Heidelberg Materials Aktie

Ladies and gentlemen, welcome to the Heidelberg Materials First Quarter Results 2026 Conference Call. I am Sandra, the Chorus Call operator. [Operator Instructions] The conference may not be recorded for publication or broadcast.

At this time, it is my pleasure to hand over to Christoph Beumelburg. Please go ahead, sir.

Thank you, Sandra, and welcome from Heidelberg here with, as usual, Dominik Von Achten, CEO; Rene Aldach, our CFO; and the IR team. And after going through some prepared remarks, we get ample time for your questions.

So with that, very short intro over to you, Dominik.

Christoph, thanks. Hello, everybody. Great to have you on the call. Thanks for joining. Look, we had an interesting quarter in the start for 2026. Robust performance from our perspective, but quite significantly impacted by weather in U.S., Europe and partially in Africa. So the revenue side, EUR 4.5 billion, RCO, EUR 0.2 billion, down from prior year quarter, but important for us, positive price over cost. And that, to a large extent, mitigates the volume impact that has been driven by the weather.

I don't have to tell you Northeast, you saw the pictures from New York. You saw how Northern Europe and Western and Eastern Europe were under snow for a long time. So that's our footprint in that respect. So for us, I would say, normal course of business. Transformation Accelerator, I think, has taken off. But from my seat and our seat, I think there is still ample room for maneuver on the cost side. as we go through the year, especially given the volume developments in the first quarter. So we should expect further good traction on the transformation accelerator.

More than EUR 400 million are already on the clock, and we are very confident that we'll surpass the EUR 500 million by year-end, and that's important for us, especially in the current environment. Share buyback, we stepped up our last year's buyback of about EUR 400 million now to EUR 450 million with the next tranche that will start after next week's AGM. Important for us, as we always said, we want to grow organically with our sustainable product focus, but we also want to grow externally and great acquisition down under in Australia with MAAS that's going through the antitrust process right now, everything on track.

And then we have AKCANSA, I think a very interesting step-up into the majority position of a company we know very well of a market position in Turkey, we know very well. And from an expert platform, we know super well, and we can leverage for growth, not only in Africa, but also in other parts of the world, including. A little bit behind the scenes, we need our French Airvault plant through a massive rebuild significant investment well beyond EUR 300 million. step change in efficiency and decarbonization. The plant is now running.

The kiln is running, [ kiln ] produced, alternative fuel are running. So I think in that respect, we are really -- we will see a big change in the performance of France, not only on the financial side, but also in terms of carbon footprint. Keep in mind, the carbon footprint of this new setup is 30%, 3-0 percent better than the old plant. So a massive change. That's why we said step change. And with that, we confirm our outlook between EUR 3.4 billion and EUR 3.75 billion. ROIC will be above 10% and the CO2 emissions will be slightly reduced.

If you go to the details on Page 3, I don't think I have to go through that. EBITDA at EUR 484 million, 13% down. Operating margin slightly down to 10.7%. And then on the RCO down to EUR 163 million. If you see on Page 4, this is mainly driven by volumes. That's the impact that I was describing. From my seat, that is mainly and predominantly weather-related. There are some markets that are a little bit slugg. We'll come to that, I guess, through the discussion. But in general, this is weather impacted in Q1. Important that the price over cost remain positive.

If you then go to the margin, you see that LTM, so last 12 months, the margin is actually moving in the right direction in all business lines. So cement is moving in the right direction up to 27.5%. Aggregates is up to 25.7%. And for the group then that means an increase to 21.6%. So from our perspective, the green light, the train is moving in the right direction despite all the headwinds.

Transformation Accelerator, as I said, EUR 380 million of last year, so more than on track. Of course, normally, if you have the EUR 500 million, you would have expected EUR 250 million to EUR 300 million. So EUR 380 million, a fantastic job, and we just need to do it again, and that's what we are fighting for this year. So as I said earlier, you should expect to surpass the EUR 500 million by year-end. If you then go through the different areas, Europe is the one that has had harsh weather and where the results really came down. I think Europe is large, a large footprint and the markets are quite different.

From our perspective, the sluggishness of the market sits a little bit in a line between the U.K. and Germany and Benelux in between. The rest of Europe is actually okay. And then in the East, it's maybe Poland and Romania that is a little bit slower. The rest is actually going quite well, if not very well. So in that respect, the big countries for us are a little bit hit by the weather and some sluggishness in their performance. I'm sure we'll come back to that during the discussion.

Then if you go to North America, the result is below last year. And I would say that's all about the Northeast. And that's why from our seat, it's for us the biggest region by far. And it is the one that has been hit the hardest by the weather. That's why I think we are on it. April looks good. So I think from my seat and our seat, this will -- this is going in the right direction. There are also large projects that are now kicking in and really seeing the material pull. So I'm actually quite optimistic that North America in general, but also the Northeast will turn the corner.

Asia Pacific, I would say, stable with some ups and downs in the different countries. Then you can maybe later on say something to Australia, but also there, we see movement in the right direction. So overall, I think we've seen the worst in Asia and Australia. But the question is how much uptick we'll see throughout the year. Let's wait and see. Volume development also in April was actually good.

Africa, despite the fact that volumes were a little bit under pressure, especially in the northern parts of Africa, but also in some parts of sub-Sahara driven by the weather. In the end, the result was quite stable. And also there, April looks significantly better. So I'm pretty confident that also Africa or [indiscernible] for us will continue to deliver well during 2026.

And then on the guidance, as I said earlier on, we absolutely stick to our guidance. at 3.4 to 3.75 RCO, above 10% ROIC, a slight reduction in CO2 emissions. And then on the CapEx, 1.2 to 1.3 and the leverage around 1.5x. So that's it from our side.

Rene, do you have anything to add?

Okay. Just a short info about the next tranche of the share buyback. We started this after the AGM in May. You remember the last one was around -- the last few months were around EUR 400 million. This one will be EUR 450 million. So that's a significant -- or it's a nice uptick. And together with the dividend, I think we stick to our commitment that we want to increase the shareholder return, which we are de facto doing.

And that's just what I wanted to add to Dominik's explanations.

Thank you, Dominik. Thanks, Rene. So operator, we can start the Q&A process, please.

[Operator Instructions]

Thank you, operator. So as the line is pretty full, as usual, please stick to 2 questions at a time. And we start with Ben Rada Martin from Golden Sachs.

My first was on energy inflation. I know in the press release, you spoke about expectations of cost inflation and a partial offset from pricing and surcharges. I guess it would be helpful, could you quantify what the kind of base case of inflation is on your EUR 2 billion energy bill and I guess your EUR 2 billion or so transport bill as we sit today? And then the second one would just be on pricing. It'd be helpful to touch on how you saw pricing realization in the first few months of the year in Europe and North America, please?

Yes. Let me take the first and then the -- let me take the second and really take the first. So it's Dominik. Then on the pricing, I think pricing in Europe is intact for us, that's okay. The only -- to be honest, the only sluggish market a little bit is maybe the U.K. The rest is absolutely intact from our perspective. The one more, the other a little bit less, but no change from what we have indicated earlier on pricing in Europe. We continue to do value before volume. For us, it's important to move the price also because you look, the carbon certificate is still at EUR 75.

So from our seats, the cost position is pushing, especially for those who are short. So in that respect, no change from our pricing approach. And for North America, pricing, you saw this pricing in aggregates is very strong. I think also in comparison, I think our pricing in aggregates go to the details. I think top performance of the team in North America, which is important for us.

In cement, you can always dream more. But also there, if you take the benchmark, I think, top job of the team. Pricing is moving for us in positive territory. North America pricing is up also in cement. Remember, last year, we were down. So we said we're going to target a single -- low single-digit increase in cement in North America. So we are actually on track with pricing also in North America then.

And regarding the energy inflation, first of all, I want to clarify something we read a partial offset, but the clear target is to fully offset the cost. And as you know, I'm managing the Australian business, and I can assure you and I have the numbers in April, we fully offset the additional fuel costs we got direct and indirectly from suppliers. So that's number one. Number two, how much is this affecting us? It's interesting. The oil price is now 10% down today. So this moves every hour. And now to give you a precise number is difficult, but I'll give you a little bit of preview here how you think about -- you need to think about this. First of all, fuel and diesel and oil is only 15% of our energy bill.

So it's -- if you take EUR 2.2 billion, it's EUR 300-something million. And you can imagine that we learned from the Russia-Ukraine conflict and our hedge levels were never as high as they have been in 2026. So only a certain part is affected by the Iran, let's say, conflict. And I would have said we want to recover the full impact. And it's probably from a direct fuel and energy cost impact is probably low low single-digit cost increase on our energy bill, which we want to offset and now with the 10% oil price decrease that will be even lower.

So it's clear we want to offset. But mathematically, it's clear. If you just offset 1:1, that's margin dilutive. It's very clear that's the mathematics of this, but that should not impact us big time. So we seem here very comfortable.

Next one is from Luis Prieto from Kepler.

Just a couple of them very briefly. The first one, coming back to pricing. Is there a scenario in which we see further initiatives implemented in the second half of the year? I think are changing a lot, but is that something that is likely? And the second one, if I recall correctly, you mentioned in Q4 results that you were optimistic for the year with a conservative initial guidance. Has your stance at all changed due to geopolitical risks? In other words, can we still categorize the confirmed outlook as a conservative initial guidance?

Luis, let's go one after the other. Pricing, we never give up on pricing to be very clear. So there is no rule that we can't move in the second half. We try every day to advance our pricing. But we need to react to the volatilities, and that depends what Rene said earlier. It depends also on the geopolitical wiggle room that we have that we can't manage and we'll navigate well through the for as we did in the past. But the clear message to you is there is -- we never give up until the 31st of December and then the work starts on January 1. So pricing is a continuous movement in the right direction ideally. So no question around this.

Look, early days on the guidance, let's not get ahead of ourselves. We stick to what we have said end of last year, and let's not now speculate about too many potential upsides or deviations from that. Let us deliver. And as we go through the year, we keep you updated. But given also the geopolitical volatility, I ask for your understanding that it's still a way to go until the year-end, and we need to manage all the ups and downs. We are confident we can get there, absolutely confident we can get there. Otherwise, we would not tell you, but let's not get ahead of ourselves.

Next question comes from Paul Roger from BNP Paribas.

So I have one short term, one long term. So on the short term, pleasing to see there was a significant recovery in April or in Q2. I wonder if you could be a bit more specific and maybe even quantify the volume growth and also talk a bit about some of the recent trends and if they differ by market? And then secondly, on the longer term, you referenced a bit the deal in Turkey. Can you say a bit more about the rationale for that? And also whether there will be any strategic changes following that deal?

So just because the line was not super clear, Paul, just to repeat your question. The first one was recovery in April. And what was the second half of that first question?

Can you quantify a bit and talk about the hot spots and maybe some of the weaker spots as well.

Yes. And then the other one was China Perfect. So Paul, on the recovery in April, we are clearly above prior year and also our plan in April in terms of volume. Let me not get into too many specifics, but it's not just a small tick up. It's from our seat is a significant pickup. So I think that goes in the right direction. But I think there are also, to your second half of the point, there are markets are still sluggish. And I indicated them to you earlier. So if I look at Europe, it's this access between all the way between U.K. and Romania. You can always draw a line. And that is the one that I think we are waiting for a significant recovery.

I think I have some good indications here in Germany on housing here and there a little bit. There is movement below the hood, but we don't see it yet in our numbers. So the sluggishness, Paul, sits predominantly there. And then I think that is probably the weakest spot, which I can take a smile now and say, hey, that gives us the biggest upside, but let's fix that problem first. So those are probably the weakest links. The rest nothing to mind bother about. It's ups and downs, but it's nothing to be either too happy or worried about.

And then on AKCANSA, let me start and then Rene adds because he knows the business also quite well. He is also involved in that. So for us, why did we do this? You know that we know the business for 30 years. We had a joint venture with. And we have now the opportunity to take over their shares. That's what we are doing, which then puts us into almost 80% share, so predominantly ownership. From our seats, the business has been underperforming. That's also why we were forcing a little bit a solution here. And we do believe we are the best owner for this. You know that we have also a Turkish Board member who knows the business and the surroundings in Turkey very well. So as a team setup is also good.

The assets we know very well. We know the upsides of the assets. We know the market position in Turkey very well. We know the surrounding markets of Turkey, and that's important. The plant in [indiscernible] sits at the water and is a powerhouse when it comes to exports, both in terms of serving Africa, Asia and even North America. And I think that's important for us to get a grip on that because with all the volatilities, taxes here, imports absolutely, blah, blah, blah. There is a lot of wiggle room that you get and flexibility you gain in your network. And you know that we have a very powerful trading arm that is leading globally under HM trading.

But Rene, maybe you have something to add also financially, to this.

As Dominik said, the business was in '25 are not performing. But if you look at the prior years, it was okay and there's significant synergy potential if we manage this on our own. And I guess this is strategically very, very good deal. And if they come to normal EBITDA levels as well financially, it's good. So we buy an own known business. The risk downside is very low. And we have [indiscernible], who is working for [indiscernible], he knows everything and now we can manage by ourselves. So it's a very good strategic acquisition, helping as well our growth story within our financial metrics.

Next question comes from Elodie Rall from JPMorgan.

So just a follow-up first on both questions. April volume, does that mean that April volumes are up in Europe as well? If you could just clarify because I'm not sure I understand that you also said that overall European volumes are up in April.

And then second question is on your overall margin performance in Q1 and maybe going forward, because you're saying that you're delivering on your cost initiatives, but your EBITDA on a like-for-like basis is down in all regions, even in regions where you generated positive like-for-like sales. So for example, in North America, like-for-like sales were up 3%, but like-for-like EBITDA is down 27%. What's going on there?

And where are the cost savings basically going? Because it's a bit disappointing not to see that translating in EBITDA performance. So maybe Q1 is exceptional. And from here, it's okay. But if you could give us a bit of color there, that would be quite useful.

Okay. Very good. And, let me give you the first answer. The volumes are clearly up for the group. Europe is flat. And then to be clear, which is much better than the first quarter.

And Elodie, second quarter regarding margins, let's go through this. You say North America revenue is okay and margins are down. This is correct. But you know what, we have only one region in Q1 in North America, which is down. All the others are nicely up. And which one is the region which is down heavily, it's the Northeast, Dominik alluded to this, New York, what have you, snow, heavy snow. And this is by far our biggest region. And that is also -- it's a cement region with high margins. And if this is heavily down, then it weighs on the average margin. It's very clear.

And then we have as well, obviously, this maintenance timing inventory, you don't need to go into the details. So Q1 was impacted by the Northeast. All other regions were clearly up. So from our point of view, that is not a concern because in April, that region as well volume-wise went nicely up. So that's a tick. And then you know what, in Europe, we have 20 countries now to Q1 for the weather report to go through margins from my perspective, doesn't make any sense. The cost reduction focus is there, and we will push further.

And as Dominik also said it, the EUR 500 million is probably not the end number, but probably it will not be the end number, it will be nicely higher. So the savings will show up. And what we have also done in Q1, you have seen this, we further optimize the European footprint. We have announced to close another cement plant in Germany. We have announced to, let's say, restructure, optimize our cement network in Sweden.

So that will all come through, don't worry. And if you look at the European cement margins, I think they are even -- they are improving. So I'm not worried about this. Even if in Q1, look at the Slide 14 of the deck, the cement margins are up in Europe with she volumes and weather. So that gives me confidence. And there, you see the savings.

Next one comes from Arnaud Lehmann from Bank of America.

Firstly, just a clarification on your full year guidance. Do you include any contribution from MAAS Group in Australia or AAA in Turkey in the guide for EBIT?

Secondly, and if you can clarify maybe the timing of consolidation for these 2 assets, please? And secondly, just to finish the world too, in Africa, you mentioned bad weather for declining sales. And I thought it was always sunny in Morocco and Egypt, but maybe you can give us a bit of color.

Okay. On the guidance, I think no, it's not included. MAAS, Rene, you want to say something about?

Okay. MAAS, we have signed this after we have, let's say, decided on the guidance. And there's a -- they authority reviewing this. earliest, I would have said, late Q3, beginning of Q4. So that's it from us.

And AKCANSA, also there is an antitrust process running with the agencies in Turkey. So very hard to predict. Again, let's not get ahead of ourselves. It's not in the guidance, but it's very hard to predict when this will close. This can go fast, but this can also take longer. So I'm being cautious on this. We are not trying to overpromise here. So that would be an uptick if it comes earlier, but let's not speculate on too high hopes.

On Africa, as I said, I think the North Africa was actually good in April. Volume performance across the board was very positive. There was also Ramadan effects that's clear. And Sub-Sahara Africa comes and goes a little bit. But overall, also in Sub-Sahara, there are parts of sub-Sahara that were stronger than others. But overall, Amba is clearly up in volumes for April.

Next question comes from Pujarini Ghosh from Bernstein.

So if we discuss the RCO margin, so Q1 RCO obviously dipped quite a bit. And going back to your full year guidance, it implies almost like at the upper end, more than 10% increase. So my question is what kind of volume price, price cost expectations are you baking in to take you to either the bottom end or the upper end of the guidance? So basically, how should we expect the remainder of the year to progress?

