follow up with some of you, and especially next week to go more in detail on that presentation. Again, thank you for the time spent with us. Thank you again, Hilary. All the best to you, Nathan, and focus on 26 now.

All right. Thanks, Olivia. I think we'll stop there. Look forward to meeting you, Olivia mentioned earlier, on some virtual roadshows in the coming weeks. And additionally, of course, the IR team is available for you to engage. Thank you very much and have a good rest of the day. Thank you.