Georg Fischer Aktie

Good morning, ladies and gentlemen. It's a great pleasure to welcome here to welcome you to our full year results conference here at the Hotel Widder in Zurich. Present from our side are our CEO, Andreas Muller; our CFO, Mads Joergensen; our Head of Investor Relations, Anna Engvall; and myself, Beat Romer, Head of Global Communications. Andreas and Mads will guide you through the key operational developments and also the financial performance of 2025, share our outlook for 2026 and provide you an update on the priorities of our Strategy 2030. Following the presentation, my colleague, Anna will moderate the Q&A session. We will first take questions here from the room and afterwards then from the participants in the webcast. Afterwards, you are warmly invited to join our lunch buffet here in the back or in the room adjacent.

With that, I would like now to hand over to Andreas to begin the presentation. Thank you.

Thank you, Beat. Also from my side, a warm welcome, and thank you for joining us this morning. Let's start on Slide 3, highlights of the year. 2025 was marked by the largest transformation in our corporate history. With the divestment of Casting Solutions, GF has become a pure-play Flow Solutions business, focused on the buildings industry and infrastructure end markets. I would like to thank the entire GF organization as well as external stakeholders for their support during this time of significant change. With a solid foundation in place, global footprint, broad offering and innovation capabilities, we are excited about the journey ahead of us, and we focus on executing Strategy 2030, establishing ourselves as the leader in Flow Solutions.

Coming back to our 2025 results. Overall, our performance in Flow Solutions was solid given persistent geopolitical headwinds and a challenging macro environment. Infrastructure continued to demonstrate strong momentum. Industry, however, was impacted by muted demand in general as well as continued project delays for semiconductors. The European construction market remained mixed, while the U.S. market weakened in the second half. In addition, we faced adverse tariffs and currency effects impacting our industrial U.S. business.

It is important for me to emphasize that we will -- that while we performed well in certain areas, our overall result did not fully met our expectations. As an organization, we are capable of achieving more. As such, we are swiftly moving forward with a new effectiveness and efficiency program called Fit for Growth, which will take out CHF 40 million this year, of which most will be secured already by end of Q1. Along with an expected recovery in key end markets in the second half of the year, we expect low single-digit organic sales growth and a comparable EBITDA margin of 14% to 16% in 2026, which corresponds to 10.5% to 12.5% at the EBIT level.

Let's now take a look at some of the key metrics for 2025 on Slide 4. Sales for Flow Solutions came in at CHF 3 billion with 0.6% organic growth, more or less in line with guidance. Comparable EBIT margin for Flow Solutions was 10%, excluding items affecting comparability, which was slightly below our expectations. Including these items, the reported EBIT margin stood at 8.9%. The comparable EBITDA margin was 13.4%. The proposed dividend per share is CHF 1.35, in line with last year's level, subject to approval at the Annual Shareholders' Meeting in April.

Moving on to Slide 5. With geopolitical issues escalating through 2025, we leveraged our global footprint and local-for-local presence, which limited but not eliminated our exposure to tariffs. We also benefited from diversification with certain markets and segments compensating for others. The Americas is nearly CHF 1 billion business today and grew 3.5% organically. Our Building Flow Solutions business outperformed an increasingly challenging construction market, and our industry business performed well. We continue to invest in our U.S. business and inaugurated a new 15,000 square meter facility in Shawnee, Oklahoma. By doubling our capacity, we are now in a position to better serve our customers in the important and growing natural gas sector.

Europe was weaker, down over 2% organically with strong growth in infrastructure, partially offsetting weaker performance in industrial end markets and buildings. A key development last year for Building Flow Solutions was the start of the expansion of Hassfurt into a Central European warehouse. By streamlining our logistics setup, we will make distribution both more efficient and also faster for our customers. APAC performed well, driven by momentum in marine, chemical processing and various industrial segments, offsetting weakness in semiconductors. Building on our long-term presence in the region, Asia remains an important and attractive market. Last year, we opened our new customer experience center in Shanghai, bringing the GF experience to our customers, in particular, localized industrial solutions for the Chinese market.

Moving on to Slide 6, which summarizes the many steps which have shaped our transformation. While progressing the Machining and Casting Solutions divestments, we also took important steps to enhance our Flow Solutions business with the acquisition of VAG, which brought mission-critical metal wealth technologies to GF. Going forward, GF is uniquely positioned to capitalize on its broad Flow Solutions expertise across industry, infrastructure and buildings.

Moving on to Slide 7. The integration of Uponor, which was, of course, the initial catalyst of our transformation is also progressing well. We further reduced portfolio complexity in 2025, optimized our production footprint and began harvesting customer and channel synergies. For example, we strengthened our presence in the fast-growing MENAT region with an end-to-end portfolio of integrated Flow Solutions for large-scale projects across buildings, industry and infrastructure. We expanded into the U.S. renovation segment through a partnership with Home Depot.

We also combined Uponor AquaPEX with GF's ChlorFIT to deliver complete domestic water solutions for commercial buildings in North America and as well launched the Uponor S-Press portfolio in Switzerland to address the attractive hot and cold water and heating applications. In total, we achieved run rate synergies of CHF 29 million in 2025, which compensated for multiple adverse cost impacts, including ForEx, utilization, wage inflation and therefore, allowed us to maintain last year's profitability level in Building Flow Solutions. Looking ahead, we remain on track to reach CHF 40 million to CHF 50 million by 2027.

As mentioned in the beginning and shown on Slide 8, we have launched a new effectiveness and efficiency program in late 2025 called Fit for Growth to drive profitable growth. With this program, we will take out CHF 40 million of costs in 2026 by reducing noncustomer-facing roles and external expenses. We will also continue to optimize our production footprint and rightsize our corporate functions. In total, approximately 600 employees will be affected by the program. We started in Q4 last year and have made strong headway already. The majority of measures will be secured by the end of Q1. Importantly, Fit for Growth will allow us to continue to invest in our future, specifically our strategic priorities, which underpin Strategy 2030. We expect to reinvest a part of the achieved savings in our sales organizations to ensure effective and superior customer service. We also have started a net working capital initiative to enhance the performance of our net working capital.

Let's move to Slide 9. With our transformation, sustainability has become even more closely linked to our business and strategy, and we remain fully committed to our ESG journey. I'm very proud to confirm that we successfully delivered on key targets of our 2025 sustainability framework. We expanded our portfolio of products with social and environmental benefits to reach our target of 77%. We also reduced Scope 1 and 2 CO2 equivalent emissions by 51% compared to our 2019 adjusted baseline and increased our number of carbon-neutral sites to 12, including Sissach and Seewis in Switzerland. Very important, we also reduced accidents by more than we have targeted.

Moving on to Slide 10. Overall, Industry & Infrastructure Flow Solutions, I&I Flow Solutions grew sales by 1.9% organically, driven by the strong momentum in infrastructure in Europe as well as gas distribution in the U.S. Organic sales growth in H2 was 2.2%, up from 1.6% in H1. Demand in industry in the U.S., Middle East and Northeast Asia also remained solid. In Europe, geopolitical tensions weighed on our customer willingness to invest. Demand in certain end markets such as chemical processing and mining remained muted. Semiconductor-related sales landed below expectations at minus 16%, driven by persistent project delays, especially in the U.S., Europe and China.

Looking to 2026, we see an improved outlook for semiconductors driven by AI-related infrastructure, high-performance computing and memory demand. We have secured key projects and are well positioned with advanced new technologies such as the SYGEF Ultra, where we are setting new purity and performance standards for ultrapure water systems. We also anticipate demand for data center cooling solutions to accelerate, albeit from a relatively low base. Sales tripled to around CHF 30 million in 2025. Comparable EBIT margins for I&I Flow Solutions declined to 10.9%, driven primarily by unfavorable product mix given lower semiconductor-related sales, ForEx, but also tariffs. The ForEx impact at EBIT level was clearly nearly CHF 19 million.

Moving on to Slide 11. As we highlighted at our recent Capital Markets Day, liquid cooling for data center presents an attractive growth opportunity. With 7 pilot projects, more than 30 proof of concepts commissioned as well as more than 20 initiatives currently in advanced discussions, we are seeing encouraging signs of polymer-based solutions gaining traction in the market. We are particularly excited to be working with Rittal as the provider of a complete cooling piping infrastructure for Netmountains' new data center in Velbert, Germany, covering the facility water system, the technology cooling systems and room cooling. This is the first project where we have supplied the entire polymer-based cooling loop from chiller free cooler to the chip, including all components.

Behind the products and systems, GF was also responsible for the entire design and engineering work as well as the prefabrication, which enabled fast project execution. We also brought a few of these products and the ones which haven't been with us at the Capital Market Day. We brought our new energy valve, which is a balancing valve, which controls the flow when it goes into the racks to ensure the most efficient removal of heat. We strongly believe that in the generations to come of data centers, the liquid as being water will take over glycol-based systems as we see them as per today. The polymer solutions offer multiple advantages, which I will not stress at this point of time.

But looking up here, GF is also outside the building, which is the facility from the compressor to the cooling distribution units, the CDOs, which serve then the cooling liquids to the individual racks. And GF offers a comprehensive and complete solution in polymer, and we're going to see an advantage in water over glycol in the years to come. We will launch this energy valve, the balancing, the Delta T balancing in the months to come.

Moving on to Slide 12. To support growth in broad range of industry and infrastructure applications, including liquid cooling, we have invested in our Seewis plant in Switzerland, the Canton Grisons. Following the upgrade, Seewis is a world-class facility for production of ball valves and actuators with high levels of automation and increased efficiency in all areas, ranging from production to logistics to energy use.

Moving on to Slide 13. On the infrastructure side, we are capitalizing on strong market momentum by helping customers upgrade their water networks and minimize water loss. Together with VAG, we were uniquely positioned in the market as a one-stop shop solution provider. Our high-performance DMA Flowise chambers enable installation in 1 to 2 days instead of weeks. And with industrial like prefabrication, the high quality reduces water loss, improved pressure management and provides faster response through continuous network monitoring.

Moving on to Slide 14. The acquisition of VAG made us uniquely positioned in the market as a one-stop shop solution provider. The integration after the closing in Q4 is well on track, and our plans are executed to drive commercial synergies. I think one of the great examples is this so-called DMA district metering area pressure control chamber. Such a chamber is being used 50 times for approximately 20,000 inhabitants. What does it do? It keeps the pressure in the network always constantly on the same level to ensure, first of all, that when you open the faucet, you are not getting splashed or you don't have any water at all. But it is much more important in terms of keeping the network well intact with a good thought through pressure management, you're going to reduce the exposure and the aging of a network by more than 75%.