And the second question is back on AMWA. So basically, you've discussed the Africa region, but the other markets in that segment, how are they doing? Is there any impact from the conflict? So yes, any color around that would be very helpful.

Let me take the second one, and Rene takes the first on the margins. Look, we are not in the direct conflict zone. The biggest impact we see for years now in Israel. Obviously, Israel is under a war scenario for quite some time now. So that's where we see the biggest impact. But Egypt is not impacted, at least not negative, I think even positively because the market in Egypt is strong. Malco, same thing. And we are not in the Middle East, Turkey, no impact other than the indirect impact that Rene was describing earlier. But other than that, Pi, we are not in the Middle East with any presence. So no impact to us.

And then to your first question regarding our guidance, as Dominik said it, we have one small quarter now. Yes, we are a little bit behind prior year, but we could explain this. And April looks good. We will catch something up what we have missed in Q1. And the overall North America, as we said it, pricing is very, very good in aggregates. Our volumes except Northeast were good across all the regions. So no change to our assumptions in North America.

AMWA also April very strong, catching up what we missed in Q1. Again, in Q1, our highest margin, biggest country that Morocco and they had floodings in the first 2.5 months. So -- and we see this catching up. So as well here, no change to guidance. And then Europe, as Dominik also said, there are a few bigger countries not performing like we want to. But we will make this up with cost and our pricing is okay. So also here, Overall, no change to what we said when we have given out the guidance. And probably there's maybe upside a little bit in Asia and Australia. So let's see. But overall, I think we will hit what we wanted to hit.

on the line is Yassine Touahri from On Field Research.

I think my first question would be on the cement margin in North America. I think the cement margin have been coming down for, I think, fourth quarter in a row now. And the compression that we see in the first quarter, it's like nearly 700 basis points. I understand it's like partly weather related. But again, it's very surprising. Is there any one-off in this or the timing of maintenance or anything that explains this collapse in margin in Q1 -- and when we look at the rest of the year, do you feel that you're in a position where you could see a return to margin expansion in cement or at least margin stability?

And then my second question would be on -- there is a press report suggesting that you might be looking at an acquisition in South Africa. Is it something that you can comment on? And if you cannot comment on the specific press report, could you explain a little bit your strategy in emerging markets? Could we see more acquisition in emerging markets in cement? Or are you going to focus mostly on developed markets?

Let me take the second one and then Rene takes the first one. As always, Yassin, no comments on any press speculations. That is also true for this one. And when it comes to M&A, we've always said we are going to grow both in developed and in emerging markets. We have a global portfolio. There are ups and downs in each of those markets. We want to balance also things out. We focus on delivering our financial metrics and our growth ambition. And in that combination, we look at every opportunity in our core business.

So we will not leave our focus on heavy building materials. That's what we always said, and that's our clear focus because we believe that's what we know best. That's where we'll have our global advantage. That's where enough growth sits -- and with that, we stick to what we have said all along. So both developed and emerging markets are absolutely there. You see now MAAS was a developed market acquisition. I would say Turkey is probably counting somewhat to emerging markets, maybe stuck in the middle.

But in that respect, the full range is up for grab, but it needs to deliver a contribution to the financial metrics. As Rene was explaining earlier, it's true both for MAAS and it's true for AKCANSA, and it's true for every acquisition that will come. So the pipeline is full, and you should expect more acquisitions as we go through the year.

Yes, regarding the cement margin, and I think I thought I have somehow alluded to this, that delta is coming again only from our biggest region, cement region we have in North America. And you are saying on a number level, it's what 650 or whatever basis points. In that region, we are talking 200 basis points, 2,000 basis points delta because there was not much going on there. So again, margin expansion, that's obviously with increasing costs and you put fuel surcharges in everything that's margin dilutive is clear.

So we need to get back to the margin path for North America. It -- it should not go down clear. And cement pricing needs to move better than it is last year, but that's not the problem in the whole industry, cement pricing last year was not great. But it's clear, Yassine, that we need to get better here and we will. And again, Q1, don't use Q1 because there is the biggest region under heavy pressure with no de facto much sales. So I'm not so concerned. again. So let's see.

The idea -- when we look at the second quarter, the idea is the volume should be better, at least in April. As a result, the margin pressure should be much less substantial and it could even be potentially stable depending on the pricing execution. Is that the way to look at it?

No, that's -- you have summarized it better than I did. That's correct.

But there are 2 more questions on the line. We are doing okay on time. So if you have any more questions, feel free to step back in line. The next question comes from Julian Radlinger from UBS.

So 3 from me, please. I think they should be relatively quick. The first one is a really easy one. So we've talked a lot about the cement margin decline in North America. The aggregates margin decline in Europe, is there anything other behind that than just volume declines that you saw in Europe? Second question, if I'm looking at your segments, taking a step back from the Q1 now, APAC continues to be the one that sticks out as the one where earnings have been moving sideways for a long time now.

I know you get this question a lot, but how happy are you with this region in general? Is the performance there meeting your expectations? And if the answer is no, what can you or are you doing about that? And are you -- and how far are you considering portfolio actions there as well? And then my last question, and this is sort of similar to what Yassine asked about emerging market acquisitions.

If you can kind of come back to that and elaborate a little bit, I'd love to understand a bit what makes certain emerging market assets look more attractive right now than, for instance, doing more aggregates bolt-ons or cement bolt-ons in the U.S. or contributing to European cement market consolidation in a region which is highly underutilized, things like that. If you can kind of help us understand a little bit the trade-offs there.

Yes. Okay, Julian, that's almost a textbook for the next half hour. So only a small 3 questions. Let me take a step and then Rene will jump in when it comes to your second question. Aggregates margin decline in Europe, it's very simple. I indicated to you, U.K. is sluggish, and that is one of our biggest aggregates. The aggregates volumes, if you look a little bit where they sit, they sit predominantly in the markets that I described as being sluggish. So I think that's the main reason. So if you take that in the flip side of your argument, that's the volume pressure there.

So I think overall, from my seat, we should also see a recovery in aggregates in Europe and predominantly in the U.K. It depends also on the specific market development. So I think overall, I think that's mainly the answer there. On APAC, let me give you the answer for total APAC and then Rene can again comment on Australia because I would argue we do take portfolio measures quite substantially in APAC. You know that we've done an acquisition recently in Malaysia. You know that we have done moves in Indonesia, and Rene will come to the moves in Australia. So we are growing that region quite substantially, and it has the beauty that it has a fairly stable market of Australia in there and then the more emerging markets, Indonesia, India, Malaysia, Thailand, Hong Kong.

So I think that's the case. And maybe before we get to Australia, it's clear that we continue to work on our portfolio. That's also clear for APAC. The question was whether we are satisfied. No. Does it meet your expectations? No. But can we change or should we things change overnight hastingly? No, because that's destroying shareholder value. That's not what we are paid for. So we are keeping an eye on what we can do from a portfolio perspective. But clearly, portfolio management will continue also in APAC. And you should expect that not only in Australia, but also in Asia. But Rene, maybe you describe a little bit the situation in Australia.

Okay. For Australia, we have done the BGC acquisition via our joint venture Smit Australia. That is a big, big, big success. And then following our strategy, we want to increase our, let's say, presence in markets where we are and where we can further improve, and that is the mass acquisition on the East Coast. I think that fits perfectly to our portfolio. And you have seen as well our other competitors in the building materials growing in Australia, and I guess we are doing the right thing. And we follow these result contributions of these acquisitions very, very closely, and they are all performing like we wanted to have it in Australia. So I think that fits perfectly to the strategy.

And then Julian, on your last question, emerging market acquisitions versus aggregate bolt-ons and European consolidation moves, I think it's pretty straightforward. Again, going back to what we said, we want to grow, we want to meet the financial framework. The beauty about the emerging market acquisitions that we do, they are very quickly value accretive, both in terms of margin and in terms of ROIC because in most cases, these are asset-light steps, not everywhere, but in most cases. So that means that typically on a ROIC performance, you get a good return. That's especially true for the AMWA setup.

And then aggregates and cement bolt-ons, obviously, we are looking at everything that moves, but we do say no to a lot of things because we don't see the value and the value accretion for our financial framework. It's a matter of availability of the acquisitions, but it's also a matter of price and the matter of synergies or missing synergies. So that's the way we look at that. And that's basically also true for European cement consolidation. Rest assured, we look at everything, but I haven't seen 10 deals in the last 3 months in that respect.

So there is not a lot of this movement moving yet. But absolutely, we are looking at this same principle. If we are the best owner for the asset, if we can drive the biggest synergies, if we can get value accretion to our financial framework, then we absolutely move also in cement consolidation in Europe.

Next one comes from Harry Goad from Berenberg.

I've got one question, please, on U.S. federal funding of infrastructure. So specifically on the IIJA bill where although I appreciate there's quite considerable capital still to be spent, as I understand that the bill needs to be reauthorized this year. Is there any -- I guess, first of all, can you give us any insights on what you're hearing on negotiations around reauthorization? And is there any risk on funding for not say 2026, but 2027 if negotiations sort of don't go as well as you would hope?

Harry, I think it's hard to predict -- it's never been harder to predict how these negotiations go in general, and that's not a detail for any negotiation. In general, I'm quite optimistic that they will bridge it somehow, whether they do it through a reauthorization in September or October or whether they do it in January. I don't think that's going to -- they have muddled through this in the past. You can go back to history. This has never led to a cutoff in investments. They somehow them do interim solutions or something.

If I look at the general political setup and the desire of the current administration to at least not lower the chances for the ballot in November, I'm quite confident that there will not be a dramatic swing to the one or the other points. I don't see that at all. So I think I would rather assume for now, don't quote me, but I would rather assume a fairly stable maneuvering. I wouldn't see a massive uptick and I wouldn't also see a massive decline at this point. And from our main scenario, we would assume that the funding continues well through 2026.

Next one comes from Glynis Johnson from Jefferies.

Two, if I may. The first one in terms of Transformation Accelerator. There have been some more recent plant closures that you've announced. And I just wanted to understand, are they part of the original transformation Accelerator program? Are they supplementary to that? And if so, can you give us any additional quantification of what the potential savings could be?

And then second of all, similar thematic actually is your friendly peer in Switzerland put an EBIT number on AI upside. You've obviously talked about digitalization very enthusiastically since the Capital Markets Day at the very least. Do you feel confident enough to put a number on it yourselves on what the upside could be in terms of digitalization and AI?

Rene, do you want to take the first one and then I'll take the AI one.

It is for the transformation accelerator. These plant closures we have announced in the Q1 will be additional savings to the original EUR 500 million. And that's why Dominik and I say the EUR 500 million will not be EUR 500 million will be more. And we always said there's fixed and variable cost part components. And don't assume this is for the full year. There's a process. We have unions. We have a lot of things to manage. There will be an impact in 2026, but the full run rate then will come in

And on the second topic is, you know that we've been on the topic of AI for quite some time now. We've given you very specific examples. And I'm always happy to see that others in the industry are also following that. I think that's fine. I think it will also increase the suppliers moving on this. the whole network will move down the road of AI, which I think is great. It's also great for us when we talk about our digital investments in terms of command AKCANSA and other things. So I think in that respect, we are moving in the right direction.

We are not -- we have not put a number on this at this point. Partially, it also drives the transformation accelerator, but we have bigger hopes and dreams on AI and let us continue to work on this in a diligent way along our processes and together with our customers and then eventually we will come up with something nice, but we should -- at this point, that's the status from our side.

We go back to a second round this time from Elodie again, JPMorgan.

Let me ask another question. So we haven't discussed benchmark ETS. It's something that we all seem to have forgotten now. But do you have any latest views that you can share with us on, first of all, when you think we'll get the benchmark, which has been longer waited for and what level you expect? And then the ETS reform to come, what kind of changes you have assumed the timing, the news flow, we should expect basically?

Yes, we manage our business, but it's hard to manage the politicians. And I'm being careful with making assumptions on what will come out of Europe in this respect. You know the discussions. I can only pick up what I'm sure you also picked up the rumor that the new benchmark will anyway sit around, what is it, 650, 660 or something. Let's wait and see. So that would be a little bit relief versus what the speculation was maybe a couple of months ago. But I can't tell you. My understanding is that they will try to come up with a decision here in the next couple of weeks. But it's -- again, it's hard to predict.

There is no formal date to the best of my knowledge. And then on EU ETS, again, a lot of speculations back and forth. The market at least is not speculating at this point about a fundamental change because the CO2 certificate price has been pretty stubborn around EUR 75. And normally, the market is pretty clever. I'm not trying to beat the market in that respect. So this for me gives an indication, maybe it's only one indication that there is a revision coming. But clearly, the market at least is not speculating on the revolution nor do we.

I think they probably will try to put some sort of relief in there, and you've discussed market stability reserve, linear reduction factor. You know all the ups and downs and limits around this. But it really would be not professional for me to speculate on where they exactly land because there are so many discussions going on also behind stores. We are -- wherever we can be, we are giving our inputs, absolutely, but it's hard to predict and I for your understanding, I don't think this would be professional for me to say anything more than I've said now.

Then we go full circle and end with the one that asked the first question, Ben from Goldman Sachs.

Excellent. My first was on evoZero. I know we haven't really spent much time on it today, but be interested, we're a few months into production with the product, how have the volume and I guess, the green premium realizations been versus your expectations set at the CMD? And then second one is we've seen some press articles about admixture shortages in APAC and diesel shortages. Are there any geographies that you think are at risk from physical supply shortages of input materials that's worth flagging?

Ben, thanks a lot. Let me answer the first one and then Rene, as he heads procurement, he will come to the second one. On evoZero, I think interesting dynamics continue. First part of your question, production goes very well. So technically, it's a clear green tick in the box. Also the integration with the cement plant, the team has done a fantastic job. We are producing -- we are capturing the CO2. We are storing the CO2. So the carbon bank is filling. That's fantastic. Big innovation, nobody has done this before, but it's really working. So I think in that respect, very, very encouraging, and we are working diligently on the sales side of things.

We have very engaging customer discussions all across Europe and with some global tickets that are also centered around their European footprint. So I think that's really -- the pipeline there is very full. And now to the price point discussion, it's clear, and we've always said that we are demanding for this product a completely different price point. And we are very focused to get to that price point. And for now, that works very well. So let's wait and see.

The good advantage that we have that we don't have a pressure to act. And that's much different from if you start a cement plant and you have a silo of 20,000 tonnes. If the silo is full, you have 2 options, either you sell the product or you stop your production. So that pressure is not there with evoZero to be very clear because we can breathe over 5 years in terms of storage with the tokens. So that gives us also ample opportunity to pull every lever we can or want on finding the right projects, the right customers for the right price point.

Okay. And then regarding your question about additives and diesel supply security here, I have nothing to report with no shortages, supply right now is okay. So nothing to report from that perspective right now.

Okay. This concludes our conference call. Thanks for your good questions. Just a reminder that, as always, we will be on the road following our AGM next week on -- when is it, Wednesday next week. We will be at a couple of conferences in Frankfurt, also in the U.S. So stay tuned. If you're interested, please let the IR team know. And with that, have a good day.

Thanks.

Thanks, everybody. Thanks.

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.

Ladies and gentlemen, welcome to the Heidelberg Materials Full Year Results 2025 Conference Call. I'm Sergen, the Chorus Call operator. [Operator Instructions] and the conference is being recorded. [Operator Instructions] The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Christoph Beumelburg. Please go ahead, sir.

Thank you, operator. Good morning, good afternoon, good evening to everyone listening into our Full Year 2025 Conference Call. Thanks for dialing in. As usual, we have Dominik and René with us, CEO and CFO plus the IR team in the room. We have some total remarks. We're going to go through them relatively quickly and then take the time for your questions. Over to you, Dominik.

Chris, thanks a lot. Hello, everybody. Sunshine in Heidelberg, 20 degrees. That's a good time to have the conference call, great setting. Welcome. Let's go into the summary first page. Very good year for us, yet another record year. I think all the key metrics is going in the right direction, as we all reached a new record high at EUR 3.4 billion. EBITDA margin up important for us. You know that we are very focused on improving the structural profitability up to almost 22%, also driven by a great success on the Transformation Accelerator initiative that has already encountered EUR 380 million of savings.

Remember, the saving target is down the road EUR 500 million by end of this year. I remember very well our Q3 conference call. Here you go, European margins increased to 20.5%. And so -- very good performance out of Europe, especially also in Q4. So I think a fantastic entry point going into 2026.

Free cash flow, René will further go into at a strong level of EUR 2.1 billion, leverage stable at around 1.2x. What is very good now is the ROIC that has surpassed comfortably the 10% mark. So 10.4%, I think is the highest we ever had and it's really well on track to our midterm guidance the capital markets where we said we go up to 12%. Shareholder return up 10%, so even more than the profitability increase with a combination of progressive dividend and share buybacks, EUR 1.1 billion. The second tranche has been done and the acquired shares have been canceled.

We are really continuing to make the difference, not only because we are the only global ones, not only because we are the heavy building materials guys but also because we now turn this into superior differentiating products. EvoZero hits the market as the world's first carbon captured net zero cement. And the first customers are happily using it.

