Sika Aktie

Good afternoon, everyone, and thank you for joining our Q1 '26 Revenue Call. Before I hand over to Thomas, a couple of housekeeping points. This is a 30-minute call. We have prepared remarks followed by Q&A. [Operator Instructions]. Thomas, over to you.

Thank you, Dominik, and also welcome all from my side, and thanks for joining our call. The first quarter, as you know, is typically the smallest one of the year. And for the first quarter, Sika delivered revenues of CHF 2.49 billion versus CHF 2.68 billion last year.

In local currencies, our business delivered around 1% growth, and we gained market share, outperformed across all regions. Our Q1 performance was in line with our full year revenue guidance. We continue to expect global market conditions to be muted this year with a low single-digit percentage decline of our underlying markets and the gradual improvement in momentum as the year progresses.

Our local currency growth in Q1 was driven by EMEA, which delivered 3.6% growth. In Europe, we saw improved momentum through the quarter in every European country. In the Middle Eastern region, the strong growth we saw in January and February cooled in March after the events impacting the region started. Our customers in the region continue to operate and are focused on delivering their projects as you would expect in this dynamic region.

Following the events in the Middle East, we are very proud of the way that we have been able to support our customers in that region by reorienting our supply chain at tremendous speed to continue to serve them reliably. For all our customers, their #1 priority is availability. We have been proactively securing capacity and ensure flexible routing. We have rapidly developed alternative input sourcing, and we monitor and help our suppliers through this time.

These actions serve to deepen our relationship with critical customers globally and leading us to gain share from others that are unable to draw on the benefits of such an agile global manufacturing and sourcing footprint. In the Americas, we saw a continuation of a weaker trend from the fourth quarter as we expected and saw local currency revenues down around 1% -- in North America, as was the case in the fourth quarter, we saw strong growth from activities serving data centers, but saw the subdued trends from the fourth quarter remaining across the rest of the commercial and residential market.

Infrastructure activities remained solid in the U.S. Latin America delivered good local currency growth in the quarter. In Asia Pacific, we saw an improved local currency performance versus the fourth quarter. In local currency, revenues fell just over 2% year-over-year. Outside of China, our performance improved versus the fourth quarter of last year, with most countries showing a better operating performance.

Asia Pacific, excluding China construction, was up by 5% in Q1 with notable strength in India and Southeast Asia. China developed according to our expectation with distribution still being strongly negative also due to our rebasing of the business, but also seeing positive growth in our automotive and industry business.

As we progress through the year, we face notably easier year-on-year comps in China. In Q1 '26, it was an important quarter for the future direction of Sika given it was the first full quarter of the implementation of our Fast Forward initiatives. We have made strong progress towards our delivery of the CHF 150 million to CHF 200 million of EBITDA contribution and the CHF 60 million of savings to be delivered this year.

Across our markets, customers are more willing to embrace innovation. For example, fast bridge repair systems that enable our customers to do the job in days instead of weeks. Or our move towards bio-based raw materials such as bio-based epoxies gives us alternatives that are less exposed to oil price movements. This is a natural hedge that did not exist a few years ago.

Our customers are also excited by alternatives to petrochemical products, and that's also a big benefit that we are seeing under the circumstances now. But now I hand over to Adrian that will walk you through some further details of the first quarter.

Well, thank you, Thomas. And indeed, yes, in Q1, we delivered revenues of CHF 2.49 billion, which represents a modest growth in local currency, while at the same time, foreign exchange had a very strongly adverse impact. Specifically, in local currencies, our revenues grew 0.9% year-on-year in the first quarter, with Europe delivering a solid 3.6% growth year-on-year.

Overall, our organic revenue growth was minus 0.2%, so a small decrease in Q1, but sequential improvement quarter-on-quarter. For EMEA, organic growth in Q1 was 1.5% with Europe seeing a strong March across the board. Overall, this was a similar performance versus the fourth quarter in '25. The Americas fell 1.2% organically in Q1, which was slightly lower than in Q4 -- and APAC, as heard, organic revenue declined minus 2.3% in the first quarter, but a clear improvement versus the 2025 outcome for the region and also in the fourth quarter.

As Thomas highlighted, excluding China, organic growth was a good 5.2%, driven by Southeast Asia, by India, but also our Automotive and Industry business. For the region as a whole, the biggest impact had, again, in line with our expectations, a continued negative development of the China distribution business.

However, the share of China in the first quarter is always seasonally low, hence, the lower impact. China will have a more normal impact in the coming quarters for the second quarter onwards. China is typically close to half of regional revenues. In the first quarter, it was closer to 1/3.

Turning to external growth here on the M&A side, M&A added 1.1% to our revenue growth for the first quarter, driven by the closed transactions in quarter 4, '25 and at the beginning of Q1. All in EMEA and so far are expected to add about 1.5% growth for 2026 as a whole, which assumes the closure of Akkim in the third quarter, but we also continue to run here a very robust pipeline.

And foreign exchange was the primary driver of the 7% year-on-year decline in revenues in Q1 with a minus 7.9% adverse impact on the currency side. This was most pronounced in Asia Pacific, where the foreign exchange drag was minus 10.5% and also in the Americas, where foreign exchange caused a minus 10% revenue headwind, largely driven by the weak U.S. dollar and weak Asian currencies.

Based on today's rates, foreign exchange headwind for the year, is expected to moderate somewhat to approximately minus 3% to minus 4% due to the strong previous year declines from Q2 onwards. Our call today is mostly to discuss our revenue performance, but I also wanted to help you understand how business deals with input cost inflation that has been a theme over the past few weeks, clearly, given the Middle East situation.

As a company, our input costs have a dependency on supply and demand and some correlation with the oil price but it is not direct. We buy further down the value chain. So the link to crude oil is diluted and come through with a certain lag. The lag means the impact of recent input cost moves will be seen later in Q2.

However, and this is important, we're acting preemptively with pricing and other measures and have moved rapidly to protect margins, drawing on our experience from previous inflationary period also being quicker as we do these increases.

Also, if we pass through the full absolute input cost increase of our raw materials, this could still have a mechanical -- mathematical negative impact on our material margin in percent net sales depending on the magnitude, but as you have seen historically, we have managed our margins well also through new and higher value-added solutions, leveraging procurement scale and the ability to diversify our input base.

And also, as heard through our Fast Forward program and through additional MBCC synergies, this will alleviate much of the pressure on the group EBITDA level. Fast Forward will deliver CHF 80 million of incremental benefits in 2026, and we are on track to deliver CHF 30 million to CHF 40 million of additional MBCC synergies for the year.

Now with this, I turn back to you, Thomas, for a few final remarks.

Okay. Thank you, Adrian. And maybe here, coming back with any geopolitical developments we monitor, the potential knockoff on FX closely. But at this stage, the direct impact on our business has been limited. Our team's ability to rapidly reorient supply chains to serve customers has been exceptional and exemplifies Sika's strengths.

We have preemptively addressed expected supply chain costs with pricing to protect our best-in-class margin, and we continue to leverage the CHF 280 million we invest annually in R&D to drive industry-leading innovation and returns for our customer. This is when our customers deepen their partnership and rely increasingly on us to solve their problem.

When supply chains are disrupted, when customers need availability and reliability, our ability to shift resources across regions and serve them when regional competitors cannot is helping us to achieve market share gains and growing trust with our global customer.

We are seeing this play out right now. The current environment highlights the Sika uniqueness, and we intend to build on this. Through Fast Forward, we have invested in improving productivity, which will deliver CHF 80 million of savings this year. We are accelerating our investment in product innovation and improving our customer value proposition. Our digital transformation and investment across distribution channels will accelerate our future industry outperformance profitably by giving our customer best-in-class solutions efficiently.

Our outlook for the year is unchanged. We confirm our full year guidance of 1% to 4% in local currency sales growth and an EBITDA margin range of 19.5% to 20%. We continue to expect global market conditions to remain muted in 2026 and remain watchful of the unfolding events in the Middle East. We continue to expect a softer first half for the global construction industry and gradually improving momentum as the year progresses. Q1 was a constructive start, but we remain vigilant and agile to react to market conditions.

Back to you, Dominik.

Thank you, Thomas. With this, we open our Q&A. [Operator Instructions].

[Operator Instructions] The first question comes from the line of Ben Rada Martin from Goldman Sachs.

My question was on the 2026 guidance. I know at the start of the year, we were talking about a broadly flat pricing and inflation backdrop. That's obviously changed a whole lot in the last 1.5 months. What is your -- I guess, your updated expectations in terms of pricing contribution and inflation from raw mats as we sit today?

I understand that the situation continues to evolve, but just in light of, I guess, the reiteration of guidance, it might be helpful just to speak about what kind of contribution you see at the moment?

Okay. Thanks for the question. And it is too early to really quantify for the full year the impact as we have seen here almost daily, weekly changes in the direction. We see punctual limitations and especially on transportation. But so far, our approach is clearly we are putting all those elements that are increasing our input costs into proactive pricing measures.

But so far from the magnitude, as I outlined also for the Q1, it is rather limited. It might increase in the coming quarters, but it's really the magnitude will very much depend on the evolution that we are going to see and the evolution is, at this point, unpredictable. We see limitations, but at the same time, to draw now already, let's say, an absolute contribution for the full year is premature.

The next question comes from the line of Ephrem Ravi from Citigroup.

Related to the pricing on the cost side, given different dynamics in the petrochemical chain, are there any materials where you are facing in particular, pricing increase or, in fact, kind of just pure supply shortage given kind of just a different refining and processing capacities in the Middle East?

Yes, there are nuances in certain commodities. So let's say, the polyethylene streams are very much, let's say, challenge, the epoxies as well. So it is not across the board. It is more also to the supply chain setup. Some of this feedstock are coming out of crackers in Asia, which have difficulties to get their input material and the input materials are at higher cost.

So there, this is when we refer to supply chain rerouting and our mitigation means compared to local players or regional players, we can then also tap into availabilities of other regions to support, but this comes then at higher cost, which we then also transform into our product pricing.

