NV Bekaert Aktie

Good morning, and welcome to the Bekaert Q1 2026 Trading Update Call.[Operator Instructions] And as a reminder, this conference is being recorded. It is now my pleasure to turn the floor over to your host, Mr. Dries Van Hamme, Director of Investor Relations. Sir, the floor is yours.

Thank you very much, and welcome, everyone, to our Q1 trading update call. I will first read out the safe harbor statement as usual before handing over. So this presentation may contain forward-looking statements. Such statements reflect current views of management regarding future events and involve known and unknown risks, uncertainties and other factors that may cause actual results to be different from any future results, performance or achievements expressed or implied by such forward-looking statements.

Bekaert is providing the information in this presentation as of its date and does not take any obligation to update forward-looking statements contained in it in light of new information, future events or otherwise. Bekaert disclaims any liability for statements made or published by third parties and does not undertake any obligation to correct inaccurate data, information, conclusions or opinions published by these third parties in relation to this or any other publication issued by the company. And then I hand over to Yves Kerstens, CEO.

Thank you, Dries, and also a warm welcome from my side on the trading update. So for quarter 1, we delivered a top line of EUR 917 million. So on a like-for-like basis, stable business, volume growth of 3% mainly in areas like Rubber Reinforcement, Steel Wire Solutions in the transmission, but also in Sustainable Construction with some lower volumes in the BBRG project. We continue -- and of course, and Seppo will give some more comments also on the FX impact and also the impact of the -- on the top line of our Latin American disposal, which we still had consolidated in first quarter 2025.

So in that period -- in this period of Q1, we continue to work on the actions to make the company more sustainable and in terms of profitability and resilience. We all know the geopolitical tensions and the trade changes that are happening in the market around us. So we've been continuously navigating that by additional initiatives on optimization of the cost structure and our conversion costs. We've seen that the conflict in the Middle East have so far not impacted our business in the sense that the projects mainly in the construction area continue to be executed. Of course, we see an increase in the cost like transportation cost or energy costs. So we are carefully watching the indirect impact of this conflict in the Middle East on the rest of the world in terms of inflation and cost changes.

We remain flexible in our supply chain and trade flows to serve our customers. From a financial point of view, we continue to drive good working capital. CapEx for the year, we estimate around EUR 140 million, and we proposed today during the general assembly here in Zwevegem headquarters, a dividend of EUR 1.95 per share, which is a continuous increase of 3% versus last year and continuing the share buyback of EUR 200 million, finalizing this program by the end of this year. So now I hand over to Seppo for more color by business and on the financials.

Thanks, Yves. And let's start by looking at the sales bridge from first quarter of '25 to first quarter of this year. Like Yves already mentioned, we have stable like-for-like sales after taking out negative 5%, about 5% effect on FX. That is a reflection of weaker Renminbi and U.S. dollar. Both those two started to devalue after first quarter last year and more recently, devaluation of Renminbi -- sorry, Indian rupee versus Euro.

Also, we had the disposal of Latin American business of SWS mid last year. And if you look at the comparable figures, that had 3% effect on the top line. Then looking at the volume growth and some business drivers before going to BU. So in Rubber Reinforcement, we have volume growth in Asia and North America. While in Steel Wire Solutions, we have volume growth, continued volume growth in transmission wires in North America, in Energy Utilities business. So good positive trend continues there. And in Sustainable Construction, we saw growth in higher value-added applications in North America.

So the positive sentiment over there in North America when it comes to our construction business has continued after a slowdown after first half last year towards end of the year.

So I think that's also, I think, important business driver that we can see now. We had a bit unfavorable mix in Rubber Reinforcement as we saw more sales in China, if you look at the relative share of sales globally. And in Steel Wire Solutions and Energy Utilities businesses, we saw some project delays in Europe. And a bit similar trend in BBRG, both in steel and synthetic ropes, we saw some project delays affecting the top line development for the quarter. Then let's look at the separate individual business units, and let's start with the Rubber Reinforcement and Steel Wire Solutions, where we saw volume growth in both business units.

Like mentioned, in Rubber Reinforcement, we had strong volume growth in China, and we continue to have full plant utilization levels over there. We also saw volume growth in North America, but volumes were down in Europe. We continue to focus on stronger high recycled content, tire cord and increasing scrap content in tire cords. And that is, of course, a competitive advantage we have and how we can differentiate from many of our competitors.

Also a bit of positive news relating to Bridgestone acquisition that was completed after the end of first quarter at the end of April as expected. And we also signed long-term sales agreement. So that has now added 2 new plants, one in China and one in Thailand to our footprint in Asia, strengthening our position there in the Rubber Reinforcement business.

We have 550 new employees coming from Bridgestone. EUR 80 million annualized sales and EUR 60 million cash consideration that was paid for the acquisition. And those plants will be now included in our figures starting from second quarter of this year. So nothing included in the first quarter report yet. Then we have a structural change. We moved ph( HEP ) back to Rubber Reinforcement from energy transition. So that increased the sales of Rubber Reinforcement and equally reduced the sales in energy transition. And it's because good manufacturing is similar and takes place in the same entities. So the operational technology synergies when looking at the RR and ph( HEP ). So that's the driver for the change.

Then moving to Steel Wire Solutions on the right-hand side of the slide, where we saw volume growth in Europe, but some delays in energy utilities projects impacting the mix. We had lower volumes for flex bright and flat cable armoring replaced by volume growth in round wire cable armoring, which is more mature product. We also saw strong volume growth in energy utilities in North America. There is structural demand trend, large investment in power and data transmission related to data center connections, grid expansions and modernization. So the positive trend there that we have seen already earlier has continued. There is some time lag of input price pass-through, especially U.S. where wire rod prices remain high.

We also have seen some price increase of the European market recently after the smart actions by the EU that were announced end of last year. Then let's move to BBRG and Specialties, where we had mixed performance in both BUs. In BBRG, we have some macro uncertainty that has continued to delay customer investment decisions impacting steel ropes demand. And we have some delays -- we have seen some delays in deepwater mooring projects impacting also synthetic ropes. The transport volumes were slightly lower as construction environment is subdued. However, other core applications are doing better and partly offsetting the sales value.

In Specialties, Sustainable Construction had lower volumes in commoditized segments, but strong growth in high value-added applications, especially in North America. So mix has clearly improved there. And that's something that we have been also actively working on. Other segments. In Specialties, good to remember that we had high comparable sales in first quarter last year, especially in hydrogen. And as you remember, we did some rightsizing actions in hydrogen business in Belgium last year that is obviously then reflected as well on the sales. And now back to you, Yves, to summarize and come back to our outlook.

Yes. Thanks, Seppo.

So as you can see, we continue the journey of making the company more resilient despite the market environment by work on portfolio, cost structure resilience. I want to highlight a couple of things specifically for '26 that are coming our way. The first one is, of course, the steel metal action plan that will come in place by the mid of this year. So with, let's say, import duties for imported steel. And we have to see, as we said, how that develops and impact the market. It should be favorably for the European steel industry production upstream and downstream.

We source 90% of our wire rods locally, correct? So from a cost impact, no impact. And secondly, after also consultation and discussion with the European Union and Commission, the steel metal action plan is in the first phase focusing on the steelmaking industry and not on the downstream, where there has been an agreement to review the scope of that within 6 months so that the full, let's say, value chain of the steel industry in Europe is protected.

Second change for '26 is CBAM, which came into place beginning of this year. And so there's a carbon border adjustment tax for imported products. And so that we are -- for the products we import, of course, translating to the customer, but also is protecting, of course, incentivizing the local production for our products here in Europe. On the financial, I already mentioned, I don't want to repeat. So if you look at the outlook for 2026, which is unchanged.

For the moment, we see no significant impact on the Middle East conflicts for us from a direct point of view. Indirect, we have to see how the inflation and the supply chain evolves in the upcoming months and also how the conflict evolves. On the energy side, we have been proactive and also have some hedging on some of the energy cost increases. We see good growth in areas like sustainable construction. If you remember last year, '25, probably '24 was lower, let's say, tailwind we had in construction, but that has turned around, and we see stronger demand in the U.S. and also continued strong growth in markets like India and Middle East.

We, of course, have to balance the competitiveness and uncertainty in more commoditized products like Rubber Reinforcement and some of the Steel Wire Solutions, but we have growth opportunities in the energy and utilities -- and also in energy transition, last year, we rightsized the growth platform of hydrogen. But in 2026, we have a stable platform, good stable cost structure. And we also continue to win qualifications certification with customers, which will increase gradually the volumes of that business upcoming months and years, of course, not with the growth areas above 10%, but some nice growth year-on-year.

So we expect top line like-for-like and also EBIT bottom line like-for-like to be the similar levels as 2025. Let me close on a personal note as this earnings call and today's general assembly meeting here at the Zwevegem headquarters marks a transition for me as I conclude my mandate as CEO.

It has been a privilege to lead Bekaert and to work alongside all our people and our customers around the world. I also want to express my thanks to the analysts for your constructive challenge and following of the business and also the investors who are putting their confidence in Bekaert and into the management. I wish my successor, Olivier and the entire team every success as they take on the next step for the company. I'm confident they will continue to build on the strong foundation in place and deliver sustainable value for all our stakeholders. So thank you for your trust and your support, and then we are open for questions.

[Operator Instructions]

Our first question today is coming from Wim Hoste with KBC Securities.

Yes.

And let me maybe also start with a thank you from our side for the engaging interactions in the past couple of years, and we wish you all the best in your future endeavors. Then on the questions -- sorry. Then on the questions, the first one is on Rubber Reinforcement. Can you maybe elaborate a little bit on the competitive situation, especially in China?

And I think your strategy in the past few years has been to go for an optimal capacity utilization. Is the rise of Zenith and the arrival of Zenith in the market changing anything to that strategy? Or will it change anything to that strategy? If you can elaborate a little bit on that?

And then my second question would be on the whole inflationary discussion, raw materials, transportation costs, energy. Can you maybe elaborate a little bit on how much or what kind of percentage of cost increases you're seeing at the moment? And how swiftly can you pass this on? Have you already succeeded to pass on past inflation? Or is that still an ongoing process? If you can offer a little bit more clarity on that? -- that would also be helpful. Those were my questions.

Perfect. Thanks, Wim. So let me take first on the Rubber Reinforcement.

So from our perspective, no change on our strategy. So we keep on loading the plants in China, selecting the right customer profiles and mix in China. So our utilization rate is above 95% in China and also taking, of course, the opportunities in Europe and U.S. And we've seen recently in the U.S., some opportunities for us to increase some of the volumes and the share there. So it's an evolving competitive landscape. Concerning Zenith scaling up, of course, it's not up to us to make comments on our competitors. But basically, that, of course, as mentioned in previous calls, the first impact is more local competition between local players. And we have to see over the long term, how that plays out. But for the moment, our strategy remains the same.

And when it comes to your question on inflationary environment and effects, I think, first of all, if you look at the key raw materials, especially wire rod. So what we can see is that if you look at overall, I would say that prices are rather stable. In U.S., we have seen a bit of reduction on the prices. In Europe, we have seen recent increase of steel and wire rod prices. I think it's an indirect effect of the smart action plan by the EU.

And we are working like always on the pass-through mechanism, which has been typically working well also with our customers. On energy, first of all, good to remember that energy is about 7% of our -- if you compare to sales, so it's about 7%. So that's at the share of the total. It's mainly electricity. Of course, volatility is having some concerns and has an effect on the overall the cost. In the shorter term, we are pretty well hedged if you look at our hedging policy.

So that, of course, smoothens the effect. But going forward, depending on how the Middle East crisis develops and how the energy market is developing, that can, of course, become a bigger issue. And on the logistics, obviously, increasing logistics costs, especially in Middle East and around Middle East shipments, some effect on the availability of ships and containers. But there also, we have been able to manage quite well on pushing through the increased costs to our customers. I would say that overall, the pass-through mechanism continues to work well. But obviously, as there has been quite significant increases also because of tariffs and other things in the past year or so, it's, of course, increased -- what we see is an increasing pushback from customers, but our sales teams has been very strongly on this and keeping an eye on the ball, so to speak. So I think we continue the strong push and work on that.

I think we have to see how this whole inflation will impact the demand in the industry. So that's, let's say, an uncertainty moving forward. But that's for all industries, not just for ours.

Our next question is coming from Frank Claassen with Degroof Petercam.

I have 2 questions. First of all, on your guidance, what can you -- on the flat revenues, what can you say about seasonality? What do you expect H1 versus H2? Will it be, as usual, a stronger H1 and H2 weaker? Or is there anything to say about seasonality? And then a more general question on competition, the Asian competition. You talk about supply chain issues maybe coming up, cost inflation. Do you already see that, let's say, in the Latin Americas, the U.S. or Americas of this world, there's less competition from Asia because of these issues?

Or do you still expect to see this? What can you say on that?

Frank, I'll take your second question and then Seppo can comment on the financials by half or the business by half. I would say if your question is specifically about the impact of the Middle East conflict on some of these global competitive threats, perhaps a little bit of mixed bag. For example, what we see in Middle East is that where Chinese competition has been also pretty severe. For example, there, we see a little bit relief from that competitive pressure and again, a little bit more for local dynamics. The impact on the U.S., I think we don't see specifically on certain trade flows changes, so perhaps a little bit too early to see. So I would say, in summary, except one our left area, no impact for the moment or no change.