And then last but not least, importantly, the outlook for this year, we are optimistic. We are going to increase our result with a range that you know from us is always cautious at the beginning of the year, EUR 3.4 billion to EUR 3.75 billion again above 10% and the CO2 emissions continue to decline.

With that, I think next page is basically just repeating what I just said. I think we don't need to go through that other than it's green on basically all dimensions and the adjusted EPS has also gone up, René will talk to you that in a minute. So overall, I think a strong performance. René, you want to say something on the transaction in Australia?

Thanks so many. Hello, everyone, from my side. You've seen 3 weeks ago, we have announced that we signed an agreement that we want to take over the construction materials segment of the mass group in Australia. And here you see some numbers. It's 40 aggregate quarries and you can read it, they have released the results and it's a listed company. He saw it's 7 million to 8 million tonnes of aggregate, [ 50 ] million cubes of concrete and asphalt in the recycling operations, that complements our footprint on the East Coast very nicely. And important is to say that we stay in our strict financial framework. You see it the transaction value is AUD 1.7 billion only, and after synergies, the multiple is 8.4%, which fits to our, let's say, targets what we have guided for. And you have seen probably 2 days ago, mass on stage 1 results. We as put it here on the chart, and the revenue was up 43% and the EBITDA increased by EUR 36 million which is on track to what we have assumed even slightly better. So you see there's good potential in that acquisition.

So the only one is what we need now is authorities from the regulators, which will come probably Q3, hopefully, and then we see how that goes. Dominik, over to you.

On the back of that, Page 5, I think we need to pause here for a moment because I think this is a super important slide, underpinning strongly, the 7% to 10% growth, the target we gave midterm on RCO, where does it come from? Organic and acquisitions side by side.

On the left side, you see the organic development. And we really have to take a couple of seconds here to digest this. 2022 versus 2025, the RCO went from EUR 2.5 billion to EUR 3.4 billion. I would say "Sorry, guys, [indiscernible], that's not a bad track record". It is solely driven by the triangle management of price costs that includes both fixed and variable costs and some M&A. So a good contribution, strong contribution from that end. But then you go back left to the volume side, and with the decline of the volumes in the past couple of years, we got a headwind -- a headwind of EUR 1 billion result. EUR 1 billion result just driven by volume decline.

Now statistically, I said it this morning in the press conference here, statistically, after 4 years of volume decline, we are coming nearer to the point where this will turn, and I will give you some further indications down the road. Now you can make the calculation yourself. If this only turns slightly on the much better cost base I tell you, we're going to have some fun when it comes down to the RCO development. So that's just the organic side.

And then you put -- you complement it with the acquisition side that goes on top of it. we not been sitting on our hands, but we told you we're going to accelerate. And that any just showed you how we are accelerating already at the beginning of 2026, with a focus on all our key markets, North America, Australia, Morocco, Tanzania, Southeast Asia and also Europe, including the recycling piece. So every market is now really focused on a very strong M&A pipeline. The pipeline is clearly full and you should see more M&A as we go through 2026, more than in 2025.

Then Transformation Accelerator initiative. I mentioned it already. We said, I think, in earlier calls, it's going to be backloaded, 40-60 between '25 and '26. And look, what we have done, it's been front loaded quite significantly. With a significant impact positively on the savings side. Then it will give you the impact that it also has on other financial metrics later on. But I think the EUR 380 million are really strong. So from my seat, I am very convinced that we will surpass -- well surpassed the EUR 500 million when it comes to the end of this year. So from my understanding, there is clear upside on the TAI savings.

If you go to decarbonization, I think we are trying to stay on the floor and we're trying to be modest, but I think it's fair to say all the numbers that we've seen so far we are now the clear leader the clear leader in decarbonization of the traditional levers long before we even come to carbon capture and storage. So our net CO2 emissions on alternative fuels, on clinker incorporation, unsustainable revenues. It's hard to be out. So I think all are moving in the right direction. And look at the jump down in alternative fuel rates, 300 basis points in just 1 year, guys. I think this is a very strong track record that will eventually also turn into superior results.

Talking about sustainability. I think it's clear that we want to make the difference on the back of this on the product side. In the end, every technology is only as good as it turns into an advantage for our customers. So we are very focused on selling at the very interesting margins, both EvoZero and evoBuild, including evoBuild carbon capture to make sure that we carry the technical advantages that we have built also to the P&L of our customers and to the advantage of our customers.

And we are going to build out our near zero leadership through CCS. We've done Brevik technically, it's running CO2 gets captured. The product is in the market. Padeswood is the one that we have now kicked off. We are going to continue to push Padeswood. And you know that we have gotten the funding for other projects in the framework needs to still be adjusted in order for us to FID any of these projects. I'm sure we'll come back to that point later on in your question.

Now what is important for me to understand, when you think about Heidelberg materials, it's not just about CCS. Sometimes I have to going to get some of your feedback, everybody says, "Hey, [indiscernible] at CCS, but not the rest", sorry guys CCS is well marketed, that's clear, and it's important for us for the future. It's the proof point that we get to near zero and net zero on concrete side, absolutely. But Heidelberg is not built on CCS only. As I showed you, it's built on a very solid decarbonization piece, and is built on a very strong and ever being stronger digital automation and AI piece.

And I just brought you this one example on autonomous trucks. I think we've shared with some of you already directly. And that is really now getting into -- being scaled up. We've done -- completed the pilot before end of 2025, we have completed a 2 million tonne haul package in our Bridgeport -- Lake Bridgeport quarry. And from there, we expect significant savings out of this.

This is not [ Mickey Mouse ] guys. This is a huge addressable cost base when we talk about both CapEx and OpEx. Buying these trucks is very costly, operating them is very costly. Also because you need drivers and not only one driver, you typically do two or three drivers if you run on the three shift system. And that means significant staff cost savings significant savings on fuel and tariffs, significant savings on repair and maintenance costs and, by the way, also better productivity levels. If you put that all together, this has fantastic paybacks below 2 years. There's not a lot of projects where you can get to us.

And again, very say mindset like in decarbonization. We do these things to bring it down to the bottom line. If it doesn't create value, we don't touch it. Don't assume that we are just investing into these things to make a big marketing splash about it. No, we make this to increase our margins to accelerate our growth. And here is a good example I could give you 10 more.

You followed also the partnership setup that we have created to also switch the industry into the cloud and to move the industry so long beyond Heidelberg Materials into the cloud, with a partnership ecosystem setup between Command Alkon, [ Geotech ], Pathways and C60, that one is really going well. And with that, both using that set up internally and also for third parties. The drivers are clear. We want to increase the stickiness for our customers, we want to boost their and our revenue and margins with that set up. We want to really accelerate our EvoZero and evoBuild sales by combining it with a very robust digital process. And obviously, we'll also use it to automate the EPD. So you don't get it only once a year, but you get it basically real time. Again, here only a couple of examples.

On the operational side of things, I think important to note that Q4 was a good Q4, especially when it comes to EBITDA, EBITDA margins and RCO, I think, strong exit point out of 2025 going into 2026. Of course, there is winter here and there. So I think it's fair to say that in Europe and also in the U.S., you saw the blizzard in New York during this week. There is a little bit in the small months and small quarters. There is always the risk of winter. And once things are frozen today, 20 degrees, as I said, sunshine in Heidelberg, so we are moving in the right direction.

If you go to the full year, I think we've shared with you the results. I think for me, that's okay. Let's go to the bridge on Page 14 and 15, you see that the picture that we've seen for a while has not fundamentally changed we have -- we see good price over -- positive price over cost, even stronger than in Q3, I think. So Q4 had a better price of our cost development than Q3. So you see the structural advantage of Q4 but a big volume hit again. So to my earlier remarks, if that only turns flat basically, that would be a significant advantage.

If you go to the same page on Page 15, for the full year, you see that price over cost is very positive, still a hit on the net volume side, but also to the very right, you see some good contributions from M&A now kicking in EUR 65 million. So I think that's good.

Then if you go to Europe, I think Europe convincing performance. And again, remember, in Q3, we had a little bit of a question and answer TikTok around what's going on in Europe. And we -- René and I, hold your breath guys, from 1 quarter to the other. We said there were some extraordinary shifts over the quarter borderline. So here we go. So I think Europe, despite s****** weather, sorry, despite s***** weather, especially in December, I think Europe will offer a very strong performance in Q4, and we are moving in the right direction. Both in terms of EBITDA but also in terms of EBITDA margin. And by the way, across all three business lines.

North America, I think, overall, okay, but I wouldn't say something to celebrate too much. I think there is upside in North America. From my seat, I think we are working well on the EBITDA. I think that's okay. especially if you take the weather effect into account because remember, our footprint is quite northern. So it's -- we have a big footprint in the Northeast, Midwest, including Canada and in the Northwest. And that's obviously in winter always a little bit. So Q4 and Q1 for us is always in North America is a little bit volatile. But I think on the EBITDA margin side on aggregate, good performance, I think 33.3%. I would say there is still upside on cement and ready mix as we go into 2026. And the team has fully understood this, as we have obviously discussed this internally.

Then Asia Pacific, I think, okay, but I would say, below my personal ambitions and expectations. I think, René, maybe you say something to Australia in a second. But I think overall margin moving up, that's good. That's a good sign that the structural profitability is moving. Cost management is being very good, despite the markets being really sluggish. China, Hong Kong, Bangladesh, Indonesia, [indiscernible], Thailand and especially India, better volume growth. Malaysia getting better throughout the year. So overall, I think the markets are still somewhat sluggish. Nevertheless, the team has pulled off a good -- very good margin performance. And with that structural profitability as volumes come back, I think we should see also better result development. Maybe René, you say something.

Sale, Q4, I think, was 10% up in Q4, which was very good and then the full year also up versus prior year, even if we -- due to the fact that the first 6 months were weak in Australia, so -- but the market is coming back in general, February confirms that the market is improving. So our outlook for Australia should be okay.

Yes. And then what you want me to say, you enjoy this one on your own. What do you want to say? I think a fantastic top line growth in all dimensions in the right direction, EBITDA at the margin level, the EBITDA margin in cement, 30%. I leave this for you to enjoy without a comment.

Africa, Middle East.

Sorry, I'm talking about 19, Page 19, Africa, Mediterranean and Western Asia. Okay. With that, René, I'll turn it over to you.

Thanks, Dominik. Let me go on Slide 21. Just quickly the highlights. Adjusted earnings per share go up 4%, and the adjusted, as you know, we take the out. And in previous -- in prior year '24, we had a EUR 65 million provision release in discontinued operations, which is also purely one-off it we've taken out, and that leads to a 4% increase. Free cash flow at EUR 2.1 billion. We come later to that. Why is this slightly going down cash conversion at 45%, which we said was the target for '25. Now with -- in the United Capital Markets here, we've moved this to 50. But I think with that number, we are on track, ROIC, at record level, as Dominik said, that tells you a little bit that we manage the company very -- in a very disciplined way, leverage at 1.2, [ no surprises ] below our midterm target.

And then capital allocation, we said it shareholder return went up 10%. And will also further go up in 2026 because we had progressive dividend plus we have the last tranche of the share buyback, so that will go up further. And then [indiscernible] is closed and [indiscernible] signed, so that's just repetition.

Let's go to the next slide, the P&L, until [indiscernible] have discussed, [ AOR ] is EUR 170 million better than last year, but still, we have some impairments, some restructuring costs in the EUR 264 million. And as we have outlined in the Capital Markets Day, we have, let's say, European at plan also and this needs to be prepared here you have numbers in for restructuring and impairment, but the good thing is it lower than in '24.

Financial result, I think, very, very, very low for the size of the company, EUR 193 million, I guess it's best-in-class number. income taxes goes slightly up, and you see our profits go up, so we have to pay taxes. Net result from discontinued operations, that's the minus EUR 80 million, what I said that's the EUR 65 million in last year. So the factor is nearly flat. And the noncontrolling interest, you see EUR 190 million that goes EUR 50 million up. Why is this? Because in Africa, we have countries where we don't own 100% like Morocco or Egypt and then here the minorities go out. So we come to a reported group share profit of EUR 1.94 billion, which is EUR 160 million up. And if you take the one-offs out, let's say, [ AOR ] and the big provision release, we go up by EUR 0.50 per share, which is, I think, a very good result.

If we go to the next slide, to the free cash flow, you see that here, EUR 2.1 billion, EUR 60 million lower. Two major, let's say, items. You see the CapEx goes up by EUR 80 million. And Dominik alluded to that, we have here already some money in Q4 for Padeswood, which is good. Yes, we are building something that's very good. And you know that we get here also support from the U.K. government.

And then another line is your noncash items and other, you see a minus EUR 152 million. And this is due to the fact that we have some cash out from provisions last for the restructuring last year, we have built up the provision and this year, we have paid it out. There's for restructuring. There's some -- obviously, some bonuses if the company does a record result and there's 1 to one-off payments for some litigations. So there's nothing we have very good transparency here. Obviously, there's nothing of concern.

And this end, you have seen the TAI project instead of EUR 250 million, we have delivered EUR 380 million. That comes obviously with some costs, but we should see some relief here because the big things have been done.

If you then go to the next slide, net debt development, you see that debt is going up EUR 400 million leverage, I'd say, EUR 1.2 billion to EUR 1.2 billion, that's flat. And how did we use the free cash flow, yes, net gross CapEx of EUR 1.1 billion, which then the biggest one was the Giant and Asment Témara, that's roughly EUR 800 million, EUR 900 million of this or EUR 800 million of this dividends, we have increased minorities also, share buyback EUR 400 million to EUR 1.1 billion return, which is plus 10%, and then some other [indiscernible] liabilities in there, which gave every year. I think very solid number EUR 5.7 billion for the company comes to a leverage of EUR 1.2 billion.

If we then come to the next slide, the earnings per share over a longer period that moves up to CAGR 12%. I guess that's a remarkable number. And obviously, the plan for '26 is that this move further up and the ROIC now at 10.4%, I alluded to that. It's a record number. RCO up tax rate, better invested capital well managed. So all three dimensions are very well managed, leading to that number. Dominik, I hand over to you for the outlook.

Thanks, René. Then let me go through the outlook before we come to your questions. Let's go from left to right.

So overall, North America, positive outlook as we have good both good volumes and also pricing expectations for North America. Of course, residential is going to continue to stay a little bit soft. But I think data centers but also the real estate sector is coming back when it comes to the commercial real estate sector. So overall, I think a quite positive outlook for North America.

Africa, Mediterranean and Western Asia are same thing. We kept it short intact organic growth, good management performance on pricing and costs should lead to another good year out of [indiscernible].

Europe, I think, overall, continues to be strong, especially in Eastern and Southern Europe. But I also do see some light at the end of the donor for this home market here in Germany and also our Northern European market, which is very important for us that it comes back. And hopefully, the same will then happen eventually in Benelux, France and the U.K.

Pricing, we have deliberately not put on the slide here in Europe because this is very competitive sensitive. That is why we are staying here very diligent when it comes to competition.

Asia Pacific, I think, good market momentum in Australia, as you heard from René and some positive development in India, especially on the volume side. But hopefully, Thailand will recover after the election now has been done was very quiet. I think this should lead to a stable government. And then Indonesia and China will remain probably a little bit challenging as they are trying to find their foothold in the new setup, both in China and in Indonesia.

So that's the picture for us, and that then turns into positive guidance. We are confident on RCO, I will grow our RCO between [ 3.4 to 3.75 ]. As you know from [indiscernible] materials, both cautious and a larger range at the beginning of the year, and then we'll continue to go through 2026. [indiscernible], we are confident that we can deliver again above 10% CO2 emissions should see a further slight reduction on the back of a global leadership already. CapEx, as René was alluding to slightly higher than in 2025 for the reasons he gave, and then leverage going to stay around 1.5x, in line with our midterm targets. That's it from our side, and then we'll get to your questions.

Thank you. Operator, can you start the QA process, please?

[Operator Instructions].

Okay. So we have quite a few people on the line. So please, as always, restrict your questions to two at a time, if you will. We start with Ben Rada Martin from Goldman Sachs.

My first was just on the 2026 EBIT guidance. I wonder, can you talk through some of your assumptions when it comes to scope and FX. I noted you're talking about better M&A year in 2026 versus 2025, but just so we understand what's driven by those two buckets? And I guess what's organic?

And then the second question would just be on the European EPS. I know we've seen a lot of uncertainty in the last few weeks, a range of outcomes. I'd be interested in, I guess, how you internally see the outcomes that are on the table I guess, if you're looking to incorporate any flexibility into your European cement planning at all, just when it comes to clinker rationalization and any investment? I know there's a lot of things being thrown up at the moment, but it would be valuable to touch on that topic?

René take the first one, and I'll do the second one, okay?

Ben, it's a Déjà vu for me. Now we have the same first question I think, last year when we talked about our guidance, also guys just for transparency, our guidance includes a 3-digit million negative FX impact, which is roughly 3%. And then the rest, you can do the math. So if we add up organic and scope, we are coming to a growth of roughly 8%, which is fully in line with what we told you at the Capital Markets Day. And the scope piece of this is probably rather on the 1% to 1.5% to 2% range. So that tells you something.