But as mentioned before, especially in the Middle East, construction is ongoing and the biggest concerns of our customer is that they would have to stop activities on the sites because of inavailability of products. And therefore, it's rather our discussion is centered around give them the confidence that we are a reliable source, and we can help them to maintain the operations going. And this is very different from other parts of the world.

The next question comes from the line of Ebrahim Homani from CIC.

So could you give us maybe more details on the Fast Forward cost reduction impact of CHF 80 million between H1 and H2? It is balanced between H1 and H2 or the costs are more may be back-end loaded?

Yes. Thank you for this question. I think on Fast Forward, as mentioned, we're making very good progress in terms of also impact on the P&L. In terms of execution, we're even, let's say, further advanced. I mean we're currently running, if you take this CHF 80 million at sort of around a 70% run rate. So this is going to increase here over the course of the year. We had some early effects last year in Q4. So the expectation is second half is higher, but continuing to ramp up from here.

The next question comes from the line of Martin Flueckiger from Kepler Cheuvreux.

Just a quick one on business conditions in the U.S. If I look at the Architectural Billings Index, still slightly below 50, but it's starting to show encouraging signs. So just wondering whether you can reconcile that, whether -- what kind of feedback you're getting on the ground, particularly with direct sales in terms of the sentiment across the U.S., not only in residential but also in commercial and infrastructure, please?

Yes. I mean the start of the year in the U.S. as well as in parts of Europe were also impacted by some more severe weather condition. And we have seen that March was then kind of trying to catch up as much as possible from that. So the momentum going into Q2 was really also a bit in this catch-up mode. But the underlying, let's say, sentiment, especially on the commercial side hasn't changed that significantly.

The positive sentiment around, let's say, the data centers absolutely is continuing. We have here excellent momentum. Also, the infrastructure is moving very nicely in the right direction. But the other parts haven't that much changed, even so we have seen a bit of a catch-up lately, but that's more of the delayed activities that were executed in the past few weeks and also going into April. But that's not -- I think it's premature to say this is now a fundamental change.

The next question comes from the line of Elodie Rall from JPMorgan.

Sorry to come back on pricing, but could you tell us what kind of price increases you've already announced, what has been already announced and maybe that you see realized? And you said that this will have an impact on margin lagging. So how much impact do you expect that curve? And when will you recover the gross margin of 54% to 55%.

Okay. Here, of course, the situation is very different from region to region, even country to country. So what you can say in general, we have seen that transportation costs have gone up. I mean, the famous or infamous fuel surcharges are almost everywhere applicable. But they are also, let's say, in the magnitude, not, let's say, that big.

But then you have some like in the Middle East with the, let's say, rerouting and with the higher costs, you have a more significant contribution there. But the Middle East, the affect the Middle East countries are only 4% of the Sika Group revenues. So also this, we have to be a bit, let's say, calm in reactivating this and not make the one thing applicable to everything.

So here, there might and will be slightly more pricing visible going forward, but this can also change any time when things are changing in the Middle East when the Strait of Hormuz is opening up, when oil price comes down or goes up. So here, it's just really, at this point, too premature to make here already a forecast for the full year. But it might be slightly higher than what we have indicated at the beginning of the year. We talked about that at full extent. That's probably to be expected. But the magnitude, I would just be cautious to model in something.

It's -- we are not in a situation like after COVID. After COVID, we had demands going through the roof and supply chain collapsing. We don't have that demand situation now. We are rather in muted market conditions. Yes, we do have limitations. We have restrictions, but it is not the same pricing momentum that we have seen post COVID.

The's next question comes from the line of Pujarini Ghosh from Bernstein.

So coming back to your guidance for 2026, given that when you gave the guidance initially, we didn't have this war situation. Standing here almost 2 months later, how do you expect -- or what do you expect the impact of the war to have been on your local currency growth guidance as well as the margin guidance?

Okay. Thanks for the question. And I really want to reiterate also here that we started the year with a cautious guidance. We talked to extent the plus 1% to plus 4% in local currency is also anticipating eventual for the full year, muted market condition with negative growth rates. But it could also change over the year, and we still expect also some momentum there as signals, especially also in big markets like Europe are indicating some improvements.

At the same time, we also, on the margin side, we have been cautious giving a range that we feel comfortable and not the first, let's say, unexpected move is already jeopardizing our guidance. So at this point of time, we want to be very clear that our initial guidance, we don't see any reasons why we would change our top line guidance nor our profitability guidance.

And as also Adrian has outlined, our -- the things that we have in our control, I mean, pricing is in our control. Our supply chain is in our control. But also, of course, it's in our control to deal then with market opportunities going in both directions. So here, I think we have a lot that we can still bring. We have the fast forward that's purely organic, let's say, contribution. The remainder synergies of the NBCC, this gives us the confidence that we can reconfirm our guidance as articulated in the middle of February.

The next question comes from the line of Cedar Ekblom from Morgan Stanley.

I just wanted to follow-up on how your customers are responding to price announcements. Have you seen any prebuying from any of your customers? And if a customer was thinking of prebuying, what kind of time frames are we thinking about that they might want to have a little bit more stock?

Does your product category sort of last a while? Like can you put it in stock for 6 months or 9 months? Or is it really a case of your customers buying for immediate consumption? It would be helpful to hear how customers are responding to the likelihood of future price hikes.

Thank you, Cedar. And I mean, it's clear these are discussions which customers don't like that much because it's putting their cost up. But our argumentation and our clear also commitment, we transfer what we incur from the input side, from transportation side.

So we are very transparent and these discussions very soon center around availability because customers still keep in mind that that's how it started after COVID and then it turns from a pricing into an availability dilemma. And we see that customers have this still in their minds. And so I think this -- of course, it is always a delicate conversation, but I think we learned a lot that we have to go earlier and we have the right ammunition to explain.

But at the same time, we are also firm on installing those price increases. And they are, of course, tuned for each customer individually -- in each country individually. And our products don't offer that much of a prebuy opportunity. We are not talking here about months or so. You can maybe prebuy for a week, 2 weeks, maybe 3 weeks maximum. And we are also watching this as we don't want that, let's say, we get into this hamster situation where the early movers then empty our warehouse, we are balancing.

We are looking at the forecast. We're looking at -- and we also look at new customers that want to buy from us and see how we can serve them. So it's a balancing act that we are executing. And I think it's also well understood in the market that we are reliable and that we have also resources available to maintain availability to them when others fall short, and this is super relevant.

The next question comes from the line of Yassine Touahri from On Field Investment Research.

Just one question. I think when I look at the period when you had a big increase in oil price like in 2011, 2018 or 2022, your gross margin temporarily fell below the 54% of your target. Could you -- if we assume that oil price remain elevated, could we see again a scenario where your gross margin on that a little bit below the 54% knowing that -- if you can see what happened in the previous years after it was recovered afterwards when oil price fell down, but it would be good to get a sense of how to think about the gross margin range in an environment where oil price could remain high for a long period of time...

Yes. Thanks for that question. And I think, again, to really sort of give a definitive answers here where we will be landing in terms of, let's say, the input cost movements is difficult to say from today's perspective. So I think we have to think in scenarios. And of course, there is scenarios where we can, let's say, fall below that range. On the other hand, there is also clearly some which will keep us in there.

Maybe secondly, and I think this is also important here in the overall context. I mean the 54% to 55% is not sort of a hard target. It's really very strongly a steering mechanism. And if you look at sort of EBITDA margins, which we manage from starting point before onetime costs last year, the 19.2%.

I mean we have these elements which are very much under our control in terms of the Fast Forward impact, 60 to 70 basis points of improvement, the MBCC incremental synergies, another 20 to 30 basis points. And of course, here, the swing factor is operating leverage, which is also here related to pricing, which clearly, given the environment is skewed towards the upside.

And then you have the input cost side, which in connection with, let's say, the price increases, we will pass through in order to protect absolute margins depending on the magnitude, obviously, can have a mathematical effect on material margins. So I think, yes, it is possible. But clearly, we're managing here the whole P&L and the respective elements, particularly here, pricing versus input cost too early to really clearly pinpoint.

The next question comes from the line of Priyal Woolf from Jefferies.

I just had a question on [indiscernible]. You obviously called it out in Asia Pacific as being a positive influence. I just wanted to check if it had a tangible impact in EMEA or Americas. Thanks.

Here on the automotive and industry business. Yes, I think the automotive one obviously is clearly related also to build rates and the ability of us to continue to increase content, which we have actually been able to in all the regions.

Here also in the other regions, we have here increased sales more strongly than car build rate performance sort of across the board. Also the industry business in most of the key countries and the regions has been quite solid. Overall, a bit stronger than construction growth across the regions.

The next question comes from the line of Remo Rosenau from Helvetische Bank.

In the fourth quarter, you mentioned the negative impact in the Americas from the government shutdown. Have you seen some catch-up effects already in the first quarter due to that? I mean we should expect them sooner or later, right? Or should we rather expect those to come in, in the later quarters?

Good point, Remo, and very clear, this catch-up is something that takes time as this release is not done in a week or in a month. So we have seen that this backlog of approvals has been worked through in Q1, which will also then probably become more visible and pronounced in Q2.

This effect has been, let's say, now faded out from the administrative point of view, but now it's, of course, then in the pipeline of projects for execution.

So bottom line, that means that you didn't see that much of a catch-up already in Q1?

That's correct. We didn't see that much of a catch-up. But Q1 is also a bit difficult to read. We had very bad weather conditions in North America, particularly in the East, which is a very strong region. So here, it's not so clear visible to say how much is what contributed. So -- but going forward, I expect here to see a bit more stronger input from that.

The next question comes from the line of Alessandro Foletti from Octavian.

On Asia Pacific, you mentioned, Adrian, that maybe in Q1, the negative impact from China was below average. But in previous calls, you also said that the phaseout of your distribution or the closing of your distribution points of sales might end at the end of H1. So I was wondering, if I look in the next 3 quarters, is it fair to assume maybe a bit of a more negative organic growth in Q2, but then going back maybe above Q1 and maybe even in positive in Q3 and Q4?