And when it comes to seasonality, your question, first half versus second half, like you said, normally, and that's also our expectation that typically first half is stronger than second. As with the second half, we have the holiday season, Christmas, et cetera. What you can say that the wildcard, obviously, is currently what happens in the Middle East crisis or Ukrainian war. So those can, of course, change a lot, as you can imagine, with the macro environment and when it comes to demand development. But leaving that aside, I mean, no reason to sort of expect anything else with the seasonality than normally.

Okay. That's clear. And of course, also from my side, thank you for the past few years and good luck in your future endeavors.

Our next question is coming from Martijn den Drijver with ABN AMRO.

Yves, it's been a tough few years market-wise, but again, all the best with your future endeavors. Let me start off with that. Question-wise, I have 3, and I'll take them one by one. I just want to come back to that RR volume plus in North America because if I look at production volumes in the U.S., they were down mid- to high single digits, passenger cars and light commercial vehicles. You just mentioned that the competition from Asia in the U.S. was stable. So what drove the volume plus then? Because I assume it was market share gains because the trade tariffs were hampering your Asian competitors? That's question one.

Martijn, so you know that, first of all, on top of my head, I don't have the exact ratio, but if you look at tire cord production locally versus import, you know that for the American market, most of them are import. We are one of the few local players locally.

And what we've seen recently is for our business that we produce locally, but also on what we import is also some gain of market share at customers specifically. So I think you don't have to link it back to the overall tire demand, but more about how we've been able to develop some of the relationship with some local producers there and get some share from competition. But again, it's the local part is minority versus what we import tire cord.

And just a follow-up on this one. Do you think this is sustainable in the coming quarters?

I think, yes, in the sense of -- because the customers evolution mix is not something that changes quarter-by-quarter in a business like our.

That's great. That's understood.

And then on Asia, I was wondering, you mentioned something which I would call prebuying that customers were anticipating some supply chain issues. Is there some way you could help us understand what roughly the effect was in Q1 of that prebuying in Asia? Was that material? Was it -- any color would be helpful.

No, it's not really material, some increases, but not substantial.

Okay. And then on -- you briefly mentioned CBAM in your discussions with the EU. What are your thoughts now currently on the effect of local European wire rod prices once implemented?

So we have -- so first of all, I think in the current geopolitical situation, I think industrial companies like us are welcoming the trade barrier certainly for a period in time because we know that trade barriers are not a solution long term for competitiveness, but for the whole industry, upstream, downstream to get organized energy costs under control in Europe and becoming more competitive. So from that perspective, of course, welcoming for Europe, the import duties. They will be applicable from mid of the year. So basically, and I mentioned in the last call, I expect that -- I hope that the steel wire prices are not increasing in Europe because the objective is that the upstream, our suppliers would be able to produce more, get more share from the downstream business and become so more competitive.

So a little bit to be watched, and we have May coming closer to July to see what the prices are doing. We see slight increases, correct? So there is certainly the opportunistic approach of with import duties coming to increase margin and price in Europe. But of course, the steelmakers need to be very careful because if they too much and the downstream projects are not protected, they will not have a sustainable increased volume and profitability. And I think that's a little bit the trade-off and the dynamic that we need to watch the upcoming months until the downstream is protected.

Okay. And then moving on to SWS. Can you help us understand the effect that you mentioned of these power transmission project delays in Europe and the effect on volume? Because you've done well in the U.S. Are you now guiding for a more stable volume development in Q2 given these project delays? Or how should we view that element?

Well, it's -- first of all, it's project business. And that's always a challenge in the project business that when it comes to project delays, but it means the tenders are delayed or the existing projects are delayed. Obviously, they are not disappearing. So it's more the delay in the volume rather than lost business as such. But the key thing here is like also referred to in my comments that, of course, geopolitics has an effect as well there on the business activity and investments going forward, and that might then be driving the volume development as well.

All right. And I'll squeeze in one final one. What -- you mentioned several times that there are initiatives to mitigate inflation and supply chain challenges. Can you give us a few examples of what you do?

[Technical Difficulty]

When it comes to wire rod, simplifying the SKU [Technical Difficulty] structure, combining consolidating the volumes to more to fewer number of SKUs, meaning that we are more volume player in those. So we can then shift easier volumes from one supplier to another or from one region to another, and that may also mitigate the effect of those smart as well as increasing our actions when it comes to tendering of our volumes. And then also, I think the pass-through mechanism, that's an important part. I mean our sales teams are actively working on passing through the increased cost also to our customers so that we need to be there very active.

Our next question is coming from Alexander Craeymeersch with Kepler Cheuvreux

Also from our side, thank you, Yves, for the interactions and the color that you have provided on Bekaert. My questions -- I have 3 questions. The first question would be on Rubber Reinforcement. I think the mix has been a bit lower. So I think you also mentioned that there's more volumes in China. So I remember in the past that the China production has been a bit more margin dilutive. So I'm wondering how we should see the margins for the remainder of the year if volumes remain like this for the rest of the year?

The second question would be on BBRG. You mentioned weakened steel rope demand due to delays in projects. So are we now in the outlook foreseeing a pickup in the remainder of the year? And also, if volumes would remain where they are at the moment for BBRG, what would the effect be on the EBIT margin? Because I remember OpEx is rather stable in this segment. So it's not giving much room for adjustments, if I remember correctly.

And then the third question would be on the outlook. So the flat sales, flat margins. Would -- is that made with the basis that we see an improvement versus Q1 or that we see the same as Q1?

Let me start with the first on RR and then you can take BBRG on the outlook. So on RR, the strong business in China is, of course, linked to the whole, let's say, shifting of the automotive industry. Is it car making, truck making? Is it the tire industry? Correct? Which is increasing the global impact out of China. That means there is a strong pull and strong opportunity in that market. We've been always -- we've been very selective.

In the past, we've been also reducing our capacity in China while optimizing in existing plants. So we have 4 plants running at full tilt. It's true that the competition in RR has been severe, but it continued to be severe. And so we're also working on our cost side, correct, to protect margin in a business or a market where there is more price pressure than you have typically in Europe or in the U.S.

So it's a combination of good filling of the plant, but also we continue to be disruptive in the way we lead our production plans and drive cost efficiencies. So that's the journey we are on.

Then coming to your question on SWS and Rope business, I think in SWS, what we are continuing to work in is the mix, both geographical and product mix. And that's, of course, the key going forward. It's not only volume always, as you can imagine. Then on the ropes business, it's good to remember that the number of tenders are still in the pipeline and think about the future outlook and where do we then end up with the full year depends very much also on our success on the tenders going forward. So that's, I think, one of the key drivers there. Then it comes to outlook, as you saw that Q1 is in line with last year like-for-like as we are guiding. Other than that, of course, I mean, we expect normal seasonality like I commented earlier. So no change in that expectation, think about the outlook.

But as you saw, we flagged and highlighted certain risks around the geopolitics indirect effects of the war in Iran and energy market turbulence, et cetera, which I think it's something we all are facing on the macro economy, and that will, of course, drive the way forward. So far, like we said, we have been mitigating well and direct effects have been very limited, and we have been able to manage the indirect. But of course, if the situation continues, we are not immune. And that is, of course, the risk side of it. But so far, so good.

Okay. So in conclusion, I mean, the margins in Q1 have been -- we cannot say much about the absolute and the relative margin, but the margins have been somewhat stable versus the prior year.

I like I said, so far, so good.

Okay.

[Operator Instructions]

As we have no further questions on the lines at this time, I would like to turn the call back over to management for any closing remarks.

Good. All right. So thanks for taking the time for the trading update. So more to come in the upcoming months. And again, also thanks for the good collaboration, constructive discussions we had from the analysts and investors really enjoyed it. And so looking forward to meet you somewhere else. Thank you.

Thank you.

Thank you. This does conclude today's conference call. You may disconnect your lines at this time, and have a wonderful day, and we thank you for your participation.

Good morning, and welcome to the Bekaert 2025 Results Call. [Operator Instructions] As a reminder, this conference is being recorded.

It is now my pleasure to turn the floor over to your host, Mr. Dries Van Hamme, Director of Investor Relations. Sir, the floor is yours.

Thank you, and welcome to our analysts and investors. I will first read out the safe harbor statement and then hand over to Yves Kerstens, CEO; and Seppo Parvi, CFO, who will comment on the results and the outlook before we go indeed into Q&A.

So this presentation may contain forward-looking statements. These statements reflect the current views of management regarding future events and involve known and unknown risks, uncertainties and other factors that may cause actual results to be different from any future results, performance or achievements expressed or implied by such forward-looking statements.

Bekaert is providing the information in this presentation as of today and does not undertake any obligation to update any forward-looking statements contained in it in light of new information, future events or otherwise.

Bekaert disclaims any liability for statements made or published by third parties and will not undertake any obligation to correct inaccurate data, information, conclusions or opinions published by such third parties in relation to this or any other publication issued by Bekaert.

And I now hand over to Yves Kerstens.

Thank you, Dries, and welcome all. Many thanks for joining today's full year results presentation. As per usual, I will cover some introductory comments, highlights, and then Seppo will take us more through the financials in details and also by business unit. And I will wrap up with some updates on operational strategy direction, including the outlook for 2026.

So 2025, clearly a year with a lot of market volatility and trade tensions. In that context, we've been working on passing through and mitigating all the effects of the tariffs. We've seen stable volumes in our Rubber Reinforcement business and some volume growth in our Energy & Utilities business.

On the other hand, we've seen some project delays in steel roofs and construction business, mainly in the first half of 2025 in the US and in some other markets. During '25, we also adjusted our hydrogen footprint in line with the weaker outlook on the green Hydrogen business.

In '25, we've been focusing on the things we can control, meaning making our company structure more leaner, more agile. So we took a big step in reducing the overhead cost by EUR 40 million. We created around EUR 40 million, EUR 39 million efficiency in operational excellence. That means in our, how we purchase wire, but also how we operate the factories and also by good utilization of some of the factories, creating operational leverage.

In 2025, we have EUR 162 million of one-off charges, which has a limited only EUR 8 million cash impact by adjustment we did on the footprint to in line with the future demand expectations. So clearly, we will work on a lower cost base, creating us also a lower cost base moving forward. And we are also further working on the portfolio evolution of the company. We took a further step in divesting the LatAm North in Ecuador, Venezuela and Costa Rica business in Latin America in our SWS business.

From a financial performance point of view, a lot of focus. So we delivered an 8% EBIT in and thanks to this well good cost control and on top of a strong free cash flow generation by working on all the levers of the working capital. And so free cash flow above EUR 300 million. We propose with that strong performance dividend increase from EUR 1.9 to EUR 1.95 per share, and we will continue our share buyback until the end of the program this year.

So I hand over now for Seppo for some more color on the overall financials, but also some insights per business area.

Thanks, Yves, and welcome also on my behalf to this full year results call.

Let's start with the Q4 sales performance. And we are now seeing gradual recovery after a soft start in the first half of 2025 when tariffs caused significant project delays for customers, especially in our flooring business in the US and steel ropes business in US. In the last quarter of the year, we continued the improvements we saw in the third quarter of '25. In Q4, like-for-like volume increased about 2% compared to 3% increase in the third quarter, the quarter before.

In SWS, Energy & Utilities had strong growth, especially in the US. And also in RR, our Rubber Reinforcement business in China, we continue to see volume growth, and that helped us to increase the capacity utilization at the plants and happy to see that we have full plant utilization there continued. However, there was continued softness in steel ropes both in the U.S, and North America. Then weaker demand in hydrogen prompted us to adjust our footprint and cost base leading to also hydrogen impairment. I shall return to those later in the presentation.

Then look at the full year sales. As said already earlier, soft start for the year in the first half due to tariffs had an effect on the full year sales development as well. But positive thing is that with the second half of the year, we started to see recovery across many of the BUs. We are not back to normal levels yet, but I think development in Q3 and Q4 was encouraging.

Second half, we saw 2.5% volume growth for the group on a like-for-like basis. And for the full year, we were still 2% behind like-for-like, mainly due to lower raw material input cost pass-through as well as then on top of that, there was FX and M&A related issues, why the sales came down from close to EUR 4 billion to EUR 3.7 billion during the year.

Then on the EBIT view, and I would say that, first of all, we have continued to defend the margins. We have to support the margins by cost reductions and footprint optimization. So there, I think the work done is paying off well. So we managed to protect margins well despite lower volumes, thanks to cost control, both overheads as well as operational improvements when it comes to efficiency at our plants.

We had high plant utilization in China, leading to better fixed cost absorption in RR and cost savings were done in all levels. I think throughout the organization, our teams have been contributing in all plants, all functions, as well as in the corporate center to the margin protection work through the cost savings. And we had EUR 40 million reduction when it comes to overheads as well as another EUR 39 million, close to about EUR 40 million when it comes to operational cost savings and better plant utilization. And we continue to focus on cost base to protect margin and cash flows, also going forward.