So as Dominik said it, let's see how it comes through the year. But I think an 8% growth, not considering FX is a very, very reasonable number. And maybe there is something in it. If it gets better, we have upside here on the fix side. If you look at the rates, maybe there is something and in the scope side, Dominik said it, we want to grow. Math is obviously not included in that guidance, for example. So I think there is some room if everything goes well.

Okay, René. Thanks a lot. And then, Ben, on the [ ATS ], we are not the market, but I can tell you, I'm shaking my head a little bit. I think I really don't understand quite frankly, what's going on there. because for us, to your point, the [ ATS ] system has been there for 20 years. Do you really believe that's going to get scrapped? Forget it. It's never going to happen. Are they going to make some adjustment maybe, but guys, just remember, [indiscernible], you asked about flexibility. Guys, we are daily able to shift between the different years, and we have proven this for many years now. And I think it's clear to be specific to your point, rationalization of capacity will absolutely continue because with or without CO2, we want to be the cost leader especially in Europe, but also in other parts of the world.

So -- and then you can put the CO2 thing on top, and that may create even more dynamics. But in the end, clearly, the rationalization will continue.

On the investment side, the general part of the investments also the traditional decarbonization will absolutely continue. Obviously, in line with returns. If we have a decarbonization investment, that depends on a CO2 price of EUR 100, and we don't have that CO2 price right now inside well, then we hold off with that investment, but that's nothing new for us. That's normal day-to-day business.

And the same is true for CCS. We always said, we only FID these projects, if there is a superior business case. And if the government will spread some uncertainty, we just sit on our hands and wait until the framework is in a way that we can use it. And that was the fact in Brevik, and that was the fact in Padeswood. That's why we've done those two. But guess why we have nothing done in Europe yet. Maybe there is not enough stability in the framework and not enough funding from either Europe or the national governments. And then we do not move. That's also what we said in the capital markets. don't get so excited in last year in May. We are the clear leader, CCUS leader we are going to be that for the next 5 years. There is no rush for us to go into anything crazy. We are going to stay financially disciplined. So I really don't understand all these more for me that I have to smile a little bit, sorry.

The next question comes from Luis Prieto from Kepler.

Two for me today. The first one is how have price increases started this year in the context of declining CO2 allowances. And also regarding this, when do we know more about benchmarks and how the industry is suffering or not from the lower loss.

And the second one, is surpassing the EUR 500 million transformation accelerator savings target to an extent included in your current guidance range that you just commented on?

Okay. Let René take the last one, and I'll take the first two ones. On the price increases, again, came down. There is no change to what we have told you before. Price increases get implemented across the world. That's also true for Europe.

Obviously, as I said, given the winter setup in Q4 and Q1, there is always -- there may be some delay as the business is just not moving at this point, but there is no change in terms of what we want to achieve in terms of pricing both in Europe and in the U.S. and in other parts of the world.

When it comes to the benchmark, Luis, we are not the EU Commission or the parliament. You know the time line around this. They are trying to get their answer on this in this quarter or at the latest next quarter, and they will publish a benchmark. There are thousands of rumors around what the benchmark figure will be personally. And this is my personal opinion, don't want me on this. I do not believe that the benchmark is going to be tightened to the very limit. It's going to be somewhere in the middle between where we are now and where the big speculation was in the park. So I foresee that there may be some relief on the benchmark versus the very extreme approach that was maybe discussed half a year or a year ago.

But it's -- sorry, that's the normal that's the normal review process that happens every year, but now everybody gets so excited about it. I don't know what's going on. Every a couple of years, you have this review cycle and then they play around with the benchmark and they do a little bit here and there, but that doesn't change anything fundamentally guys. So that's where we sit on the benchmark discussion.

So Luis, regarding TAI, just one in advance to -- you see our TAI numbers clearly in TAI savings in our P&L. We have reduced our fixed cost this year by EUR 40 million reported, even though we have EUR 40 million negative inventory. So like-for-like is EUR 80 million reduction. So that tells you that we see the net effect of the tie in our numbers. So that's number one.

Number two, to your question, do we have more than EUR 500 million in our guidance. I would say, obviously, there is a big part in the guidance. But as we have written it on the slide, maybe there's some upside in that number also.

Great. Next one comes from Elodie Rall from JPMorgan.

My two questions would be, first of all, going back to European cement prices. I just wondered if you could just tell us if the discussions that have taken place started to take place on the has impacted the outlook at all for you for European cement prices? And in particular, the price cost spread that you do expect to generate this year and next year, if there's any change to that in your view? And if a lower carbon price also impacts that?

And second, on your guidance, it'd be helpful if you could can help us understand what takes you to the lower and higher and of the branch in terms of pricing, volume or other assumptions that you've made there? .

Thanks, Elodie. To your first question, no and no. So no change. And we are fully on track and also know whether there will be an impact to price over cost from my perspective, no clear target will be, again, to deliver a positive price over cost scenario for 2026. So in both cases, no, no, which means, yes, yes, in the end, okay.

Regarding the guidance and to, first of all, the lower end, obviously, Dominik said it. I think we -- and you see it on the slide, we have assumed volume recovery in a few of our areas. And we were sitting here last year, and I said it also for euro volume recovery for the rest and it didn't happen, but we still deliver the result. So if the volume recovery does not happen, maybe we come to the lower end of the guidance. But if everything goes to plan, we can be probably a little bit better than the midpoint of the guidance. It's early in the year. I said it. We have some maybe tie-up side. There's a fixed maybe something, there's scope, maybe something. So this can lead us probably to the upper end of the guidance. I hope that's enough.

My team gets completely nervous with my now. And yes, yes, just to be very clear, what you asked whether there is any change on the pricing targets and the pricing implementation, no. whether there is any negative impact on the price over cost dynamics, now. So that's why I said, yes, yes, because both goes in the right direction in pricing and also in price of our cost, just to be clear about it.

Next in line is Pujarini Ghosh from Bernstein.

So one question is on the margin expectation for -- that's baked into your guidance for 2026. And could you provide a little bit of color around what range of margin expansion you're expecting given the very strong margin expansion we saw last year? And then how this flips into maybe the synergies, price cost, operating leverage or deleverage and anything else? And could there be some regional differences.

And I think my second question is around, again, going back to the question, and you've already invested in Brevik, and you've started investing in Padeswood. And last year at the CMD, you gave a very good explanation of the excellent profitability and returns from Brevik but supposing, hypothetically prices collapse. Then could you provide of your returns or at least from these plants to like every in the carbon prices?

René, maybe you want to talk about the margins -- with the margin question first, and then I'll help a little bit with the EU [indiscernible] and maybe they can also add with the financial.

That's a very detailed margin question, I have to say. So I'll give you a high level what should happen, obviously, what we said as well in the Capital Markets Day. For Europe, our margins should move further up. We do the, let's say, the plant optimization the pricing should be reasonable. And if volumes come back a little bit, that is all obviously contributing to our margin, and you see this also in '25. So that works and should go further up. .

Then we go to North America. You see we have in cement, you have seen the number went slightly down in '25. That should obviously recover because the cement price increase in the U.S. should be more pronounced than we added in '25. And also on the cost side, the U.S. colleagues have a very good cost target. And in aggregate, there should be decent pricing also. So margins in the U.S. should move further up.

And then in Asia or in APAC, the margins are already pretty at the bottom. So that depends on a little bit what does pricing do because cost management is very good. let's see how that moves in APAC for sure, Australia margins have to go up due to good cost and good pricing.

And then for [indiscernible], margin is already at 30%. So let's see how we move there. But overall, the sentiment here is also good. So overall, we should see the group margin obviously going up with all the measures we are taking.

The next question comes from Tom Zhang from -- sorry, sorry, yes.

So on the [ EOACS ] first of all, there is no sign whatsoever that the demand for our evoBuild carbon capture or EvoZero products is collapsing or even the prices comes collapsing, absolutely not. There is no impact whatsoever, just to be very clear. And I think that answers then also the question, what's the to a hypothetical approach for us that the hypothesis is not one that we follow at all -- and as you know, just as a general remark, our equity in Brevik is very limited. So you should try to get to the downside protection, forget it is meaningless. That's always what we said, it needs to be a very, very profitable business case and our skin in the game is not 0, but it is very, very small and reasonable that's both true for Brevik and Padeswood so there is no impact for us from that end.

The only -- if I may add and we discuss it intensively, obviously, as if the price really drops to EUR 30 to EUR 50, the only thing what we will do then is there will be a very hard review of all the CapEx projects we are doing. New CapEx projects, which are purely based on CO2 prices, we obviously have it very difficult to get approved because the business case just doesn't work.

If at all this happens, then you should see an improvement in our cash flow because the CapEx spending will somehow go down, yes. So that's because for the big projects, we will then put the brakes on and we said it today morning in the press conference also, uncertainty politically in a particular environment is not helping that Heidelberg is speeding up investments. So that's very clear. And if at all, our cash flow would go up.

Then Tom Zhang from Barclays.

Maybe following on from your point around cash, actually. My first question was just you just about hit the cash conversion target for above 45% this year. I understand there was quite a lot of restructuring cash out, could you maybe talk about the phasing of that? Has the cash out for restructuring, are we part of the peak of that? Should that come off in 2026, now that the bulk of transformation accelerator has done. And do you have a view around can we get above 45% cash flow conversion next year even though CapEx is going higher?

And then the second question is just on your shareholder return policy. I suppose you talked quite a lot about M&A as a use of excess capital, obviously, with the pullback in your share pricing, is that -- does that create an opportunity, I suppose, to either pull forward the third tranche, extend the third tranche. Yes, I was be curious of your thoughts on that.

Okay. Tom, thanks for the two questions. On the first, let's do the shareholder return policy question. we will start the third tranche after the AGM, as we have done the second one as we have done in 2025. So there's no change. And if you do the math, we announced EUR 1.2 billion for that program. and the third tranche will be the biggest. So that improves, let's say, the -- move the share buyback already up in 2026.

That's an important point. I think it's overlooked a little bit because we are going to stick to the EUR 1.8 billion. And then you can do the math, and you can calculate that the last tranche is deliberately the biggest. So in that respect, I think I'm not sure everybody got that.

Yes, it really falls at EUR 50 million, the third tranche in this year. So that is a good increase. And as we said it also, from a dividend perspective, so progressive. So that means it will go up. So you see -- we'll see nicely increased shareholder return also in 2026. And for now, no change to our return policy.

We increased -- we will increase it in '26 and then let's see how the year goes, what we then do the year after. In terms of free cash flow and the -- in cash conversion, yes, we reached the 45%. And coming to your question about restructuring and cash out I would say we should be near the -- we should have seen the peak. So the number in 2026 should be lower -- materially lower than we have seen in 2025, which should help obviously on the cash conversion. And then we -- as we said it, we want to come closer to the 50%. But also, we do see the U.S. Padeswood wood in 2026. But you see it in our CapEx numbers. We always stayed below our guidance. And that is a little bit the thing in the CapEx guidance. This year, we have EUR 1.2 billion to EUR 1.3 billion. And if we will be below the EUR 1.3 billion, which we have announced at the Capital Markets Day, there's a well room for the cash conversion, I think we are on track, Tom. There's a big one-off of this restructuring cost this year. So we should be okay in 2026.

Next in line is from Ephrem Ravi from Citi Group.

So two quick questions. Firstly, on M&A, you say the pipeline is very full and you seem genuinely excited about it. Just to get to that 1.5x net debt to EBITDA, you're talking about probably about EUR 3.5 billion of cash headroom for acquisitions and you've already spent about EUR 1.3 billion on mass. So are we looking more like EUR 2.2 billion, EUR 2.3 billion sort of scale of acquisitions? Or are you also looking at acquisitions that may require issuing equity? So just in terms of the scale of that you're looking at.

Second question, on your digital investments, obviously, [indiscernible] and those. A lot of the software companies or legacy software companies in the market have seen their share prices half or more because AI is going to basically replicate all of that. Do you think you've got the right suit of digital tools for the AI work rather than sort of the legacy software world in terms of your digital strategy?

On the very first one, 0 equity raise on for M&A. Just to be very clear, if there's any speculation on your end, sorry, guys, no equity raise for acquisitions. We never indicated that, and that's clearly off the table. Just to be very clear. But René, you want to make and then I'll say something on the [indiscernible].

[indiscernible] math, I need to understand because you said we have capacity of what EUR 3.5 billion or something. So our free cash flow is -- let's pick a number, is this year, EUR 2.1 billion, and then we pay a, let's say, EUR 1.1 million, EUR 1.2 million shareholder return, dividends and share back. Then there's EUR 1 billion left. And if I want to move the leverage [ 0.3 ] up, there's another 1.3 billion to come. So there's EUR 2.4 billion left for me. If I do that math, if I want to come to the net debt-to-EBITDA target is there will be some EBITDA contribution also.

But okay, and the math number, I need to correct, you said EUR 1.3 billion, it's AUD 1.7 billion, which is EUR 950 million. That's the mask number. And as Dominik said it, we have more capacity to do that. If we spent EUR 1 billion then the leverage would be still below [ 1.4 ]. It's a most just right now. And the [ 1.5 ] is not a -- it's our midterm target. We can be maybe [ 1.6 ], so we can be [ 1.2 ]. So that's our midterm target, which we will keep. But it's very clear we want to grow further, and there will be more M&A to come.

Okay. And then on the digital investments plan, I think you're right from my perspective, and you see what the capital markets have done in the last couple of weeks on the software side of things. Rest assured, we've taken diligent reviews on exactly that point. And I think from our seat, it's clear that the software world will split a little bit with all that AI discussion into, I would say, the general software companies and those who are deeply intertwined with the workflow end-to-end with your customers and those will rather profit from this whole discussion because we have a vast acceleration of product development and a much higher productivity in terms of coding. So the costs will lower. The time to market will be quicker and you get a very sticky connection in the workflow. So we have done this review also together with our partner, Thoma Bravo, and we have no reason to believe that Command Alcon gets any hit from this. It's probably rather the opposite.

The next question comes from Cedar Ekblom from Morgan Stanley.

Questions from me. Can you talk about the North American business. We've now had 4 quarters of consecutive negative organic top line growth. And if I'm assuming that you had a little bit of positive pricing momentum in the fourth quarter, you're looking at sort of high single-digit volume declines across all product categories in North America.

So I'd like to get a sense of how we should be thinking about the development in this very important market for you in 2026. Are we actually seeing growth yet at a top line perspective?

And then secondly, on M&A, we've obviously debated a lot about the scope for M&A, which sounds very material. It sounds like you guys are really bullish on the growth opportunities.

Can you just remind us about how are we thinking around sort of priorities regionally, products, et cetera, that would be helpful.

Yes, thanks a lot. Let me take those two questions, and René jump in if you want, on both. So North America top line growth, you're right. Top line was sluggish in North America for a while. I don't think we are on our own. So I think that tells you that the market, especially on the volume side has not been our friend, over the last couple of years, I would even say.

I think the other point is that cost management has been good. but it needs to be super good because inflation underlying inflation in North America is still fairly high. So I think there, you have that one element. The relief on the energy cost side in North America, you don't get as much as in other parts of the world. And then last but not least, when it comes to pricing, I think it differs quite market-by-market, quarter-by-quarter. And business line by business line.

And as I indicated earlier, if you look to the last couple of quarters, we are not entirely happy with the development on the cement side. I think there was some import pressure historically that I think has balanced out a little bit under the whole tariff discussion we are more optimistic for pricing in cement in the U.S. That's what you saw in the guidance. And obviously, anyway for aggregates. Aggregate pricing performance was actually good. we are -- that's the picture from our side, Cedar. You want to add to that?

Cedar you made the comment, high single-digit volume reduction. That is absolutely not correct. In cement, it's even close to flat in aggregate is now low single digit. So that's not correct. I just want to say this because. And if you look at also the competition, and we went to the transcript like-for-like, we are the only one which is really better than everyone else is [ Martin ], okay, fair enough. We don't need to hide from the other ones because from a volume perspective, we are not -- we are on par with the other ones.

Sorry, before we go on to M&A. So in the fourth quarter, you had minus 3.6% like-for-like negative organic at the top line. So if volumes are sort of flattish, that...

Ready mix, ready mix.

So we don't have to be worried about pricing trends in cement to pricing in aggregates were quite comfortable with those futures.

Exactly. The biggest stock was in ready-mix, Cedar. [indiscernible] ag is okay.

Okay. Great. And then on M&A, some color on target priorities, et cetera.

Yes. M&A. I mean, first of all, we want to stick to the core markets that we have announced and that you know very well, we're going to tighten the net -- we're going to stick to the business lines that you know. So no endeavor into any other stuff like light side or anything. We're going to stick to the heavy upstream, downstream, that what we've always done. And then from a geographic perspective, as you saw on the earlier map, on our core markets on the radar screen and in the pipeline. That's true for North America. It's true for Africa, Asia, Australia, and it's true for Europe. So no exclusion from there, it's an opportunity-driven game wherever we have the best opportunity, we will jump, but all pipelines are being filled and compete against each other.

Next question comes from Julian Radlinger from UBS.