GF uniquely positions throughout the Uponor infrastructure integration, which produces this kind of special Weholite chambers. With our existing product portfolio of couples to multiple systems with a pressure retaining valve, which is only 1/3 in terms of complexity compared to conventional technologies, we offer a very easy-to-install solution. Such a chamber can be between CHF 30,000 and CHF 40,000. And as I said, on a 20,000 population city, you most likely would deploy some 50 of these chambers. The prefabrication makes it so unique due to the fact that you have a control quality within this chamber. Our teams join forces across Europe already today. We have focused with the VAG integration on a few countries. And we have done so far good progress already also here in Switzerland and the customer feedback to have a first-time one-stop solution when it comes to urban water infrastructure systems was well appreciated.

Let's move on to Slide 15, Building Flow Solutions. The business declined by 2.7% organically. Adjusting for discontinued product lines, the organic decline was 1.8%. On a quick note, in Switzerland, we have been able to grow by around 5% in that market, also due to the fact that we have launched new products from the Uponor range into the Swiss market. Europe remained mixed during the year, down 2.1% organically. Adjusting for discontinued product lines, Germany held its ground amid a slow market recovery. Residential building permits were up 11% year-over-year in 2025 after several years of decline, indicating positive momentum in construction activity beginning towards the end of 2026.

Switzerland, Benelux, Iberia, Poland and some of our key European markets were in positive territory. U.S. and Canada also proved resilient in a slowing market. Our collaboration with Home Depot to expand in the U.S. do-it-yourself market got off to a good start with our presence increasing to 30 stores on the West Coast. The comparable EBIT margin remained stable at 8.7%, supported by the value creation program. The currency effect at the EBIT level was minus CHF 6 million. With the measures implemented, we are confident that we have set the base to achieve our target margin.

Moving on to Slide 16. As we increase our exposure to the renovation market, innovations such as Siccus 16 underfloor heating system play a key role. By 2030, nearly 16% of the EU's building stock will require renovation due to energy performance standards introduced by the EU. Our Siccus 16 underflow heating system enables energy-efficient comfortable heating as well as cooling with fast installation times. The system also combines seamlessly with our Smatrix AI wireless control system, which intelligently adjusts room temperature for maximum comfort and efficiency.

Looking at Slide 17, Siccus 16 and Smatrix are compatible with both traditional systems and heat pumps, connected via pipes such as the next-generation GF Ecoflex VIP 2.0. With its superior thermal performance, flexibility and fast installation times, Ecoflex is a natural fit for every new heat pump installation and our offerings perfectly match the need for efficient heating and cooling. Driven a push towards energy security, decarbonization and affordability, heat pumps have overtaken over traditional energy sources and are expected to grow at a CAGR of 15% until 2030. Supported by this momentum, the Ecoflex range was one of our best-performing solutions in 2025.

Allow me quickly to reflect on what will come along with the exchange of conventional thermal fossil systems in housing. A heat pump allows you simultaneously to make benefit of cooling. And this is something which is largely and highly appreciated by many of the households and being obviously also considered in new build. We offer not only refurbishment solutions, what you see here with ceiling cooling systems, which can nicely then be connected to heat pumps. We also offer systems which can go in new build, but also the smart control, which allows them to make best use of the heat pump, where we also have interfaces to control the heat pump through our Smatrix systems, especially when it should be used in combinations with cooling and not only heating. So we see -- we have set the ground with the solutions, not only Ecoflex, but also our indoor climate control systems, a good base to profit from this trend in the market.

With this, I will now hand over to our CFO, Mads Joergensen, to go through our financial performance.

Thank you very much, Andreas. The transformation obviously has had quite an impact on our financial report. To provide transparency, we present our income statement in discontinued and continuing operations. The discontinued contains 12 months on Casting Solutions and 6 months of Machining Solutions until the closing of the sale, which was on the 30th of June 2025. We also have certain one-off effects from the divestments, including noncash book gains and losses, which I will elaborate on later.

Starting on Slide 19. Here, we provide an overview of the net sales of the GF Group. Net sales were CHF 4.1 billion, down from CHF 4.8 billion, primarily driven by the deconsolidation of Machining Solutions, the foreign exchange effects. Organically, group sales were down 1.7%. Focusing on our Flow Solutions business. Industry & Infrastructure Flow Solutions was up 1.9% organically, and Building Flow Solutions was down 2.7% organically for the reasons Andreas mentioned earlier. And Casting Solutions consolidated for the full 12 months declined over 8% organically, driven by a continued weakness in the European automotive market.

These movements are broken down on the bridge on the next slide. And looking on Slide 20. Sales were down CHF 74 million organically, driven by Building Flow Solutions, Casting Solutions and Machining Solutions. The foreign exchange effect had a negative impact of CHF 153 million. I'll come back with more detail in a bit. The consolidation of VAG from October 1 added sales of CHF 54 million and the deconsolidation of Machining Solutions lowered sales by CHF 492 million.

Moving to the full income statement of the GF Group on Slide #21. As a reminder, continuing operations reflect our Flow Solutions business, although with certain one-off effects this year. Discontinued operations include Casting Solutions and Machining Solutions, as mentioned earlier. Gross value added of the group declined as a result of the sale of Machining Solutions. Continuing operations increased primarily driven by the book gain on the divestment of Machining Solutions of CHF 143 million. Personnel expenses declined for the group. For continuing operations, they increased slightly to CHF 841 million, driven mostly by new employees joining from VAG. The personnel cost ratio increased to over 28% from 27% in the prior year. Reported EBIT of the group was CHF 326 million and a margin of 7.9%. This includes impairment charges for Casting Solutions of CHF 83 million shown in discontinued operations.

The net financial result amounted to minus CHF 136 million for the group, including additional value adjustments of CHF 83 million on the affiliated Casting Solutions business. Note that this CHF 83 million is in addition to the CHF 83 million mentioned just before, so that the total is CHF 166 million for 2025. Income taxes decreased slightly for the group. The corporate tax rate was temporarily elevated at around 40% as a result of the nonrecurring taxes and other one-off effects. It will likely remain elevated in 2026 due to the divestment-related effects before normalizing in 2027 at around 26%. Finally, net profit to GF shareholders declined to CHF 103 million, including all items affecting comparability. For the continuing business, the net profit increased to CHF 196 million, including the machining book gain. I'll elaborate more on the net profit in a moment.

Looking at comparable EBIT on Slide 22. The margin declined to 7.6% for the group. As can be seen, this decline was driven by the lower profitability of I&I Flow Solutions, Casting Solutions and Machining Solutions. BFS remained stable at 8.7% despite a weaker top line, benefiting from synergies achieved via the value creation program and including SKU rationalization from plant closures that we did in Italy and Turkey as well as procurement savings.

Slide 23. Overall, our core Flow Solutions grew 0.6% organically for the year and 1.2% organically in the second half. As mentioned earlier, the decline in Industry and Buildings was offset by strong growth in Infrastructure. The comparable EBITDA margin declined to 13.4%, while the comparable EBIT margin fell to 10%. This was due to the unfavorable product mix and due to lower semiconductor-related sales as well as adverse FX effects and tariffs.

Slide 24, which provides details on the items affecting comparability. At the EBITDA level, these items include CHF 44 million of restructuring and other expenses. The purchase price allocation impact of CHF 3 million refers to the inventory step-up that we did on the VAG acquisition. The deconsolidation refers to the CHF 143 million book gain that we did on Machining Solutions and the total on EBITDA level is CHF 96 million. Including impairment charges of CHF 83 million relating to Casting Solutions and value adjustments of CHF 83 million, the total impact on net profit is minus CHF 71 million. And on the right-hand side, important note for 2026, the EBIT and EBITDA will be negatively impacted by a divestment-related CHF 180 million, mainly noncash loss from recycled currency translation effects, also CTA called and goodwill. This is also being communicated, but it affects the 2026 accounts.

Let's now take a look -- closer look to the EBITDA bridge on Slide 25. Starting from 2024 with a comparable EBITDA of CHF 618 million. The organic impact was minus CHF 64 million and FX effect was minus CHF 34 million. The divestment of Machining Solutions and VAG acquisition led to CHF 53 million lower EBITDA contribution, resulting in a comparable EBITDA of CHF 467 million. Reported EBITDA was CHF 564 million.

On Slide 26, yet again, we saw significant adverse currency effects in 2025. Almost all major currencies, particularly the U.S. dollar, developed negatively against the Swiss franc. The total effect on group sales was around CHF 153 million and an EBIT minus CHF 29 million.

Given the significant one-off effects, we show an adjusted net profit on Slide 27. Adjusting for the book gain of Machining Solutions of CHF 143 million and the impairment charges and value adjustments relating to Casting Solutions in total CHF 166 million as well as one-off taxes and other effects, we arrive at an adjusted net profit of around CHF 147 million.

Moving on to the asset side of the balance sheet on Slide #28. Our cash and cash equivalents decreased to CHF 569 million, reflecting free cash flow development and M&A activity during the year. Overall, total assets decreased to CHF 3.6 billion, down from CHF 4.3 billion, driven by the divestment of Machining Solutions.

As for the liability and equity side of our balance sheet on Slide 29, our current liabilities decreased by more than CHF 600 million, driven by proceeds from the divestments and the total equity decreased to CHF 41 million.

Now to the free cash flow on Slide #30. Reported EBITDA, which includes the book gain on Machining Solutions was CHF 564 million. Net working capital increased by CHF 86 million, driven by the increased inventory levels to improve service levels at I&I Flow Solutions. Please note that the net working capital will also be addressed as part of the Fit for Growth program through supply chain optimization and other measures. The interest paid decreased as a result of the repayment and the refinancing of the Uponor-related acquisition debt. Deducting the noncash Machining Solutions book gain, cash flow from operating activities declined to CHF 268 million. CapEx remained elevated, driven primarily by investments in Casting Solutions for production facilities in the U.S., of which approximately CHF 40 million has been repaid by the new owner. Excluding M&A, free cash flow declined to CHF 21 million.

I would now like to highlight a few additional figures on Slide 31. Net debt was around CHF 1.7 billion at year-end, including approximately CHF 300 million cash proceeds from Casting Solutions and the building in Biel, it was CHF 1.4 billion. Net debt to EBITDA was 3x at year-end, in line with expectations. The equity ratio has decreased now to 1.1%. As already mentioned, the 40% tax rate was temporarily elevated in 2025 for the reasons explained before, and it should return to a normalized level of 26% in 2027.