Well, thanks, Alessandro. Here, maybe to sort of reframe a bit what I said here, I was particularly referencing, let's say, the weight of, let's say, China as a percentage of Asia Pacific sales, which is clearly lower in Q1, hence, having sort of a disproportionate impact on overall sales trajectory, which, by the way, outside of China was out -- was quite solid with 5%.

On China specifically, I mean, overall, we have seen in spite of, let's say, the -- or next to the lower weight, a certain improvement compared to Q4. Q2 will have, let's say, more weight of China. So yes, we're not expecting a further improvement, maybe a more negative impact on Asia Pacific. But also given the comps, but particularly also the activities we're driving and it's less, let's say, closing of here point of sales.

Here, the expansion will continue to progress with more focus on, let's say, the refurbishment part with, let's say, sort of the quality of the program. But yes, all in all, we're expecting here a better relative performance in China in the second half year.

The next question comes from the line of Patrick Rafaisz from UBS.

A quick follow-up on pricing. And I think, Adrian, you talked about the potential for a mathematical dilution of the margin from price increases ahead. But you also said you are implementing the price increases preemptively with input cost inflation probably hitting you more towards the end of Q2. Does that mean that we should anticipate a degree of windfall profits in the second quarter?

Thanks, Patrick. I mean, here, of course, firstly, it continues to be quite a moving target in terms of impact. Thomas talked about, let's say, sort of the immediate impact on the transportation cost side. I think here, we're also -- we have also been very immediate on the pricing, particularly the preemptive was clearly focused on our reaction in terms of obviously announcing it.

There is typically still a certain lag in some cases to actually get it implemented. So I would not here count on as you call it, windfall profits, but we're trying to be as much aligned here with the actual cost as possible. And I think that's clearly quicker than in, let's say, previous situations.

The next question comes from the line of Arnaud Lehmann from Bank of America.

I have 2 questions, if I may. The first one is a follow-up on your cost outlook. In terms of your own raw materials, have you been able to secure everything you need for the next few months for the second quarter? And do you have visibility on your cost base for Q2? That's the first question.

And the second question is related to your recently announced acquisition of Akkim in Turkey. Do you have an idea on the closing of the deal? And is it included in your full year sales guidance?

We wanted to have one question only, but I think the Akkim question is one that is of general interest anyhow. So I start with that one. And I do kind of reconfirm what we already mentioned in February. Yes, we are on track to close the transaction in Q3. And we have included in our top-line guidance 1 quarter of contribution from that, which is 0.5% net sales growth. So that's unchanged.

So we are advancing with that process as planned. And then on your first question, I think on that side, we do have visibility for roughly 1.5 to 2 months on the cost side. And what Adrian mentioned before is that we are kind of integrating the visibility in our preemptive pricing measures. So it is kind of going in parallel.

And as we progress in Q2, and we have not yet the full visibility for the full quarter, but we have a pretty good visibility, which we then also utilize to adjust our pricing in line with that. And we don't know yet where the prices or the input cost situation will be, let's say, mid of May, end of May, which still has an impact for Q2. But at this point of time, I think we have availability and also transparency for a good part of Q2.

The next question comes from the line of from Harry Dow from Rothschild & Co.

Just one question really on the step-up in activity in March in Europe that you mentioned. I wonder if you could sort of pull out some of the strongest growth by country in Europe and whether those trends have continued through to April?

Yes, we have seen -- I mean, we talked in February about, let's say, the good momentum in Eastern Europe, which has been building up over the whole year in '25, and that has continued. And we also have seen this to further contribute. We also have talked about the Nordics, so the countries, the Scandinavian countries, but also about the U.K.

Our business in the U.K. has further progressed mainly because of our activities in the market, our integration of the last few acquisitions, the synergies. So we have there. We talked about that. But in the meantime, also -- and we talked about, let's say, the Iberian Peninsula as well as parts of Southern Europe.

And in the meantime, also Germany and France are signaling a progression in the Q1. So now it's to be seen how much of that is going to further accelerate? Or is it just at this level, but good overall, let's say, traction that is building up.

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

Thank you very much. This brings us to the end of our Q1 discussion. Thank you for joining our call and speak to you soon, the latest for our Q2 conference call. Thank you, and bye-bye.

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

Dear shareholders, ladies and gentlemen. I would like to extend a very cordial welcome to you to the Annual General Meeting of Sika AG. It is a particular pleasure for me to welcome so many of you today to Congress House of Zurich.

I would particularly like to welcome the members of the Board of Directors and the group management as well as the Sika employees, President and Dr. Paul Halg and Monika Ribar, of course. Joining me on the podium, we have Thomas Hasler, our CEO; Adrian Widmer, our CFO; and Sebastian Battig, Head of Corporate Legal and Secretary of the Board of Directors.

And then on site, we have more than 20 Sika employees on duty working in various places. I would also like to extend a warm welcome to these hard-working helpers and thank them for their efforts.

Safety is a top priority at Sika. Every event begins with a safety moment. And this is why I would also like to give you some important information on safety at the start of the Annual General Meeting. The entire building has emergency exits, which are clearly marked. You can see them, for instance, on the sides here in this hall. In the unlikely event of an evacuation, I would like to ask you to use the appropriate emergency exit and leave the building by the most direct route, an emergency team identifiable by high visibility vests will assist you. The assembly point is located on the other side of the road on the Lake Shore. You can also see it on the map that is being displayed.

Now let me continue and set up the Annual General Meeting today. The invitation to this general meeting was issued in accordance with the statutory and legal requirements both in due form and with within the prescribed time limit through publication in the Swiss Commercial Gazette on the 24th of February '26 and by written notice sent on the 25th of February 2026. The invitation contained the agenda items as well as the proposals of the Board of Directors. From February 24, 2026, the annual report, the auditor's report and the compensation report have been available on the website for shareholders to view.

We have received no request to add items to the agenda within the published deadline following the company's call in the Swiss Commercial Gazette on the 23rd of January '26. The minutes of last year's Annual General Meeting was signed by the Chairman and the minute taker. They were available for inspection by shareholders at the company's head office and were also published on the Internet.

Now pursuant to our Articles of Association, I shall Chair this general meeting as Chairman of the Board of Directors. Mr. Sebastian Battig is going to keep the minutes today. And in this context, I would like to draw your attention to the fact that the general meeting is being video recorded and broadcast live on the Internet via a web stream. The minutes of the general meeting as well as the presentations will be available from our website, and these can also be sent to you upon request.

We will now proceed to appointment, the appointment of the tellers whose names are being displayed on the screen behind me. The tellers will be used only in the event that the electronic voting system fails, and we have to vote using the voting coupons attached to your admission cards. Ms. Caroline Inauen will be the head teller. I would like to thank the tellers, ladies and gentlemen, for performing this task.

The statutory auditors, KPMG AG are represented by Mr. Toni Wattenhofer; and Ms. [ Anna Paul ] whom I also warmly welcome. I welcome Mr. Jost Windlin, Lawyer and Notary Public at Bright Law AG in Zug as the independent proxy. He will vote in accordance with the instructions given to him by the shareholders. I would like to thank Mr. Windlin for accepting this mandate and would like to ask him to stand for a moment, thank you. Shareholders must be informed at the Annual General Meeting, if the independent proxy has already notified the company of the voting instructions received prior to the Annual General Meeting. I hereby inform you that Mr. Windlin has not provided the company with any information regarding the voting instructions received.

Shareholders were also able to participate in today's Annual General Meeting by submitting proxies and instructions electronically to the independent proxy. Electronic participation and any amendments to instructions submitted electronically were possible until 11:59 p.m. on Sunday, the 22nd of March 2026. As in previous years, shareholders also had the option of signing on an online platform to ask questions orally at the annual -- or verbally at the Annual General Meeting.

In this context, I would like to remind you once again that shareholders attending the Annual General Meeting via Web stream were able to exercise their shareholder rights either through the independent proxy or by granting a proxy to a third party prior to the Annual General Meeting today. It is not possible to exercise shareholders rights via the online platform.

And finally, I would like to take this opportunity to extend my sincere thanks to Mr. Dominik Slappnig and his team for organizing the event today. The number of shareholders present and the votes represented are updated continuously. I shall announce the attendance figures before the vote on agenda item 1. I therefore confirm that the invitation to today's Annual General Meeting was issued in accordance with the Articles of Association and the law and that the Annual General Meeting is duly set up. And thus, has a quorum for all agenda items. Anyone against these findings, any objections? This is not the case.

At today's general meeting, you have the opportunity to express your views or ask questions. If you wish to speak, please first register at the speakers' registration desk on the left-hand side in the hall and let us know which agenda item you wish to speak on. You will then be called upon in due course and may deliver your remarks at the left turn here at the front. To ensure the general meeting runs efficiently, when members wish to speak, we ask you to register at the speakers' registration desk as early as now. Maximum speaking time will generally be 3 minutes.

Shareholders also had the opportunity to sign on via the online platform for taking the floor via the web stream. However, no such requests have been received. The Board of Directors reserves the right to respond to questions in aggregate or individual form or to further limit speaking time. At today's meeting, we shall proceed in accordance with the agenda shown here. Following my remarks on strategy, our CEO, Thomas Hasler, will report on the past financial year 2025 on the agenda item 1 and provide an outlook for the 2026 financial year.

Ivo Schadler, Head of Construction, a member of the group management will then explain how Sika is supporting the globally-booming data center industry with innovative technologies in an area that has become a key growth driver for us.

Ladies and gentlemen, first of all, I would like to discuss Sika's share price development. Our share performance in 2025 remained well below key stock indices and also below our own expectations. Price performance reflects the cautious sentiment in the global construction industry characterized by difficult end markets. At the same time, it illustrates the adjustments made to our growth expectations in the past financial year by reducing our medium-term annual sales growth targets from 6% to 9% from 3% to 6%.

[indiscernible] difference lies in the fact that the exclusion of the market growth elements was added. So these were elements that were previously factored into our targets. At Sika, regional diversification is the strength. Our global presence and our local roots with production on sites enable us to cope well with geopolitical complexities. However, since 2025, Sika has also been caught in the crossfire of geopolitics. Of course, it doesn't help that our 2 strongest markets, the U.S.A. accounting for around 20% of sales, and China representing up to 9% were impacted by these geopolitical developments in the past year.