And it's important to notice that we are more cost competitive now than ever before so that when volume growth returns, our improved operational leverage will support our higher profitability levels going forward.

Then let's look at the various business units, how the business was developing. And let's start with Rubber Reinforcement, where we had stable margins in challenging environment. So, despite the significant challenges in the market that the weak truck tire market and intensive competition in many of the markets, our cost and footprint actions allowed us to report stable volumes and margins.

Full year volumes were slightly up 0.2% and the lower wire prices with the exception of US, and lower selling prices due to pass-through mechanism as well as with a bit more volumes in China led to 2.7% mix and raw material price impact. Organic sales decreased 2%. Like I said earlier, in the group level, we also saw here encouraging development, especially in the second half, when the volumes were up 2%. And especially, we saw positive development in China and North America.

Important step was also our acquisition of the captive tire cord production plants of Bridgestone in China and Thailand. This was announced after the new year, but it's worth to mention also here. And it is an important step to strengthen our position in the growing Asian market as well as amongst the big 5 customers where Bridgestone is one of the most important customers we have globally. And as many of you know, we have a good track record when it comes to consolidating captive production from key customers. And I think this also reflects Bridgestone's confidence in our quality and operational excellence when it comes to running tire cord production.

The sales on annual level will be increased about EUR 80 million, thanks to this acquisition, and cash consideration that we paid is about EUR 60 million. We expect to close the deal during the next month or 2 once we get all the antitrust approvals in place.

Then next, moving to Steel Wire Solutions. The strong volume growth was driven by Energy & Utilities demand and also profitability was strong. Important to note that following the LatAm disposals back in '23 as well as last year in '25, we have now repositioned business into higher-margin markets. For instance Energy & Utilities is now 30% of the sales.

We are seeing double-digit growth in North America in this business. And that is, I think, important proof point of our position already in the electrification market, which we think is an interesting growth opportunity area in general as well. For the full year, like-for-like sales were up 4%. Of course, the divestments and previous capacity closures are having effect on the reported sales. But important to note is that there is good underlying growth.

Strong profitability. EBITDA margin remains close to 10% despite temporary delays in pass-through of raw material costs in North America and unfavorable mix in Europe, where we had more Agri and construction wire business and some project delays in Energy & Utilities.

Next, let's look at our ropes business, BBRG, where, like I said earlier, steel ropes were affected by tariff uncertainty, but synthetic business has been performing well throughout the year. And I think it's fair to say that the BEXCO acquisition that we had done a couple of years ago has been well integrated and created new business growth opportunities, where there are 2 good proof points also when it comes to 2 largest ever contracts that they have been able to win recently. I think I will mention about those later a bit more.

When it comes to Advanced Cords, they had slightly lower volumes due to weaker construction markets in China and Europe. Otherwise, I would say A Cords has continued also stable performance throughout the year.

Then moving to Specialties, where I would say that the challenges were probably largest looking at different BUs. There we had slower growth, and that has led to adjustments across the businesses. In the Construction, like I said earlier, tariff uncertainty was high, especially in the first half, and US customers were delaying projects until more visibility was available. And that had significant impact in the first half, followed by a recovery in the second half.

But like I said, we are not yet back to normal. There has been increased competition in the EU market in Australia impacting volumes and prices, and it's fair to say that the EU market has remained rather slow. But we see strong growth in the new regions, Middle East and India, where we are building a position and penetrating the markets at the moment. Of course, starting from a low base, but quite encouraging development there.

In Hydrogen, slower demand outlook has been visible now for some time, and it's very much linked to the regulatory delays in Europe and US And that has led us to adjust footprint and cost base, and also the impairments that we have taken to be aligned with the new demand outlook. So, profitability in Specialties was impacted by weaker demand and unfavorable mix in Construction, especially in the first half, and lower demand in energy transition-related end markets, not only in hydrogen, but also in some of the others.

Then let's take a look at the joint ventures that we have and how they have been performing. Top line was slightly coming down. That's mainly driven by the foreign exchange rates, a bit also lower volumes. But important to notice that they continue good cash flow generators for us. If you look at the dividends received again last year, about EUR 50 million, in line with the year before. So, this is an important contributor to our cash flow continues.

Then to summarize the restructuring and impairment charges that we had taken last year, EUR 162 million in total. Important to note is that only EUR 8 million cash impact on net basis is coming from here. In Rubber Reinforcement in total, we had EUR 40 million. That is related to restructuring in China. We closed some plants there a couple of years ago, and there were some additional one-offs still, as we have not been divesting those plants yet. So, we had to take that. And in Europe, Europe is also related to restructuring, streamlining, and rightsizing.

Steel Wire Solutions was also EUR 50 million. A Big part of that relates to LatAm disposal, as communicated also earlier, and EUR 13 million of impairments and restructuring costs mainly in Belgium.

In the ropes business, EUR 14 million, which relates to the consolidation of the synthetic ropes business from Scotland to Belgium. And then finally, specialties in total, EUR 61 million, out of which EUR 55 million relates to Hydrogen business impairments and consolidation of the activities in China.

Important to note this year, we are not exiting the Hydrogen business. We are adjusting our footprint and capacity to the current demand, and we are ready to ramp up production in Belgium when we see that the demand is coming back. But we need to, of course, face the realities of the market currently.

Then, looking at the full profit and loss. I don't start to go through it line by line, but maybe a couple of comments to summarize a bit the development during the year. So strict cost control has improved our cost base, reduced SGA costs and other overheads, has safeguarded our margins. But our reported EBIT and profit were significantly impacted by the mentioned one-offs, even though they were quite neutral when it comes to cash impact.

You might notice that the ETR Effective Tax Rate is quite high for the year, 69%. But if you exclude and neutralize the effect of the one-offs and impairments, ETR would have been 24% in line with the year before. So I think that's a reasonable level, also looking into the future. We obviously work on optimizing the ETR going forward.

Then to another focus area. So, in addition to costs in 2025, we were also very much focusing on working capital and cash flow. And there, I think our teams have been doing excellent work in addition to cost control. We have decreased working capital from EUR 650 million to EUR 520 million, so a EUR 130 million reduction in working capital. Working capital is now 15% of the turnover, coming down from 17.3% a year earlier. So, actually reaching the target level we set internally some time ago for the working capital.

Of course, work continues. It's, of course, more difficult going forward to take out another EUR 100 million from working capital, but I'm sure there are still some smaller pockets where we can release some cash. This also led to excellent free cash flow, EUR 314 million, up from EUR 193 million the year before. That also led to reduced net debt. Net debt came down by EUR 100 million during the year, and the balance sheet is very strong. Our leverage is 0.4 if you look at the net debt to EBITDA. That means that we have acquisition firepower and when we find suitable targets to.

Working capital. In addition to working capital, capital expenditure was reduced to EUR 139 million as we did not foresee the need for any major growth CapEx. We have done some smaller steps during the year. But I would say that the level of EUR 139 million is still reasonable, and we are able to take care of the asset base. So I don't see any issue with the current level that we would put our asset quality in danger. What we expect in the year that has started in 2026 is that it will go up to around the EUR 170 million level, depending a bit on the execution of the growth project, and depending a bit on how the year develops during the coming months.

Then let's look at the shareholder returns before I hand over to Yves. So we have consistently generated strong cash flows, and that has enabled us to also increasingly give better returns to our shareholders. And we continue this also in 2026. The proposal by the Board to AGMs is that we would increase the dividend to EUR 1.95 a share. That's 3% increase year-on-year. And we continue our share buyback program that was already announced 1.5 years ago. So we continue that still until the end of November this year.

And now back to you, Yves.

Good. Thanks, Seppo. So clearly, in the current environment, we've been really working on strict cost control and good cash generation. And Bekaert is really coming out of the current environment stronger and more cost-competitive than ever before, and our operational level has really improved.

In parallel, we've been continuing to work on our transformation of the portfolio with the divestment of SWS footprint changes, making each of the BUs more market-driven, but also more independent, and exploring M&A opportunities in the area of sustainable construction, Energy & Utilities, electrification, and the Lifting and Mooring segment.

So let me pivot now to each of the business segments or the end markets we operate in. Let me first start with tire enforcement and give some comments on how we see the global tire market. And it's a completely different message or picture by region. If we look at China, very strong demand, of course, driven by local demand, but also global business of the tire makers out of China and Asia. We see in Europe a more subdued demand, mainly in the B2B business for tires, combined with an increased import of, let's say, tire imports from Asian countries.

And then in the US, we've seen in '25 a pretty strong tire demand, but also there is an increase in imported tires from Asia, up to almost 80% imported tires. So that means for us a very strong position in tire demand in China and Asia, and a more subdued demand for local tires in Europe and in the US.

We continue to evolve in the strategic strengthening of our position in tire reinforcement. So we have an additional 2 acquisitions of 2 plants of Bridgestone, one in Thailand and one in China, and will strengthen our position moving forward, and strengthen our relationship with the Bridgestone Corporation and the top 5 premium players worldwide.

If I move to the Transmission & Performance Wires, as mentioned, we've seen a nice demand growth in our power and data transmission markets, supported by funding in the different regions and certainly in the US, with the modernization of the grid. Thanks also to the divestment in LatAm and the further mix improvement, 30% of our Steel Wire Solutions business is now focusing on Energy & Utilities, and we will continue that trend.

Moving to advanced Lifting and Mooring markets. So we serve with our BBRG business, both steel wires or steel ropes and synthetic ropes. We've seen weaker demand in North America linked to the uncertainty of the tire service first half of the year and also in Europe due to less mining activities, but we have seen a very strong order book and business in our synthetic ropes business.

And I want to highlight 2 nice projects in this business that we've been attributed. One is the Coral North project, where BEXCO will deliver the synthetic ropes for the mooring solution of a floating LNG platform in Mozambique. And the second win is a project in the Tiber-Guadalupe project, which is in the Gulf of Mexico, where it's an oil and gas platform where the connectors of flip will be used to connect the platform. So nice wins in new businesses we are focusing on.

Pivoting to sustainable construction. As a couple of times mentioned, North America was a difficult market in the first half, second half of '25 recovery, and we see this constant recovery in the first couple of months of 2026.

Increased competition in Europe and Australia, local competition, but also due to imports. On the positive side, we continue to have nice growth and nice wins in the Middle East and India. And also pivoting, we have tunnels, we have the mine application, we have the flooring application, we are in precast, but also moving into new applications like rafts.

And I would like to highlight 2, let's say, important projects here. One is the win of the Dubai Metro Blue line project where, let's say, the segment lining reinforcement will be done with our Dramix. And on the other hand, closer to home in Antwerp, where the new SD Workx HQ in Belgium has been built, using the Dramix fibers for the foundations for the rafts, which gives a very strong TCO advantage also in a new application area like the rafts.

Moving to the last segment, energy transition. So covering our filtration business, covering our combustion technology business and also the Hydrogen business. And as reported in the last 1 year, 1.5 years, we've, of course, seen the delay there. If I give you some perspective on how we look at that market is that 3 years ago, we were looking at the installed base of electrolyzers cumulatively by 2030 worldwide at 170 gigawatts. And then 1.5 years ago was revised to 80 gigawatts. And today, we look at the market for 2030 at 35 gigawatt.

So you see a constant evolution of the outlook of the market and the demand. On the positive side, we've seen an increase of 30% of the final investment decisions of big projects investments. So on the ground, it continues to further scale, but of course, at a much more lower growth rate than initially predicted.

We continue to invest in the business in terms of R&D. However, as mentioned, we have been rightsizing our footprint in line with the market outlook. In our customer base, we deliver, let's say, all big electrolyzers OEMs. And of course, some of them did some strategic reviews and reposition the business. On the other hand, we have some of the really big companies who are specking in our current PTL in their future products. So that's a positive news and the positive evolution. So a segment to be monitored, to be watched in the future.

So I would like to take a moment to step back a little bit on the perform, transform, grow of the company and certainly focus on the first one to perform and look at 3 periods, pre-COVID, COVID, post-COVID.

And if you look at pre-COVID, it was a market environment that was pretty positive, stable demand, low inflation. And on average, we delivered a 6% EBIT. During the COVID period 2021, '22, of course, a sharp contraction of the market, but also a strong rebound of many the mass market supply chain. In that context, we delivered on average an 8.6% EBIT margin. And then I would say post-COVID '23, '24, '25, characterized by geopolitical challenges, the war, energy crisis, inflation, slow growth around the regions, we delivered also consistently 8.6% of profit. So well delivered on the performance, well delivered on the cash generation. And so certainly, the focus points moving forward continues to further improve the profitability by operational leverage, but also by growth.

I would like to wrap up.

'25, from our perspective, a resilient performance, strong cash flow generation, position the company from a cost structure for the future, continue to transform the portfolio, nice shareholder returns. And if you look at 2026, with what we see today. We see a continued evolution in the geopolitical situation and trade uncertainty.

We see some recovery in construction, some growth for the utilities, Energy & Utilities, some more challenging market environment in core markets. But in that context, we look at a stable 2026 on the top line and on the margin side, if you look at from a like-for-like basis.

So I would like to wrap up here and open the session for Q&A.