Yes. So two for me as well. So first of all, in Europe, so the European margins in Q4 were really strong, especially in cement. Can you talk about what drove that? In Q3, I remember you had EUR 10 million to EUR 15 million inventory phasing related one-off. Has that reversed now? Is that effect in there? Is there anything else that's kind of one-off, like CO2 allowance sales or anything like that? Is it a result of the transformation program? What drove that strength in Europe, organic EBIT in Q4?

And then second question, just to come back to the M&A one more, please. So you said in the opening remarks that you expect more M&A in 2026 than in 2025 based on your pipeline, not that you factored into the guidance, but based on what you're seeing. So in '25, you had EUR 113 million EBIT contribution on -- well, you had EUR 150 million EBIT contribution. Does that mean you're -- based on your pipeline, you think you could possibly surpass that number in 2026. And then in that context, can you remind us, please, what the multiples were on average that you paid in 2025 and what you would expect for '26?

Okay. I'll have a quiet afternoon for a second. So René, maybe you start with Europe, Q4? And are there any one-offs?

Okay, the Europe, Q4, what I said clearly in the Q3 call, everybody was disappointed of Q3 margins, as I said, guys come down. It will move into Q4. some phasing effects which we have now the positives in Q4. There's no one-off of CO2 sales or whatever. Why should we sell our valuable certificates, No, we don't or the good thing out of Europe in Q4 was there was good pricing and very good cost management. So that's in simple terms, that is the answer, and it came out what we said margins in Q4 will be good, and they were good.

This is an important point just to add what René was saying. This is TAI. This is the plant adjustments, the capacity adjustments the FTE reductions, we always said we are going to focus this on Europe. And you see clearly, by the way, our year-over-year global fixed cost has come down in absolute terms.

Like-for-like. So I think that is really very strong and a good contribution, strong contribution came from Europe. And you should expect more as we go along because we are probably going to even accelerate the second wave of the master plan in Europe. So we are on it. And I can tell you there is more to come when it comes to margin expansion in Europe.

And when we come -- talk about M&A, and I don't know where you have the numbers on Slide 30, there are the numbers scope for 2025 on EBIT RCO level was EUR 65 million on EBITDA, EUR 115 million, EUR 113 million. And in the original -- at the beginning, I said our guidance includes 1.5% to 2% RCO scope, which you can do the numbers, it's probably between EUR 50 million and million, EUR 60 million. And additional scope is dependent when do we close the acquisition. The Maas acquisition is announced. That's great. But it's not in my hands when we get the regulator approval. So that depends a little bit. So to put now some estimations, I'm reluctant to do because it's not in my hands. We have something in the guidance. And if we do more M&A, and the closing is at the right time, there will be more in there, but I can't tell you how much.

And maybe to your multiples, just a general market, we disclosed the multiple on Maas and I think it's clear we are going to stay very disciplined on the M&A side. We are not going to do a 16, 20, whatever time multiple after synergies. That's crazy guys, we are -- as you saw the math, it's just above 8% for after synergies [indiscernible] returns and I think that's clearly the ballpark that we are using to commit or to stick in the framework that we have committed because you know if you go outside of this to make eventually returns on M&A in our industry will be very difficult. And that's why we're going to stay very focused to stay in that ballpark.

Next one from Arnaud Lehmann from Bank of America.

My first question is about Europe, please. You mentioned your positive outlook for pricing and the fact that price increases are getting implemented. On the other side of that, are there -- is there any cost inflation to consider, we know that French electricity costs could go up? Are there other cost factor that we need to account for? Or do you expect the price increase to flow through in the bottom line?

And my second question is coming back on your acquisition strategy. I appreciate you've made some comments, but looking at the business historically, it was U.S., U.S., U.S. We know at one point, maybe you wanted to do larger deals that did not happen. The more recent past, you've clearly focused M&A on you've done smaller deals in Morocco, Indonesia, Australia. I think there was press articles about Turkey recently. I appreciate you've done Giant as well in the U.S. So it's still on the list. But what has changed in your M&A mindset to justify this, let's say, geographic diversification in your M&A strategy?

I'll do the second one and let René do the first one on pricing in Europe.

Regarding Europe, you were asking about cost. Yes, you are right for France, the [ Arven ] electricity support, let's say, is not as cheap anymore has gone and now that hits us with additional cost. That is correct and no news. And then you asked about other costs.

Obviously, there is certain inflation on salaries. It's clear there is salary increases for our employees in every country, which is probably or whatever should it be, it's probably 2%, 3% wage increases. And then that's probably the big, let's say, cost movements.

On the other side, you Dominik said it also, our wave 2 of our European cement plant optimization, let's say, is coming into play. We have the -- we will have the TAI full effect on the cost side also. And then we have the price increases. So overall, as we said it, price over cost for Europe should be okay and positive. And overall, in energy should be roughly flat.

Obviously, January, February now was expensive because it was so cold, but the summer will come off again. So overall, for Europe, price over cost should be good and margin should improve.

Okay. And then Arnaud, on the acquisition side, just to sit back, sorry to correct you a little bit, but I can't see that we have lost the focus on U.S. We have done a giant massive big acquisition in the Southeast. We've done [ Burnco ], the assets of [ Burnco ] in the Northwest. So that we are not executing on North American acquisitions, I cannot follow. But it's not like it's U.S., U.S. and U.S. only. Sorry, we are a global company, and we can also create good or even better returns in other parts of the world. And that's why we look at a global picture. And that's why you also see acquisitions in Africa. That's why you see acquisitions in Australia, and that's why you see also acquisitions in Asia and acquisitions in Europe.

We always said in our core markets, and obviously, there is not only U.S., U.S., U.S. Plus, I think to be fair, also the U.S. market is challenging in acquisitions. It's very costly. And again, with the rigidity of our financial framework, we want to create the returns. That doesn't mean that we do anything in the U.S. guys. Very clearly, we are very, very focused, and we look at everything that moves in the U.S. market. But we are very diligent about does it fit to our financial framework. And you should see acquisitions in North America down the road, absolutely. But you should also see acquisitions in other parts of the world as they complement our existing footprint, existing markets, drive good synergies, improve the market position and with that, give us further growth potential organically and obviously, margin potential when it comes to better synergies.

The second to last question now comes from Harry Dow from Rothschild & Co. Redburn.

Just two from me. Firstly, maybe if we could just hone a bit back on Europe and recovery and kind of volumes in those comments. I was wondering if you could just give us some more color on what you're seeing on the ground. I think the like-for-like in Q4, I think it was minus 2% at the top line. I suppose it's not signaling any great improvement as of yet. But you sound like you got quite a lot of confidence I suppose that things are turning a corner.

So maybe just in some of the core countries, it would be great to hear sort of views on what you're seeing at the start of 2026. And then secondly, just around the comments on changing of clinker ratios and alternative fuels. I think obviously, that's seen as through the great lens of reducing carbon per tonne and overall. But I wonder whether you could comment also on maybe some of the economic benefits of that? I don't know how much some of those lower sort of fossil fuels and lower clinker ratios actually reduce costs, boost margins in your view? And maybe where regionally you see the most opportunity on that? I know the U.S. starts from a high base, but maybe there's more pushback from customers, but anything on the economics of those changes?

Let me just answer both and then René chips in if he wants. So on the volume side, in Europe, I think let's go country by country or, let's say, region by region a little bit. Southern Europe, absolute intact, good volume development expectation for 2026. Same is true for Eastern Europe. So that's, I think, one important part of Europe. Then we have, I would say, Germany and Northern Europe. I indicated earlier, I think we do expect recovery in both parts of that part of Europe for 2026. I think the ones that are lagging a little bit behind are Benelux, France and U.K.

Let's wait and see how that volume develops in those markets. But in general, don't forget in Europe also Q4 and Q1 are always winter quarters. This time we had winter. So you will see an interesting dynamic over the years now between the different quarters also in Europe, given the weather impact. And -- but underlyingly, and that's importantly from a market perspective, I think we clearly see positive indications in some of our key markets that things are moving in the right direction. I said it earlier, I think in the Q4, for example, in Germany, we saw that the groundwork has really increased. So those companies who are working on the ground to lay infrastructure and everything, they have really a much better and more healthy order book. and execute that order book. So that should also increase cement and concrete demand down the road.

So the early indicators, let alone the permits that are going up on housing and everything. So I think there are some good indications for volume developments in Europe. Nothing is perfect everywhere, but I think those are -- this is the color. And then on clinker incorporation, very interesting question that we have also internally. And I thank you for the question because I think it's important to clarify that again. Yes, we are the decarbonization leader, but we have combined this with superior financial performance guys, which tells you the clear message internally, which I'm happy to share with you.

We are doing the decarbonization on equal or better footing financially. If it's worse footing. And for example, for whatever reason, the coal price would drop to minus where it's 10% or 20% cheaper, then we go for coal. Sorry, we are a capital market-oriented company, and we don't throw money out the window if there is an opportunity to make money that sits within our strategy, but short term needs to be sacrificed for operational and financial performance, then we have a clear mindset here to pull that advantage. So there you see also how we play with this to make -- to give -- to create a full picture that you have seen here in the past hour or so.

Just if I may add, just you asked for the economics. As Dominik said it, alternative fuel, what does it do? Two things. In Europe, it is -- overall, it saves everywhere CO2 -- but in Europe, there is a price behind CO2. So we will save in theory, that price if you are short, you would save to use a part of a certificate, number one.

Number two is you replace fossil fuels, which are normally more expensive with a cheaper thing or even in some countries, we get a gate fee, so we will get paid to take alternative fuels. So we have a few plants in the group in Europe where we have positive cost from fuel because the alternative fuel is so high and we get a nice gate fee.

Even also in -- I'll give you another example, also in emerging markets, give you Indonesia, the example, I think the alternative fuel we are using there is half the price of coal they're not paying for CO2, fine, but we save 50% of the coal cost. So this makes absolutely sense to use alternative fuel to ramp it up. And this is core DNA. We know what to do, and we can do it.

Then clinker incorporation, it's even more pronounced because saving the percentage of clinker incorporation saves between 8 to 10 kilo CO2 per tonne, which is very valuable in the CO2 context, especially in Europe, plus using SCMs to replace the clinker is, let's say, the next cost advantage because the clinker is -- the clinker burning is the most expensive part of the cement production process. And this you replace with a cheaper product. So it makes all the sense of the world to hammer these 2, let's say, KPIs like crazy, which we have done. You see it, it's moving up, and we are #1 in both of them of the big ones, which publish. So that's for the economics.

And I think to build on what René said, Clinker Corporation next to alternative fuel is a good indication of future structural profitability. Why? If you take out that costly capacity like we do in master plan Wave 1 and 2, you build your cost position for the future because you get rid of both the most cost intensive, most maintenance intensive and most CO2 emitting part of the -- so it's a whammy in all positive directions, and that's why we are so focused to be the leader here, not only in Europe, but globally. And we do this in a very well-balanced decision-by-decision trade-off between CO2 impact and financial impact to the direct bottom line of the year. So I think that's well understood, Harry.

So we got time for one more question that's coming from [ Isaac Okio ] from On Field Investment Research.

So I have two. So first of all, any early indications that cement price increases are sticking in both the U.S. and Europe? So in Europe, maybe are the mid-single-digit increases holding so far? And do you see them supporting margins through the year? And some of your U.S. peers have guided towards low single-digit pricing growth in North America. Are you seeing similar trends? And on the CO2 pricing outlook, so maybe through the 2 scenarios, what would it mean for the long-term CCS strategy and cash generation growth if CO2 prices were closer to EUR 30 to EUR 40 per tonne as recently suggested by President Macron versus the EUR 100 per tonne assumption that was outlined at the Capital Markets Day.

Let me do the first and then René does the second. So no early indication of any changes. As I said before, pricing both in U.S. and Europe are moving in the targeted direction. We are not looking left or right. We take our independent pricing decision, both in North America, and we've indicated that we are clearly moving pricing ahead in all key areas and all product lines in North America. And the same is true for Europe. And as you know from the past discussions, we try to get out of the gate on as early as even possible. Obviously, with the winter, this may shift a little bit back and forth. But overall, there is no change to the original plan, and we continue to execute on pricing as we really have a value before volume strategy, that has not changed.

And then for the second question, I guess we've answered this already, but let's do it again. if the CO2 price goes to EUR 30, there's no business case for CCUS plant. So that's what Dominik and I said the whole time. We do it only if there's a financially valid good business case, and you can do the math by yourself with EUR 30 CO2, there's no good business case. So I think that answers the question.

So let's close this call. Thanks for your good questions. Just to remind everyone, we are going to be on the road together with management, and I'm on IR. Next week, we are going to go to the West Coast in the U.S. and to the East Coast. Then we're in London, Frankfurt and Paris with René and Dominik, we are in London again at the BNP conference, and we also hit Vienna, Zurich and Geneva. So if you want to see us, please let us know. And with that, have a nice day. Thanks for joining.

Thank you.

Thank you.

Ladies and gentlemen, the conference is now over. You may now disconnect your lines. Goodbye.

Ladies and gentlemen, welcome to the Heidelberg Materials Third Quarter 2025 Trading Update Conference Call. I'm Lorenzo, the Chorus Call operator. [Operator Instructions] The conference is being recorded. [Operator Instructions] The conference must not be recorded for publication or broadcast.

At this time, it's my pleasure to hand over to Christoph Beumelburg. Please go ahead.

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

Yes, Chris, thanks a lot. Welcome, everybody. From our side, great to hear you and have you on the call. Let me just go through the presentation quickly, and then we get to your numbers. Good quarter for us. I think revenue up 1%, RCO up 5% after currency impact even 7%. So I think that's good, also operating EBITDA margin up by 65 basis points. I think that's a good quarter, driven also by the transformation accelerator, savings around EUR 250 million. So we are basically halfway to where we need to go and want to go, although we've still got 15 months to go. So I think that's well on track from our perspective, if not even better.

The share buyback is on track to be finished by December at the latest. So I think that should be good. The second tranche, obviously, of the EUR 1.2 billion, so fully on track to what we have communicated. Good news on the decarbonization side, we expand our leadership in that respect. I'm sure we get into your questions on this one. But we took the FID, final investment decision for Padeswood CCS project. Construction will start this year. So that's good news. And on the back of that and on the back of Brevik performing well in terms of carbon -- capturing the carbon and also putting it under the Norwegian Sea, we are able now to sell the first evoZero products to the market, and we have already the first projects that are up for delivery. So in that respect, things are moving well.

And on the back of all of that, we are confident to give you a positive outlook for the remainder of the year to end up at a narrowed range for the outcome of the RCO this year, which will now be 3.3% to 3.5% instead of 3.25% to 3.55%. So I think that's also good news. ROIC will be around 10% and the CO2 emission will come slightly down. So overall, I think fully on track.

If you go to the Page 3, you see again the numbers. I think that's all going in the right direction. Revenues up, EBITDA up, EBITDA margin up and EBIT up. I think that's in difficult market environments, I think a very convincing performance. That same is true for the full year, everything green in terms of revenue, EBITDA margin and EBIT. So I think we don't need to go through the details. You can read them yourself.

If you go to the Q3 bridge, Page 5, EUR 55 million -- almost EUR 55 million up, 5% on RCO. And you see, yes, there is still volume decline. So the net volume figure is still down. But the good news is price over cost is positive, and that's a very important measure for us. We told you all along that our clear target is to keep price over cost well in the positives throughout the year. And this is what we again delivered in Q3. And you see also on the left side, currency impact, there is a significant currency impact to my earlier remark, also in the quarter, almost EUR 30 million. And on the flip side, there is positive scope effect where the acquisitions start contributing. So in this case, EUR 30 million up.

If you look at the same picture on the 9 months figures, Page 6, you see that the net volume is minus EUR 91 million and the price over cost is EUR 202 million. If you want to read something positive into this, you see that the volume decline is slowing down because it's a big quarter, minus EUR 24 million on the volume side compared to 9 months, EUR 91 million, you can do the math yourself. I think there is a little bit of a stabilization effect on the volume side coming. And then also if you go to the scope effect -- let's start with currency. If you see the currency, I think the currency impact is significant. So you see for the full EUR 29 million, while for the quarter alone, EUR 28 million. So you see the currency impact is significant. So it's the scope effect. Again, EUR 29 million for the full quarter, but EUR 48 million for the first 9 months, do the math. So I think it's moving in the right direction also on getting the effects from the acquisitions.

If you turn to the transformation accelerator on Page 7, we are absolutely confident that we will hit EUR 500 million, if not more, on the transformation accelerator. We have EUR 250 million in the books on the 3 pillars that we are chasing. And it's really showing now also in terms of how we execute this internally, the advantage we have globally and to really push the global advantage of being very focused, a pure play in our industry to really drive efficiencies along the platforms that we have described, decarbonization, digitalization, but also technical excellence and the transformation accelerator is a fantastic tool to show also the contribution of that.