Now turning to my final slide, #32. The proposed dividend is CHF 1.35 per share, in line with last year's level.

Now I'd like to hand back the word to our CEO.

Thank you, Mads. Let's turn to Slide 34. After a challenging 2025, we saw a significant escalation of geopolitical tensions, we are seeing certain tentative signs of improvements in our end markets with momentum expected to accelerate in second half of the year. In the construction market, building permits have ticked up in markets such as Germany and the Nordics. In industry, we expect semiconductor-related sales to accelerate based on our growing project pipeline, while infrastructure is expected to remain strong on the back of aging water investments. Meanwhile, we have started the year with a streamlined corporate organization and lower cost structure based on already secured Fit for Growth metals. And we are fully committed to achieving the full CHF 40 million with the majority already secured by end of Q1. Overall, we expect organic sales growth in the low single digits and a comparable EBITDA margin of 14% to 16% for 2026.

Before we wrap up, I would like to take a few minutes on Strategy 2030 and our key priorities for this year. Our vision or North Star is clear. We want to be the global market leader in Flow Solutions in our 3 business areas: Buildings, Industry and Infrastructure.

Let's move to Slide 37. Strategy 2030 provides a path to get there. Based on our 4 strategic thrusts, we want to maximize our core business and grow with new applications and innovative solutions to drive growth and margin expansions towards our 2030 targets. In the near term, we intend to double down on certain key market opportunities, which offer accelerated growth. I would like to highlight 5 in particular. Importantly, these are not only new bets. We are in these businesses with the right solutions and sometimes even with significant sales already.

Now we want to take them to the next level. With data center capital expenditures estimated to reach USD 1.7 trillion until 2030 and performance standards continuing to increase, we see a tipping point in the industry in favor of polymer solutions over the midterm. With our innovative and complete solutions, which are based on water as the ultimate coolant, we aim to grow this business to CHF 300 million in sales over the next 5 to 6 years. Based on current customer acceptance levels, we believe we are on the right track.

Liquid cooling for HVDC high-voltage direct current converter stations for example, renewable energy, we offer unique capabilities, which our customer value. We are well positioned to further expand this portfolio and grow regionally to expand in this very attractive segment. Driven by multiple megatrends, including AI and digitalization in general, the global semiconductor market is set to reach USD 975 billion in sales in 2026, up 27% year-over-year. To capture this growth, we continue to innovate to set new purity and performance standards. In December, we launched SYGEF Ultra, our next-generation purity PEEK piping solutions for the efficient transport of hot ultrapure water, expanding the boundaries of purity.

We alluded earlier to indoor climate and the potential we see given the rapid growth of heat pumps. With our superior solutions from the heat pump to climate management in the building, we are well positioned to benefit. Finally, on urban infrastructure, we can now offer a unique one-stop solution based on the combined offerings of GF, Uponor and VAG. We have received the first custom orders for pressure regulating chambers and see great potential in continuing to help customers upgrade their networks. It is important to acknowledge that water scarcity will only continue to become a more pressing topic over time. I firmly believe that GF can make a difference as a one-stop shop for urban water infrastructure with our cutting-edge technology and solutions. All in all, these growth opportunities, combined with our value creation and Fit for Growth programs are a feedstock of achieving Strategy 2030.

With that, it's time to move on to our Q&A section. I will hand over to Anna to moderate the Q&A session.

Thank you, Andreas, and good morning, everyone. We would now like to move on to the Q&A session. As Beat mentioned, we will first take questions from the room and then from the webcast. If you have a question please raise your hand and make sure to wait for the microphone so that people on the webcast can also hear you. I think we are first here in the right corner. Mr. Iffert, please go ahead.

It's Jorn from UBS. Two questions, and I go back in the queue, please. The first one is on the cost saving program, the CHF 40 million and you are freeing up the 600 headcount. Is this also changing your processes and your structure? Or is it really pure headcount reduction and processes and structures including go-to-market strategies will remain unchanged. This is the first question. And the second question, just a technical one. On the net working capital program you have launched, what are you doing exactly? What do you expect is the contribution to the equity free cash flow? And then also in general, what do you see in terms of equity free cash flow generation in Flow Solutions in 2026 after maybe a more muted '25?

Thank you very much, Mr. Iffert. I would like quickly to elaborate on our Fit for Growth program. The Fit for Growth program, as I said, is not only taking out headcounts or costs. So we're going to focus on OpEx, but also on our employees' cost. And it is a structural adjustment in a few areas, but it is also in a few areas an adjustment to a new volume and optimization of processes. We also will leverage obviously, new technologies to allow GF to become more efficient. So it's a largely efficiency increasing program.

In terms of net working capital, the increase in inventory was mainly to increase the service level of I&I Flow Solutions. To counter that, we have set a target of a reduction of inventory of 5% for the end of the year. The measures will be SKU rationalization. So product pruning, have to go back to the basics as well as supply chain optimization, which could involve some changes of the layout and how we do our warehousing and production day out. In terms of free cash flow guidance for 2026, we aim at CHF 175 million to CHF 200 million for the Flow Solutions business.

Thank you, Mads. Next question here, if I saw correctly, go ahead, Mr. Fahrenholz.

Yes. Tobias Fahrenholz from ODDO BHF. Speaking about the margin weakness in '25, the 10% adjusted, which you achieved versus 10.5% target at the lower end of the range. Can you provide a little bit more color on the reason for the deviation? So what has been the deviation impact of semi market currencies, tariffs? That would be my first one.

Thank you very much. As we have alluded, we had a severe impact of the ForEx. So the currency effects have been quite substantial, but a minor effect of the tariffs. But overall, we had a mix change in terms of what we have sold. So the infrastructure business is attractive, but it is not as attractive as, for example, the semiconductor business. As you might have seen, the semiconductor business has been affected by minus 16% in the year under review, so was the industrial business subdued across Europe. So it's more or less a mix, which has largely affected also our profitability next to the currency effect and the tariffs.

Okay. And looking ahead into '26 and your guidance, why is the range so wide? And would be the base assumption to reach the middle?

The base assumption to reach the middle would be obviously the growth being at the upper range of our guidance. And I think we feel good in terms of executing on our Fit for Growth program, but also that certain end market subsegments need to develop favorably.

Okay. Let's go to the middle of the room. Yes, please go ahead.

It's Dominik Feldges from Neue Zurcher Zeitung. 600 employees you've mentioned will have to -- that's a reduction of your workforce. Can you a bit elaborate a bit on where that is going to happen, especially how much the headquarter, I think you mentioned also corporate functions. I think how much it will be affected here, the workforce here in Switzerland. And then you've mentioned the construction market, I think, in the U.S., which is becoming increasingly challenging. What is happening there? And if you may allow one more question, tariffs. You've mentioned that there was an effect, a minor effect you said, but how much in terms of tariffs did you have to pay? And will you now try to reclaim these tariffs?

Thank you very much, Mr. Feldges. The headcount reduction, which is broadly in line with the efficiency increase program is approximately 5% of the global workforce. It is more or less equally spread with a slight overweight across Europe. Switzerland will be also affected with approximately 10% of the addressed 600 people. And yes, you're absolutely right, we will also realign our central functions, but not only on the corporate central functions also on the divisional central functions.

Coming to the U.S. construction market, I think, yes, we have seen a weakening towards the end of the year. We are confident that we will outperform the market, particular that we have -- we also outperformed the market in 2025 compared how the last quarter has been developed. I think we have been slightly negative, but only slightly organically negative in the U.S., clearly less than the overall market. We believe with our new solutions, I have mentioned the combination of AquaPEX and our ChlorFIT to allow also move into more commercial applications, but with the do-it-yourself market entrants to address the very important refurbishment market, which we haven't addressed in the years before, at least to this extent.

Talking about the tariffs, as we mentioned, we had a minor effect, but it had an effect. So it was clearly above CHF 5 million. So it was a bit between CHF 5 million and CHF 10 million and how to reclaim, I think we are rather wait and see what is now the ultimate solution on the most current developments. We are obviously now will go for our rights, but we would first wait and see how the whole thing will actually turn out.

Okay. Yes. Mr. Bamert, go ahead.

You have given us the sales figures for Industry and Infrastructure separately. Can you also give us the adjusted EBIT figure? And will you continue to do that in the future?

For the split of Industry and Infrastructure.

Yes.

For the reported figures, we have, let's say, a consolidation system that we have 2 divisions. The split is an approximation. We have set strategic targets, and we will continue to provide updates on how the separate businesses will go also on a profitability. We're not prepared for this meeting.

Not at this meeting, but from half year figures.

We have also said.

We can expect to get 3 divisions or you will also...

We do not provide 3 divisions. We provide 3 business areas.

EBIT and top line.

Remember that these profitabilities are because of the way the accounting system is put together is an approximation.

Okay. And you also split the building business between Europe and North America that will continue only on the top line? Or will also add a split of profitability there?

It's a good question. We have not decided fully on our segment reporting in the new setup.

Not also regarding the top line reporting.

We have not decided yet.

Okay. Yes. And then material cost, you should have some tailwind from the lower material prices. How does that translate over time into your profitability last year and this year and the future?

On the material cost, it's correct. We had seen some downward trends on a number of the resin prices about CHF 600 million of the Building Flow Solutions business as well as CHF 300 million of the I&I Flow Solutions business is linked to this lower material cost. So it's actually priced on a daily basis and therefore, also priced into the market, which means that we have followed partly also the decreasing material costs, which leads to, for instance, in BFS, there we were able to compensate a bit. But overall, the price effect overall for both BFS and I&I Flow Solutions has been very little in 2025.

Okay. Next question. Yes, let's go here to the front.

Alessandro Foletti, Octavian. Can I ask you a couple of questions? Maybe a quick one, if you can provide order -- organic growth for the order intake in the 2 Flow divisions.

Mads?

The organic growth for the order intake in the 2 Flow -- for the whole year in -- for the Flow Solutions business. Overall, it was for I&I Flow Solutions, we're looking at an order intake growth of and not over the growth, so about 2% order intake for the full year. And for BFS, we had a decline in the order intake also in the area of 2.5% decline.