[Operator Instructions]. Our first question today is coming from Wim Hoste with KBC Securities.

I have a couple of questions. First, around Rubber Reinforcement. Can you elaborate on the competitive landscape in China, and I'm specifically making the reference to Zenith. Now is that impacting the overall market structure and pricing levels in the market? Can you then also elaborate a little bit on the balance of your volumes between core contracts and maybe fill-up business, how that is evolving? And then also, can you comment on the profitability per geographic region in Rubber Reinforcement, is China at group levels or division levels or above? Now and then a question on the overall regulatory environment. It looks like there's going to be changes to US tariffs also in the UA regulation on steel quota, et cetera, is changing. Can you maybe impact on how you view that regulatory environment? And how is that factored into your guidance?

Thanks for your question. So let me first start with the RR and the competitive landscape. So as we know, Zenith is scaling up their business and their operations. Now as we know from history, making tires at the right quality, the right performance, consistency, it's I would not say, but it's something you need to get experience with. So they gradually are scaling up. Their primary focus, of course, is more on the lower end, the commoditized businesses, which we are less in. So we let's feel the price competition in these segments.

Of course, over time, they will further, let's say, develop and further increase their capabilities. But for the moment, I would say, from that competitive landscape, no big change. Our position in China remains very strong and that brings me to the second question of your point and it is the combination of the core business and what you call the fill-up business.

Now out of competitive situation, we don't give details here, but so we had a very strong 25% loading of the factory in China with a good outcomes of mix but also resulting in good financial performance. So I think, of course, the majority is our base good businesses and the minority is, of course, the fill-up business where we opportunistically trade off the volume effect of the plant and the business we can generate with that.

In terms of profitability, as you know, we don't give profitability per region for RR, but you can assume that the profitability is on average across the board, correct, with, of course, different mixes. But on average, all our businesses are very well profitable and around the average levels.

And of course, I think you refer to Chinese and China market. And there, you have to remember that we focus more on high premium segment of the market. And it's fair to say that customers globally, not only in China, but also elsewhere and especially in China, they appreciate our innovativeness, our good quality service level, which also supports that we are able to keep margin level also the domestic market there at a reasonable level. And we are very selective also when it comes to customer product portfolio. That's an important part of the business management, how you manage your portfolio.

Then let me pivot to your second question on the evolution of the tariffs. So there's 2 components. First of all, on the US tariffs the steel tariffs and the aluminum tariffs under Section 232, basically, there is no change, and they remain in place and there is no changes.

So the only change that there is on the reciprocal 10%, 15%, which is applicable for non-steel and non-aluminum products. And so that is I'm not saying it's not irrelevant for us because it influenced a little bit how the market and the trade looks. But basically for us from a tariff point of view, it's not changing versus the last year.

On EU, I think there we go into 2026, where the steel metal action plans will come in place by the mid of the year, correct? So to be monitored how that will be influencing the demand and supply balance of steel in Europe and the pricing, but not active in the first half of the year and to be monitored for the second half.

Our next question is coming from Frank Claassen with Banque Degroof Petercam S.A.

I can hear you now.

Yes. Okay. Sorry for that. Frank Claassen. I got a question on your margin guidance, the flat margin for '26. Can you say anything about what you see in phasing, let's say, so the first half versus the second half? And a bit similar for the different BUs. Do you expect all BUs to be around about the same level as '25? Or do you see some pluses and minuses there?

Typically, if you look at the phasing of our business, typically, first half is stronger than second half. You have to remember the second half, what we have is that there is, of course, holiday season in most of our markets as well as Christmas New Year, which is having an effect on the volumes and cost coverage.

Then it comes to businesses, I think if you look at the guidance and outlook, we do see some, like I mentioned, also recovery on construction and steel ropes in US where the first half of last year was quite challenging and difficult. And the growth opportunities continue in SWS Energy Utilities segment. But other than that, I would say that it's rather flattish.

Seasonality as well, yes.

Okay. And maybe last question on the your CapEx, it's going up. What are the main growth projects for '26?

So the different components of the CapEx is, first of all, about what we call our compliance CapEx and maintenance CapEx. Secondly is what we do the improvements in terms of productivity aspect. And what we see now what we foresee for next year is less on the growth because we don't need extra capacity in some businesses, but it's more on automation, correct, to get productivity up, cost down efficiency. So that's what's more driving the increase than really growth initiatives.

And then we have some growth CapEx in Energy & Utilities in US, relatively small in the total, but some to be able to capture the growth we see [Indiscernible].

[Operator Instructions] Our next question is coming from Alexander Craeymeersch with Kepler Cheuvreux.

Yes, I'm looking at CapEx these days, and it's now standing at 3.7% of sales versus I think it was 5% historical level. So I'm wondering how long we can keep the CapEx at these levels? And then maybe a somewhat related question, which is what is the normalized levels of working capital at the moment? 

Because I thought that was around standing around like 16%, but now we see that 14% of sales, which is obviously a nice improvement. But yes, again, wondering how sustainable it is on the long term.

Third question would be on Bridgestone. So you acquired a plant there in Asia. So I'm just wondering, considering that these are relatively old plants, if you also see some CapEx for these in 2026? And then maybe if you can just shed a bit of light on what the long-term supply agreements look like with the deal here. That's my questions for now.

Maybe I start with the CapEx and working capital and then hand over to Yves on the Bridgestone related questions. First of all, on CapEx, if you look at the CapEx structure, means we need roughly EUR 80 million to EUR 100 million a year for the maintenance and compliance CapEx. And as you can see with EUR 140 million level last year, we are above that.

So even that allows for some additional improvement and growth CapEx. If you compare to previous year's levels, you have to remember that there we had quite significant growth investments included for instance in hydrogen, which are now not needed as we are well invested for the current demand on the market, not only hydrogen, but also in other businesses. And like we have said earlier that if and not only if, but when the growth comes back, we are ready to increase the CapEx levels from the levels we have, we are currently having to, say, EUR 200 million. So, it depends on the needs. I mean we have balance sheet to do it when the need comes.

When it comes to working capital level, so we are now at 15% level. And this is quite a nice significant improvement year-on-year from over 17% earlier. It's sustainable, I dare to say we have been working a lot on structural improvements. We have worked on improving our processes to reduce overdue receivables when it comes to dunning. So we have better processes in place there has been significant reduction of overdues.

We have improved our inventory management, our sales and operations planning to be able to reduce the inventory levels that we have. We have worked on improvements of our supplier payment terms. So our procurement team has been doing the good work and continue to do it. Also on the sales side in addition to collections, we have been working on the customers the payment terms. So I would say that it's a stable level.

Of course, the challenge is that the lower you get, the more challenge is to reduce more. And that's, I think, fair to say and important to keep in mind that it's more like I said in my part of the presentation that I see some pockets where we could still reduce the working capital, but do not expect another EUR 100 million, just to be realistic.

Good. Then let me pivot to the question on the Bridgestone acquisitions type of factory. So two factories, one in China, one in Thailand. In China, we have our own factories. And of course, this is a complementary location here, which will also give opportunities for, let's say, for synergies with our China operations.

And secondly, in Thailand, which is a country where we didn't have type of production, another additional supply base for us. This, of course, like usual, is going together with a multiyear supply agreement, not only for these plants, but also partly, of course, of our continuing collaboration with Bridgestone globally.

So from a CapEx point of view, we know this technology. We know the operation. We've been acquiring Bridgestone plants before. And we've been supplying Bridgestone with all our factories worldwide. So we know their products and we know their technology. And there will be opportunities for optimization with smaller CapEx, but there's no exceptional CapEx needed for these operations. They're in a good shape, and we can integrate them in our operations.

Maybe if I can just have one follow-up there. So on that multiyear supply agreement, is there like a sort of agreement that you would bring in maybe technologies that are present in Europe that maybe Bridgestone uses here already to those plants there? Like, or what was the trigger for them to basically sell this business with a multiyear supply?

I don't want to comment instead of the CEO of Bridgestone correct on the strategic rationale, but it was part of their strategic plan to focus on the core businesses and basically to create leverage here by allocating these two plants to an existing supplier.

Okay. And then just one for housekeeping. So yes, I think you mentioned that the hydrogen plant came up and is now being depreciated, which weighed on specialty business margins. Could you maybe remind us of when, as of when in 2025, the plant started depreciating?

Full. Yes, full year 2025.

Our next question is coming from Louis Billon with AlphaValue.

So my question is on the expected dividend from your JV in Brazil in 2026. How is the market environment in Brazil? And could you give us more details on the competitive landscape in Brazil?

Of course, when it comes to joint venture development, we don't give guidance there. But if you look at the history and trend, there have been quite steady performance as well as when it comes to cash burn and joint ventures there. The dividend flow has been quite steady. Last year, they had, they suffered from currency translation effect if you look at the weaker local currency. And there has been some increase in imported volumes. But I think they are well positioned on their markets. And in that sense, we are confident they continue solid performance. But I cannot go more into details of those joint ventures. We are a minority shareholder there. So that's in mind.

Okay. And maybe on the competition, competitive landscape in Brazil?

Yes, perhaps I can give you some color there. But the two businesses we are in the Steel Wire Solutions and then in the Rubber Reinforcement business. Steel Wire Solutions, very local, very good presence, strong competitive position there for our joint venture. If you talk about the Rubber Reinforcement or the tire cord business, there you have a more, a different a little bit picture with more competition coming also from imports. So, I think you should, but the biggest part of that joint venture is the Steel Wire Solutions.

As we have no further questions on the lines at this time, I'd like to turn the call back over to management for any closing remarks.

Good. No, thanks for participation. Thanks for your questions. Thanks for following the company. I wish you, I suppose, a very nice and beautiful day, and thanks for attending.

Thank you. Ladies and gentlemen, this does conclude today's call. You may disconnect your lines at this time, and have a wonderful rest of your day, and we thank you for your participation.

Good morning, and welcome to the Bekaert Third Quarter 2025 Trading Update Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to turn the floor over to your host, Mr. Dries Van Hamme, Director of Investor Relations. Sir, the floor is yours.

So welcome, everyone, to the analyst call on our Q3 trading update. As usual, I'll read out the safe harbor statement before passing on to Seppo Parvi, CFO, who will take us through the sales update and then to Yves Kerstens, CEO, who will conclude and give an outlook before we take it into Q&A.

So this presentation may contain forward-looking statements. Such statements reflect the current views of management regarding future events, and involve known and unknown risks, uncertainties and other factors, that may cause actual results to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements.

Bekaert is providing the information in this presentation as of its date and does not take any obligation to update any forward-looking statements contained in it, in light of new information, future events or otherwise, and we do not disclaim any liability for statements made or published by third parties and we do not undertake any obligation to correct inaccurate data, information, conclusions or opinions published by third parties in relation to this or any other publication issued by Bekaert.

And I now hand over to Seppo.

Okay. Thank you, Dries. And let's start by looking at the top line development. First of all, if I would describe shortly, third quarter. It's fair to say that we had an experienced stable sales in the third quarter in difficult markets, and we have continued to focus very much on cash flow generation. Like-for-like sales in the third quarter were brought in line with last year. We saw some volume growth in core markets. But like I said, we are very much also focused on cash flow and further cost improvements.

If you look at the reported sales, we saw 3.8% decline due to the foreign exchange that is a translation related. It relates to operations in U.S. and China. Both currencies have weakened during the year and obviously then converting to euro, our base currency, we see drop on the sales line. Adjusting for M&A as well as some capacity closures, that's another EUR 30 million reduction on the reported sales bringing at EUR 890 million like-for-like base from -- in Q3 last year, so 1% reduction there.

Some volume -- positive volume improvement and development as well as the price mix reduction may be pass-through of the lower raw material costs. Looking at key drivers and 3% volume growth that we saw during the quarter. We had growth in energy and utilities sector in Steel Wire Solutions, that is transmission wires, especially on the U.S. market. We had also volume growth in China for Rubber Reinforcement and happy to report that we were running our plants fully over there. U.S. flooring business was improving in the third quarter for Sustainable Construction business.

However, we still saw some effects of the tariffs, but especially the number of tenders increasing in data center business, but also in industrial and warehouse related flooring projects were picking up, but not at the same level as we have been in the previous year. And in the steel ropes business we saw weaker demand, both in Europe and North America.

Then moving to 9-month sales bridge where we are year-to-date. Our like-for-like sales decline was mainly driven by lower raw material costs. If you look at the reported 9 months sales, we had about 2% negative effect from the FX and the M&A closures had the effect of EUR 26 million. So like-for-like, '24 sales were EUR 2,931 million compared to EUR 2,833 million this year.

Then let's look at various business units and business behind, let's start with Rubber Reinforcement, well, like I said earlier, we saw volume growth both in China and North America. Now the picture was a bit mixed across regions. So in addition to volume growth in China, where we saw strong domestic markets, we had volume growth also in North America, but lower volumes in Europe as well as in India, where we saw some increased competition from imports to the market.

We have worked on optimizing our plant utilization, especially in China, that has helped us to support profitability and overhead coverage as well as cash flow in the region. Also happy to report and tell about the award recognition for our reinforcement innovation work done, we have received Green Point China - Sustainable Case Award for advancing low carbon tire manufacturing in Ultra and Mega Tensile solutions.