On the one hand, these were shaped by tariffs, which greatly unsettled the markets. And on the other hand, by the crisis in the Chinese residential market. As the Sika is the only provider of construction chemistry that is present in China. So we were realizing 4% revenue. And it's -- we were once again -- sorry, the Sika share closed 2025 with a drop of 23.6%, while the SMI went up by 14.1% in the same period compared with the global construction markets, which declined by about 2.5% last year, Sika posted a good result in 2025 and achieved a slight gain of 0.6% in local currencies, so even 3% above market.

We have continued to implement our strategic priorities. And once again, despite a challenging environment, we were able to succeed in expanding our market share. This is not something we take for granted. It is the result of systematic strategy implementation and a corporate culture based on performance, innovation, responsibility and a clear customer focus.

Fundamentals are strong. Our strategy is clear. Our innovative strength is unbroken. And our market position is now stronger than ever. The whole team at Sika is working day in day out to create value for you. And we are convinced that the financial market will recognize this strength sooner or later.

Allow me to now give you an insight into our strategy 2028. We announced this strategy in 2023 and since then have been continuously implementing it. Today, I would like to show you where we stand in terms of the implementation and what progress we have already achieved.

Our strategy 2028 is based on 4 key pillars: market penetration; innovation and sustainability; acquisitions; and finally, employees and culture. In all 4 areas, we have set ourselves ambitious goals, financial and nonfinancial nature. Also in the year 2026, Sika will continue to pursue these goals resolutely. We want to grow even in a challenging market environment, focus here is on gaining market share, while at the same time, increasing profitability. Specifically, we have set ourselves the medium-term goal of achieving annual growth in local currencies of between 3% to 6% above market. This growth comprises around 1% to 2% by value-adding acquisitions and organic growth.

In terms of profitability, we are aiming for a corridor of 20% to 23% in EBITDA. With last year's investment in the Fast Forward program, Sika would have achieved an EBITDA margin already of 19.2% in 2025, which correspond to the second highest figure in our company's history.

Important key figure here is the strong cash flow generation. As part of part of our defined goals, we want to achieve an operating free cash flow, which amounts to over 10% of sales. Sika's figure of 12.1% in 2025, exceeded this target for the third consecutive year. Sika operates in an attractive market environment. The addressable market in our business areas of construction chemicals and industry has an estimated global volume of around CHF 100 billion. With a market share of 12%, Sika is the biggest provider.

The market is highly fragmented. 30 largest companies including Sika, hold around half of the global market share, while thousands of smaller providers make up the remaining 50%. So Sika has considerable opportunity to further consolidate the market and to achieve long-term profitable growth. None of our competitors has the same broad-based strong position like Sika. All of our 8 target markets provide a significant contribution to our company's overall performance. Each of the 8 target markets contributes between 10% to 20% of total group sales, very balanced portfolio that strengthens our resilience and ensure stability.

Our sales strategy is clearly focused on vertical market segments with considerable business potential. Our largest vertical markets which Sika serves with its products and solutions, our infrastructure at around 30% of sales, commercial construction at 35%, residential construction at about 20%, and automotive and industry at around 15%.

For example, our customers worldwide who build data centers rely on our broad solutions portfolio ranging from high-performance roof membranes through concrete admixtures, for special applications, versatile sealants and adhesives to reliable flooring and waterproofing. Ultimately, the entire product portfolio of Sika comes into play when constructing data centers. Thanks to targeted cross-selling in the vertical markets, we are able to steadily increase the share of Sika Technologies in the respective project.

While net indebtedness in 2025 declined by around CHF 300 million. The debt level measured in terms of net debt in relation to EBITDA rose on an adjusted basis to 2.3x. Adjusted for the impact of our Fast Forward investment program on EBITDA, this figure is unchanged at 2.2x. Sika has a strong investment-grade rating. And for 2026, we also expect a robust operating free cash flow results.

The Board of Directors believes that we should deploy our capital in order to generate the maximum value for our shareholders, generating strong cash flow opens up enormous scope in terms of our capital allocation policy, which is geared to high and long-term value creation for our shareholders.

Our top priority is to promote organic growth. At the same time, we are increasing profitability through high-yield investments and value-adding acquisitions, where cost synergies allow us to achieve above-average returns. We have tried and tested strategies for quickly achieving synergies with smaller- and medium-sized acquisitions. We will continue to reward our shareholders with a progressive dividend policy that enables efficient capital management and continuous increases in returns.

And opportunistic share buybacks will also be considered provided that after all other uses, including further debt reduction, there is free cash flow available. Our target is clear. We want to create from these financial resources the greatest possible value. We, therefore, always consider carefully which use of the cash flow promises the highest return for Sika shareholders. In particular, external growth in the form of acquisitions contributes to implementing our growth strategy. As a rule, smaller and medium-sized company takeovers contributes around 1% to 2% to our annual sales growth.

In 2025, we completed 7 of these acquisitions. All of them are now being carefully integrated and are making a valuable contribution to our further value creation.

I would now like to address our biggest acquisition to date that's of MBCC. Over the past 3 years, the focus was clearly on achieving a successful integration. We are proud to say that we have succeeded. For example, last year, we even exceeded our own expectations in terms of achievable synergies with a figure of CHF 182 million. After the closing of the transaction in May 2023, MBCC generated a considerably lower EBITDA margin at 15%, which we have since raised to around 20%. Integration is almost completed. And the focus is now on the market, on customers, and on making full use of this strong growth platform. We now have, by far, the most extensive product portfolio in the entire construction chemicals industry, an ideal prerequisite for generating further dynamic growth in the future, and creating additional added value for all our stakeholder groups and especially for you, our shareholders.

I would, at this point, like to thank the worldwide Sika team once again for their excellent performance in a very difficult environment in 2025. Thank you very much.

Let me now move on to the official part of the Annual General Meeting. And allow me to make a few remarks regarding the voting procedure. As you will have seen, we're using an electronic voting system for the votes. It is operated by Devigus Engineering AG. I would now like to briefly explain to you how to use the voting device. The voting device has 3 buttons. The top button is for voting yes, the middle button for abstaining, and the bottom button is for voting no. If you do not press any of the buttons during the voting window, this will be counted as an abstention or an invalid vote. As soon as I have explained a motion in the process of today's meeting and the floor has been closed. I will officially open the vote.

From this point onwards, your voting devices will automatically switch to voting mode, and all 3 buttons will light up. This indicates that the voting device is available for voting. If this is not the case, please take your voting device to access control, to check in to have it replaced. You will have 5 seconds to cast your vote, it's quick. Whilst the 5-second voting period is being counted down on the screen, you may cast your vote by pressing the green yes button, the amber abstention button or the red no button.

If you have pressed the wrong button by mistake, you can cast your vote again within the voting time by simply pressing the correct button. Once the standard 5-second voting period has elapsed, it is no longer possible to correct your vote, unfortunately. Shortly afterwards, the voting results will be displayed on the screen.

In the course of a vote, you will find your devices out of order or you're having difficulty operating please contact the check-in desk. Should you wish to leave the hall during the meeting, please take your voting device and the voting material with you.

Shareholders who vote against the motion have the option of having this recorded in the minutes. To do so, please hand in your voting device at the registration desk after the general meeting has concluded, stating your name.

Furthermore, any shareholder may request that their statements be recorded in the minutes. The exact voting results will be recorded in the minutes of the Annual General Meeting and published as such. Now we shall check the electronic voting device, check whether it's working properly. A piece of group work to do so. Here is my trial question. Did you know that Sika achieved turnover of CHF 11.2 billion in the 2025 financial year? Once I have opened the trial test, the trial time, you will have 5 seconds to cast your vote by pressing the appropriate button for yes, no, or abstention. Please take your voting devices now and vote on this trial question. The vote is open. Please select yes, no, or abstention.

[Voting]

Voting time is up. The results of the vote will be available in a few moments. You can now see the voting results on the screen. The vast majority of voters were aware that Sika generated revenue of CHF 11.2 billion in the 2025 financial year. If you noticed in the course of the vote, that your device is out of order or if you are still unsure how to use it, please contact the check-in desk as swiftly as possible.

I'll now turn to attendance figures at the Annual General Meeting today. On this screen behind me, you can see the number of shareholders present and the total number of voting rights represented taking into account the representation ratios. As you can read, we have 88,144,897 in total votes, and you can see how many are represented by the independent proxy and by the shareholders present.

The shares held by Sika and its subsidiaries do not carry voting rights and are therefore not represented. These figures are recalculated before each vote to take account of shareholders joining or leaving in the course of the general meeting. Pursuant to our Articles of Association, the General Meeting passes its resolutions and conducted selections by a majority of the voting rights represented excluding abstentions as well as blank and invalid votes unless the law or the Articles of Association contain provisions to the contrary. The number of yes votes, no votes and abstentions for each vote will be announced for every item on the agenda.

This brings us to the agenda today. You can see the agenda for the Annual General Meeting today. And you have already seen it in the invitation. For this reason, I shall refrain from reading out the individual items on the agenda. And we're going to start off with item #1, approval of the 2025 annual financial statements and consolidated financial statements. We have already reported in detail on the 2025 financial year at the press conference on the 20th of February 2026.

For further details on the 2025 and annual financial statements and the consolidated financial statements. I would refer you to detailed information in Sika's 2025 Annual Report. Our CEO, Thomas Hasler will now outline the business performance and provide an outlook for the current year. Ivo Schadler Head of Construction will then give us an insight into Sika's high-growth data center business, Thomas, may I ask you to come to the lectern.

Hello, and a cordial welcome to the Annual General Meeting of Sika 2026. Before I look back on 2025, I would first like to thank all the [ 33,000 ] employees of this company for the tremendous effort in a highly turbulent year. Their commitment and their agile way of coping with many adversities, and for the support they provided to us to make sure we are doing an ordinary business, although the markets where everything else than have been everything else than supportive.

Before I talk about the figures, this is the foundation the company has built up in recent years, as Mr. Vanlancker has pointed out, we are active in very large markets, hundreds of billions. We're a market leader at 12% -- market share of 12% through innovations and performance of our products and systems. We have well established our market shares. We're outgrowing the market. We are growing profitably, and the markets currently certainly are not ideal at all.