Great. And then on the one-off cost or let's say, the Fit for Growth program. But I'm a little bit surprised you mentioned in the slide that it will cost you CHF 15 million. Oftentimes, when companies do this restructuring, the ratio is between cost and savings is more closer to 1:1. So maybe you can explain why you'll be able to do it with less money.

I think our Fit for Growth program, as we have also alluded to, has stressed in the last year more on the portfolio optimization, which normally comes along with higher charges in terms of restructuring expenses when we have, for example, closed down our -- one of our Turkish operations and consolidated multiple places across Europe. That came along with higher restructuring costs, whereas the program to go is focusing, as I said, on OpEx, operational expenditures, but also on efficiency activities in our headcount functions. And yes, here, we talk about severance payments.

Okay. And maybe last one. Can you give an indication on the expected leverage, net debt to EBITDA for '26?

I think end of the year will be below 3, end of 2026. It will be below 3, yes.

But that also means, for example, not around 2.5.

No, we will be closer to 3.

Great. Yes, let's go here.

Ingo Stossel from UBS. Regarding your M&A guidance to reach your midterm top line targets, do you have any update here? I think you probably need to buy quite a bit to get to the range which you have. And are there any gaps in your current portfolio which you see, especially in your focus areas?

Our focus areas are very comprehensive solutions at this point of time, I have to say. I think when we talk gaps, we talk regional gaps. We have front-loaded our M&A activities with the acquisition of VAG already in the year 2025, which gave us the opportunity to combine our mission-critical wealth technology with our existing offering. So I think we are well on track in terms of our M&A pipeline. But nevertheless, talking about M&A, we will see more activities in the years beyond 2026 and not in the year 2026.

And to follow up on that, what would your leverage guidance look like after 2026 if -- you say you probably will buy something.

We have said that if we follow the plan completely, it would be at the end of 2030, our leverage will be below 1. But since we are planning on acquiring companies, we would estimate that we will be around 2 net debt EBITDA at the end of 2030.

Great. Next question.

Martin Flueckiger from Kepler Cheuvreux. I've got 2 questions, and I'll go back in line afterwards. First one is on, I think, Andreas' statement regarding the development in the semiconductor business. If I remember correctly, minus 16% organically was already the number for H1. Now you're saying, if I understood you correctly, that it's the same number for the full year. And yet again, if I remember correctly, at the half year stage, you guys were guiding for a rebound in the second half. So just wondering whether you could elaborate a little bit on what went wrong in the second half in semis and what exactly you're expecting for 2026? That's my first question.

And then the second one is on your targeted reinvestment into the sales organization going forward. You were talking or in the press release, you're talking about CHF 40 million savings, if I understood correctly, in 2026. And part of that is going to be reinvested. So I was just wondering how much of that will be reinvested and what the net figure will be in terms of cost savings?

I think 2 excellent questions, Martin. Thank you very much. I think, yes, that was something which we have not seen, and we have been quite optimistic when we have released mid-year results, then we have seen an increased project pipeline and also quite a nice order book on our semiconductor businesses. But we have seen that many of these projects can be pushed out of the year under review. So that was also for us, as I said, our results didn't live up to our expectations. That was one of the key drivers. So we have expected to be rather seeing a slight growth in the second half of the year, which we haven't seen.

Going forward and outlook-wise, we believe that semiconductor could grow some 15% in the year to come. That's at least what we expect in that field. We see ourselves well positioned. We also have a couple of proof of concepts of the SYGEF ultrapure water system, which is giving the opportunity now also to move into the hot ultrapure water applications, which substantially drives down the rinsing time of installations. We are set in a couple of validation processes and homologation processes. So we believe we have set quite a new standard in that application. GF is an early mover when it comes to that industry. So we can't compare our business development with a VAT or INFICON. This is a bit of a different momentum when this kind of applications being stalled. So yes, in a nutshell, that was one of the disappointing factors in the year 2025.

Reinvestment in our sales force, I have elaborated a bit on our new growth opportunities. As I have spoken, we have been nominated on a quite substantial order in Latin America for urban water infrastructure. That means for us that we also have to care to have the right sales force, the right technical expertise at the front, and we will invest, particularly in that one. But also when it comes to data center, this is a field where we have already employed a bit less than 40 people, but we will go and continue since we know that this is a different type of business. It's an OEM business versus a construction business.

So the OEM business requires also some special attentions, let's call it this way. So we will also employ more people in that field, but also across Europe with our solutions and Building Flow Solutions, we see still, let me say, white spots when we look at the markets across Europe. So overall, we anticipate between CHF 5 million and CHF 10 million to be reinvested of this -- CHF 5 million to CHF 10 million to be reinvested in our sales force, but not only sales force but also customer-facing resources.

Great. Please go ahead.

Miro Zuzak, JMS Invest. I have a couple of questions, if I may. The first one would be how much or how large or how big were the data center-related sales in 2025. Then the next question is a bit more a technical one. You mentioned the new valves here on stage. We also have introduced a couple of new products late 2025, including now covering the range even into the several blades, if I'm not mistaken.

A couple of questions related to this. Firstly, in the entire change, there is still missing the cold plate part, so the very last part. Are you intending to close this gap at some point in time? And how through acquisitions? Secondly, can you please give some feedback about the initial response regarding the new products that you have introduced, how they are basically accepted by clients? Thirdly, maybe you can mention in which platforms that you are, I don't know, Vera Rubin, HP and so maybe of other clients which have already co-developed with you and how you are positioned?

And lastly, the question about glycol versus pure water, maybe you can give some color there, how this is currently shifting towards pure water. And then lastly, you mentioned that the core business would be -- this business would become CHF 400 million to CHF 500 million in a couple of years, 3 to 4 years. How much of this additional growth comes from the new products that you've just introduced? And how much comes basically from the products that you already had in place last year?

It's a lot of questions, and I should have brought my technology experts with me. But thanks a lot. First of all, the DC business in 2025 was approximately CHF 30 million, troubling from CHF 10 million to CHF 30 million, where our outlook for the year 2026 is approximately another growth in the magnitude of CHF 20 million. The new valve and in terms of -- so first of all, the feedback which we have received on the comprehensive solutions, what we have displayed now on multiple exhibitions was very positive. Nevertheless, the go-to-market is a slight different one than in our other businesses. So the so-called cooling processes is a very close business to the HVAC installation companies, but it's also an OEM business. That means you have different kind of contraction partners.

As we all know, NVIDIA is specifying down to the concept to the horse to the quick connect, how a rack, which is serving their GPUs should be constructed. Talking obviously, to this kind of experts and homologation experts is not that easy. We have co-developed a lot of things together with big players such as Google, but also we are in touch with Algae. We are talking to AWS. So we have good inroads to that one because we have been already in hindsight in the facility water. We differentiate facility water, which is everything which goes out, let's call it a white room. So anything what is outside there, GF is well present already today. We also are now present in this kind of applications. For example, we have equipped a very well reputated data center facility of one of the big players in the Nordics with the storm water management, which is also then an application which nicely fits into the GF comprehensive offering.

But coming back to facility water, going then into the technology area, that means the technology water, that is new for GF. Here, we are now with the first, as I have shown you, the Netmountain with Rittal being one of the big supporter and promoter of this kind of solutions. Algae was also a big promoter. We have multiple smaller developers, but we are also in the big ones. Next, cold plate. I have to say we have not looked into cold plate. We believe this is a technology which we're going to leave to the experts. We also believe that the cold plate technology might going to see some strong innovations in the years to come, which means that the cold plate will be replaced by a direct in the packaging cooling channel. So here also, we believe that liquid water, high-purity water will be superior over anything else because the purity of water is something which GF has played since decades. And so therefore, we can handle that one.

The initial response, as I said, was very positive. I think the platforms I have mentioned, I just would like to correct, I said we strive for CHF 300 million in the strategy cycle, 2030 in terms of data center sales and new products, at least in the white room, a lot of our most recent presented innovations, whether it's being the balancing valve, energy valve or whether it's being the quick connect, what we have also here on display or the manifolds, which we provide, we assume in the white room, even 2/3 would be stemming from new products in the white room, in the white room, which is more or less most likely a 50-50 or a 60-40 split in terms of the entire installation.

If you look at the entire large-scale hyperscaler, when we go from storm water, which would be a bit infrastructure applications to the facility water from the chillers to the CDUs and then the conveyance of the entire system and then it goes white room distribution here. I think this is obviously it would be quite attractive and appealing.

Thank you, Andreas. Any further questions? Another one, Mr. Flueckiger.

Yes. I'd just like to come back to your statement, Andreas, regarding the CHF 300 million targeted long term. If my memory serves me right, at the CMD, you guys were talking about CHF150 million to CHF 200 million. That's quite an increase. What's changed there?

I think our market insights, also certain customer feedback and also the belief that water as a coolant is superior over glycol, makes us believe that in the second generation, you're going to see more polymer-based solutions. And we target it is still not that big. The total expected capital expenditures in regards to piping systems in the data center is approximately CHF 3 billion, at least that is the anticipation for the year 2030. So we're going to believe with our solutions, we are quite well positioned and also our discussions and our proof-of-concept installations with the positive feedback made us to believe that CHF 300 million is an achievable target.

Yes.

Of course, it's not the focus today, but still you have sold now the -- also your -- the Casting business, the timing there. I mean is it -- was it -- I mean, could you not have waited for it? I mean, do you really have to -- I mean, is that not really unfortunate to sell it really at the bottom of the cycle? It seems you have had an impairment. I mean, why not being a bit more patient maybe like the Chinese who just wait and to put it maybe a bit provocatively?

I think what is the right time of an acquisition or what is the right time of a divestment? I think that becomes quite a complex question. When we reflect a bit on how the business is being set up and embedded in the industry, we believe with the transformation, we have seen a lot of European suppliers, but also European OEMs strongly suffering from the developments. And we have seen that also in our call-offs and in our orders and order fulfillment rates even of the most recent order acquisitions, let me say, over the 3 and 5 years, as you may know, you acquire an order and you execute on this order in 3 to 5 years on these businesses. We have seen many of the platforms overpromising and underperforming of our OEMs, which also resulted obviously in severe headwinds on this entire group across Europe.