And then let's not forget our sales in Brazil, joint venture in Rubber Reinforcement business had sales of EUR 33 million in the third quarter. And these are not included in our consolidated sales, I'm sure you are aware.

Then moving to Steel Wire Solutions, where we had strong volume growth in energy and utilities business, I'm happy to report that we have actually like-for-like basis, 6% increase in the sales. We had strong volume growth and higher volumes also in China, supported by strong automotive end market, in addition to energy and utilities market, like I mentioned earlier. You have to remember, if you look at the reported sales that there's an effect of about 30, 3-0, EUR 30 million from divestment in LatAm, Costa Rica, Ecuador and Venezuela businesses that were finalized end of the first half of this year. And sales in Brazil joint venture, EUR 166 million in the third quarter. And again, to remind that those are not included in the consolidated sales.

And before moving to next, just to remind and comment also that we are expanding production capacity in U.S. to EUR 1 billion as the grid investments are supporting demand for transmission wires, one of our key businesses over there. And that is help and we are leveraging on our local U.S. footprint to enforce our position there.

Then in BBRG, our ropes business, synthetics business is performing well. Other than steel ropes, we have seen a bit softer market conditions. We have seen weak demand in North America partly due to tariff uncertainties, but also in Europe from lower mining activity, and we expect soft demand to continue also through the rest of the year. Synthetic business is performing well, strong performance from the newly acquired BEXCO and Flintstone also integration of those businesses has been done well. We continue to optimize our production footprint with traditional site closer now in Scotland, and we are now consolidating our activities to Belgium. In A-Cords business, we were impacted by lower hoisting demand especially lower elevated demand in China and Europe has reflected subdued construction environment.

New long-term sales agreement was signed for elevator hoisting belts with a key OEM that is sort of also a bit taking our position because earlier we were focusing more on core side. In Specialties, where we saw some positive signals in North American flooring market in the third quarter after the slow first half of the year. Positive momentum in India and Middle East has also continued, and we see nice growth opportunities there going forward.

Weak demand in Europe has impacted volumes and in prices, due to the subdued construction market that was also visible already during the earlier part of the year. And on the tunneling side, we have won some new projects during the recent months and weeks, and that provides us greater visibility for future volumes. If you look at the other segments in specialties, in hydrogen, weak demand has continued, and that is also a reason why we have decided to pause production in Wetteren to address demand slowdown. However, I want to remind that we do continue our hydrogen-related production in China and Japan.

And we continue our development work with the key electrolyzer OEMs to continue our progress in the area and also to strengthen our position for the growth when that comes. This hydrogen, we have seen weak demand in filtration and fiber-end markets. In combustion technologies, that business has been resilient in North America and China, while there has been challenges in Europe. And in hose and conveyor belts, we saw some volume growth in the third quarter.

Now handing over to you, Yves, on summary and outlook.

Yes. Thanks, Seppo. So if you look at quarter 3 of this year. I would say, a good stable sales satisfied with the sales in a very challenging market environment, where we see some volume growth in some business and in some regions, some country geographical mix evolution. And so we've been very well navigating the challenges of the potential headwinds of the tariffs. We continue to focus on what we can control.

And of course, that's cost optimization, that's balance sheet management, is cash flow generation. Let me give some comments on the footprint changes we've announced. First of all, the consolidation of the synthetic ropes production in BEXCO. So as mentioned by Seppo, the business development performance, but also a pipeline of projects for the synthetic ropes is developing very well. And so we concentrated all the production into the BEXCO operations into Belgium. On the other side, more driven by market delay. As mentioned, we had the opportunity to put on hold the production site in Wetteren and focus supply from China and Japan for the business for the upcoming 2, 3 years.

We keep on focusing very much on good cost evolution, both into SG&A, but also in our footprint evolution over the upcoming years to really be competitive in a global market, and we expect also very good cash flow generation for 2025. We continue to scrutinize the CapEx spending. And since growth platform are well invested, there's no additional CapEx needed there. We continue with the share buyback where we are almost half -- half of the program of EUR 200 million. So EUR 100 million has been completed year-to-date.

From a full year outlook point of view, we are targeting a sales of EUR 3.7 billion and an EBITu margin of 8%. Having said that, I hand over for Dries for the Q&A.

Yes, who will we take first in the queue for questions.

[Operator Instructions] Our first question today is coming from Wim Hoste with KBC Securities.

I have a couple of questions around Rubber Reinforcements and then a follow-up on CapEX. So first, on Rubber Reinforcements, China is fully utilizing capacity. Can you maybe give some or shed some light on the capacity utilization levels in the other regions? And then I'm also very interested in the current profitability breakdown per region, if you can shed some light on that, yes, how is China doing versus the rest is basically the question.

And then also, is there any impact from Zenith or from competitive pressures on pricing in China? If you can also elaborate on that? So that's on Rubber Reinforcement and then a follow-up on CapEx is, can you update us on given the investments you're starting in the U.S. or you're undertaking in the U.S.? How much is the full year CapEx budget would then be and maybe also shed already a light on 2026 regarding CapEx. Those were the questions. Thank you.

Thank you for the questions. I propose I start with the RR on the capacity utilization and also on the competitive landscape. And then Seppo, you can give some perspective on what that means in terms of profitability by region.

So basically, as mentioned, strong demand in all automotive sector in China, and with a pull-through to tire core. So plants are fully loaded between 95%, 100%, full utilization. We continue to work, of course, to optimize the output of the existing footprint we have over there. In terms of competitive landscape, the overcapacity, as mentioned before, has been there before the last couple of years, correct? So no drastic change there, except that they need further scaling up.

But you see that we are holding a very good position in China and a good balance of market share and profitability. But then I would say then in terms of the regional mix, I think, Europe and the question around -- Europe and U.S. So from a figures point of view, top of my mind, I think we'll be around 60%, 65% of utilization in the -- in Europe and U.S., so close to 70%, yes.

When it comes to regional profitability. This is, of course, a trading update, so we don't go into profits and loss more in detail, but a more higher level. So I think the challenge, of course, is that when looking at profitability in some regions. And as the volumes are shifting more and more to China and Chinese market, but more the production in China is, of course, how you manage your business portfolio. And there, our team is working very much is on focusing on customers who appreciate quality service, innovative product performance and there we are able to, of course, get better margins than on those customers who are only interested in the volume and that could offer volumes.

So I think there our team has been doing a good job. But if you look at the year to-date figures we reported for the first half in RR, I think it's a proof point that we have been able to keep profitability on a good lever in RR despite the pressures on profitability-related pricing of some of the competitors. Then your question on capital expenditure. As Yves mentioned, we have EUR 145 million for this year, as expected, CapEx, we are well invested in our growth platforms, EUR 145 million is a reasonable figure, keeping in mind our maintenance needs, which is roughly half of that EUR 145 million, and that leaves us still with CapEx that we can spend on some growth projects as well as improvement projects.

As well as for instance energy efficiency improvements that we are working on various parts. When it comes to next year CapEx, we will come with more detailed guidance related to next year in connection to our full year report in February and then they can share it with you more outlook there.

If I'm right, you had also a question on CapEx in the U.S. Is that correct?

No, it was more general CapEx given that you announced some investments in the U.S., but I think the question has been answered.

Our next question is coming from Frank Claassen of Degroof Petercam.

Two questions, please. First of all, on your margin guidance, you've lowered it, let's say, from the range, 8.5% to the lower end, 8%, where do you see the gap, let's say, the difference between that -- those margins versus a couple of months ago? Why have you lowered that to the lower end? Let's put it this way. That's my first question.

And secondly, on the import tariffs in the U.S., have we now seen -- have you been able to pass it on all now? Or is there still some to come? And how is the local demand environment reacting? Do you see impact of these tariffs, or yes, some words on that, please.

I'll start with the last one on the tariffs in the U.S. and situation on the economic activity and our volumes there. So I think we can say that we are now in a stable situation, correct, where the import tariffs are clear, translated also in terms of agreements with our customers, what it means in terms of pricing. So we've seen, of course, a local uptick in the wire price in the U.S. as an input material, and that means also for us translating that to the -- our customers and that has been done.

Secondly, we see a slightly better local demand, but not yet I would say, to the expected benefit of the import duties, which is to promote local production. So I think it's too early to see that. But certainly, we see a slight increase in that amount for local production.

Then when it comes to 8% EBITu margin that we are guiding now for a full year. First of all, like you said, it is -- we think that the guidance rates we are giving earlier from 8% to 8.5%, but at the lower end of the range. If you look at the businesses and also like commented, I think we are seeing positive momentum continue in SWS, as an example, but also like I mentioned in the report, we have seen the soft market to continue on steel ropes as an example.

And we see still quite a lot of uncertainties when it comes to year end in many other business like construction, we saw some improvement in the volumes in Q3 but winter months are always a bit shaky construction business, and typically, they slow down. And in some of the business as well. I think it's very much still around the uncertainties that we have seen and continue to see partly because of the tariffs and partly because of the economical situation, which is not really picking up currently compared to past.

Our next question is coming from Alexander Craeymeersch with Kepler Cheuvreux.

So on Steel Wire Solutions and BBRG, I think last quarter, there were delays in American energy and utility sector that was attributed to the tariff uncertainty. And now this quarter, I see that this is somewhat resolved, they reflected in the order book. However, in BBRG that uncertainty persists. So could you maybe elaborate on the uncertainties or the differences in the underlying dynamics between the 2 segments and maybe explain why the uncertainty has been alleviated for one and not the other?

And then second question, if you care to give an update on the midterm guidance because I think there is a midterm guidance of higher than 10% EBIT margins. Do you now expect that to be like 27% or 28%. I know you have never been down a date, but it would be handy to know. And then third question would be probably a quick one. It's basically on the steel tariffs in Europe, I think as of next year, I think steel tariffs are going to be implemented. So would you consider that a net positive or a net negative for Bekaert in the current state that the tariffs are going to be implemented?

All right, Alexander. Good. Okay, let me take them one by one, and please Seppo, fill me in to complement. So your first question was about the difference about the business opportunity or challenge for SWS and BBRG in the U.S. based on the tariffs. So what we see SWS, so there we -- the main business we do in energy and utilities is basically the reinforcement cable for overhead conductors. And so the initial situation in the U.S. was that, let's say, the import duties on the steel components, but not on the finished conductors. That has been through the local, let's say, local businesses and ecosystem players clarified, correct?

And there is a more competitive situation again now for local production. So I think it was a time to, let's say, I would say, settle down the tariff set up for the full value chain. And so we saw that in Q3 and also for the rest of the year, a good continuation of that business. while that value chain or supply chain setup for ops is different, correct, the local production, the export to Canada.

There's not a competitive landscape than in SWS where there are a couple of competitors for this finished or the reinforcement cables for conductors, well, of course, the competitive landscape of ropes is different. So there's a really clear driver why that is slightly improving.

Then on the midterm guidance, as communicated, I think, in the mid of the year, correct? So in the Capital Market Day, based on the situation, the plans and the outlook on the sustainability agenda that we saw in '23, we were predicting a 10% EBIT levels from 2026 onwards, we already updated in the last update that perception of -- projection, I have to say, based on the delay in the growth platforms and driven by a different sustainability agenda on hydrogen and also some other segments like the floating offshore wind.

And so we moved that target to a midterm target without specific date and it will mainly dependent on the program of further scaling up growth platforms, new growth platforms and also economic situation. The good thing is that with all the actions we've been taking, we will create a lot of operational leverage which means that with an economic uptick, that should certainly be a lever to work towards that 10% EBIT.

I think then the last question, if my memory is good, was about Europe, correct?

Steel tariffs.

Steel tariffs in Europe. Yes, good. So I think we are still in the middle of the deployment of the policies of the European Commission, correct, which were the protect, let's say, safeguard the steel industry in Europe with the reduction of the quota on the tariff-free import and also a doubling on the import duties, correct? So this is mid of next year. if I'm right, will be the implementation date. So that's in full preparation, still need to be voted in the European Parliament. So we'll have to see.

So we are monitoring the same like we did for the U.S. in terms of our supply chain, our flows, our competitive situation, what it means for the different businesses and the different flows. Coming back to the intention and to protect the steel industry, but it's not only to protect the upstream, but it's also to make sure that the whole steel industry in Europe is having fair competition with imports.

So I think this discussion are, if I'm rightly informed, still ongoing on the European level to make sure how the full value chain in the steel will have a fair playing field. So a little bit too early to say how concrete, but we can confirm that we are clearly close to it and monitoring what opportunities and challenges this gives and we'll adopt accordingly.

And of course, key is that like in the case of U.S. tariffs, we will monitor the situation and then react fast if we see that the steel prices are increasing to pass through the raw material price changes, as always, the logic, but that remains to be seen what is the effect and when.

Great example and if you look at from the intention of the Metal and Steel Act for Europe is to make the whole steel industry more competitive and that should not lead to price increases normally but should lead into more local production, quite more competitiveness for the whole industry.

Our next question is coming from Martijn den Drijver with ABN AMRO.