The cycle -- business cycle in the construction industry is, of course, marked by the uncertainty in recent weeks and months. And yet, we outperformed again in 2025 and produced excellent results. But we've also identified that this weakness in the economy will probably continue in 2026, and that's why we took preventive measures in the form of the Fast Forward program to respond to the structural changes weaknesses, and to invest in substantial increases in efficiency in the future to retain our market leadership through the new digital means. As I mentioned, the acquisitions. Acquisitions have a long tradition in the company, small and medium-sized acquisitions to reinforce our local presence and use them as an extended growth platform. I'll present to you some examples of what we did in the past year in this regard.

Let's go back to the market. As I mentioned before, the relevant global market, all the markets we are active in declined by 2.5%. The year actually gone off to a good start, an excellent start in North America with a momentum reshoring of the industry drove that. And unfortunately, at the end of February, it was abruptly challenged when all the tariff issues arrived and with their implications and their influence on other market, in particular, China.

The big markets, China and the U.S. big markets for us, suffered most in China, it was particular housing, housing construction that receded by 45% in the past 2 years due to the lack of optimism among the Chinese and of course, as a result of that, there is reticence in investing in -- on housing. And towards the end of the year, add to this, the unexpected shutdown in the U.S. The U.S. government shutdown, the longest shutdown in the history of the U.S. activities that were ready to be implemented were prevented because authorities were not active. Didn't issue the necessary approvals, didn't launch projects.

As I mentioned before, below the line, in 2025, we achieved growth in local currencies of 0.6%. Of course, you can clearly see the influence of the Swiss franc, strong Swiss franc that appreciated by 5.4%. And this has an impact on the figures, sale -- both sales and profit margin, EBITDA. And as mentioned before, in the history of Sika, these are excellent results, second best result for EBITDA development and for sales, also the second best annual result below the line.

In EBITDA, you can see the influence by the Fast Forward program and it's one-off cost. And the reported result at 18.4% return was decreased because of the one-off cost. Otherwise, it would have been 19.2%. Now this investment campaign or efficiency program has 2 objectives, really, on the one hand, in this weak economic setting, we want to clearly speed up our efficiency programs. And double the contribution of efficiency increases compared to previous years. These are substantial cost savings that will produce CHF 80 million cost savings in 2026. CHF 80 million out of the income statement. That's an immediate effect, that is very important, and it's a strong basis of 2026, considering all the unpredictable situations we are faced with.

But not only that, not only that report of Fast Forward, but it was also the exploitation of digital opportunities that we have done consistently -- we've built up consistently. And with the Fast Forward program now, we are driving this ahead to use automation and digitization within Sika and in working with our clients to drive that ahead in a setting construction industry certainly is not leading as far as digitization is concerned, but there is an opportunity for Sika to be a leader, pioneer. We're not only a market leader, we're not only a leader of innovation, but we clearly have a claim with regard to digitalization in our market to go ahead to be in the lead to support our customers, generate more value for our customers and to automate our internal processes to use artificial intelligence to further increase our innovation capability using data scientists supporting our traditional scientists to be faster, to be better in coming up with new innovation.

And as you see, the investment program has a substantial volume of CHF 120 million to CHF 150 million for the years to come. But it's -- will bring a highly appealing return on investments of below 2 years. And I think it's a fundamental step towards the future.

Back to sales in the regions. As you can see here, the regions of EMEA and the Americas produced growth of 2.2% each in local currencies. Asia Pacific posted a decline of 5.2%. If we took out the adaptations in China, or in other words, the rest of Asia Pacific would have grown by 2.5%. In other words, all markets grew, whereas in China, there is a special situation, which we address structurally in the second half of the year.

Now we compared to market and to competitors. And we have been doing that for many years. We are using the publicly available data on our competitors that operate in a similar setting like ours, and we have seen constant outperformance of 2% to 3% when it comes to organic growth compared to our competitors. And we have 2 options of outperformance that we're showing here because all our major competitors are not active in China, which I think is a big drawback for them for their future, and it's a big advantage for us to be active in China.

But with the short-term weakness of the economy in China, of course, this had a pretty strong impact on the figures. Now with and without China, as you can see, our performance is significant and has been continuous irrespective of the business cycle. It's always been 2% to 3%.

Now let me give you some key figures. Materials margin here is certainly remarkable. It further increased last year. And this increase is primarily attributable to us generating more value for customers, bringing more innovation to customers thus customers are willing to pay higher prices. Now looking into the future, in the next 12 months, for instance, in the next coming years, I think this is a very healthy foundation of basis for profitable growth of the company.

Moving on to cash flow. Cash is king. In particular, when the economy is not doing all that well. Cash is key, is crucial. As I mentioned already, we have 12% of operational cash flow that we delivered in the past 3 years, and we are committed to producing positive cash flow in 2026 along similar lines in the previous years. Of course, the Swiss franc is not very helpful, let me say, in that regard, but we need to make use of all the opportunities, all the things that can contribute that. And we have shown that in various circumstances.

Sika is in a position to generate that cash flow. It's substantial, and it's a basis for our healthy investment ventures in organic growth and inorganic growth, apart from paying out an ordinary -- a decent dividend to shareholders. It was also mentioned that safety takes high priority at Sika. This program was launched in the COVID-19 and in 2021, and we noticed that we're not market leader in safety in our industry at the time. And we wanted to make sure because we thought, well, our employees are our most important assets. So we cannot accept that result. And ever since 2021, we've seen substantial improvements in terms of safety.

Safety is also a cultural issue has become a cultural issue. It's deeply embedded in the organization. And as you can see, the curve is continuously going down. We want to drive that ahead. Because at the end of the day, it means that our employees can return home safely every day and do not suffer harm at Sika.

But we also place considerable focus on the nonfinancial key figures. Our own CO2 objectives that we want to achieve, bringing them down. We're talking about Scope 1 and 2, which we have been able to reduce by 6.1%, but it's also simply a question of improving on the use of water, waste dispose -- waste water discharge per ton sold was reduced by 3.4% and reduction of waste dispose is also very constructive, less waste really means less cost, disposing of waste. So we're not only doing something good for sustainability for our sustainability claims, but it also has financial implications, positive financial implications.

Moving on to acquisitions. In the past year, we announced 7 acquisitions, and 6 of them were completed, smaller acquisitions. But as you can see in this chart, the whole world is covered by them beginning in Singapore, where we have acquired an urban greening system that is also used in Australia, in North America, in building, finishing. We carried out an acquisition that is a perfect match with our existing business in England. We have a roofing business and is related to our retail business and wonderful synergies and opportunities.

We carried out 2 transactions in the Middle East, 1 in Qatar, a traditional mortar and concrete admixture business. And in the United Arab Emirates, a Bituminous membrane, the waterproofing membrane company. Now these are essential extensions of our footprint in the Middle Eastern region, a booming region certainly not at the moment, but it is being challenged at the moment. But below the line, it's one of the sustainably growing regions in the world. We also carried out 2 transactions in Scandinavia. I'll be coming back to them, both of them are in the field of motor, cement solutions. They're highly value accretive. And I'll show you a point out what the opportunities of these transactions are.

Now our own plants were further expanded, bringing them closer to the markets, the development market that are growing latently, Southeast Asia, Central Asia and South America, North Africa. These are markets that continue to grow, and we are growing disproportionately. We want to be close to customers with our plants, and we want to produce more locally. But also in China, we made substantial investments. Let me emphasize that in our largest plant in Suzhou in Shanghai, a new adhesive and sealants production plant was commissioned in the summer of last year with the objective of making adhesives available for the automotive industry.

We have a 3-shift operation currently and will receive -- will achieve full capacity. These are additional volumes that we have generated, in particular with Chinese automakers. It just a clear proof that our presence and our innovation is appreciated by local volume producers.

Now I would like to talk about how we got started into '26. We got off to a great start in '26, opening 5 new plants in high-growth end markets. As you can clearly see here, in particular, again, in emerging markets, developing markets in South America, in Asia and Africa but also in Florida. The Southeast of the United States, apart from Texas is one of the regions that is growing most heavily, and it's highly appealing for us with this new plant in Orlando to serve this market.

Now back to the acquisitions. Finja, last year in December, we closed the deal with Finja. And at the beginning of February, we signed the deal, in the beginning of February, we closed it. Finja is a strong player in Scandinavia for cement products, mortar, for waterproofing, for floorings. Finja stands for these products. And Sika has a strong presence in Scandinavia for adhesives and sealants. In Scandinavia, we can now use the combined strength from the 2 categories: fully exploit them. We can use our products, the bonding and sealing and combine them with Finja products.

Moving on to the last acquisition that we announced the acquisition of Akkim, a leading manufacturer of adhesives and sealants in Turkey, a leading manufacturer of solutions that are strongly in demand in Turkey and the Middle East and then the Far East. Again, we have more of a presence with cement and mortar similar to Scandinavia, but with the products that we represent vice versa and we are supporting the local products and will be able to generate growth substantially. We expect for this transaction, to close in the third quarter, 2026. As you can see, with sales of CHF 220 million, it's an essential contribution to the growth of the company.

I would also like to emphasize on outperformance in different market settings. Mr. Schadler will dig deeper in the field of data centers, he will provide more insight that data centers are booming around the world. It's a privilege for us to have been an early adopter in the field of data centers more than 20 years ago in the beginning, these data centers. We're focusing on maximizing safety, security to make sure the building shells are not disruptive for the business inside the building.

So security, safety, waterproofing systems have to be top-performing products, to be durable and enable the interior space to generate the value that we know tech companies generate. 20 years ago, that was key for us to enter this field, and it's our dominant position that we have today. A data center owners are risk averse, they simply want to be able to do their business and want to avoid any problems that the buildings could be making to their business. They want to run their businesses around the clock. They certainly don't want to have any water coming down through the roof. They simply want to have peace of mind.