Now when we get to Europe, from our perspective, not a great quarter in Europe. We say that very clearly. There were a couple of one-offs in there. Rene will maybe go through the details in a minute. But I think okay on a fairly high level, but we are an ambitious team. And I would say, as good as Q2 was in Europe, I think Q3 was also driven by those one-offs, not a fantastic exercise. But I think everything that we can see and what we can manage internally, both in terms of pricing, but also in terms of costs, I think that goes in the right direction. The market is the market to some extent. And obviously, we have -- we are heavy weighted to some markets that are still under pressure, which is great news because if we do our homework right, then the upside potential out of this is substantial, if not substantially better than with any comparison. So in that respect, it moves in the right direction in general, but Q3 is nothing to over celebrate on Europe. We are very honest about this. But for me, the more important message here is this is a quarterly impact. We do not see a change in any positive trend from the bottom-up in Europe, and we are doing consistently our homework. So I'm very confident that Europe will show its strength down the road.

Then we go to the page, we move to North America. Other than Europe, I think strong quarter from North America. Also the comps we can see. I think overall, I think there was a good development in North America. Overall, I would say, revenues up, EBITDA up, RCO up like-for-like in the higher single-digit numbers. I think that is good. And also margins up, especially in aggregates, good performance also in cement, stable on a good level. So overall, I think a good quarter from North America.

Asia-Pacific, I think, splits into a couple of different messages. I think Asia, to be honest, is still in difficult territories. I think the hopes were higher. I'm being very honest with you on the Asian performance. I think we are doing good homework again. I think there are markets and countries that are really performing above our expectations, but there are clearly also countries like China, Hong Kong, to some extent, also Indonesia that are clearly under our expectation. Again, upside for the time to come, but I think that's not where we wanted it to be. Maybe on Australia, Rene, you want to comment?

Australia is a very strong quarter for us. August, September was very good also October was very good. So Australia is slightly coming back, which is very good cost base. Now the volumes come, we deliver good margins. So Australia is in very good shape, was very good shape in Q3.

Yes. okay. And then I think in a global portfolio, you have always movements, but I think the good news is that AMWA is continuing to clogging along on a very high level, I would say. So revenues up 6% like-for-like reported even 13% because of the Asment acquisition. Then we have the EBITDA up 23% reported, I would say that's a very strong growth, unparalleled and then like-for-like even up 15%. So underlying performance and acquisition works very well in Africa. And the same is true on RCO. Look at the EBITDA margin development, 250 basis points up, guys in cement. I have to say kudos to our team in AMWA that is really doing a fantastic job in difficult circumstances. I think let's not assume that this is all easy, but it's our duty as a global company to manage the volatilities. And I think the African team is doing a fantastic job.

Good news also on sustainability, a lot of good news, I would say. First of all, evoZero is now finally hitting the market. We've started the first projects with the underground station in Oslo, for example, and also a 3D printed house here in the vicinity of our headquarter here in Heidelberg. I've been on the site myself. That's quite energizing to see how you combine a 3D printing technology with near zero carbon products. I think that really moves in the right direction. It shows how applicable this product is and how much value we can drive for the end customer with this product. So I have high hopes that this is really our future, and this works well.

Final investment decision in Padeswood, I think why do we make a significant fuss about this? Because the final investment decision, guys, is an important milestone. And I think the market is underestimating this milestone. I have to tell you, there are project portfolios all over the place, by the way, also in Continental Europe, but there is -- in Continental Europe, guys, not one project, not one project that has even taken a final investment decision. And just to be very clear, a, the hurdle to take a final investment decision from a project stage is massive. And secondly, to then deliver the project that carbon capture...

[Operator Instructions] Hold the line as it has been lost and the conference will continue shortly. Please hold the line.

Sorry, guys. Somehow the line broke down. So let's go back to the sustainability side of things. In the end, I think good news is that evoZero now finally hits the market, and we have a couple of exciting projects. I think you still captured that. What is important is the FID, so the financial -- the final investment decision that we took now on Padeswood is, I think, vastly underestimated by the market. A final investment decision is a very important milestone and a difficult milestone to hit even if you have a lot of projects that you are chasing to get to a final investment decision is a major hurdle and I think should not be underestimated.

And then once you've made the final investment decision, you still have to execute the project. You have to capture the carbon, you have to store the carbon. And again, this takes 3 to 5 years before you get there. So I am convinced we have as Heidelberg Materials here, a huge competitive edge, and we will -- rest assured, we will build on this. If there are questions later on, I'm happy to make that point. But I think let's just be clear that this is a significant edge that we do have in that respect. And again, we are clearly going to build on it.

Talking about building on it, I think it's clear that the latest news from this week about the EU Innovation Fund decisions is just another proof point that we are on the right track and also the EU government has understood that there are companies that are delivering on what they are promising. So in that respect, I think we have -- all 4 of our applied projects basically got reunited. The one in Belgium, ANTHEMIS, the one in Airvault in France, the one in Italy in Rezzato and then the pilot project in Goradze in Poland next to the ones we already had, GeZero and ANRAV. For the 4 this week, we alone got EUR 520 million of carbon contracts for difference or in this case, EU Innovation Fund money. And we need to complement and want to complement this now with local support, and let's wait and see how we get there and when we get there. But overall, this was very encouraging news and a clear sign that the EU has understood who is leading the game here.

In that respect, I would move over to the financials, Rene, and do you want to take over?

Thanks, Dominik. Hello, everyone, as well from my side. So what you see here on one page is a rough overview about our key financial metrics. Adjusted earnings per share, 4% up. And even if you would take the reported earnings per share is even 11% up. So if we take the AOR out, it's only 4% because last year, we had the impairments of European master plan part of it in our numbers. So last 12 months, free cash flow is at EUR 2.3 billion, now that's EUR 150 million higher than the last 12 months December '24. I think that's a pretty good result. And the final outcome will depend on working capital in an outflow at year-end. So let's say, we have inflow, but let's see how much. But the clear target is to be on EUR 2.2 billion to EUR 2.3 billion. So that should flow in.

And then leverage, that's seasonal 1.5x right now, which will go down by year-end, we'll probably between 1.2x and 1.3x depending on, as I said, working capital. But I guess that as well showing the healthiness of our balance sheet. And then regarding M&A, Dominik alluded to it, we have closed Asment de Temara, Morocco, a very good acquisition for us. And then also in Australia, the Buckeridge Group of companies is closed and already in October, it will be in our numbers. So that is still a very, very good acquisition. And then the second tranche of the share buyback, as Dominik said, we will finalize by mid-December latest.

Dominik, I hand over to you for the outlook.

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

Thanks a lot. And with that, I would say let's turn to your questions.

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

[Operator Instructions] The first question comes from Luis Prieto from Kepler.

I had a couple of them, hopefully, very quick. The first one is, if you could please provide us with some sense of what the percentage level of subsidy obtained from the EU Innovation Fund for the plants in France, Italy and Belgium. You mentioned EUR 520 million for the award, but I'm not sure what the total CapEx for the 3 plants was. So that would be useful. And if you have any updated timing for the projects?

And then the second question, this might be a bit difficult, but a close peer of yours has stated that they see U.S. residential subdued next year in -- I assume in the U.S. Do you have any commentary on what you're seeing for next year in this particular part of the market?

Luis, thanks a lot. Look, on the subsidies, there is no number we can disclose at this point because, a, the investment levels is still obviously under scrutiny. Yes, there is and in that you put into the application process, but this is a moving target. So it's far too early to make a final conclusion because we -- keep in mind, we continue to learn from Brevik. We continue to learn from Padeswood, and that obviously goes into the budget. So we're not going to throw out any inflated number. We do our homework.

Secondly, I don't think that the EU Innovation Fund is the end of the subsidy game. There is carbon contracts for difference that are, for example, available in Germany and the process is still ongoing. So I don't want to jump to any early conclusions on this. So I ask for your understanding that rest assured, we will only greenlight carbon capture project if we have a very convincing business case. As we always said, Brevik and Padeswood are performing above the average return on invested capital compared to the total group, and that will stay the goalpost for any additional investments we do into carbon capture and storage.

On the U.S. residential side, it's very hard to read 2026 is still a couple of months to go. The situation in the U.S. on the interest rate side is volatile. There is discussions going on. The good news is that the turning point seems to be reached. So the interest rates are coming down. But remember, there is an interest rate and there is a mortgage rate, and there are historical hurdle rates where the mortgage rates need to sit at certain levels when you then see things coming back. Pent-up demand is absolutely there. But I think the -- some additional movement down on the mortgage rate side would still help. I'm quite confident. Do we see this in January 1? I don't think so. But throughout 2026, would we see some upside potential on the residential side from today's viewpoint? Absolutely.

The next question comes from Goldman Sachs, Ben Rada Martin.

I just had 2, please, and both were on the European cement business. I guess, firstly, Dominik, you mentioned some one-offs within the quarter. I was wondering, could you quantify some of those? And I guess, the expectations that they won't be recurring going forward? And then second, on the European cement business on pricing in 2026. We've got some pretty significant regulatory changes when we look at the ETS benchmark, the phaseout of allowances, CBAM. I'd be interested what kind of pricing do you expect on European cement in 2026? Is it right to think that the contribution will likely be larger than what we've seen in 2025?

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

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

Okay. And then on the European question around CBAM, EU ETS, I think it's true that in the last couple of weeks, there was a little bit of noise about what's going on there. You saw probably that yesterday, the EU has been agreed now on a framework how to adjust some of the climate targets. From all what we see, no significant change to what is relevant for us. I think CBAM is there to stay. EU ETS is one is there to stay. Is there a discussion around what happens in 2034 and 2039? Maybe, but that's way out, guys.

For us, it's clear that you look at the carbon price right now, it's EUR 82 or whatever it is. So the significant price move further up. Our strategy does not change. We are fastly -- on a fast pace, decarbonizing our assets in Europe and become not only the cost leader, but also we are clearly from our side, pushing value over volume, and that strategy absolutely not changed. And to your specific question, Ben, do we expect for our company a better pricing performance in Europe in '26 than in '25? Yes.

The next one comes from Elodie Rall from JPMorgan.

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

Elodie, EUR 20 million to EUR 25 million is the number for your question number one.

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

Next one is Tom Zhang from Barclays.

First one, so you mentioned in the remarks, you're over-indexed to some of the more, I guess, sluggish or weaker markets in Europe. Could you maybe expand on that a little bit more? Maybe you're sort of talking about Central Europe, Germany and in particular, if you're seeing any changes in the competitive dynamic there as we go into 2026?

And then the second question, just around capital allocation. So you mentioned the second tranche of the buyback. We're close to finishing, but I see you haven't bought back really any shares for the last month. So if the balance sheet is looking at 1.2x to 1.3x leverage, maybe a bit of a slowdown in M&A in this quarter, at least, what are the hurdles to just starting tranche 3 early and maybe committing more capital to buybacks?

Thanks, Tom. Let me start the first one and then René takes the second one on share buyback. Now in Europe, I think Europe has a large footprint. And the question is, are all markets performing on the same level? The answer is clearly no. And I think it's no secret that Eastern Europe is, in general, performing well. And if you look to our exposure in Eastern Europe compared to others and our exposure in Northern Europe and in Western Europe, I think you will see some difference. And my comment was going towards the point that our markets -- stronghold markets, they are very much next to Eastern Europe. They are very much also tweaked to Northern and Western Europe. So for us, obviously, markets like Norway, especially Sweden, the U.K., Benelux, France, Germany, they are a significant stronghold for us.

And guess what, those markets are volume-wise have clearly underperformed in the last 2 or 3 years compared to the -- and you are now on levels far from the peak going back to the 50s of the last century. So the upside potential in those markets is fundamental to say the least. And that's why I think we are doing our homework, trimming the asset base, trimming the cost base and with that should have a significant upside potential as those markets come back up. That was the reason of my comment.

So Tom, regarding capital allocation, regarding the share buyback, that's correct. The last 2, 3 weeks, we did not buy a lot of shares, but that's in -- the process is in the hand of the banks and they steer, let's say, the purchase, and that's what I can tell you. And as well, I can tell you that we want to -- the deadline is mid of December that we want to finish this. So that's all on track.

And then regarding the third and last tranche of the second program for next year, we want to keep the same rhythm as we had it. And rest assured, we stick to what we have said. We will finish the share buyback in next year, and that's it. And then we see when we have announced it or when it's finalized, we see what else we do, that depends as well on M&A opportunities or whatever and how our cash flow goes. So we keep you informed when the time is ready for this.

Next one comes from Pujarini Ghosh from Bernstein.

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

Yes. Okay. Let me comment on your 2 questions. First of all, I think if you look at APAC, I think it's clear that Rene was making the point that Australia, I think, is moving in the right direction, and that is very much driven also by cost management -- disciplined cost management and also stable pricing and good pricing, I think, overall in Australia. But then clearly, I think the team in Asia is doing their homework. So we are massively looking at our costs. So the majority -- I'm looking a bit to Rene, but the majority of the improvement on the margin side does not come from the pricing. It comes clearly from our cost management. And that's the name of the game right now in Asia, which I think is also the right thing to do.

On Germany, please allow that I'm not commenting on pricing for competitive reasons on certain markets. We've never done this and cannot do it for legal restrictions. Overall, I think I go back to my earlier comment, I'm absolutely -- for us, it's a clear focus to -- focus on value over volume and see a significantly better pricing performance for our operations in '26 in Europe than in '25, and that obviously also includes Germany.

Next question comes from Julian Radlinger from UBS.

Two questions actually on CO2 for me today. So first of all, you just got another 4 sets of subsidies on these projects. We're seeing quite little activity in that area from most of your smaller competitors. And of course, you're doing a lot of other things to reduce your carbon intensity and clinker factor and so on as well. Where do you think you are on the CO2 cost curve today in Europe, very low end, bottom half? Or put differently, do you have a view on what portion of your cement plants in Europe might make it into the benchmark, the top 10 cleanest plants? That's my first question.

And then secondly, so you mentioned earlier the CO2 price in Europe is now above EUR 80. That's up from EUR 65 or so a year ago. Any good explanation why you think that might be happening?

Good questions, but maybe we are not the right ones to answer that. I think, first of all, on the benchmark plans, you know that this benchmark is run by the EU in a secretive process. There is very little transparency around this. We have our own assumptions, but please understand that we cannot -- I'm not starting to speculate. But as a general mark, it's clear that we want to be at the very top of that -- or if you wish to say the other way around, at the very bottom of the cost curve in order to -- especially if you include the CO2 price, that's the whole game for driving this decarbonization agenda that in the end, we want to have the majority of our plants sitting in the benchmark top 10. So I think in that respect, that's the clear aim, but I can't comment on any specifics of the running process.

And then on the EUR 82, there is only speculation. It's very difficult to judge what's driving that price. If it would be easy, we would all speculate in CO2 certificates. But I don't. So I think in that respect, hard to predict. But obviously, the higher the price moves, the better it is for us. If we are the decarbonization leader for us, that's absolutely okay. We have no problem with that. So we are in the camp of saying, hey, this has been the agreed system. This is how it works. And whether the price sits at EUR 80 or EUR 120 or EUR 150, we are able to cope with everything given our strategy. And in that respect, we are also fine with EUR 82.

Next question comes from Cedar Ekblom from Morgan Stanley.

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

Yes. Thanks a lot, Cedar. First of all, there is only one reason why we don't follow. There's only one single reason why we don't follow because we take our decisions independently. I don't care what others do. In this respect, we take independent decisions and especially on pricing, this is a completely independent process, and I don't care what others do. Of course, we are competing in the market, but our pricing decisions, we take absolutely independently. I think that's the first point.

The second point is, I think we have taken you along over the years what the transformation of the company is all about. And I think it's -- I'm very thankful for your question, Cedar, because while for decades, if not centuries, we were a very production-focused company, trying to build our assets in a competitive way. This transformation now moves very much and evoZero is just one prominent example towards the commercialization things. And we are just scratching the surface in that respect.

But that's why I keep telling everybody internally, it's value over volume. I think it's clear we need to drive the best value for our customers. And if we drive the best value for our customers, we also demand the right price points for that. That's the name of the game. That's how we run the internal incentives. That's what we focus on as a leadership in the company. It's all about doing the top job in our countries with our customers and our commercial teams. And there is -- I think, as I said, we are probably just scratching the surface in that respect, but that's our clear strategy, Cedar. Thanks for the question, very important topic for us.

The next one comes from Anna Schumacher from BNP Paribas.

I'm on for Paul Roger today. So I have 2. The first one, now that evoZero is on the market, do you have a better idea of the green premium for net zero cement? And is it possible to quantify it and compare to either low CO2 cement? And secondly, how could the U.S. shutdown impact demand if it isn't resolved soon? Does the potential fail in Washington make a new infrastructure bill less likely next year?

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

Yes. So...

You were talking about the shutdown in the U.S.?

Yes. So whether the shutdown in the U.S., like -- is there a risk that the infrastructure bill might be less -- will less likely happen next year?

Okay. Anna, let me get to your 2 questions. Again, we -- the [ net zero ] products from our perspective is not a question around the premium. They are -- when it comes to evoZero, it's a unique product in the market, and it will demand a unique price point because it has unique value we can drive for the customer. And that's what we are very -- to my earlier remark to Cedar, that's what we are very focused on. So we're not talking about any premium because it is a completely different product that can't compete with any -- that is the way you can say it that way or the other way, there is no competition for this specific product. And that obviously comes with a sound commercial strategy and a sound value strategy for those customers that are buying those products. And that's for us, the clear focus. And it's clear for us that this uniqueness will also turn into a good pricing and margin performance, if not to say, very good pricing and margin performance for those products.