A number of questions. I'll do them one by one. Yves, coming back to the European import duties. I understand that -- if I understood correctly, that in the U.S., the local wire rod prices have gone up after the import duties. We don't know the outcome yet of the European vote, but let's assume that Europe votes for these import duties. Wouldn't it be fair to assume that prices in Europe would also go up? And if so, given the price pressure that we've seen lately for various reasons, how would you deal with that in that situation? That would be question one.

So first of all, let's see, Martijn, what's going to happen. It's correct that you see that the first impact in U.S. was wire rod price up, but the normal intended of the measure is that there would be more local steel production, right, which the utilization of the mills in Europe -- in U.S. and Europe are low. That's also why these protective measures are taken. And economically, people should expect price reduction and efficiency to make the whole downstream industry more competitive.

So I think we need to monitor and see how it plays out first in the U.S. but then also, and you're right, the next step is here in Europe. So if it's, let's say, 2 scenarios, if it would lead to wire rod prices increase in Europe, there are a couple of levers we have. is how much we source wire rod locally here in Europe and how much we import, including the 3 quarters that they are, correct, to have a competitive offering.

Secondly is on some of the product segments, depending on the competitive landscape, do we compete with local competitors, do we compete with import products. We will pass through, right, these increases like we've been doing in the U.S. And so there could be third segments where the competitive landscape is strengthening or where we would, on the other hand more competitive also being local. So I think your assessment is right and we have to see what's going to happen.

Okay. That's fair. Then on RR, forgetting about Q4, can you tell us a little bit what's your clients are saying, when they talk about 2026 in the truck bus segment and also in the PCR light commercial vehicle segment. What are they telling you in terms of, well, RFPs, RFQs, just a general sense of how they're thinking about 2026, please?

Of course, it's a little bit early. We're in the discussions with our contracts, with our customers. You know that we make with most of them pretty long-term agreements for the upcoming years and have long-term relationship and so we're in the midst of discussing the volumes, the shares. I think in general, I would say, without disclosing specifics, but overall, I think we need to -- the tire demand is a pretty mature business, correct, in terms of global demand with some left and right some growth, but also let's assume on average table of plus 1% to 2% growth. So moderate growth in the whole tire industry.

Then you have the evolution of the competitive landscape of the tire makers, the competitive landscape between the Indian, Asian, European, U.S. players. And there we need to see -- there are actions, correct. So we've seen evolutions in market share of some players. And of course, these players are not standing still, and they are taking actions to recover market share. And that's what we expect for next year, again, I want to repeat, we are in a good position that we are supplying all of them, and we are present in all regions. But that's the dynamic I see playing out next year.

Good. And then moving on to BBRG and specifically, A-Cords, A-Cords volume was down in 2024 by roughly 1% year-to-date, minus 7%, that's mainly elevator driven. Can you talk a little bit about what you're seeing specifically in the elevator business, not so much the region. So that's specified in the press release. But talk a little bit about competition, perhaps also touching a little bit on the demand side, non-resi Europe is not going to improve materially. China has plans, but they've had plans before. What are your thoughts on the elevator market going forward?

So first of all, from a competitive landscape, we don't see an evolution or new elements in the Advanced Cords there. So it's -- as you mentioned rightly, the downturn we are in -- first of all, it's still a good business for us. But of course, from a top line point of view, it's linked to the China construction. So we know that how the elevators are installed and are maintained in China. So that construction market revitalization in China is a key role. What are we doing in the meantime as a player is further, let's say, work on innovation with our main customers. and also being part of their strategic approaches into markets like challenge. So that's how we are working on this segment.

There's no immediate need to do something about the production footprint at this point in time?

Do you mean in terms of expansion or in terms of different locations?

Well, cost containments, correct.

No, we have no...

How to give...

Small adjustments, but it's not really significant.

More normal continuous improvement type of actions, but no capacity reduction deals, if that's what you refer to.

And my last question, with regards to the additional cost-saving measures that you've announced. And can you elaborate a little bit on the effects of those cost savings, so in millions of euros and when to expect them and what do you mean exactly with that optimizing capacity in Japan and accounting of the other region? Maybe a little bit of additional color there, please.

Yes. So let me start with helicopter view and then Seppo can chime in with how it flows to the P&L and what we expect. So -- and I think it's not new, but what I'm sharing here is that the strategy from an organization point of view is to go really to a BU-centric organization where each of the business units have really end-to-end responsibilities and capabilities.

So one of the streams is that we've been rightsizing and making a leaner corporate structure and integrating as much as possible into the BUs. That's one. Second initiative we are taking and as continuous is, of course, on the journey of shared services, digitalization and expanding that in shared services together of all the function have really integration and digitalizing. There are initiatives ongoing some announced on footprint consolidation. We, of course, are competing sometimes with competitors who have a bigger size, more scale.

So it's important to the journey of the footprint, we continue to look at opportunities. And that doesn't mean closure of factories, it doesn't mean always because the business is going down, take the example of synthetic ropes, where the business is growing year-on-year, but we consolidate, we strengthened the footprint depending on the needs of the logo. Other driver of initiatives is the synergies between the plants, even if you have different locations, how do we manage plants across businesses. So there's a number of initiatives that we take step by step, making the organization lean and agile.

And the big benefit we are creating is that despite some of the volume challenges, we delivered strong performance. And we, of course, have good operational leverage moving forward.

And then most specifically on overhead cost improvement reductions and SG&A-related actions, good proof point is that if you look back to our first half report, you could see there already EUR 20 million plus reduction on overheads, and we continue that reduction program with the rest of the year also going beyond the year. So we keep continuously focused on those costs. And that means streamlining the organization and taking actions to reduce costs.

Our next question is coming from [ Louise Bellon ] with AlphaValue.

So my first question is a follow-up on the capacity utilization in the Rubber Reinforcement division in China. So, if I understand the capacity is fully low? And do you expect to increase this capacity and do you think that because this capacity is maybe you can be more selective right now and in the future, you -- so you have a high pricing power, and maybe in the future, your pricing power will be lower, if you cannot increase the capacity?

Good. No. So in terms of -- it's correct that utilization is high this year, was also last year, pretty high, even a little bit more higher this year, correct? So the strong demand, that's great. We have 4 plants in China. We have no plans to expand capacity in the near term, correct? As mentioned, there is since more than 10 years or decades overcapacity in the China tire cord market. In that context, we've been performing very well on selecting as Seppo said, the businesses we want to have and the customer we want to work with, and that remains our strategy.

Having said that, within the 4 walls, I would say, of course, like every industrial company, we are doing, let's say, optimization to maximize what we call the OE and the equipment utilization so to improve the output and create more leverage, but we have currently no plans to expand capacity in China.

Okay. And maybe for the Steel Wire Solution, could you give us a kind of indication of the split between the high volume in China in automotive and the grid investment in the U.S., which part reflects the price increase and which part reflects the volume increase in this division?

The most relevant is the energy and utilities in the U.S. the bigger guys in automotive.

Our next question is coming from Stijn Demeester with ING Financial Markets.

Two questions from my end. First one is on pricing. When you would separate the pricing and the impact from the pass-through effect in your group revenue? Are there strong differences between the different divisions? And secondly, a follow-up on Alexander's question on EU trade action. Can you share your current sourcing distribution in Europe, how much is now being sourced from Asia?

So let me take the second one and perhaps Seppo, can take the first one. So if I understand correctly, Stijn, your question is on the -- our sourcing in Europe on wire rod and steel, correct? Is that your question?

Correct, yes, yes.

So for Europe, we have a pretty local-for-local sourcing strategy with wire rod players. So above 80% is sourced locally. Complemented with some other sources coming from the U.K. or even import Japan, depending on the wire rod grade and the needs we have. But in summary, it's basically a local-for-local today, but we have flexibility on what we can do.

And then when it comes to pricing, that's different BUs, I would say that we have a good capability in all BUs across the board to pass through the raw material price changes to our customers. So that works well, and we are very much on top of that and follow very carefully, continuously that we are not falling behind. I think that the pricing difference and development is then more driven by mix in changes when it comes to product portfolio or geographical mix.

Example in construction for instance, volumes in U.S. has been lower, right, in terms compared to U.S. that has meant that tariff prices are different because of the different markets served or in SWS, for instance, there's been a bit more agri compared to past versus other business. So those are driving sometimes up or down the average price. But that's then a different compared to pass-through mechanism of the raw material price changes.

I think in the past, you separated the price mix from the past through at least on the group level, can you do this for Q3?

It's about 50-50, if the goal -- the rate in this quarter.

As we have no further questions on the lines at this time, I'd like to hand it back to management for any closing remarks.

No. Thanks for, first of all, joining the call. Thanks for the good questions. Hopefully, that our perspective gives you some additional insight and wish you a nice day and nice weekend. Thank you very much.

Thank you.

Thank you, ladies and gentlemen. This does conclude today's call. You may disconnect your lines at this time, and have a wonderful day. And we thank you for your participation.

Good morning, and welcome to the Bekaert H1 2025 Results Call. [Operator Instructions] As a reminder, this conference is being recorded.

It is now my pleasure to turn the floor over to your host, Guy Marks, Vice President, Investor Relations. Sir, the floor is yours.

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Many thanks, and thank you to you all for joining today, what I know is a very, very busy morning. As per usual, I'll just quickly run you through the safe harbor statement and then hand over to Yves and Seppo.

So, this presentation may contain forward-looking statements. Such statements reflect the current views of management regarding future events and involve known and unknown risks, uncertainties, and other factors that may cause actual results to be materially different from any future results, performance, or achievements expressed or implied by such forward-looking statements.

Bekaert is providing the information in this presentation as of its date and does not undertake any obligation to update any forward-looking statements contained in it in light of new information, future events or otherwise. Bekaert disclaims any liability for statements made or published by third parties and does not undertake any obligation to correct inaccurate data, information, conclusions or opinions published by third parties in relation to this or any publication issued by Bekaert.

With that, tongue twister out of the way, I'd like to hand over to Yves. Thanks.

Thanks, Guy. And a warm welcome from my side and Seppo's side. So if you look at first half '25 at Bekaert, we delivered a resilient financial performance in the current challenging end markets.

You can all see the benefits of our long-term strategy, which has been focusing on the portfolio rationalization, good pricing discipline, and driving further cost efficiency in the organization.

Certainly, first half of the year has been busy with managing the impacts of the tariffs. The first wave of 25% import duties on steel and aluminum, we were pretty successful in passing them through to our customer base, as you know, like we did in the past during COVID times, energy surcharges or wire rod fluctuations.

The second wave in June bringing the import duties to 50%, as you can understand, was more difficult to pass fully to the customers. We were successfully, but we are more and more concerned about the second half impact on the overall demand of the market economy.

We continue to execute our strategy. We disposed and concluded the disposal of Latam North is fully completed by end June. We keep on -- intense focus on our cost optimization. So in first half of the year, we reduced overhead cost by EUR 21 million compared to last year and we will continue working on these topics.

The strong working capital improvement reduced by EUR 135 million versus first half of last year, creating good, nice cash flow generation for the first half and we keep on scrutinizing the CapEx investing -- while investing in good maintenance, good sustainability we are seeing how to invest in the growth segments.

So having said that, we delivered a robust financial performance of 8.8% of EBITu in a very difficult market situation, strong free cash flow EUR 128 million (sic) [ EUR 123 million ] and keeping a very low leverage of the balance sheet, continuing our share buyback of EUR 200 million.

So let me hand over to Seppo to give you a little bit more details by business segment and overall.

Thanks, Yves. Now let's start by looking at the sales bridge and sales development at this year first half versus last year.

I would describe in general results and figures that they are showing resilient results despite the challenges on the markets. Like-for-like, this excluding portfolio changes and foreign exchange movements was down 4.3% versus first half last year.

Foreign exchange rates had negative effect of 1.1% or EUR 24 million mainly due to the effects from U.S. dollar and renminbi development -- weaker currencies impact sales versus euro. Portfolio change, quite flat, small 0.2% effect. That is a net from acquisition of BEXCO last year and capacity closures SWS in Indonesia and India.

Price/mix and raw material impact was negative 2.2%. That is a reflection of lower raw material costs globally in different geographies with the exception of the U.S. where steel tariffs and market has been driving up the raw material costs.

Net volume effect was negative 2%, and that is excluding discontinued SWS Indonesia and India entities that were closed last year. There what we have seen is especially volumes are down in Europe as well as in U.S., partly because of the tariffs as well as positive effect of volumes in China, but not fully offsetting the negative development in other geographies.

Then moving to EBITu bridge and how the development has been there between the 2 years. I would say the margins are well protected despite lower volumes through strict cost control and mix improvements that we have been working on. Especially, I can mention higher plant utilization in China, leading to better fixed cost absorption there, offsetting the negatives in Europe and partly in U.S.

We have worked hard to reduce overheads, and that work also continued second half. And the demonstration of that is, as you can see on the bridge, also EUR 21 million reduction year-on-year on overheads. And that is something important we continue to do in order to protect our margins and cash flow.

I would say that we are more cost competitive than ever before. And when the volume growth returns, we are confident that operational leverage will support higher profitability levels relatively fast compared to past.