Now let's talk a bit more China. China is a second pillar where GF has been strong with its Casting Solutions business, particularly with the automotive part of the Casting Solutions business. We have seen also a shift there in terms of which OEMs are the successful ones and how the supply base has changed, and has been less money being deployed in real estate as we have seen, let's say, some 10 years ago. Nowadays, a lot of venture capital flows into technologies and in manufacturing setups. We have seen a lot of new competitors growing over the last 2 to 5 years. Mads has presented the figures of the discontinued businesses, and he has also presented the figures of what has been achieved in our Casting Solutions business. If you take now a bit more than 3% EBIT margin and think about that we still keep a very profitable precision casting business, which serves the aerospace, commercial, but also the industrial gas turbine business, you can imagine that May profitability is far out of what has to be expected.

If you ask me, I think it was one of the best possible moments in the last couple of years to get at least a decent strategic buyer attracted by our business where the combination with Nemak being one of the largest or the largest player in that field makes a very nice combination. We believe it's the right moment. And I think waiting wouldn't be the right recipe. You wouldn't have liked that.

And if I may complement, Andreas, in terms of timing, if you go back in 2019 was not a good year for automotive in China, 2020, COVID, 2021, supply chain, 2022, chip problems, et cetera, et cetera. What actually happened over that period is that the automotive industry changed fundamentally, and it's really in such a transformation at the moment that we were happy to be able to exit this business. We're very happy to be able to exit this business.

Thank you, Mads. Any final question from the room? If not, then I will ask the operator if there are any questions from the webcast.

So far, there are no questions from the webcast.

Okay. In that case, then I will thank you for joining us this morning and invite you to join us for lunch in the room next door. Thank you very much.

Thank you very much.

Ladies and gentlemen, welcome to the Georg Fischer Midyear Results 2025 Conference Call and Live Webcast. I am Valentina, the Chorus Call operator. [Operator Instructions] The conference is being recorded. The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Andreas Muller, CEO. Please go ahead.

Good morning, and welcome to our midyear results webcast. I'm Andreas Muller, CEO of GF, and I'm pleased to update you on our progress during the first half of 2025. Joining me today are our CFO, Mads Joergensen; [Technical Difficulty] Investor Relations and Beat Romer, Head, Corporate Communications. Let me begin with Slide 2 and a brief overview of the highlights. In the first 6 months of the year, GF's Flow Solutions business once again demonstrated its resilience in uncertain times. Our strong positioning in infrastructure, our innovation-driven portfolio and our balanced regional presence enabled us to seize opportunities despite a mixed market environment.

While the global environment remains turbulent, shaped by geopolitical tensions, U.S. tariff-related uncertainties, a strong Swiss franc and a hesitant investment climate in some industrial markets, we stayed on course. This is also reflected in our strong customer order intake, which was organically 5% higher than in the first half of 2024. Infrastructure remains strong, especially in Europe, whereas industrial demand was affected by industrial demand was affected by delays in [Technical Difficulty] we continue to advance our strategic transformation to become a pure-play leader in Flow Solutions.

In May, we announced the acquisition of the German VAG-Group, a leading provider of mission-critical metal valve technology for water applications. At the end of June, we closed the divestment of GF Machining Solutions. The divestment process for GF Casting Solutions is well advanced. The first 6 months of 2025 marked a defining chapter in GF's journey to become the global leader in Flow Solutions. Our new [Technical Difficulty] we successfully closed the divestment of GF Machining Solutions to United Grinding Group at the end of June. The agreed purchase price of CHF 630 million resulted in a onetime book gain of CHF 140 million.

These proceeds were used to repay the loan related to the Uponor acquisition, thereby strengthening our financial flexibility and setting us up for future value-generating investments. The divestment of this division marks a decisive milestone in accelerating our portfolio transformation. There is also a moment of gratitude.

I would like to sincerely thank the more than 3,000 colleagues who have contributed to the success story of GF Machining Solutions over many years. One additional point, the sale of GF Machining Solutions building in Biel, Switzerland, which is not included in the main transaction, is expected to close in the next 6 to 9 months. We expect the fair market value [Technical Difficulty] in the high double digit number. Okay. We have a technical issue.

We have the backup line working. Is it okay now? We expect -- okay, I'm going to repeat my last sentence. An additional point, the sale of the GF Machining Solutions building in Biel, Switzerland, which is not included in the main transaction is expected to close in the next 6 to 9 months. We expect the fair market value for the building in the high double-digit millions.

Let's turn to our core business going forward and take a look at the corresponding key performance indicators on Slide 4. Our Flow Solutions business, spanning industry, infrastructure and buildings generated CHF 1.5 billion in sales, holding steady year-on-year. As mentioned, organic order intake grew by 5%, reflecting robust demand despite sector-specific slowdowns. Negative currency effects impacted sales by CHF 46 million. Excluding items affecting comparability, the EBIT margin reached 10.4%, 1.3 percentage points below last year. However, underlining the operational robustness of our Flow Solutions business in an evolving landscape. Including these effects, the reported EBIT margin stood at 9.5%. Both numbers include estimated proportionate corporate costs.

Moving on to Slide 5. In addition to resetting our focus for the divestment of GF Machining Solutions, we also took a further step to strengthen and expand our Flow Solutions offerings. In May, GF signed an agreement to acquire the VAG-Group based in Mannheim, Germany. With annual sales of around CHF 190 million and approximately 1,000 employees, VAG brings mission-critical metal valve technologies to our portfolio for water applications, including pipes, fitting valves, connection technology and storm water management. The acquisition will strengthen our footprint in the infrastructure sector, particularly in Europe and the Middle East.

It will also support our ability to serve customers who depend on us to keep water flowing reliably, especially in urban and climate-sensitive region. The transaction is expected to close in the second half of 2025. Slide 6. In addition to all the strategic milestones we reached in the first half of 2025, I would like to speak about our continued efforts with regards to the integration of Uponor, GF's most significant acquisition in decades. Uponor provided the initial start for GF's transformation process and its integration continues to progress ahead of schedule. We are on track to reach our synergy target of CHF 40 million to CHF 50 million at full run rate by 2027. In the first half of 2025, we achieved CHF 14 million in EBIT level savings, double compared to the CHF 7 million in the same period of 2024. A single procurement team is now in place and our commercial integration initiatives, including a compelling joint product offering are beginning to gain traction.

Both initiatives contributed to greater efficiency and improved business momentum. At the leading European trade fair, ISH, we showcased our compelling combined product portfolio as you can see here in the images. We have launched a new joint product line, not only in Switzerland, but also internationally. The extension of the Uponor AquaPEX product line with GF's ChlorFIT enables us to deliver complete domestic water solutions for commercial buildings in the U.S. I will come back to this topic a bit later. We are also optimizing our footprint across Europe with consolidation efforts in Poland, Turkey and Italy. In addition, we have started to streamline our corporate functions such as IT, HR and marketing and communications by implementing the One GF operating model.

Let's move on to sustainability on Slide 7. Sustainability is another area where we made good progress. As of midyear 2025, 76% of our sales are linked to Flow Solutions products with social or environmental benefits, bringing us close to our adjusted 2025 target. These achievements demonstrate the high degree to which we have integrated sustainability into our business model. We further reduced our Scope 1 and 2 CO2 equivalent emissions by 55% compared to the H1 baseline and our accident rate improved further to 4.0, surpassing our 2025 target. The share of newly appointed women in management reached 32%, underlying our [Technical Difficulty].

Ladies and gentlemen, please hold the line.

Okay. Since we had a technical issue, I will repeat from the beginning of Slide 6, the Uponor integration. In addition to all the strategic milestones we reached in the first half of 2025, I would like to speak about our continuing efforts with regards to the integration of Uponor, GF's most significant acquisition in decades. Uponor provided the initial start for GF's transformation process and its integration continues to progress ahead of schedule.

We are on track to reach our synergy target of CHF 40 million to CHF 50 million at full run rate by 2027. In the first half of 2025, we achieved CHF 14 million in EBIT level savings, double compared to the CHF 7 million in the same period of 2024. A single procurement team is now in place and our commercial integration initiatives, including a compelling joint product offering are beginning to gain traction. Both initiatives contributed to greater efficiency and improved business momentum.

At the leading European trade fair, ISH, we showcased our compelling combined product portfolio as you can see here in the images. We have launched a new product line, not only in Switzerland, but also internationally.

The extension of the Uponor AquaPEX product line with GF ChlorFIT enables us to deliver complete domestic water solutions for commercial buildings in the U.S. I will come back to this topic a bit later. We are also optimizing our footprint across Europe with consolidation efforts in Poland, Turkey and Italy. In addition, we have started to streamline our corporate functions such as IT, HR and marketing and communications by implementing the One GF operating model.

Let's move on to sustainability on Slide 7. Sustainability is another area where we made good progress. As of midyear 2025, 76% of our sales are linked to Flow Solutions products with social or environmental benefits, bringing us close to our adjusted 2025 target. These achievements demonstrate the high degree to which we have integrated sustainability into our business model. We further reduced our Scope 1 and 2 CO2 equivalent emissions by 55% compared to the H1 baseline, and our accident rate improved further to 4.0, surpassing our 2025 target.

The share of newly appointed women in management reached 32%, underlining our strong focus on diversity and inclusion. GF's efforts were once again recognized by the Carbon Disclosure Project, CDP, as well as by the highly regarded publications such as the Financial Times and Time magazine. Let's take a closer look now at our 2 Flow Solutions divisions, starting with GF Industry and Infrastructure on Slide 8. The former GF Piping Systems division saw diverging dynamics. Infrastructure sustained growth across Europe with solid demand in the Middle East and Northeast Asia, supported by a healthy project pipeline.

Meanwhile, tariff and geopolitical-related uncertainty led to delays in industrial investment, particularly in the microelectronics sector. Sales reflected solid organic growth of 1.6%, even stronger, and this underscores the robustness of these businesses was the customer order intake with organic growth of 7.4%. An unfavorable product mix and currency movements negatively impacted the division's EBIT and led to a comparable EBIT margin of 11.5% in the first half of 2025 compared with 13.7% in the period a year before. However, cost-saving measures across the organization and progress made in the value creation program helped to partly mitigate the negative impact.

Let's move on to Slide 9. The world's largest ground-based telescope is currently being built in the Chilean Altacama desert, an altitude of more than 3,000 meters above sea level. With its massive 39-meter primary mirror consisting of 800 segments and other advanced adaptive optics, it is designed to capture images of other planets, stars and galaxies with a resolution 16x sharper than that of the Hubble Space Telescope. GF provided a complete process automation package for this project, including manual and automated valves as well as critical measurement sensors. This package plays a key role in maintaining the telescope's mirror in excellent condition and ensuring its smooth operation by precisely controlling the flow and temperature of its critical substances. The pioneering project is expected to become operational in 2029.