On the shutdown, I think...

[Operator Instructions].

So hopefully, we are back. I'm not sure where we haven't paid the bill for the telecom provider. So sorry, let's get back to your question, Anna. I think I don't want to speculate on the shutdown in the U.S. There is a lot of volatility around this at this point, also a lot of political rhetoric going on. Hopefully, it will come to an end rather sooner than later, but it's difficult for us to speculate on infrastructure. I don't think that there will be a significant impact. You know that the current administration is up for some reelection November next year. And if you would scrap infrastructure stuff, that doesn't go down well with the voter. So I do have significant hopes that they're not going to play around with this. And with that, I'm quite positive for the infrastructure situation in 2026.

Welcome back, Arnaud Lehmann.

Just a couple then. Can we talk about Africa? It's been quite strong for a while, but I think in the quarter, the margin was at EBITDA level above 30% for the first time maybe ever or at least for a very long time. Could you please give us a bit of granularity in terms of which countries have performed better than expected? And heading into next year, do you think this performance is sustainable for the Africa region? That's my first question.

And my second question is on the cost outlook. Have you seen raw materials, energy moving a little bit higher, including coal? And does that give you ideas around price increase in the kind of Asia and Africa regions for next year?

Okay. Arnaud. Let me do the first and then Rene takes the second one because he can then also comment on Australia, maybe a little bit because that's an important part of Asia Pacific. Now on Africa, we've always said it's not about one country. Africa is a portfolio of countries, and it would be far too volatile and risky to run Africa on just one -- a bet on one horse. That's why also it doesn't make much sense to comment on single countries there because things go up and down. But what I recommend, Arnaud, is to look at the past 5 years and our AMWA performance. So everybody gets excited that things are moving right now in the right direction.

But if you take the trajectory of our AMWA portfolio and its performance over the last 5 years, I would say there is almost a straight line in only one direction, and that's up. So that has to do with good management, but it has to do also with acquisitions and everything. But I think overall, I think this is our task as a management team to deliver consistently a good performance.

Now is this somewhat volatile within the different countries? Absolutely. But overall, as the AMWA portfolio proves over that time frame, and I think that's a meaningful period. I'm actually quite confident. Now can we guarantee you for the future? There is -- for nothing, there is a guarantee for the future. But are we working very hard to keep the trajectory moving in the right direction? Absolutely. And we have a fantastic management team in place that has shown that it can perform on a very high level. And I have no reason to believe that, that can't continue.

Arnaud, regarding your question regarding cost outlook and here energy raw materials. So from -- we have our budget meeting still to come, but obviously, we have a view. And for next year, energy, I don't expect that we get a lot of headwinds here from energy. And if you just look -- if we increase our alternative fuel rate like we do this year, there will be obviously fuel cost relief, yes. And from the power also, it should be at least flat, maybe it's even a little bit lower than this year. So energy is not -- currently status today, not a big concern.

And then raw materials and other items as well, the world economies are not booming. So there should be as well some cost relief in certain categories over there. And as you know, we -- with our tight program, we changed our procurement organization where we now try to organizationally do much more here centrally to get leverage also, and that is really -- you will see in our numbers. So I think that's okay. And then Asia outlook, that's -- as Dominik said, right now, it's not booming. It's not great. And let's see how the political situations in these countries go. But if we have Australia working, that is half of the result in Asia. And as I said to you, Q3 was good. October was very good. And the outlook for Australia, '26, '27 is pretty good. So fingers crossed that this will come, like I just said.

Moving on to another Arnaud, Arnaud Pinatel from On Field.

The first one is on evoZero. You are telling us that we should integrate much more of your decarbonization benefit. Could you help us by giving us a little bit more granularity on what tonnage you have already sold on evoZero? And is it fair to say that we have not seen in Q3 any real contribution of evoZero in Europe in your EBITDA? That will be my first question.

My second question is on the U.S. One of your competitor highlighted this morning that they are announcing a $12 per ton price increase in the U.S. for 2026 across their markets. They are mainly on the East Coast. It would imply a mid- to high single-digit increase for the U.S., a market where we have not seen any momentum in H2 2025. Could you please help us to understand if such price increase are possible taking into account the impact of the tariff and other parameters of the equation?

Yes. Arnaud, thanks a lot for your questions. Let me comment on both. When it comes to evoZero, you know that we're not disclosing too many specifics around this. But I think to just draw the line, it's absolutely right, your assumption that there is no meaningful EBITDA contribution at this point. As you know, we have just -- we told you that we can only and want only start selling these projects when the whole supply chain is robustly working. And that means that the CO2 is really stored. We are on track. The carbon capture is working. In fact, I get it every morning, I get the capture rate on my mobile phone. And the carbon bank is filling. So there are CO2 is being stored. And that means that we can now sell evoZero. But we are very, very focused on what we want to achieve, again, value over volume.

We're just running out there selling everything of CO2 just to chase something. We chase the best value from our side. And the good news is we have time to do so, and we will get the EBITDA contribution for sure. But you are right. If come Q3, there is basically nothing in there from evoZero at this point. This is ramping up as we go through the next quarters.

And you cannot comment [indiscernible]...

Yes. We said at the Capital Markets Day, it's a couple of hundred thousand tonnes for next year cement. So I think that's a little bit the target. I think that's what we communicated also in Brevik. But again, that's cement. I was earlier talking about the CO2 being captured and that turns into higher volumes of cement. So just for you to understand, the capturing of CO2 is then multiplied with something in order to end up in a cement tonnage.

Pricing in the U.S., I ask for your understanding that I cannot comment on any other announcements that others make. We don't make any announcements around this. And you will also not hear this from me. I'm going back to my earlier remarks, Arnaud, where I did say that for us, we expect a significantly better pricing performance in '26 than we have seen in '25, and that's true for the U.S. as well. And that's all I can say. I cannot comment on what others do.

And then the last question comes from Sven Edelfelt from ODDO.

I apologize if it has already been answered. My line was cut several times. So the first question is on Europe margin. Europe margin is down in Q3. So can you perhaps tell us about -- tell us more about the price over cost specifically on this region? Is it volume driven or the decline in the margin? Has there been any unusual maintenance? So that's the first question.

And my second one would be on the EU ETS. Can you maybe elaborate on the benchmark? I understand it might be lowered by roughly 50 kilo of CO2 going into next year. And I would be interested to better understand if you can specify what is driving this. I would be interested to know what is really linked to the benchmark and what is linked to the inclusion of calcined clay on alumina?

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

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

Okay. And then on the -- Sven, on the EU ETS benchmark, again, as I said, it's a fairly intransparent process. There is a lot of discussion around what's in, what's out. I also hear the speculation that the benchmark should come down, but I would be very surprised if it doesn't because then what would be the message, there is no decarbonization going on. So for us, again, if the benchmark comes down, we'll deal with it. We absolutely expect it to come down by how much, difficult to say. But it's -- for us as the market leader in Europe, I think it's clear that we want to be at the best end of the cost curve in that respect.

And whether calcined clay or alumina is in or out, I think I understand there is a constant discussion with the officials in EU, what's in, what's out. They certainly have an interest to drive down the benchmark. But I think it's clear that this benchmark still needs to be realistic and not driven by some specific setups that have nothing to do with the main market in Europe. So let's wait and see when the benchmark comes out, what will be the final result, and we'll deal with it.

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

Thanks, everybody. Thank you.

Good afternoon, ladies and gentlemen, and welcome to the Heidelberg Materials Half Year 2025 Results Conference Call. My name is Josef, the Chorus Call operator. [Operator Instructions] And that this conference is being recorded.

[Operator Instructions] The conference must not be recorded for publication or for broadcast. At this time, it's my pleasure to hand over to Christoph Beumelburg. Please go ahead.

Thank you, operator. Good morning, good afternoon, good evening to everyone listening. We have our Q2 results call, and we prepared some remarks that you may have read already. Dominik and Rene will go through them real quick, and then we have ample time for Q&A. .

So over to you, Dominik.

Thanks, Chris. Thanks, everybody, for joining. Welcome from our side to the Q2 2025 call, where we will present you the prepared remarks. I think overall, great quarter for us. We are satisfied with the delivery of what we have promised, strong revenue growth 3%, but especially RCO, up 8%, carried by disciplined pricing, by good cost management, not so much volume up, clearly upside down the road. We have executed the second tranche of the share buyback. As announced, still running and has been started during Q2 and magnitude up to EUR 450 million. We are continuing to be on the gas pedal when it comes to growth. We have closed the giant acquisition in the U.S. in April, and we've also successfully closed the transaction in Morocco end of Q2.

So in that respect, things are moving in the right direction. That's also true for sustainability. Great progress here, minus 4% CO2 emissions year-over-year. I think that's good because we wanted to pick up speed a little bit towards the targets of 2030, and I think that moves in the right direction. And on the back of all of that, we are confident to confirm our outlook for 2025, with an RCO band of EUR 3.25 billion to EUR 3.55 billion, ROIC of around 10% and a slight reduction on CO2 emissions.

Okay. Then we go to Slide 4. When we come to the details of the results. You see revenues up 3%, EBITDA up 7%, EBIT up 8% even, and the operating margin moved up 81 basis points to 24.2%. I think that is pretty much in line with what we have targeted. H1 is a little bit weaker. That also tells you that Q2 has the right trend. And you see on Page 5, the results for the first half, which is then 6% up in EBITDA and 7% up in RCO, margin up to 18.7%.

What is important for us is on Page 6, you see that volumes are still coming down a little bit. So there was no help at all from the volume side, which leaves the upside on the road, but good management of price over cost with a clear positive EUR 99 million that then leads to an operating EBIT of more than EUR 1 billion first time for us in the history of the company.

H1 2025, then even with a more pronounced picture on the price over cost, you see also here the volume pressure for the first half, minus EUR 67 million was a little bit higher for the first half. That shows you that the volumes are ever so slightly leveling out and even coming back, which is good news, while the price over cost is even more pronounced in H2 than it is in -- in quarter 2 versus H1. So overall, also that trend goes in the right direction. It's carried not only but also by the transformation accelerator, we have said we target the EUR 500 million. We are absolutely fully on track to get there. I would be even hopeful that we may even overperform on that one. But for now the clock is ticking, and we have about EUR 140 million in the pocket, but the trajectory is going in the right direction.

So overall, I'm very satisfied, and we are very satisfied with what we see here. Europe, on a high level on the revenue basically more or less flattish, slightly up, reported like-for-like flattish, EBITDA margin moving up in the right direction and also RCO on a high level, moving beyond the EUR 500 million. For the EBITDA margins you see, in cement, up and also in aggregates up. So also there, the train moves in the right direction.

North America with a little bit of headwind like-for-like revenue is down but reported 4% up because the growth is really moving in the right direction. I mentioned Giant, EBITDA margin more or less flattish, RCO, more or less flattish. And therefore, the business lines, cement slightly up and aggregates quite significantly up in terms of margins. So I think the underlying structure is okay. We just obviously need the market to come back in North America, which we are hopeful that this will happen.

Asia Pacific, still I think there is upside from our perspective. But turning the corner in the performance, you see that EBITDA margin goes up. You see that the RCO goes up. And you see also that margins both in cement and aggregates go up. So I think that indicates that Asia is finding some stable ground from where we then can further accelerate. And talking about acceleration, AMWA; Africa, Mediterranean, Western Asia is clearly performing on a very high level, 25% -- almost 25% revenue up. EBITDA margin significantly up to 25.8% and results almost 50% up with plus 44% up to EUR 144 million. EBITDA margin in cement, really good now at 27.8%.

If you go to Page 13, you see that also good results on the financial side come with good results on the sustainability. Obviously, for us, key milestone in Q2 was the opening of Brevik, some of you were present there. This is the world's first carbon capture industrial scale plant in our industry. We are well on track also with acceptances and delivering the first -- storing the first CO2. So that looks really promising, and we are happy that on the back of that in H2, we will start with the sales of evoZero, which is a unique product globally, and we will clearly market that to some very exciting customers and projects.

Circularity moves on with our development in Poland, both on recycled aggregates and also recarbonation. So the combination of EcoCem there and also our Gorazdze cement plant are doing, in the hyper-local vicinity around the plant, a very good job where we will now deliver the first concrete with 100% recycled aggregates. I think that's great news. So circularity is also being advanced quite substantially.

And last but not least, especially also for our emerging markets, a very good news from Ghana. You heard us talk about the erection of the calcined clay plant. We are now in the market with the low carbon products there locally sourced and locally produced and locally sold, which for imports markets like Ghana is a very important advantage because you don't get stuck in ports with clinker imports, but rather produced locally, so 100% local content in that respect. That's great and the market is very well accepted -- the product is very well accepted in the market.

If you go to the details of the sustainability performance for us, it's -- we continue to build our leadership in terms of clinker incorporation sector. Now down to 68.5%. That's very good indeed. We started back in 2020 at almost 75%. So significant progress there. But what is also very important to see is the acceleration of the alternative fuel rate. You see that we jumped up from 30.6% to 33.5%. So the above 50% target is clearly in reach. Big contribution from that end, and we are very confident that we will get to the above 50% by 2030. And on the back of that, obviously, the CO2 emissions came very close to 500 kilograms on a global scale in reach with a target for 2030 of below 400.

With that, I would hand over to Rene and you go to the financials.

Thanks, Dominik. Hello, everyone, as well from my side. What you see here are the quick snapshot of our financials. You see the adjusted earnings per share is very nicely up that tells you that below RCO, everything is in shape. Also, our free cash flow generation in the last 12 months remains strong at around EUR 2.3 billion and very close to our 50% conversion target, which is good. Leverage is similar to last year at around 1.56x. And then as Dominik alluded to, our shareholder return is, let's say, progressing with the second tranche of the share buyback, which is ongoing, I think, overall, a very solid financials in terms of cash flow and below RCO.

If we go to the details on Slide 16, the full P&L, you see our AOR, additional ordinary result is EUR 108 million better than last year. Why? Because last year, we had the big impairment and restructuring costs for the plant closures in Europe in our numbers. So that -- obviously, there's a little bit relief here. Financial results flat, which stays at a very, very low level for the size of the company. Income taxes is EUR 50 million up. And why is this because we had last year, due to the impairments of the plants, which we closed, we had a positive DTA of around EUR 20 million this year -- EUR 20 million negative. So that's EUR 40 million, let's say, accounting effects on taxes.

The good thing is the current income taxes, which is as well determining or a big factor for our ROIC stays flat year-over-year, which tells you that our effective tax rate here for current taxes is improving. And then the rest, noncontrolling interest goes slightly up. Why? Because our Africa result is very strong. And here, for example, in Ghana, Tanzania, we have some minorities. Obviously, the result goes out. So in total, group share profit goes up roughly 20%, which is then translated into as well earnings per share. So I guess very, very solid financials below RCO also.

Coming to the cash flow on Slide 17. Overall, the cash flow is roughly EUR 100 million up versus prior year and where does this come from, obviously, change in EBITDA up and then you see that. The cash outflow from working capital is EUR 120 million better than it was last year. That's what I said what we are targeting to improve our working capital, and this is what you see here. And this is a little bit compensated. You see noncash items and other. We had to pay some cash out of provisions for the restructuring and you have seen the currencies moving, and we have some negative effect on our currencies. Now cash flow here in that number also. But overall, if you then look at CapEx, very disciplined, we are even EUR 40 million below last year. I think that is everything what we promised here. Again, we deliver.

If you go to the next slide, Slide 18, there's a net debt bridge. You see here our net debt per end of June stays at EUR 7.2 billion, which is a leverage of 1.56x. You see that in the last 12 months, our growth ambition here is clearly visible. We spent EUR 1.4 billion on M&A. And in -- for the shareholder returns, again, above EUR 1 billion. I guess it's confirming what we said. And in that EUR 7.2 billion, we closed Aspen until late June. So there's Aspen number in there. So pro forma, the leverage would be lower if you include also the Aspen result, which you obviously don't have in here. So in reality, the leverage will improve even like-for-like in the next few months.

For the outlook, Dominik, then I hand over to you back again.

Thanks, René, and I'll close with the final chart. On the back of all what you have heard, we have then confirmed our guidance or will confirm our guidance to come in, in an RCO between EUR 3.25 billion and EUR 3.55 billion. ROIC around 10%. CO2 emissions was a slight reduction. And then just as an indication, CapEx will stay around EUR 1.2 billion, and the leverage will stay around the midterm target of 1.5x. So that's it from our side. .

Thank you so much, Dominik and Rene. Operator, you want to start the Q&A session, please.

[Operator Instructions] The first question comes from Luis Prieto, Kepler Cheuvreux.

I have 2, if I may. The first one is if you would be able to break down the price over cost building block of your Q2 EBITDA bridge between price increases, cost inflation, cost efficiencies, transformational accelerator and sustainable products. And the second question regards -- is with regards to your awards of EU Innovation from subsidies in two of your European plants. Should we assume that the remaining CCS projects will all be awarded EU subsidies and in what time frame? And if you could -- if I may squeeze in another one, if you can comment on what happens to the Mitchell decarbonization plans after the U.S. DOE subsidy cancellation?