Then let's move to our PUs, reporting segments, and I start by looking at the Rubber Reinforcements. Very strong China volumes have been offsetting lower volumes in Europe and North America, like already mentioned. They have managed tariff challenges well, thanks to local sourcing and production as well as global footprint and capability to pass through quite strongly the tariff effect to customers.

Volumes were down 1.5% versus first half of last year, but actually 1% up versus second half of last year. And we have to remember second half last year was getting rather weak. Weaker demand in truck tires has been seen across all geographies, but resilient margins through cost reduction and high plant utilization levels, especially in China, where volume development has been positive, compensating for lower volumes in Europe.

Then just as a reminder that outside our reported figures, we have our Brazilian joint venture in the Rubber Reinforcement business, where we had sales of EUR 84 million, down 1% year-on-year despite 14% FX impact -- negative impact. And that result shows positive underlying development that continues there on the Brazilian market. Their FX impact has been offset by higher volumes and better pricing. So margins have improved versus year ago.

Steel Wire Solutions, like-for-like volume growth has been positive or at least stable, and we have been able to keep double-digit margin despite market headwinds. So Steel Wire Solution delivers another set of robust results. Excluding the impact of SW (sic) [ SWS ] closures in Indonesia, India, like I said, we had stable sales versus first half of last year. Especially, I want to highlight positive volume development, both in North America as well as in China, where we see volumes up more than 10% versus first half of last year.

In North America, thanks to strong agri and energy and utility markets and in China, strong auto and agri markets. But volumes have decreased in Europe, driven by lower auto and energy utility market-related sales. And during the quarter, we also completed SWS units entities disposal in LatAm North. And those have been still fully consolidated during the first half, but will not be included in second half figures. That's just as a reminder.

Then moving to our ropes business, BBRG, where we have been able to have sustained profitability improvement as also indicated end of the last year, although market have been getting weaker and outlook has been getting weaker as well.

So we continue to sustain operational and profitability improvements that we implemented towards the end of last year, but uncertain trade environment has caused some delays when it comes to customer projects and orders.

Sales were up 2.4% versus first half of last year. That is thanks to BEXCO acquisition mainly. And steel ropes in U.K. and U.S. have maintained output improvements, but there we have suffered from slower demand, especially in U.S. during the second quarter. And that has limited somewhat the profitability improvement potential that we would have seen otherwise. Positive thing is that profitability is now almost back to double-digit level that we are targeting. So on a positive trend, but we still work on to deliver more.

Then moving to specialties, where challenging end markets continue, especially in sustainable construction in U.S. But also it has been challenging in the energy transition market, especially in the hydrogen part.

Flooring business in the U.S. has been mostly impacted by tariff and geopolitical uncertainties that has continued. Let's see now after the deals are coming out between U.S. and other -- different countries, how that will stabilize the situation. At least it has been now reducing uncertainty recently. But we have been also facing increased competition in EU and Oceania in the flooring business.

On a positive note, volumes have increased in tunneling and mining business and our penetration in Middle East has increased. It's still a relatively small business, but on positive trend, and we believe that there's lot of potential to grow further, thanks to a lot of projects in the pipeline that we are able to now look into.

Reduction in sales volumes and related under absorption of fixed costs had material impact on margins but they have been also mitigated in construction business by working our cost structure successfully.

In hydrogen, we continue to maintain good market share, excellent customers' engagement with the key players and customers in the market, but growth is not expected to return in the near future. But I think that it's fair to say that we're in a good position when the market growth comes back. Also, policy uncertainty has continued to weigh on demand on the hydrogen business.

Then looking at the consolidated income statement and some key figures. There, first of all, I want to highlight strict cost control that has become now visible when it comes to -- for instance, selling and administrative expenses that are down from EUR 157 million last year to EUR 139 million first half of this year.

Then also to notify and remind that in the one-offs and reported EBIT significantly has been impacted by non-cash EUR 56 million one-off impact from CTA linked to historical currency devaluations in Venezuela that was booked now through profit and loss as part of the closure of the Latin American entities divestment. This is neutral on equity and this more IFRS technical topic as I trust and know that most of you are aware anyway.

Then moving to another focus area that we have been focusing during the first half and continue, cash flow, working capital management, where I think that we are very proud of the achievement by our teams' clear improvement of working capital level. EUR 135 million improvement versus first half last year. This has given a nice boost to our cash flow. Like I said, this has been and continues to be one of the focus areas.

We have been working on all the parts of the working capital, especially on inventory management, working on improvement of overdue collections, good success there in different geographies, especially I want to comment and mention China. China team doing good work there. And of course, working on payment terms, both on receivables and payables, customers and suppliers.

We are targeting 15% level when it comes to working capital to net sales. We are 16.3%, so there is more potential, and we of course, want to push it even further were possible. A clear improvement, 2 percentage points down year-on-year compared to 18.4% a year ago and 16.3% now.

And that has helped us to reach strong cash generation despite the lower volumes and profitability. So EUR 80 million improvement year-on-year, reached EUR 123 million free cash flow this year. That is, of course, partly also thanks to lower CapEx as we have well-invested growth platforms, so we have been able to reduce growth CapEx for the time being. Of course, we are ready to invest more on growth-related businesses once we see that growth is coming back.

So we have been keeping strict control on the CapEx and continue to do the same for the rest of the year. And that is, of course, one way to safeguard our cash flow.

Now back to you, Yves, to give a view on strategy and operations.

Thanks, Seppo. So while we are keeping on focusing on delivering on our performance, we keep on focusing on the 4 -- the 5 verticals, which are our end markets that we are serving. So let me give you some comments of first half and how we look into the future.

So on tire reinforcement, we keep on driving innovation. We got some nice awards on the Tire Tech Expo 2025. We launched our Elyta brand, which is combining all the solutions we have in Ultra and Mega Tensile reinforcement solution and deploying them with our key customers.

From a market perspective, I think the competitive landscape remains the same as before. Our tire customers, both China, Europe, U.S., Indian player, of course, evolving in their competitive play.

If you look at transmission & performance wires segment, pretty stable volumes and margins there. We keep on looking at the portfolio, pulling the portfolio. And looking forward, we see a stronger second half on energy utilities for the second half, U.S. and also some expect in Europe.

On advanced lifting and mooring, so happy with the integration of BEXCO, the performance of BEXCO. And also the operational challenges we had in the past in our U.S. and U.K. operations are stabilized and are positioning ourselves to recover, let's say, the market shares and the growth, with some uncertainty temporary in the U.S. also with the tariffs to Canada. But we see on the other side globally an improved outlook on mining and industrial.

On the energy transition, so the offerings we have in the filtration business, in the hose wire business, in the heating business, but also in the hydrogen business.

Some words on the hydrogen business. On one hand, good news that in the U.S., the 45V Act has been confirmed to be in place until January '28, that means subsidies for producing green hydrogen.

And then secondly, in Europe, where the RED III, which is targets about renewable energy are under deployment. But as mentioned by Seppo, we expect a much more stable outlook in the upcoming 2 years, and we keep on positioning hydrogen as an emerging offering and technology for the future.

On sustainable construction, we discussed also end of last year, a difficult second half for us. If you look at the industry last year, first half continued. Now we see a stabilization. What we see is that the whole construction industry has been down. And for us, especially in the flooring segment, as explained last time, where we are mainly in the automotive factory and batteries, which we are now pivoting into other segments. So we see a recovery from -- now in the mid of the year, also with some nice growth in Middle East, India and also some new projects in China and a recovery in the U.S.

So we -- as mentioned, we continue to innovate, and I want to highlight, spend a minute of time on the acquisitions we did in construction play. We can go then -- thank you.

So we launched the Dramix Loop, which is using the recycled tire cord from used tires into reinforcement of concrete, so a mix of Dramix plus recycled fibers. We acquired 2 companies in the first half of this year, one company, Twincon, which is specialized in how to bring these products to the market, so go-to-market plus construction of industrial floors with a mix of new fibers and recycled fibers.

And as well Flexofibers, which is a technology which is innovating the way you take used tire cord into fibers to recycle or to reinforce concrete. So happy with this innovation in our Dramix business, continue on a journey of bringing the total cost down as well as sustainability and circularity.

If we move then to the strategic execution of the different levers we have. First of all, on the transformation, we continue to prune our portfolio, and we continue to make our business units more autonomous and more focused on the end markets.

Cost focus was mentioned. Happy on the reduction of the overhead. We will continue doing that this year. And we're also rightsizing footprint. We did the rightsizing in Belgium as well as in Scotland on the synthetic fibers, consolidating production and lowering, let's say, the fixed cost, which will give us an opportunity when volumes come back to further get margin improvement going directly to bottom line.

On cash flows, very good work on inventory management, collection overdues, payment terms, and we continue our strict capital expenditure discipline also for the second half of the year.

A word further on the import tariffs. So after a volatile first half with uncertainty, I think we see now that we get, hopefully, in a more stable policy environment so that all companies in the supply chain can adopt to the new reality. First, that means 50% import duties on steel in the 2 phases, correct, which we, most of them passed to the customers. And the last increase from 25% to 50%, we're also working on with our customer to pass that also through to the end markets.

I think, of course, the concern we all have is the uncertainty on the end market demand in the different end segments and how the end products which are having steel as content, how that price increase in the end market will evolve.

Coming to the outlook. First of all, for the full year outlook of 2025, we expect a slightly lower sales on a comparable base, like-for-like base. So corrected '24 with the disposals, the changes in exchange rates and the plant closures, we expect a slightly slower sales than top line '24. And from an EBITu margin, we expect a margin between 8% and 8.5% for the full year.

Moving to the midterm and long-term outlook. So we communicated in our Capital Market Day, our ambition level, which remains the same. So 5% growth on the long and midterm driven by, of course, the growth platforms that are now delayed. So the timing of this growth will be postponed.

Secondly, on the profitability side, we projected an ambition of a 10% profit by '26. So based on the recent events of the market outlook and the evolution of the growth platforms that will not be likely to be achieved in '26. However, we remain confident that we can achieve 10% profit levels.

As mentioned by Seppo, we're bringing down our cost structure, more flexing our cost structure. So with the recovery of some of the volumes even in the core businesses and then also some growth, the 10% ambition is in reach.

So let me conclude based on the summary pages. So pretty proud in a very difficult market environment about the performance. So focusing on what we can control, which is basically cost, cash flow, winning the businesses, client relationships, plus keeping our position ourselves for the future, working in parallel on the portfolio of the company and also on the future emerging products and offerings so that can help to transform the portfolio of Bekaert.

Having said that, let me hand over, Guy, to you for the Q&A session.

Very good. Thank you. Let's get back to the operator for questions.

[Operator Instructions] Our first question is coming from Frank Claassen with Degroof Petercam.

Two questions, please. On your outlook of the like-for-like slightly reduced sales, can you elaborate how much you think will be volume and how much will be price driven? That's my first question.

And then second question on the gross margin. I noticed that it declined quite a bit from 18.4% to 16.6%. Can you elaborate what are the main drivers? What is the main reason for the decline in gross margin? Is this mix effect? Or are there more factors playing a role?

So if I take first the question on the outlook like-for-like. I think if you look at the key drivers and look at the guidance that we had given, slightly down. That if you look at the main effects, it is foreign exchange that is having an effect when it comes to consolidation of non-euro profit and loss to euro, our reporting currency.

And secondly, the changes in the footprint and taking into account the acquisitions and divestments that is BEXCO acquisition, then for the rest of the year, divestment of Latin American entities as well as the capacity closures that we did last year. So those are the key drivers so that when coming to like-for-like.

Maybe, then you can comment on the gross margin.

On the gross margin. So, Frank, there are a couple of drivers. First of all, if you go business-by-business. So in the Rubber Reinforcement business, so most of the changes are coming from a region customer mix. So in the Rubber Reinforcement business, the business in China, as mentioned by Seppo, has been pretty strong in the first half of the year, also like we planned and budgeted for, with a good demand and good absorption of the fixed cost. However, less demand in U.S. and in Europe has impacting the margins of that business.

Secondly is the impact, of course, the margin erosion in Specialty Business, 2 drivers there. One is on the Dramix business, mainly a country mix. So we have less business in the U.S. and in Australia, which are more higher-margin business. But of course, the effect of the volume drop due to the market demand, which is having some impact on cost absorptions where we are taking the necessary actions to rightsize that.

And then also in the energy transition play in hydrogen, so nothing on pricing, margin, but more also the cost absorption where we've been versus last year, basically the start-up of the factory in Belgium was basically capitalized. And of course, this year, the impact of the operation of this factory is fully into the P&L with, of course, lower volumes. So these are, let's say, the main drivers of the margin differences first half '24, '25.

And to remind everybody, in first half '24, we still had good margin on the ultra fine wire, certainly in the first quarter, which also played a role. And second half of the year, we focused on semicon and for ultrafine wire and not anymore on the other segments.

Okay. And to come back on the guidance, do you expect pricing to be negative for the rest of the year or still a slight positive maybe by passing on the tariffs? What do you -- what can we expect from pricing?