Let's move to Slide 10. One of the most pressing challenges in Europe's energy transition is transporting electricity from offshore wind parks in the North to industrial centers in Central Europe. This requires robust, high-capacity underground power networks. With our advanced cable protection systems, we are playing a vital role in enabling this shift. Our polyethylene 100 RT technology can withstand high continuous and peak temperatures, making it ideal for HVDC applications. Our full system solutions includes fittings, welding machines, quality assurance services and digital tools like the WeldinAir app for traceability.

This holistic approach not only helps safeguard energy transport, but also accelerates project execution and reduces costly rework. The image seen here is of a power line in Lower Saxony, Germany that uses our full system solutions. Let's turn now to Slide 11 and to GF Building Flow Solutions. GF Building Flow Solutions sales amounted to CHF 586 million. Taking into account the closing of one plant in Italy and one in Turkey and the corresponding discontinued product line, the organic decline was 1.6%. Also sales in the U.S. were flat. They outperformed the U.S. market overall. New housing starts decreased by 1.1% in the first half of 2025 compared to the previous year.

The markets in Europe showed a mixed picture with regional differences. The value creation program and cost-saving initiatives supported the comparable EBIT margin increase from 9.2% in the first half of 2024 to 9.7% this year. The new combined offering as presented to customers at the leading European plumbing trade fair, ISH, positions GF as a one-stop partner for comprehensive and integrated flow solutions for buildings worldwide. Key innovations such as the eco-friendly digital shower system, which received both innovation and design awards further strengthen our competitive position in our target markets.

Let me share an outstanding example of how GF Building Flow Solutions is contributing to iconic sustainable urban development on Slide 12. In Austin, Texas, we are supporting the construction of Waterline, a 74-story mixed-use tower that is set to become the tallest building in the state. The project is targeting LEED Gold certification, one of the highest standards for building efficiencies. Sustainability was a key design driver from the outset. GF Building Flow Solutions delivered a comprehensive system made in the U.S. for the U.S., including radiant heating and cooling using PEX piping, a hybrid domestic water supply systems combining PEX and CPVC and our Uponor Kitting Services to ensure efficient installation with minimal waste. This project showcases how integrated flow solutions can help customers achieve both environmental goals and construction efficiency.

We are also proud that this work was recognized by the Plastic Pipe Institute's 2024 Project of the Year Award, a testament to the strength of our technology and our collaboration with trusted partners. GF Casting Solutions, Slide 13. GF Casting Solutions recorded sales of CHF 388 million, a year-on-year decline of 16%, reflecting the ongoing challenging market environment. The result was mostly driven by the continued weakness in Europe's premium automotive segment. Demand in aerospace and industrial turbines remained solid with growth of 4%. The lower volumes in the automotive business weighed on the results and led to a decline in the division's EBIT margin to 4.9%, which is relatively robust given the harsh business environment.

Construction of our new die-casting plant in Augusta, U.S. remains on track and the installation of initial equipment has started. However, the divestment process for GF Casting Solutions is well advanced. With this, I will now hand over to our CFO, Mads Joergensen, who will provide a detailed financial review.

Thank you, Andy, and good morning also from my side. Slide 15 shows the orders from third parties, meaning that we've eliminated intercompany orders, particularly between GF Industry and Infrastructure Flow Solutions and GF Building Flow Solutions. I will use the abbreviation for the rest of my presentation. For GF Corporation overall, orders decreased by an organic 0.2% to CHF 2.3 billion, whereas I&I Flow Solutions performed very well, driven by strong momentum in the Nordics, the U.S., Middle East as well as ASEAN. The BFS division was overall flat. Casting Solutions was impacted by missing tools, invoicing, many end of production cases and delays in planned ramp-ups with both European and Chinese OEMs.

Machining Solutions was negatively impacted by the uncertainty in the global markets for capital goods. In total, Flow Solutions order intake increased organically by 4.6%, which bodes very well for the second half of the year. Slide 16 shows that sales declined organically by 3.6%. Again, we see positive organic growth at I&I Flow Solutions, driven by Infrastructure business in Europe and Industrial business in the U.S. and China. Building Flow Solutions decreased 2.8% organically. However, this includes a substantial reduction in stock-keeping units from several plant closures.

Adjusting for this, the decline, as shown previously, would only have been minus 1.6%. For reasons explained earlier, sales in Casting Solutions and Machining Solutions were down organically by 14.1% and 5.9%, respectively. On the right-hand side, you can see that the organic flow in Flow Solutions was flat. Slide 17. The comparable EBIT margin for the GF Corporation declined to 7.3%, driven by negative development at I&I Flow Solutions, Casting Solutions and Machining Solutions. On the other hand, GF BFS improved the margin significantly despite the sales reduction and adverse currency effects. The decline in the margin at I&I Flow Solutions was caused by relatively lower semiconductor business, more infrastructure business as well as adverse foreign currency effects and tariff effects. Overall, the Flow Solutions comparable EBIT margin declined from 11.7% to 10.4%.

Moving to Slide #18 and the EBIT bridge. Starting on the left-hand side with the first half 2024 comparable EBIT of CHF 222 million (sic) [ CHF 220 million ]. The organic decline accounts for CHF 40 million. The FX effect was a negative CHF 16 million. And the comparable EBIT, therefore, came in at CHF 164 million, CHF 6 million lower than previous year. This gave a comparable EBIT margin of 7.3%. Moving to items affecting comparability or IACs, as we call them. As mentioned earlier, the deconsolidation of Machining Solutions led to a onetime book gain of CHF 140 million. The value creation program, a number of restructuring projects and various other effects resulted in one-off costs of CHF 32 million in the first half 2025. Adjusting by the items affecting comparability brings us to the reported EBIT of CHF 272 million.

On Slide 19, you see the foreign currency exchange impact on our sales and the reported EBIT in the first half of 2025. The impact on sales amounted to minus CHF 64.7 million. And on the reported EBIT, we had a negative impact of CHF 14.4 million. As can be seen on the right-hand side, most of the effects came from the euro, the U.S. dollar and the Chinese yen. Now let me guide you through the summarized income statement on Slide #20. The column continuing operations include I&I Flow Solutions, BFS and Casting Solutions as well as the book gain from the divestment of Machining Solutions.

The column discontinued operations contains Machining Solutions. As I have previously explained the development of sales and EBIT, I will only comment on the below EBIT items. We look at the financial results for the total corporation. You can see that it is at previous year's level, although the refinancing and repayment of the Uponor-related bank financing led to a decrease in the interest expense of around CHF 8 million, we had to fully amortize one-off loan fees to the same amount, as we had repaid the loans before maturity. Income tax for the continuing business was high as it includes a CHF 10 million one-off capital gains tax stemming from the divestment of Machining Solutions.

On the next slide, we will show more details of the net profit. Net profit on Slide #21 increased from CHF 101 million in the first half of 2024 to CHF 165 million in the first half of '25. The main positive impact was the divestment of GF Machining Solutions led to a gain of CHF 140 million at the closing of the transaction. IACs and other adjustments had a negative impact of CHF 48 million. And finally, CHF 27 million relates to the lower profitability at I&I Flow Solutions, Casting Solutions and Machining Solutions.

Finally, on Slide #22, you can see that we have reduced our leverage to approximately CHF 1.6 billion with a net debt-to-EBITDA ratio of 2.5x. From November 2024 to May 2025, we launched 4 new corporate bonds totaling CHF 1.050 billion, all with attractive coupons ranging from 1.03% to 1.55%. These bonds and the proceeds from the divestment of GF Machining Solutions enable us to completely repay or refinance the Uponor-related bank financing. The refinancing and repayments results in significant savings on interest expenses.

With these final comments, I will give the word back to our CEO for the outlook for 2025.

Thank you very much, Mads. Slide 24. Before we move to the outlook and Q&A, I'd like to share one more important update. GF's transformation is well underway, and the strategic repositioning is with the significant steps we have outlined during the last 35 minutes progressing as planned. At the same time, we are refining our internal operating model and group level service functions to divisional structures. These changes will help to ensure we can better support our customers, accelerate synergies and deliver on our vision to become the global leader in Flow Solutions.

You see here on the slide is the new leadership setup for GF's Executive Committee, assuming a pure Flow Solutions business and hence, a successful divestment of GF Casting Solutions. With me as CEO, Mads as CFO and the 2 division presidents, Thomas Hary, leading GF Industry and Infrastructure Flow Solutions and Michael Rauterkus, heading GF's Building Flow Solutions. With this new setup, we are shaping a focused and agile organization that is fully aligned with our core business areas, Industry, Infrastructure and Buildings.

Now let us move to Slide 25 and look ahead to the second half of the year. In 2025, GF continued to make substantial strategic progress, laying the groundwork for the future and strengthening the foundations for sustainable growth. While macroeconomic uncertainty and geopolitical tensions, including the ongoing U.S. tariff discussions persists, we are well positioned to benefit from strong global trends. These include the ongoing semiconductor rebound even if projects are currently postponed, the rising adoption of liquid cooling in the booming data center sector, increased investments in sustainable water infrastructure and the shift towards energy-efficient building systems.

For 2025, we confirm our guidance for our Flow Solutions businesses, barring unforeseen adverse events and assuming an easing of geopolitical tension. We expect flat to lower single-digit organic growth and a comparable EBIT margin in the range of 10.5% to 12.5% Let me move to Slide 26. With this final slide, I'd like to conclude our presentation and extend to you a warm invitation to our Capital Markets Day, which will take place here in Schaffhausen on Tuesday, 4th of November 2025. On that day, we will showcase how GF as a pure Flow Solutions company is positioned to benefit from long-term trends from solutions for water scarcity and ensuring safe drinking water in buildings and cities, to address the growing demand for cooling and data centers, energy-efficient buildings and storm water management. A formal invitation will be sent out after the summer break. Thank you for your attention. We are now happy to take your questions.

[Operator Instructions] The first question comes from Jörn Iffert from UBS.

Two to three questions, and if it's okay, I will take them one by one. The first question would be, please, on your internal thoughts about the second half. Your guidance is pretty broad for the second half. So the question is, do you expect that you can increase the absolute EBIT in Swiss francs in the second half versus the first half? And if so, what do you see are the 2 to 3 really key drivers in the subsegments?

Thank you, Mr. Iffert for your question. I think assuming a very unforeseen circumstances, we assume to have a higher absolute EBIT in the second half of the year. On the account of the strong order intake in the first half of the year, we expect the execution of multiple projects also in the industrial environment, but also a strengthening of the U.S. infrastructure business. That are the 2 main pillars for the second half of the year.