But Mr. Schadler will tell you more about this. It's a strongly growing market and will be in the year or 2 to come. He will give you more information on that. But then there are the infrastructure activities. They are less dependent on the business cycle. They are more resilient and even in times of budget restriction, they are not exposed to as much variation as housing or conventional construction. We can see the progress of urbanization that is taking place everywhere in the world, expansion of cities in North America, in Europe, in Japan, it's going on. And we have the developing markets with strongly growing mega cities. Just to give you some examples here, where we're active in Germany, in Sao Paulo in Brazil or New Zealand.

Now this is another field where we can show our performance with our solutions. We are a well-known market leader, able to support these gigantic projects, these large-scale products, but also when it comes to renovation of infrastructure we are a first choice with our products that clearly generate added value for the owners of this infrastructure. But in retail trade, there are also major opportunities for us to create outperformance. This is an example from Asia, out of China. We have a fully digitized end-to-end ecosystem from us to retailers, points of sale to users, we can fully cover that with a digitally to maximize both push and pull.

As you can see here in the recent years, our POS outside China in Asia were increased from 70,000 to 80,000 to 160,000. We go in as far as -- up as far as 300,000 points of sale in this field. On the right-hand side, you can see this produces double-digit growth. Growth increases. Growth rates and will do in future. This clearly outperforms the market, and these are our components that demonstrate our outperformance in booming market in infrastructure in retail markets.

Let me come back to a core piece, the DNA of our company, innovation, which generates added value for customers. This is an impressive chart here, you see we invest in innovation. Innovation does not come about overnight. We have 1,800 R&D specialists working on that on a daily basis, we are spending CHF 280 million in research and development, and they produce unique solutions that are patent protected and that we can use in market implementation that we can position excellently. And as you can see on the right-hand side, almost 1/4 of our products has been in the market for less than 5 years. And these produce higher materials margins by 3% to 5%. This is the added value is appreciated by our customers who accept margins and prices. This is the core piece of our success.

Let me briefly explain it with our waterproofing system, SikaProof A+ which was entered in the market several years ago, it's unique. It's a patent protected waterproofing system. Currently, the growth momentum exceeds 20%, and the growth curve is rather steep. We expect for this to continue along those lines. On the right-hand side, you can see largest airport in the world, which is being constructed, the Al Maktoum International Airport in Dubai, this mega project involves more than 300 million square meters of our solution is applied there over several years. This is significant innovation that helps sales and profitability and market share.

Now let me briefly move on to an outlook for 2026. As mentioned before, we are expecting markets in 2026 to produce little tailwind. So we made an assumption of negative markets to bring down our outperformance to 1% to 4% of sales growth in local currencies, EBITDA margin of 19.5% to 20%. Well, maybe as a sideline comment, this is a new record. We're going for as far as profitability in 2026 is concerned. Certainly, in the past 3 weeks, we've seen that this year is going to be another turbulent one. It's something we need to take into account. It's too early to tell. But with our guidance, we're still comfortable, but we will keep a close eye on whether the freedom announced yesterday -- the piece announced yesterday by Mr. Trump will come about.

But you know better that we can't believe everything, but we will respond swiftly to developments. We work with our local, regional and global supply chain partners. We have daily exchanges. And I think we will be able to champion this challenge as well. But let me also confirm our medium-term objectives, as outlined in our strategy until 2028.

Now on this, I would like to conclude and hand over to Ivo Schadler to provide more insight in data centers. It's a [Foreign Language] the German word for data center. I never use it, but Ivo, please.

Thank you, Thomas. Dear shareholders, and everybody else, it's my great pleasure to talk to you about our data center activities in more in depth and give you more details on why Sika is playing such a large role in this market segment and why it's so important for us and also offers great opportunities. You might have already seen in the Sika magazine that was offered as part of the annual report. There was an article in there that I would encourage you to take home and peruse, it tells you more about all these attractive vertical markets.

So one thing that's for sure, in my opinion, is that AI is the driving force, something we all deal with. We're using all the different bots to -- we also use systems to download, to upload, to use other data systems. And sometimes, people think the cloud is just floating around somewhere. But of course, these are massive amounts of data that need to be somehow managed and housed. So you need a very large infrastructure for that, which also consumes a lot of energy. And these data centers, by now, together with water, electricity, gas and telecommunication are the so-called fifth utility already. This is not something that's only happening. It's here to stay, we believe, and it's growing dramatically.

And you might have heard from us before already. We follow the money, and this is definitely one area where we can do a lot of business. So look at these figures here. Maybe we're talking previously more about the construction investments, but these are the overall investments. So we're talking about billions here. These are figures from so-called global data that we use. And as I already mentioned, whoever runs the data centers, they have very high costs. These big tech companies but also specialized companies, they need a very high value building envelope to protect their service. So also, of course, the demand for electricity is constantly increasing.

So as the owner of such a data center, what's are the risks that we need to help them deal with and to give them peace of mind, as Mr. Hasler said previously. So we are helping them protect their assets a data center means an investment of 100% to 300% -- CHF 100 million to CHF 300 million, 60% to 70% of which is the IT equipment and all the equipment. And we've been in this market for over 20 years. That is very important because we have a very good track record for reliability. And that is a central pillar of what makes us special.

Then of course, we also want to help them construct as rapidly as possible also with simple solutions. Then energy costs are immense, as I already mentioned, but we can also help to reduce them somewhat and become more carbon efficient, not only for the construction itself, but also for the whole life cycle of the entire plant. So then it's a very global market. the large tech firms are active worldwide. That is actually handy for us. A lot of them started out in the U.S. or Ireland or some other locations, but we are actually very well equipped with our international experience and our many subsidiaries to directly make sure that the know-how required is available in that particular place.

So first of all, what is important? The speed of construction. What is the demand for data? There's an -- there's an endless appetite for data. It seems so we can't even build them as fast as it increases. We look for standardized solutions to reduce costs and accelerate delivery. And thanks to all these various markets and product groups that we cover we can offer really great comprehensive solutions. Then sustainability, as I already mentioned before. It's not about only CO2 emissions as such, but also when we use material that have a longer durability and life expectancy, of course, that is also in itself more sustainable and will ultimately result in less CO2 consumed.

And anybody who is running such a plant doesn't really want too much to do with the building itself, and they want as little maintenance as possible. And this is why we offer these long-life solutions. So you already saw this briefly during Mr. Hasler's presentation. So we are active in roofing, solar roof solutions, then the whole foundation, the flooring, waterproofing and passive fire protection.

Maybe I'll go into more detail here. So talking about roofing as a target market. So durability, longevity is important. We use a lot of recycled material, and we also have so-called self-healing ceiling foils, waterproofing foils. So if there is any kind of a tear in the foil it can actually close it itself. So this is a very, very good thing, and we can also certify cradle-to-cradle recyclability. And finally, we can help reduce costs.

Then the concrete envelope itself. Here, we increasingly use fibers to replace steel reinforcement. You might be familiar with the process from construction sites. You always see how they put in all these steel girders and then add the concrete. And now the fiber can just be added directly into the concrete and pull it. So it's a much simpler process. And we'll eventually have many other positive effects for sustainability and cost.

Then we don't want any water coming in from above, but certainly not from below either. So it's important that we have high-value flooring systems. And here, we also have very innovative systems that will have the additional virtue of being very quickly installed. So Sarnafil AT is a product that we've had on the market for a few years for long life expectancy, combined with high sustainability and is already tried and true in many projects.

In flooring, we have in the data centers, mainly cement floors that are actually also aesthetically quite adequate, of course, we don't need to additionally coat them. And once again, the -- we can help reduce the entire construction time for a flooring system, 80% quicker in some cases even and that, again, lowers the CO2 footprint. So patented value-adding innovations. I already mentioned these self-healing membranes for flat roofs. So there's no need for repair or much less. And we can prevent water damage, any damage to the infrastructure. And these fibers that you see here, these are plastic fibers that are an alternative to steel mesh. And once again, besides saving costs in terms of work time, it is also very positive in terms of sustainability.

Other systems. So of course, we have our range of products, but it's not just individual products. They always work together. There's always a combination of products that help us offer a solution to the constructors. So we're talking about joint sealants, fire protection, applied membranes and joints. So here you see some very well-known clients along with the specialist companies that operate these data centers, but also very important partner companies. There, we really want to be -- have an early start on the project and to be able to specify our solutions there, we really are able to stand out from for competition.

Maybe a few points here. How we manage to really gain a good market position and to keep expanding it. So first of all, we differentiate ourselves. That is attractive for any clients. So already early in the design phase, we are involved and can contribute to efficiency. So the specifications, the tenders. Here, we are once again present from the beginning.

Another important point is, of course, track record and experience. Not many have as much experience as we do in this particular market segment. And then comprehensive solutions. So it's a combination, not just of a few products but really a quite a wide range of products and that support each other and improve the function and guarantee it.

Then sustainability. We have building standards certificates and so on. Lead certificates. So we have had all our products certified and tested needless to say. And then finally, international collaboration, just to mention it again, we have an international team that I also supervised that really takes care of the international clients. And in good harmony and cooperation with our local representatives, we can be sure that's -- well, some of you might know construction sites, you know that things are not always that efficient there or can easily become very complicated. So it's great to be present there on site, close to the customer.

So a few more information and examples in Switzerland. We are in Switzerland here. And also here, a lot of data centers are being built. This year, no less than 11 across the country where Sika is involved with its comprehensive solutions. So it's not just somewhere far away in the U.S. or elsewhere in Europe. There are more and more of these centers in Switzerland. They look like this one, for example. So the companies don't always want us to disclose their names. There is confidentiality involved, but we have some just some images of data centers here.

And with that, I thank you for your kind attention.

Dear, Thomas, dear Ivo, thank you for your presentations. It was a very wild year. If you see a new data center, you'll know where it comes from and who made it possible. It was us with our Sika materials. So back to agenda item 1, the annual financial statements was checked by KPMG. You will find the details on Pages 262 through 264, and 281 through 283 of the annual report. KPMG, there in recommends to approve the financial statements and the consolidated financial statements for the year 2025. So to the actual agenda item 1.