Like we have said, we have been already quite actively achieving the price increases needed to compensate for the tariffs. And the main effect looking at the sales line is more coming from FX and the footprint changes and acquisitions, divestments.

Our next question is coming from Alexander Craeymeersch with Kepler Cheuvreux.

A couple of questions from my side. So the first one would be that in Steel Wire Solutions, you showed good results, and you also mentioned a good order book. Yet in the outlook, you seem to warn for uncertainty and challenges. Could you clarify like which sentiment we need to follow now? Is this now -- do we expect stability in the second half on the back of that good order book? Or do we read more into like lower sales into the second half?

Second question would be on the decline in working capital. It's very nice to see that declined further to 16.3% on sales. But I also see that there's a significant part on inventory. So I was just wondering if this is mostly explained by lower finished goods or rather lower materials -- raw materials.

And then the third question would be on BBRG. This margin is now around 10% with the U.K. and U.S. production problems being solved. Is this now a sustainable margin going to the second half? Or do you think there's even more room for improvement?

Perhaps I'll start with the question, Alex, on SWS. Good. So for SWS, basically, we see for the second half, a good outlook in the energy utility segment with some more deliveries in the second half. So that's on the positive side.

Automotive markets in China are strong, but less in Europe, right? So we see a little bit of mixed bag depending on the region. But I think you could say that we are -- our sentiment is a stable environment with left and right some changes.

Yes. And then on your question on inventory and working capital. So like I said, a lot of work has been done on the working capital improvements across the different items. And if you look at the inventory in specifically, especially, so we have been working obviously on many areas. And I would say that the main effect is coming from the fact that we have been reviewing consignment stock arrangements. We are reviewing safety stocks. We are improving production planning. And that way, we can manage our inventory levels better. And that is where the -- we see that the future potential is also supposed to come.

Of course, if you look at the working capital, specifically, there is some about EUR 16 million, EUR 17 million reduction coming from the divested units that we have now divested in Latin America.

Then over to you on BBRG.

Yes, good. No, good. So happy with the progress we made on the operational improvement and the business development. So actually we will continue our journey targeting the 10% for that business. So no reason not to believe that.

I would add that it's more a question of the volumes. We saw some softening of the volumes. And without that, we probably could be already at a higher level.

Our next question is coming from Martijn den Drijver with ABN AMRO.

I have a number of questions. I'll take them one by one, if I may. On Rubber Reinforcement, you mentioned tactical capacity management. Does that point to short, temporary work? Or is it something more permanent? And if not, are more permanent capacity reductions still on the table?

There is no -- for the moment, Martijn, no plans on any rightsizing of capacity in China.

And this tactical capacity management relates more to this kind of -- you can always have more filler volumes or less. And in order to manage capacity utilization rates, occupancy rates, the strategy has been to get some of that filler volume to run [ bills ] with full speed and that way you can achieve better cost absorption and improve your total profitability.

And so far, the ratio between filler business and sort of our core business is quite healthy. And in that sense, no -- I don't foresee any issues with that as such.

Just coming back to Yves' statements. No plans in China, but what about the other regions, which is where the volumes were dropping and have been dropping for quite some time now?

So from a long-term perspective, of course, you need to look at how the demand is evolving and in per region, correct? And we'll do the necessary adjustments in terms of rightsizing, let's say, capacities at different levels.

First of all, within the operational means of flexing the volumes. And we also do mix sourcing, correct, delivering our customer in Europe from local Europe, but also from Asia. So there, we have some flexibility to work with. And then on the long term, structurally, we have to see how the demand will evolve.

Got it. Then a follow-up on RR. You mentioned, Yves, no real change in the current competitive environment. Could you specify that that's currently, but what are your expectations going forward, specifically in China with Zenith now coming to the market?

So we all know that, and that's not new that there has been an overcapacity in the tire coat business and mainly in China. And that remains stable, correct -- that situation. You have Zenith coming online, focusing on certain segments of the business, correct? We understand as well, okay, that's for them to penetrate the customer that will take time. Yes. They need to demonstrate as well to work at the quality and performance levels of the leaders in the market.

So we keep on monitoring how the competitive landscape is evolving. And that's why I said today, we see no further changes versus what we mentioned last year.

Got it. Moving on to Specialty. You mentioned in your comments rightsizing, specifically with sustainable construction. What measures are you thinking about? And when will those take effect? And how much should we pencil in, in terms of savings? Is there anything you can add to that a bit more color?

Yes. No, happy to do that. So basically, what we've seen is different markets at different stages. So in Europe, you have the high penetration of the fiber reinforcement. So there, we've been first half now taking actions to move resources more to the growth markets, so from Europe into Middle East, India, supporting the U.S. So it's rebalancing our investments in terms of SG&A to more growth regions.

Secondly, continue on the high mix, 4D, 5D was already high. We keep on doing that. Now with the new recycled fibers on top, we have an extra weapon, correct, to work on the high end. And secondly, it is more on the manufacturing side, capacity adjustments, basically that we are taking in terms of productivity, leaner and so on.

But still, if you look back, the Dramix business has been a growth business over the last couple of years, last decade, correct? If you look at the added value created, that's a CAGR of 7% to 8% over the years. So yes, second half and first half were tough. But if you look from that business from, let's say, 10 years perspective, this has been a very healthy business. And even the performance of this year is much better than what we did in the past. Of course, our ambition is higher, to grow higher and we'll continue to invest in that business.

Got it. And another question on sustainable construction. I read that Sika is now also planning to enter this market in a more substantial manner. Has that been visible already? Or is that not visible yet?

No, not. They were already, correct, active to a certain extent. And there are also areas where there's collaboration between the companies on how to go to market, correct and bring the offerings to the market. So we are working on that.

Okay. So that's not really something -- not really a concern. Okay. And then moving on to SWS. I asked that question, I know also in Q1, but now it is mentioned again that strong performance in agricultural markets. It wasn't mentioned last year. Is this really a factor to take into account, because in the Q4, I think you mentioned, it was modest? But is it modest? And if not, is it structural? Or is it just a seasonal effect due to good commodity prices for farmers in the U.S.

So there is -- so today's situation is, I would say, on the favorable side for that business, correct, also with the import duties and the competitive landscape for that business. We can capture pretty good business in the U.S., correct? And then also in -- I think was your question related to China or U.S., Martijn?

Well, all of them basically, because you mentioned them in multiple geographies.

Yes.

And maybe to add on, it's of course, seasonal business compared to many other business. And this year, especially, I would say that we managed the season better than previously. For instance, being able to produce some in advance so that we were not having so much capacity bottlenecks so that we could meet the demand quite well. So I think planning-wise, also quite successful and helping to increase the sales in the segment.

Okay. That's helpful. And then my final question, would it be possible to just disclose the 2024 sales level, excluding M&A, plant closures and foreign exchange? Could you just give us the number, please?

I think in rough terms, I would say that the net-net, it's about EUR 60 million difference right, Guy?

So the -- well, say the net-net of the '24 like-for-like is about EUR 3.8 billion. So that's deducting about EUR 150 million, EUR 160 million from memory, of which about EUR 90 million is FX and EUR 60 million is lost revenues from the disposed business.

Our next question is coming from Wim Hoste with KBC Securities.

A couple of questions from my end as well. Can you maybe give us an updated CapEx budgets for the year and also your thinking on CapEx budgets going into next year, given, yes, the market conditions where they are and also given the -- certainly on the hydrogen front, which will probably not require any additional investments soon. So the CapEx budgets for '25 and '26.

And then another question would be on the steel tariffs. To what -- you said that you made good progress in passing that through, although the second leg was probably -- was more difficult. But is it also impacting consumer or customer behavior in terms of where they are producing? Or maybe it's increasing imports from other regions where you were not used? So can you maybe be a bit more specific about fallout effects from the whole steel tariff discussion and how you might have to adjust to that, if you can also elaborate on that. Those were my questions.

Perhaps I can start with the last one. So on the tariff side, so I think everybody is looking at more stable policies, which, hopefully, we're getting there, correct, and to adjust the supply chains. So we don't see our customers changing their policies on where to source and where to produce. Not yet. But to be seen in the future.

What we've been doing is, since we have, of course, almost 70% of our production is locally, yes, we have been in the last couple of 6 months changing some flows towards the U.S., correct -- from more Europe, U.S., in India, Southeast Asia, U.S. to optimize within the constraints and the opportunities we have.

But to answer your question, we don't see structural changes yet. But of course, logically, we would expect that with the policies and the ambition of the Trump, obviously, to have more local production that there would be some changes in the future.

And on capital expenditure, we previously in connection to first quarter guided EUR 150 million, EUR 160 million region. What we see now is that looking at the current business conditions, where are we with the growth platforms, they remain well invested. The growth is -- it's going to take time before it comes back. We see now that we would be heading below EUR 150 million, maybe towards EUR 140 million. So some further reduction that we can foresee there.

It doesn't mean that we would not be investing in growth and improvement projects. Roughly half of that in general terms is sort of maintenance, health and safety related and then the rest is still for the business development.

When it comes to '26, it's a bit too early to comment. You have to remember that, like I said, that already this EUR 140 million, EUR 150 million level includes CapEx for growth and development. And as soon as we see the market conditions to change, so we are ready and we have a balance sheet to increase CapEx even significantly.

I think previously, year before, we were somewhere, like, EUR 190 million, even plans to go beyond EUR 200 million. So that we can do then when we see that the growth is there. So we are not in a situation we would be cutting CapEx because of balance sheet. It's more to adjust to the growth that we have visibility to today.

Okay. That's clear. Maybe if I can then just follow up on the kind of cash or cash flow conservation or consideration you have. Is that -- is there any concern or restraint on doing additional acquisitions at the moment because of the preference for having good cash flow generation? Do you still have a decent pipeline of M&A projects? Are you still going fully for that? If you can also elaborate on that, please?

If I start about the balance sheet, and as you see from the leverage figures, we continue to have strong balance sheet. And I would say rather the contrary that thanks to focus on cash flow operationally, it makes us strong, and our balance sheet can take quite substantial amounts when it comes to potential acquisitions. So this kind of war chest is quite big in that sense. Maybe then I hand over to you --

Yes. No, I can confirm that besides the performance delivery, the transformation of the company is a priority. So we keep on working on the M&A agenda. The organic play and the investment thesis is that we shared in the past, so it's about where can we consolidate the industry, where can we go into more sustainable construction offering and energy transition.

In energy transition, also looking more at the whole electrification play, right, we see the investments flow, the development on electrification continue. Yes, we see the slowdown on the hydrogen, but there's a lot of still energy transition anyhow will take place, correct? So we keep on looking at targets. And we have, as Seppo said, a good healthy position to do the necessary moves.

Our next question is coming from Stijn Demeester with ING Financial Markets.

Just one for me. Sorry to repeat on this theme, but can I probe once more into your volume and price mix expectations for the second half? Because if I understand correctly, your guidance of slightly lower sales versus a base of EUR 3.8 billion seems to suggest a rather stable, even potentially positive organic revenue growth drivers for H2, despite your press release, which breeds uncertainty, et cetera. So can you be a bit more articulate in what you expect for the second half in terms of organic growth?

Well, I think it's -- like I said, if you compared the first half and second half, the main driver is on FX and our footprint changes, acquisitions, divestments. A lot -- and I think what we were trying to highlight in the outlook and guidance was still the remaining uncertainties around volume and end customer demand because of the tariff situation.

Tariff situation is becoming more clear now. We have been able to mitigate direct FX, I would say, extremely well. And what remains to be seen is the consumer behavior that can U.S. -- especially U.S. consumers absorb the additional costs that is coming through because of the tariffs? And then what does it mean in general economy in Europe or China or elsewhere as a reflection of the development in U.S. But as such, we don't expect huge -- as in our base case, huge changes in the mix or volume development as such.

If I can add to that, what Seppo said is that, what we hear from our -- some of our customers is that their cost increase passed through to the end customer is taking in steps. It's a 5% per month and evolution. So I think what we want to monitor, clearly saying, how is that potential price increase inflation impacting the demand in the market and overall market sentiment.

Understood. Still not very clear. If you say we expect stable, is that versus the first half of this year or versus the second half of last year?

It's rather related to this year. You have to remember last year, especially Q3 was rather weak if you look at the developments, then improving towards end of the year. And then if you look at the development as such, it's more reflecting first -- second half this year.

Of course, again, repeating then excluding the scope changes, like-for-like exchange rate, because exchange rates second half, if they continue at that level, from a consolidation perspective will impact the top line, correct? So I think --

As we have no further questions on the lines at this time, I'd like to hand it back to management for any closing remarks.

So thanks for joining the call. Thanks for your insightful questions. From our perspective, I think you know all the market environment, and we basically are, as the management and the Board, let's say, appreciating the performance of the first half in a very difficult market context, volatile and uncertain, and the team has delivered on a pretty resilient performance while we are continuing to work, let's say, on preparing the group for the future. So more to come. For the ones who still have holidays ahead of you, enjoy it. And for the ones who had already holidayed, I'm sure you're back with renewed energy. So thanks for joining. Have a nice day.

Thank you.

Thank you. This does conclude today's conference call. You may disconnect your lines at this time, and have a wonderful day. And we thank you for your participation.