And second question, please, can you maybe clarify what is the percentage of sales in entire Flow Solutions where you have to pass on the lower raw material cost? And what was the impact on organic sales in the first half?

Thank you very much for the question. I will pass that on to our CFO.

Thank you, Mr. Iffert for the question. In terms of price effects here, our analysis shows that on the price line, we are roughly flat this year. On the raw material side, we have seen a number of decreases in the classic polyethylene, PVC and PP around the world. But we have not, in all areas, been forced to pass that on. So we can say we have a stable pricing level at the moment.

And can you maybe clarify what percentage of sales in Flow Solutions where you have this pass-through models both ways?

In the I&I Flow Solutions is around CHF 300 million, and it's much more substantial in the [ PVCs ] business, mostly around CHF 600 million, CHF 700 million on their side because they contain more pipe. That's why they have to be closer to the pricing level.

And then the last question, quickly, the FX impact and the tariffs. I mean, FX impact was clarified. Let's see if you can price this, but the direct tariff impact on the EBIT in the first half, what was it roughly? Because you mentioned it as a reason for the EBIT decline?

Yes. No, it remains connected with business imports into China. And there, the effects remain a mid-single-digit million number. It's not substantial.

The next question comes from Martin Flueckiger from Kepler Cheuvreux.

I've got 3 as well, if I may, please. Just coming back to your EBIT margin guidance for Flow Solutions, which you've reiterated. We've been at 10.4% for the first half. Now just looking at the upper half of the guidance with regards to the underlying margin, that would require to get to 12.5%, that would require a 400 bps increase in the second half. How -- it seems a bit steep at first glance. So I guess my question is, why are you sticking to your pretty broad range for the comparable EBIT margin for the Flow Solutions businesses? And related to that also, if talking about items affecting comparability, what's your guidance here for '25 and going forward? That's my first question, and I'll come back with the second one afterwards.

Thank you Mr. Flueckiger for your question. Let me rephrase or repeat what I said to Mr. Iffert's question. First of all, we expect with the elevated order intake of the first half of the year to benefit and to execute on multiple projects in the industrial sector, but also with an uptick in our infrastructure project in the U.S. The guidance hasn't been changed with our annual results guidance due to the fact that we believe we will be within this range. But also, as I said, we expect a stronger EBIT in absolute terms in the second half of the year. In regards to items affecting comparability, I will hand over to our CFO.

Yes. Thank you, Mr. Flueckiger. The question, I must say, I will -- it's a quite challenging question because we are looking at a number of potential transactions here. We have the potential closure of the VAG. We have a potential divestment of Casting Solutions. We have a potential sale of a building in Biel. And I can tell you one thing is that from the integration work that we've done with Uponor, we're looking here at a mid-single-digit million Swiss franc, maybe maximum up to CHF 10 million on AICs in the second half, but there may be many other substantial elements that impact it. So it's impossible for us now and unwise to give any guidance on it, unfortunately.

Okay. Then my second question is on your comments regarding data centers. I was just wondering whether you could update us on your exposure to -- sales exposure to data centers. I guess it's in IIFS. Also a little bit, talk about the regional spread as well as your growth and margin outlook for the business in 2025?

I think it's a very good question. It's a very promising and very attractive segment where GF is embarking with new innovative solutions. And what is important, GF is currently homologating the product range with major players in this field to be able to capture also the next level in terms of cooling, which is direct liquid cooling, which goes directly on the GPUs, particularly now for high-performance data centers. GF will most likely triple the sales in data centers during the course of this year, but also here, we're going to have to watch out.

We are starting from a rather low base at this point of time, but we believe with our solutions, which we just recently launched, for example, the so-called Quick Connect Valve, which is a mission-critical component to hook up a data center rack with the main cooling lines, particularly for direct liquid cooling, but also with our manifold solutions. I think we are perfectly set to benefit going forward from this substantially growing market. As we all know, the future will take direct liquid cooling as one of quite a lion's share of the entire data centers being built. And therefore, GF is currently setting the field to benefit from that one going forward, but the impact once again in the year 2025 is rather a low double-digit million sales impact.

Okay. And I suppose with that margin for liquid cooling, the margin is probably going to be quite attractive. So that's going to have a positive mix effect. Am I right?

It will have, obviously, because there's a lot of innovation products and currently being launched and I think as innovations normally stand out in terms of their margin policy.

Okay. Great. And then my last question before I'll step back into the line is, if I remember correctly, at the February conference call, Mads was guiding for a book gain of CHF 150 million to CHF 200 million for GF Machining Solutions. Now CHF 140 million is below the lower end of that range that was previously indicated. Why is that? Can you specify some reasons, please?

The main reason is that during the course of the final negotiations of the closing work, we were assuming a certain separation costs and they have been provided for basically. It's about -- mainly about IT systems. So without those provisions, we would have been within our range of CHF 150 million to CHF 200 million. On top of that, should also be considered that the Biel which -- Biel building, which is a Machining Solutions building, when we sell it, there should also be some sort of additional profit from that.

The next question comes from Martin Comtesse from Jefferies.

Just to specify again quickly on what my predecessors asked. For the margin recovery in the second half, is it fair to assume that your sales mix in Industry and Infrastructure should shift in the sense that you will see more margin-accretive in microelectronic projects? And can you maybe specify here where do you get the confidence that these projects will be executed? So how visible is this for you? And then I have 2 follow-ups, please.

Thank you very much for the question. The order intake book-to-bill ratio, particularly in the month of June in our semiconductor segment has been at 1.2, which is a strong indication that the execution of this project in the second half will materialize. Can you be 100% certain? No, you can't. But our order book and our project pipeline gives us the confidence to guide on the second half EBIT in absolute terms growth. And therefore, as you correctly stated, bringing us a bit more of a favorable mix as well, not to be neglected, the infrastructure projects to be expedited in the U.S.

That's helpful. And the next question would be on the U.S. Building Flow Solutions side. Can you give us any more color in terms of the sentiment here, exit rates maybe? So is there any confidence for the second half? Or do you think things will deteriorate from here even?

I think what we will do in the U.S. is we have a quite strong position in the U.S., and we will leverage our great opportunities also combining, as I alluded in my presentation to combining products from our industrial range with our Building Flow, which opens up new applications in commercial buildings, particularly the riser and leveling distribution systems where we have launched very simple looking products, but substantially easing the life of the plumbers and installers in such kind of project.

That gives us confidence that we can win market share with our building flow solutions combined offering in the U.S. We also believe in converting more copper into plastics. That also was one of the reasons that we could demonstrate a resilience even so that new housing starts have been slightly down in the first half of the year. Overall, we are confident that our solutions can be further ruled out, and that is the sentiment we are approaching the second half of the year.

But is there any -- has there been a change or deterioration in the course of the first half? Or overall, it's been the phasing?

No, I think you're absolutely right. And I think that when you take builder confidence, consumer confidence, we have seen a light deterioration. So the consumer prices even have been slightly flattish in that respect for that market. But the confidence of the builders and the consumer confidence has slightly deteriorated, whereas residential mortgage rates have been traveling horizontally. So I think definitely a positive pick could be given when mortgages would go down, the rates, but we are not here to speculate on the U.S. Fed policy.

That's fair. And maybe a final question, if I may. You did mention that the DACH region and in particular, Germany was a bit of a highlight in building Flow Solutions. Can you give us your take on the impact on the industry of recent German stimulus announcements? And in that context, maybe remind us of the share of German sales that you have as a percentage of Flow Solutions.

Right. I think, first of all, we have seen particular commercial project or residential -- large-scale residential projects where we could increase the share of wallet in Germany. That means, for example, we have been providing solutions for district cooling and heating or mainly heating in Germany, but also the distribution in the buildings itself. That is [indiscernible] where we're going to see quite a lot of potential. So for example, we have low temperature district heating systems supported with our solutions and also develop specific products for that one, but also we have new products for district heating and higher temperatures, which is the so-called Ecoflex VIP product.

That's all products which support us in Germany in other areas than the pure new build floor heating and hot and cold water distribution. We're also leveraging the strong positioning of Uponor's brand in Germany to bring in the building technology product of the legacy Piping Systems business. As we multiple times stated, this is a very traditional and conservative industry. So I think the last 1.5 years have been perfectly used to make this product in combination transparent to our customers to creating a certain pull effect, which means installer plumbers being appealed and being attracted by our solutions, whereas the distributor is going to have to list this product.

So this will now materialize over the months and years to come. But as we always said, this is in terms of unleashing the commercial synergies of this business, not a walk in the park. The German exposure in our Building Flow Solutions business is in the range of approximately -- on a full year scale, the German turnover is in the range of 20%.

The next question comes from Walter Bamert, Zürcher Kantonalbank.

You put in a caveat in your outlook for geopolitical conditions. What has impacted you there in the first half? Can you quantify that or give us some color on it? And what should change in the second half that you can stick to the guidance?

I'm going to reiterate what we said. Our group order intake growth in the Flow Solutions business will give us confidence that we can benefit from, first of all, the order book, but also from our strong presence around the Europe. I think as Mads alluded to the tariff impact, we have seen with this huge, say, interactions in Q1, Q2 affecting the U.S.-China and China-U.S. trade, but also here in the European business sentiment, we hope that, that will ease in the second half.

As we also have seen now, at least whether this is satisfying or not, there is an agreement between the U.S. and China. Let's cross fingers that we also see, let's say, a resolution of these issues we see in Europe. But we should not neglect the fact that this kind of uncertainties has affected capital expenditures or capital goods spending in major European markets. And here, we also would clearly indicate that industrial projects from chemical process industry, from water treatment projects, they have been subdued in the first half of the year.

And this is mainly that entire capital goods spending has been down. We have -- saw that also in our divested business, Machining Solutions. Mads was giving you a heads up on the figures, how they were dropping in the first 6 months of the year. I can tell you that Germany was a market, which has been substantially down next to a few other industrial markets in Europe. So taking now into consideration what's going on in the second half, we are confident that we're going to expedite on our industrial projects, which are in the pipeline and once again, our projects we see in the U.S. in infrastructures.

Okay. Then a small question to the CFO. You had a write-down on loans of CHF 16 million. Was that related to the costing loans?