Okay. Luis, it's Rene speaking. So I will take your first and Dominik will take the second. So price over costs for Q2. The good thing is all regions price over cost for Q2 are positive. And best news is the highest number is in Europe. So that's, I think, very convincing. And the -- every -- the biggest sales price increase was obviously in AMWA. We had fixed cost for all regions going into the right direction in Q2, we had in fixed cost below last year of EUR 36 million. And there, you see clearly our transformation accelerator effect. So overall, we are very happy that every region now is price over cost positive and sales price, again, also for all regions up versus prior year.

Okay, Luis. And then on the CCS project, couple of thoughts around that. First of all, EU funding is nice, but it's by far no guarantee that these projects will fly because in most cases, the EU funding is by far not sufficient to make the projects go. That's also why you see outside of [indiscernible], there is not even one FID decision taken in the industry. I wonder why. Because you need to complement these things with many, many, many other things before you can actually FID a project. So yes, everybody is so focused on EU funding, that's nice, but let's wait and see how these projects really come to the FID status. So for us, that's one not unimportant decision point, by far, not the most important one. Just to be very clear, just to set the scene a little bit right on that one.

And yes, there is a new round of EU innovation fund awards coming. And obviously, we have applied with quite a few projects for that funding round. And we are confident that we will get a positive decision on some of them. Let's wait and see how that goes. On the U.S. it's very similar to the behavior that we see that we read in the paper of the administration. Yes, they have canceled the -- formally not only our grant, but I think overall USD 3-point-something billion grants to, I think, a lot of projects. And we are now in negotiation with the administration how we deal with that situation.

We formally have appealed that decision, and we will now -- we have started to negotiate and see how that will play out. We have certainly not given up on the mutual project to send a very clear message. We are confident to somehow find a solution with the administration because I think they -- my understanding and our understanding is that they want investments happening in the U.S., and they want also jobs to be created, and both would be done through the Mitchell plant. And that's why let's wait and see how this plays out.

Next question comes from Elodie Rall from JPMorgan.

My first question is on volumes, please. So still negative in H1. Would you expect that to turn positive in H2? Notably, could you give us a bit more color on what's going on in the U.S., if the exit rates are any better, if you think the outlook is going to improve Europe, do we forecast a bit of positive volumes from here and sustainability maybe on the strong trends in Africa?

And then I just have a like a detailed -- a little bit of a housekeeping question, but it's this line in operating results in group services and other, which had a big swing of EUR 24 million in Q2. So I was wondering what drove this swing and if this should reverse in H2?

Let me take the first one, and then I'll give the second one to Rene. I'm sure he's already looking forward to that one. So Elodie, let me comment maybe and bring you some color on the volumes. I think in general, broadly, we should have seen the worst on volume decline, but we can't give you a guarantee which quarter exactly the turning point is reached. Whether it's happening, let's say, more towards the end of 2025 or more in 2026, hard to tell. That's also true for Europe. You know that the early indicators, if you look at permitting situation, everything that goes in the right direction, but it typically takes 6 to 12 months before it really kicks in volumes. So in that respect, whether it's the tail end of '25 or the beginning of '26, very hard to say.

That is probably true for both the markets that you described, Europe and the U.S. I think in the U.S., we have the special situation that the interest rates have not yet moved down, and that obviously doesn't help the rebound of the housing market. You know that's very interest rate sensitive. So that's the one point that I think we need to continue to watch in the U.S. And the second question for me is the mindset of the current administration, whether they want to continue with the uncertainty that they create through the current discussions or whether they want to slow down in that respect and bring some certainty to the table down the road.

Personally, if you ask me, I'm hopeful that looking a little bit at the midterms in November 26, I internally said, if it doesn't come down right fairly soon after Labor Day this year, in our industry, at least, you won't see a positive effect anymore before the midterms. So let's wait and see. I remain hopeful that the U.S. will see some rebound. And then I can be the weather guy because you know that the weather was a little bit volatile in the U.S. to say the least. Let's wait and see.

I don't -- that's something I can't manage nor guarantee, but it certainly was an usual weather pattern in the U.S. that we've seen, and let's see how that plays out in H2, and that will then also give the full-fledged answer to the volume. Africa, we continue to be very positive. Things look for the key markets for us look absolutely in the right direction. So there's no reason to believe that Africa can't continue to click along as they did.

Rene?

So Elodie, the good thing is you are in detail in our numbers in reading what we published, that's good. Thanks. And you give me the hard time with questions. But okay, this is -- there's a EUR 24 million, let's say, delta to prior year, but that is, let's say, accounting on group level provisions back and forth, in and out. So will this turn worse? I don't think so. Will we get something back? I would answer, yes. So there's no structural issue there. It's just movements, timings, provisions and what have you on group level.

Very clear, Rene. All good, Elodie?

Yes, yes.

Our next question comes from Tom Zhang from Barclays.

First one, just back on the U.S., please. So you mentioned positive pricing in all regions, but I guess slightly negative like-for-like still in Q2, so challenging volumes. Just wondering how you're thinking about price into the second half? Is carryover pricing still going to be enough? Or do you think there's a bit of a risk around price cost in the U.S. in the second half? And maybe if you could split that cement versus aggregates as well because I guess the margin progression has slowed a little bit in cement. And then the second question, just on APAC. So obviously, a very healthy rebound that you can see in the APAC RCO. Maybe just a little bit more color generally on what's driving that recovery and how sustainable that is as well into the second half?

Tom, thanks a lot. Maybe I'll take both of the questions. And then Rene, if you have some additional comments, just jump in. On the U.S., I'm positive on pricing in the U.S. That's true for cement and aggregates, maybe a little bit more positive for aggregates than for cement. But in general, the pricing momentum from our perspective is fine. And the clear answer to your price over cost question, absolutely, the clear target is to keep that well into the positive, and I have no indication that, that won't work. So in that respect, we are very confident that we can keep that positive.

When it comes to APAC, APAC for us consists of 5, 6 different key markets. I think Indonesia, to be honest, volume is okay, but overall, market development is fairly sluggish, not where we expect it to be. Obviously, that's the big upside. If that comes back, that would help us quite significantly. Good news is that India is clearly coming back after some difficult years for us in India. There, the performance has really rebound. The same is true for Thailand. China is not super important for us, but remains very sluggish from our perspective.

And then Rene, you may want to comment on Australia. That's an important market for us.

So you've seen the weather events in Australia in the first 6 months. So that was obviously not so helpful. So from my perspective, Australia should even perform better -- much better in H2 than in H1. So that's probably what I have to say to Australia. And did you mention Thailand on it? Thailand is super strong.

Next one comes from Ephrem Ravi from Citi. .

Two questions. Firstly, North America, trying to get a sense of the impact of the acquisition of Giant in your financials. I suppose most of the difference between headline and like-for-like growth is Giant. So very rough math, looks like the EBIT margin is substantially lower or around half of the rest of your North America business. Is that correct?

Or if that is correct, what would be the steps to kind of improve the margins there? And secondly, a little bit more strategic question. You had identified supplementary cementitious materials as one of your key growth areas in North America in your Capital Markets Day and a natural fit given your low-carbon cement offering in Europe. With CRH buying Eco Materials, do you think you should be moving a bit more quicker in that area before the assets get taken?

Tom, I will take the first one. The answer to your question, is it Giant? That you are clearly wrong because Giant, we closed somewhere in April. And remember, last year in August, we did some acquisitions in the ready-mix and aggregate space in the U.S. So that is the impact what you see here. And be careful first 6 months -- the first 3 months in the U.S., you can have even negative results due to winter and what have you. So that is not a Giant impact. So Giant, to give you the view, Giant is fully on our business plan. So that's positive. So we should see in H2, obviously improved numbers here. But bear in mind, we bought the aggregates and ready-mix stuff in the U.S. in August. So we have consolidation impact until August for this and then it's over. So Dominik, over to you.

Yes, Ephrem, thanks a lot for the SCM question. You're absolutely right that SCM for us, not only in North America, but also globally, is a focus. We never denied that. In fact, that's part of our strategy. When it comes to your specific question around North America and the specific transaction, to be very clear, from our perspective, it's not about speed, it's about discipline. We are disciplined on the execution of acquisitions, especially also in North America. From our understanding, the market is a little bit heated. So we are going to stay disciplined. And on the specific acquisition, I'm not going to comment on what our competition is doing. I can only tell you in transparency, we have looked at this exact same asset a couple of years back and after significant due diligence, have declined to execute. So we absolutely had it on the radar screen, but denied to execute. So that's where we are.

The next question comes from Pujarini Ghosh from Bernstein. .

Sorry for coming back to the U.S. pricing topic. So in the CMD, you had highlighted that over the past few years, you've increased cement and aggregates pricing at around 5% to 6% CAGR. And this year, we've heard from you and as well as some of your peers that pricing probably is not as strong. So I understand that it's still positive, but could you probably give us a bit more color into that? And one question for Rene. So coming back to the free cash flow and the noncash item that you pointed out, could you just explain what's going into that? You talked about currencies and provisions. Maybe if you can give some more detail.

Yes. Let me -- first of all, you don't have to excuse for your question on pricing. I think it's a big focus for us. So absolutely fine. We have no problem. If we can't comment on details, we'll let you know. But I think in general, to answer your question, it is clear -- it is positive pricing both in cement and aggregates. Obviously, with the regional market difference that I can't go into any additional details. But it's probably a little bit more pronounced positive in aggregates than it is in cement to my earlier comment. But absolutely, we are still focused to realize good pricing in North America. Keep in mind, there is also now in the translation into Europe, a significant currency impact for us because obviously, local currency has moved quite a bit, but we report in euro.

So now to your question, what is the noncash items in [ other ]. We have our discontinued operations there are -- where we have some cash outflow there. We have changes in provisions over there. We have their result from disposal of assets because if we are having a positive answer the impact that will be taken out there and you get the positive [indiscernible] in net CapEx. And that's probably -- these are the 4 items -- 4, 5 items and then some other smaller movements, which we have in there.

I hope that answer the question. The next one comes from Yassine Touahri On Field Investment Research.

Just a question about your view on pricing in Europe this year and next year. So I understand that this year, there is a bit of a pause in the price increase compared to what we've seen over the last 2, 3 years. And I'd like to try to understand how you're thinking about next year. Do you feel that you will be able to increase prices substantially because there will be less free allowance? Or do you feel like in the U.K., the independent imports might put a bit of pressure on prices or on your market share and might cap the price increase? It would be great to think a little bit about -- to understand the way you're thinking about those developments for next year.

Yes. Thanks, Yassine. I think on pricing in Europe, in general, our policy has not changed. We are absolutely targeting to cover at least inflation in our pricing. That's true for cement and aggregates. And I think that has worked well. That's clearly the message. Are there regional market differences? Absolutely.

Can I go into any more details? No, you understand the reasons from a legal perspective. But in general, to be very clear, the inflation coverage has worked in both business lines, and we are very focused to continue to make that happen and where we can advance pricing above inflation, that's obviously also our target, if possible. The mid- and longer-term outlook from pricing you indicated, I think, is positive because, yes, the costs will rise dramatically for especially those players who have a higher carbon footprint. That's the name of the game. That's why we are so focused to reduce our carbon footprint globally, but especially also in Europe.

And with that, create a cost advantage down the road. That also turns into the advantage to work more flexible on the pricing side of things and also with lower carbon products on higher margins. So in that respect, the pricing sentiment from -- you can only -- I can only comment on Heidelberg Materials. But in our head, pricing sentiment for Europe is clearly positive.

And when you see in the U.K., a lot of import terminal being built potentially like taking 15%, 20% of the market when you look at all the capacity. And when you see in France a company like EcoCem announcing that they want to take 5% to 10% of the market, what do you think can be the -- how do you think the industry can react? And how do you think can you avoid losing market share versus those new entrants?

It's a competitive game, guys. This is what it is. That's why I always said I want to be able to compete with the Chinese and everybody who I'm facing in my local markets. It's not something I can manage. It's the competition that's true now for the U.K. and it's true now for France. Hey, guys, we need to be competitive against imports or other local players. That is our clear mantra. I cannot keep everybody out or do something else. For me, that's not the name of the game.

We want to be the best operating player in each of the markets we are operating in. And that the local team has to face imports in the U.K. and deal with it. And the same is true for France. If they deal with new competition, well, they better make sure that they learn the lesson and understand that they need to get even better in order to outperform them. That, for us, is our clear focus. And then if CBAM has not been enacted fully, you know that the U.K. is discussing also about CBAM.

So let's wait and see how this plays out. I tend to believe this is more a short-term game that you are talking about now. The mid- and long-term economics for that may not work if CBAM is enacted. So let's wait and see. I put not all my hopes on CBAM, but that certainly will give some tailwind to bring a different market dynamic along and really also honor those who are deeply decarbonizing. That's the purpose of CBAM.

Next question comes from Cedar Ekblom from Morgan Stanley.

Just a couple of follow-ups. Can you make any comment on Padeswood? That was a project that we spoke about at the CMD as was potentially going to get approved in the not-too-distant future. Has there been any change there? Can you please talk a little bit about how you view the landscape in Germany? You guys are obviously there. You're a big player in the construction and infrastructure space. Maybe you've got a little bit of color for us in terms of how policymakers are thinking about the grand ambitions on infrastructure spending, current sort of backdrop?

Are there any projects actually getting approved? Perspectives there would be really helpful. And then I appreciate all the comments on sort of pricing discipline and I understand that fully. Are there any sort of regions, though, where you are seeing a little bit more competition or where the commercial approach of your competitors in the market is a little bit less disciplined. That would just be interesting to understand.

Okay. Cedar, thanks for your 2.5 questions. So we'll dive into them. Easy answer on Padeswood, fully on track. We hopefully get a final decision over the summer. That's been always the target. So from our perspective, that is still fully on track. When it comes to Germany, you've seen all the different announcements around infrastructure packages here and there, yet it's not fully in legislative -- through the legislative circles. So we expect this to happen in the early autumn.

Now it's summer break also in Germany, and then they go into the early autumn execution. And then you have stability on the planning. And then I think it takes a couple of months, as I said earlier, 6, 9, 12 months in order for it to kick in. So I would not expect, to be very honest, any significant lift up from these large infrastructure spends in the remainder of 2025, maybe at the very tail end, but then more so in '26 and going forward. But then it really kicks in. You know the mathematics around it. If only half of that comes ever true, that's a big boost for the German market. So in that respect, whether it's energy transition, whether it's data centers, whether it's defense spend, I think that is a big tailwind for the industry in Germany, and that's a little bit the thoughts around the timing.

In the meantime, you know that the interest rates are coming down. Early indication is that also housing and private construction comes back a little bit. There is small signs of hope also on that end, different to the U.S. So I think maybe we have even a couple of different factors going in the right direction when it comes to Germany. And pricing, Cedar, as I said, there is no concern for us in terms of any land slides or any clusters of markets where things go in the wrong direction. I think some of the markets have been asked by your colleagues upfront that are a little bit more volatile in this respect. But I ask for your understanding that we don't comment on any specific market for [indiscernible] reasons.

But Cedar, just to give you a little bit more color, I don't go into the details. But if you look Europe, up; North America, up; AMWA; Asia, flat, so that's a little bit by region. I think that's not a bad story. I would have said.

The next and last question comes from Marcus Cole from UBS.

The first one is just on Africa. So how do you think about sustainability of growth there, not just in the second half, but also moving into 2026? And the second one is just, can you remind us on your ambitions for M&A in emerging markets?

Yes, Marcus. First of all, sustainable growth. We've made that point very clearly in the capital markets. Africa is the only region in the world that has population growth in a meaningful way. And that will certainly also eventually drive the growth to be sustainable in Africa. Second driver is urbanization. You heard us say in the capital market that urbanization trend is fully intact, and that's also true for the big centers in Africa. So we are very positive on the mid- and long-term perspective for Africa.

That's why we are operating in Africa. And as I said, it's the only global region that has sustained population growth. So in that respect, we feel very comfortable. When it comes to M&A, you saw that Asment has now closed. That's an emerging market transaction in Morocco, will continue to build out in our core markets, not outside of our core markets, but in our core markets, we're going to continue to build out our market position, but we also turn out or leave markets where we believe that's not our core market.

You know that we are in transaction in Congo. Let's wait and see that, that gets closed. We've sold other smaller emerging markets, and we strengthened the position in our existing emerging markets. That's a little bit the strategy in the last couple of years, and we will communicate that we'll continue down that route for the foreseeable future.

Thank you. There's one more that sneaked in. No, disappeared, as I just said it. So I think this concludes our conference call for today. Thank you for asking your questions. The fact that we only have 45 minutes probably says that we're very straightforward with our answers. And the results, we are going on the road again after the summer break. Next conference we are attending is the Morgan Stanley Conference in London, and we are also roadshowing in the U.S. in September. So feel free to reach out to us if you want to see us and meet us. In the meantime, have a very good summer break. Speak to you then in September.

Thank you.

Bye. Enjoy your holiday.

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