On the basis of the report of the statutory auditors, the Board of Directors proposes that the annual financial statements and the consolidated financial statements for the year 2025 be approved. And I will now open the floor for any contributions. Does anybody wish to speak? So we can immediately proceed to the vote. We already practiced before, please take out your voting device and press the appropriate button to cast your vote. The vote on agenda item 1 is now open.

[Voting]

So the vote is closed, and you will see the results in a few moments. There we are, and you have approved the annual financial statements and the consolidated financial statements for the year 2025, and they are therefore approved. Thank you.

Agenda item 2, appropriation of available earnings and repayment of reserves from capital contribution of Sika AG. The Board of Directors proposes that a distribution of in total, amounting to CHF 3.7 per share be made. For this CHF 1.85 are to be distributed from available earnings and another CHF 1.85 from reserves from capital contributions as follows. As you were already able to glean from the invite to this year's -- these 2 items will be voted on separately.

The electronic voting system allows us to carry them out in immediate sequence and then present the overall votes after the second vote or the last vote. So you have seen explanations of these agenda items in the Annual Report on Page 280. The auditors have confirmed that this is all in accordance with our Articles of Association and the law. Does anybody wish to speak on this topic? I don't see any requests. Apparently, somebody did want to speak on agenda item 1 and didn't actually come forward, Thomas Malone, would you like to say something? No.

The interpreter can unfortunately not hear what the gentleman is saying. Well, I would invite you to go to the desk and register yourself as a speaker.

Ladies and gentlemen, dear shareholders, team Sika, welcome, and thank you for giving me the opportunity to speak 2 minutes, 53 seconds to all of you. So I'd like to start with an anecdote. All I would like to say first is that everything I have heard in all these details. I can't find any here in the [ soup ]. And as far as I'm concerned, it all makes perfect sense.

I am a positive shareholder, and I appreciate what Sika has done in the past couple of years. And I remember that a few years ago, I was in Urdorf, at the headquarter, and there was a barometer showing CHF 4 billion. That was the revenue of that year. Next to it was the Everest with CHF 1.8 billion, and the goal was to achieve that within a few years. Thank you, thank you, that you managed to make all of this work out. And all these acquisitions in 2022 from an integration point of view that all of this went very smoothly.

So my point, half time over already. So the point is everything we've seen, of course, impacts all Swiss companies in the same way. We have benchmarks. We know what the figures there are. We know what the geopolitical situation is, and we know about the Swiss franc. Of course, this is something that all Swiss companies are facing currently. And something I couldn't help think about. We -- it would be nice to see how other companies in the same industry, maybe not exactly competitors, but others in cement and so on, deal with topics such as carbon footprints, with sustainability.

For example, housing because I'm a long-term shareholder and from 2023 onwards and '24, my old love Sika went down rather than up when others were adding 50%. So there was a 50% decrease in the share price. I don't know where this dip came from, maybe a few points -- maybe the communication wasn't good, is communication with influencers good? Are you rated the right way? And isn't Sika supposed to be a solid Swiss company? What are the costs? Are they reasonable compared -- or the imbalance compared to the earnings?

And another thing I have to think about, are you really making use of your pricing options when you look at the competition and your competitive position which I'm sure is not untrue. But then take a look at what Geberit does with their prices. I don't see the same thing with Sika. I don't see any efficiency apart from data centers. No increase in efficiency, no target for the next 5 years. This is something that's missing. And even if it wouldn't contribute directly to overall growth, it's very important for the overall picture. I thought we'd reach rock bottom now, but we need to start going up with the share price again somewhere. We're missing the push and the dedication, professionalism the necessary mindset to really change that trend around and turn it around.

Thank you for your contribution. I will answer it in my [indiscernible] German, please forgive me for that. I'm sure and I assure you that the irritation about the share price in 2025 is something that we share with you. All of us -- all of us here are also shareholders, I would remind you. So everybody on that stage has also been impacted and is aware of what a major impact that was.

So the questions you are asking is questions we have to ask ourselves on a daily basis. And the company management, of course, is doing everything they can. It's annoying, but on the long term, I do believe that Sika is intact. We have been able to gain market shares. Maybe more than others, we were hit by what happened in China, together with the entire Board, I'm very happy that we didn't try to hide this away or look for artificial solutions. But sometimes, you have to stay down to earth and take responsibility and say -- the Chinese business was a jewel in the crown for us and is a huge machine for the entire Asian market.

But unfortunately, in 2025, it was a strange yield, let's call it like that, where the main markets were not progressing. The questions you were asking us is as I said, questions that the whole management deals with, okay, I'm not sure I agree that there was no productivity. We have plenty of examples where we made a lot of progress. But geopolitically in the last year and macro and micro economically, there were unpredictable events that had a massive influence. And the whole team at Sika is disappointed how things went for us with relation to the share price. And we see it as a motivation to even better than previously. But thank you for your contribution.

So agenda item 2. So we will do both of these proposals separately. So as I mentioned, they are asking for CHF 3.70 divided into 2 parts. So from available earnings and another from reserves from capital contributions. But can I ask, does anybody wish to speak on this? If not, we will progress with the vote, but I will not read out the proposals in a sequence. I would ask you to bring out your voting device now, for agenda item or for the appropriate items. So we start with appropriation of available earnings and this vote is now open.

[Voting]

2.2 repayment of reserves from capital contribution starts now.

[Voting]

And the voting has closed now, and we will await the results. So the results for both agenda items and you have both approved them with a large majority. Thank you very much.

Item 3, granting discharge to the administrative bodies. The Board of Directors proposes the responsible members of the administrative bodies be discharged. We are going to vote collectively on discharge with the Board of Directors. Before we proceed to the vote, I would like to note pursuant to Article 695, the Swiss Code of Obligations, all persons who've been involved in the management of the company in any way, are not entitled to vote on this agenda item, nor are persons entitled to vote who represent the shares -- share votes of persons who have been involved in the management of the company. Anyone requesting the floor on this item? Not the case. I would like to ask you to take your voting devices and press the appropriate button to cast your vote. The vote on Item 3 is on now.

[Voting]

Voting time is over, and the results will appear on the screen shortly. I herewith note that you have granted discharge to the members of the administrative bodies. Thank you very much.

Item 4, elections. We'll begin with item 4.1 reelection of the Board of Directors. As provided in our Articles of Association, we elect all members of the Board of Directors individually and for a term of office of 1 year, that is until completion of the next Annual General Meeting. Again, we will conduct the elections for all candidates, one after the other and present the aggregate election results to you after the final round. As can be seen from the invitation, the current members of the Board of Directors listed on the screen behind me, are standing for reelection. They are all supported by the Board of Directors. Unfortunately, Mr. Paul Schuler has decided not to stand for reelection. We will bid farewell to him at the end of the meeting and pay tribute to his great services to Sika. Anyone requesting the floor on this item of reelection of the members of the Board of Directors? The interprets can't hear the comment. Well, could the members of the Board of Directors raise for a minute. Good exercise.

You will see nice pictures in a minute. No one else requesting the floor. Anyone else? Mr. Marc Possa from Zug.

Mr. Chairman, members of the Board of Directors and the group management, dear shareholders. My name, as was said, is Marc Possa from [indiscernible], we have an office in Zug I represent Sika shares of the SaraSelect Fund which has been investing for more than 25 years in Sika out of deep conviction and in the takeover battle with Saint-Gobain, we took the side of a strong management and against the irresponsible family Schenker-Winkler. Thank you. If we consider absolute and relative performance of the Sika stock, over the past 1.5 years, there are certain questions arising. If you look at the composition of the Board of Directors, including the newly suggested members, you will notice, especially now that [ Paul Halg ] has left, that Paul Schuler is leaving, 2 tried and tested battle horses, one takes note of the following 5 points.

First of all, the first [indiscernible], the spirit that was there a few years ago, which saved the company not only from the friendly -- unfriendly takeover by Saint-Gobain provided a lot of momentum is missing to some extent, at least as far as I'm concerned. Secondly, there are too many representatives of the services and the financial industry who are not very familiar with the construction industry or representatives of investors that are no longer there like Justin Howell from Cascade. And thirdly, we have a Chairman of the Board who is heavily challenged as the CEO of the Aliaxis group. They had a profit decrease of 79%. And probably does not have the necessary time to devote to Sika. He lives in Belgium. Unfortunately, Aliaxis is closer to him probably than Sika in Switzerland. Fourthly, in the year of crisis in 2025. There were only 7 meetings of the Board of Directors. And in standard years before, the number of meetings of the Board of Directors was 10 to 12 per annum, almost double the figure. And fifthly, at 3.75 years, the average holding period or staying period on the Board of Directors is relatively short. And still, Sika is a rather complex business.

As a general rule, member of the Board of Directors takes at least 1 to 2 years to be able to generate value. In the years before, we have people staying for 6 years on average. And this is really in contrast to the group management where we have an excellent representation of the long-term factor. So we ask ourselves whether some of the current candidates and the newly proposed candidates or even the current Chairman of the Board Thierry Vanlancker are truly the right persons to provide the impetus in the face of a challenging market and to consistently support the group management. So we would suggest not to reelect Thierry Vanlancker and Gordana Landen and Justin Howell, not to reelect them as members of the Board of Directors and would wish for more representatives for the industry. We want to have a more Swiss, a more dynamic Sika, the way we knew it before and the way it was highly successful in global competition. Thank you very much.

Thank you for your statement. Well, we know what you are going to vote on, but maybe we can have a chat about that in person. Anyone else who request the floor on this item? Let me propose to begin with the elections. The Board of Directors proposes pursuant to Item 4.11 to 4.17. The reelection of Thierry Vanlancker, Victor Balli, Lucrece Foufopoulos-De Ridder, Justin Howell, Gordana Landen, Thomas Aebischer and Frankie Ng to the Board of Directors for a term of 1 year each. I would now like to ask you to take your voting devices and cast your vote on the respective proposal of the Board of Directors by pressing the corresponding button.

As mentioned, I will now put each reelection to the vote in turn. We will then present the results of the individual votes to you in their entirety after the final vote. Moving on to reelection of myself 4.1.1, the floor is open. The vote is open. Please cast your vote.