To the tune of CHF 60 million -- CHF 16 million, 1-6. Sorry, I didn't hear audio-wise. That is correct. It was related to the legacy loans back in 2018, and it is about the payment terms as well as the likeliness of repayment of these loans. We had to take another value adjustment on them.

What's the balance still?

We -- the balance is now around CHF 60 million.

6-0?

6-0, for the plant in Germany, yes.

And then perhaps you can help me with the adjustments. I see an ongoing net profit of CHF 180 million reported. I deduct the CHF 140 million extraordinary gain at EBIT line, but I add back the tax of CHF 10 million, that would give me an underlying net profit of CHF 50 million. What's wrong in my calculation?

We have -- I have to apologize, I have a very bad audio. Could you please repeat the question?

Yes. I adjust the CHF 180 million net profit reported for ongoing business for the disposal gain, which is CHF 130 million net of tax, then I would have only CHF 50 million underlying net profit left. What's wrong with my calculation?

That seems logic, yes. And the net profit has been affected by the items affecting comparability, as alluded by Mads, and it's shown on Slide #21.

Okay. So it's not that wrong with that calculation. So the tax is CHF 10 million on the gain.

Yes.

The next question comes from Alessandro Foletti from Octavian.

I also have a couple. First of all, on the 2 Flow Solutions divisions, when I take the sales of the 2 divisions and I add them up, there are CHF 40 million more than what you indicate as this CHF 1.507 million sales for the whole Flow business. So that means you have a lot of intercompany sales there. I would like to understand what kind of products these are and from where to -- where these products are going?

I think it's a very good observation, and thank you for the question. It's products from our multipurpose plants. For example, here in Switzerland, we have a multipurpose plant, which produces industry infrastructure and building technology products, but ownership remains with Industry and Infrastructure division. I think this is a bit of an organizational topic. We have multipurpose production plant in the Nordics, particularly in Finland, where we produce also in one plant, all sorts of infrastructure, but also building products.

And this is one of the topics, but I think this is a good sign, and we hope to increase this combined offerings across the world because I think this is exactly one of our commercial synergies we're going to expect that we, on the one hand side, not only have the market commercial synergies, but also the operational synergies by leveraging our production capabilities around the world.

Right. So this will continue to stay there, I guess, then in the future as well?

Yes.

Okay. And then on the margin, maybe -- we have discussed about the outlook, but maybe you can give a little bit more information and color on why it was down in Infrastructure and Industry and it was up in Building Flow.

Right. So first of all, our businesses in infrastructure have been globally up. We have a strong momentum across Europe, as we have said. The Industry business has been subdued. This is on the account of industrial projects, mainly on micro-e, as we also have illustrated that one on our slide, which was down minus 16%, minus 14% organically, but also chemical process industries, water treatment and so on and so forth. So that has been obviously created less of a favorable margin product mix and that was weighing on our overall EBIT margin negatively in the first half of the year.

I'm going to reiterate why we are confident. We have orders on hand and the order intake, particularly in the semiconductor industry in June of 1.2 book-to-bill ratio, which gives us the confidence to expedite these orders in the months to come. But also in this case, in infrastructure in the U.S., giving you a bit more there. We are here there in the business from main to meter, which means is the connection from the main pipelines in the road to the houses. We have here quite a substantial uptick on orders. And so therefore, we are confident that the second half of the year can materialize in this effect.

Okay. I understand the mix, but was there also some operating leverage there or...

No, it is actually -- as Mr. Muller states, it's a product mix. Semiconductor, which is a profitable business area, minus CHF 16 million is substantial. We have FX effects in there of CHF 5.6 million, as shown on Slide 19. And also previously reported, Mr. Foletti, we talked about some negative impact from the tariff, maybe CHF 4 million to CHF 5 million on that. That's the reason why we have a reduction in the margin.

All right. And maybe on Building Flow, this was slightly up. What drove that?

The Building Flow Solutions was leveraging their operational streamlining over the last couple of quarters. I think we have given you a heads up that we have streamlined 2 facilities, one in Italy and one in Turkey. That obviously started to reduce the cost base and the first fleet could be born in the Q2 of 2025. So that is definitely one of the positive effects, but we could also slightly favorably change the mix. So we have more control valves being sold across Europe in the first half, as I said, by leveraging the strong channels of the legacy Uponor partners.

The next question comes from Remo Rosenau from Helvetische Bank.

On the planned disposal of Casting Solutions, of which you said that it was well on track, could the current negative earnings momentum have any impact whatsoever on the planned disposal? Or are you still well on track to achieve the price you had in mind, let's say, already 9 months ago? And if so, do you expect a deal to be signed this year?

I think I'll start with your last question. We expect to strike a deal in the year 2025. We are well advanced in our negotiations. I think in terms of enterprise value expectations, I have to say that hasn't changed a lot, since the visibility of this market segment is quite substantially transparent over the last 9 to 12 months. So there is -- the business is not acceleratingly being hit. I think the European supply base news are flushing in since the last 12 months. So there hasn't been any change in expectations over the last 9 months.

Okay. So what you're saying is that the current earnings development was foreseeable already when the negotiations started. So the whole pricing is based on the figures which we see now from the start?

More or less, that is -- I think give a grain of salt on that kind of statement. Obviously, I think multiples are a topic which you're going to negotiate and underlying normalized EBITDAs are a topic. So I think what you're currently going to see anyway needs to be normalized. So therefore, I think, yes, more or less we are troubling within the bandwidth.

The next question comes from Christian Obst from Baader Bank.

First of all, free cash flow before M&A was minus CHF 57 million, always weaker in the first half, as I know, but what do you expect in the second half? I assume it will be positive, but can you give us a guidance how much you can achieve in the second half? This is the question, and I'll take my questions one by one.

All right, Mr. Obst, thank you very much for the question. And as you rightly stated, the free cash flow was slightly -- before acquisitions was slightly below the previous year, but it still travels in the area of our normal development in the first half. For the Flow Solutions business overall for the entire year, we should be able to come in the area of around CHF 200 million for free cash flow before acquisitions.

So positive CHF 250 million approximately in the second half?

[indiscernible] million for this year.

Yes. Then Casting Solutions, you said that you are well advanced in any kind of negotiations. Does it include a complete divestment of casting or in parts?

We will disclose the details of the transaction that we have signed potential sale.

Sorry, I didn't get the answer really.

The answer was that we will give details to the transaction when we will have signed the deal.

Okay. So -- and you cannot say or give an indication complete or in part.

It can be both. It can be both. But the -- one thing is important, the auto business will always remain as one part. So there will be no breakup of the auto business...

Okay. Yes. Then concerning the U.S., do you have any difficulties to increase prices to counterbalance any kind of like FX changes going forward?

That is a very valid and good question. I think the innovation and our market potential with our Industrial Solutions allows us to more or less compensate most of the tariff effects. This is mainly driven to that this is a very unique system, which addresses mission-critical ultra-pure water applications. But besides that, it's important to note that more than 90% of our sales in the U.S. being produced in the U.S. and therefore, not affected by tariffs.

Yes. I didn't mention the tariffs. I alluded to the FX changes, so the strong Swiss francs against the U.S. dollar and everything you are losing in translation towards Swiss francs.

The translation is most likely a different topic. Transaction is something which we can also leverage.

Yes. Typically, you see that companies that are doing business in a third-party currency, but would be buying raw materials in U.S. dollars, most of these markets, for instance, the Turkish market, partly also the Chinese market. There, it is normal that all competitors buy in a certain currency, and therefore, the entire industry is, let's say, willing to flow with the exchange rates.

Okay. And last but not least, personnel costs. I haven't found something in the half year report concerning personnel costs. What do you expect going forward when it comes to personnel cost development, almost in line with sales? Or do you have -- with all your measures you are taking internally, are you able to maybe grow on the personnel cost side below the expected top line growth?

Our expectations are that we will keep the personnel costs more or less flat or slight development up there, but we expect an improved personnel cost ratio in the second half. That's mainly top line driven.

Okay. But in line with the top line, is that right?

No, no. We will -- in the second half, we have these projects. We have a very good order intake and the deliveries are starting in the second half. So we expect that from a cost ratio point of view, that we will have an improvement in the personnel cost ratio in the second half.

And then going into '26, could be a little bit forward so the idea is to keep it flat?

It depends really on the business development.

We now have a follow-up question from Jörn Iffert from UBS.

It's just 2 quick follow-up questions. The first one is, I mean, M&A is a key part of your strategy. How do you see the pipeline right now in terms of priority? Is it going towards matter now to tackle new end markets? Just to see also how the pipeline is developing and is there good targets available also for the near term? Maybe the first question, if I may.

Thank you very much for the question. I think it's a very valid one. I think we have not excluded any of specific materials when it comes to Flow Solutions as soon as we can as GF add value on our journey. I think our potential M&A pipeline remains healthy. Nevertheless, let us close now the VAG and unleash the potential of this great company where we're going to believe we can really make a difference when it comes to urban infrastructure solutions, being one of the only provider of comprehensive solutions.

So let us first -- I wouldn't say digest, but let us integrate VAG now first and make the best out of this acquisition. But once again, the funnel remains healthy, but we are not at this point of time ready for the next acquisition.

And the second question, coming back on pricing, please. Do you expect you can price the negative FX transaction impacts you have in the second half? And also, if I may double-click on what I was asking at the beginning, what was roughly the organic sales growth impact from passing through the lower raw material costs?

I understand total pricing was flattish, but there were price increases maybe in other areas, but the price concessions you had to give, what was roughly the impact? Is it 2%, 3%? Or was it 5%? Just to get a rough idea, please?

It was definitely for certain product areas in regions. It really depends on the region at the moment. There were price reductions from 5% and even higher on certain product categories. That typically in the industry will follow the raw material development. But overall, at I&I Flow Solutions, we are still a premium provider. We have been able to pass on several effects on the currency side for many, many years.

We still manufacture in Switzerland. And our customers have always been willing to buy for Swiss-made products, and they know what that incurs that incurs that you have to pay for the Swiss franc basically. So we still have a customer base that is premium oriented, and we have traditionally in the past, been able to, over the time, pass on these negative developments.

Ladies and gentlemen, that was the last question. I would now like to turn the conference back over to Andreas Muller for any closing remarks.

Thank you very much. We would like to thank you for your interest in our company and looking forward to meet you in person at our Capital Markets Day in November. Thank you very much.

Ladies and gentlemen, the conference is now over. Thank you for choosing Chorus Call, and thank you for participating in the conference. You may now disconnect your lines. Goodbye.