[Voting]

The vote is closed. Next, we have the vote on reelection of Victor Balli. The vote on item 4.1.2 is on. Please cast your vote.

[Voting]

Voting time is up. Next, the vote on reelection of Lucrece Foufopoulos-De Ridder, the vote on 4.1.3 is on. Please cast your vote.

[Voting]

Time is up. Vote is closed. Moving on to reelection of Justin Howell. The vote on Item 4.1.4 is open. Please cast your vote.

[Voting]

Time is up. Moving on to the vote on reelection of Gordana Landen, the vote on item 4.1.5 is open. Please cast your vote.

[Voting]

The vote is closed. Moving on to the vote on reelection of Thomas Aebischer, the vote on item 4.1.6 is open now. Please cast your vote.

[Voting]

The vote is closed. Moving on finally to the vote on reelection of Frankie Ng. The vote on Item 4.1.7 is on. Please cast your vote.

[Voting]

The vote is closed. Bear with me until we can see the results. You have reelected all candidates proposed at vast majorities. I congratulate my colleagues on reelection. I would like to thank you for your trust.

And that brings us to agenda item 4.2. Elections to the Board of Directors. So the Board of Directors proposes the following persons to be elected to the Board of Directors Barbara Frei and Lukas Gahwiler. So the Board of Directors is convinced that due to their long years of experience they can support the Board as valuable Board members.

So let's begin with 4.2.1. Barbara Frei is an internationally experienced leader who has led large complex organizations in global industrial corporations. In her most recent position, she served as Executive Vice President, Industrial Automation and Member of the Executive Committee of Schneider Electric. Barbara Frei will contribute with her deep technical and digital expertise, combined with strategic leadership skills and extensive experience in global markets to the Board of Directors. Barbara Frei is considered independent in accordance with the Swiss Code of Best Practice for Corporate Governance of Economiesuisse. And this is also an effort of Sika raise the percentage of women represented in the Board of Directors, Barbara may I ask you to present yourself.

Yes. Hello, Thierry. I have to put the mic down a little bit. So introduction time, dear shareholders, ladies and gentlemen, it's a great honor to be before you here as a candidate for the Board of Directors of Sika. It's been more than 30 years that I've been working at the interface of industrial technology, engineering and operations and a company teams through complex processes and transformations, as Thierry mentioned. So maybe new applications and markets had to be explored or the service business had to be accelerated.

New disruptive platforms were introduced and then other topics were portfolio management, which could mean acquisitions or divestments. During my career, I have the privilege of working in different regions and markets. which also gave me an understanding of what it takes to build up companies that not only are economically successful, but also resilient and in other words, fit for the future.

So what really brought me to Sika. When I look at Sika, I see an extraordinary company. In the past 10 years, Sika showed a rare capability to keep growing continuously to keep innovating and implement all of that in a very disciplined manner with a very clear attitude and a strong sense of purpose. Sustainable solutions that have also contributed to efficiency in the whole sector. It was a nice description before about these data centers, how all the different Sika solutions work together. So the decentralized model and the long-term outlook are also characteristics that I really appreciate about Sika.

The goals of the 2028 strategy beyond expectations are -- I think this is something that was mentioned several times that we're in times where every day we're faced with new political realities are a challenge, but are also an inspiration, and I would love to be part of that journey. Board is only as strong, which we also heard as criticism, as the many perspectives that can be represented there and different attitudes and mentalities. So I am sure that I can bring something to the table, which is completely in line with the priorities of Sika. Firstly, I have depth of experience in operations in an industry, I am familiar with worldwide complex corporations. I know how value creation works on a local level and in direct contact with clients. And also, on a Board member, I'm able to ask the right questions to ensure that strategies are implemented in an efficient manner.

Then the second topic is digital transformation and technology. Integration of digital tools is no longer science fiction. Already for a while, not in an industrial company, it's a decisive competitive advantage. So I have practical experience in that area from my professional life and my client relationships.

Thirdly, a very strong commitment to sustainability. That has always been the case as well, both for RVB and Schneider Electric. This was always a very important topic. And of course, the transformation of the own company to a more sustainable method is always central, whether it's about talent developments or new business models. So looking at the ambitious ESCG goals of Sika, I'm sure my experience can be brought in very productively.

And finally, I have an independent capability of assessing situations. That is a very important aspect of a Board member. You have to be able to respectfully question decisions and always try and act in the interest of the company and its shareholders, and I'm aware of that responsibility.

Dear shareholders, if you give me your confidence today, I will commit myself to bring in my experience, my energy, of which I have plenty and my creativity and integrity into this Board. So to be well prepared, to be present, and to speak openly. The long-term success of Sika is something I want to support and ensure that the interest of all stakeholders, be they shareholders, employees, clients or society as a whole are fully taken into account is one of my key topics. So Sika is a very big success story, a Swiss success story that I would be very happy to be part of. Thank you.

Thank you, Barbara. As you are also able to see the Lukas Gahwiler, the Board has also propose the election of Lukas Gahwiler. He has been the Vice Chairman of the Board of U.S. Group (sic) [ UBS Group ] since 2022. Previously, he was Chairman of the Board of UBS Switzerland and a member of the Group Executive Board of UBS Group as well as President of UBS Switzerland. Prior to joining UBS, Lukas Gahwiler held various leadership positions at Credit Suisse for more than 20 years, mainly in corporate financing. He brings extensive leadership and industry experience across all areas of finance and banking as well as a strong institutional and political network. Lukas Gahwiler is considered independent in accordance with the Swiss Code of Best Practice for Corporate Government of Economiesuisse. I would now invite Mr. Gahwiler to join us on stage and introduce himself.

Thank you, Mr. Chairman. I'm a finance expert. I hope that I would be able to prove that someday. Dear shareholders, I would like to briefly give an overview of my career. You might have noticed from my accent, I come from Eastern Switzerland. I started with a bank apprenticeship and after studying at the University of Applied Sciences in St. Gallen, in 1990, I started at what was then Schweizerische Kreditanstalt, later CS. And in the later years, I had various stations that brought me abroad, mainly to Canada and the U.S. and always with a focus on corporate financing. This international activity has widened my perspective on different markets, cultures and corporate cultures. And in 2003, I was given responsibility for the worldwide credit business of Credit Suisse private banking, particularly the Swiss credit business here.

And in 2010 went to UBS in the years after the financial crisis, where I was active in all different types of customer bases, corporate, private, and asset management and had leadership responsibility for more than 20,000 employees there.

Then I was able to assume the chairmanship of the Board at UBS, the Vice Chairmanship at UBS Group. And when Credit Suisse got taken over by UBS a few years ago, I was the final -- I was able to coordinate the integration process of Credit Suisse into the UBS and monitor it. And as we all know, this was a successfully concluded operation, including transferring all the account holders to UBS.

Thinking back, I realize there was always 2 aspects that were especially important and inspiring to me first cooperation with people. I always had sort as a great privilege to be working with all kinds of different personalities with very interesting backgrounds, different cultures and different geographic origins. And also, of course, with clients, with customers, with fellow employees and business partners to formulate common goals, to successfully implement them sometimes with several generations. For me, this was always a central aspect. And in that respect, the corporate culture at Sika has always especially impressed me. A strong sense of identity, long-term thinking and the core values in my opinion, are important success factors for this company.

I would be very pleased to be able to contribute to the further development of this culture as a member of the Board. So development of the culture, but also the people working there, of course. Aspect #2 that always motivate me was a very comprehensive view of the business world. For years, I have the possibility to meet all kinds of different companies from the most different markets and regions, which gave me a deeper understanding of the various challenges, decisions and sustainable value creation. And it was particularly this that interested me when I became familiar with Sika in a phase where it showed create tenacity and strategy in fighting for its own independence.

As a bank partner, I was able to follow this development from an external perspective, but also accompany to an extent. I have great respect how successful Sika was able to keep developing. Today, I am particularly interested in the possibility of changing sides from banking to industry and thereby bringing my experiences in talent development, leadership, strategy, corporate governance and really apply it even more directly. My role in the Board of Directors in my opinion, has the goal of accompanying the development of the company in the long haul while assuring that there is responsible oversight.

Privately, I have been married for over 30 years with a Swiss Canadian wife. We have 3 grownup children. I love being outside in all kinds of different sports. And of course, it's handy that I live in Central Switzerland for that. So thank you very much, and thank you for your trust.

Thank you, Mr. Gahwiler Lukas, for your presentation. Let's move on with the proposal, the Board of Director proposes pursuant to Items 4.2.1 and 4.2.2. The election of Barbara Frei and Lukas Gahwiler to the Board of Directors for a term of 1 year each. Anyone requesting the floor on this item? Yes, please.

Ladies and gentlemen, I'm Max Handel here from Hagenwil. Sika is very dear to me, close to my heart, the battle at the time versus Saint-Gobain versus the family for Sika to remain independent, that was very important. I am somewhat disappointed. Now that Mr. Possa has spoken here, now what's the use of a Board of Directors, ladies and gentlemen, the Board of Directors who -- the Board of Directors who don't meet, who don't sit together in crucial phases.

The stock price is more than 50% down. We have a volume of CHF 20 billion. We used to have CHF 40 billion and more. And Mr. Vanlancker says -- oh, didn't even respond to Mr. Possa said. I was disappointed with that Mr. Vanlancker, if you as the Chairman of the Board, you have to stand up in times of crisis and perhaps travel to Switzerland a few times more and meet with the other members of the Board of Directors. The Board of Directors -- the members of the Board of Directors have to contribute their knowledge. And if you don't meet then there's no use of the members of the Board of Directors twiddling their thumbs at home.

I call upon you. I know you had a lot of work at home. But if you take up the office of Chairman of the Board, I expect that you stand up in periods of crisis and maybe work for more than 12 hours a day, that's what you're being paid for.

I'm not absolutely certain whether I have understood everything specifically. But if I got you right, you said that I only work off time or less than 12 hours a day. Well, that's not true. You're saying the Board of Directors are not interested and they will not do their work. This is nothing to do with the facts. It's just creating a mood here. The Board of Directors have their meeting. So I don't agree at all with it. It's not based on facts at all.

The members sitting here invest a lot of time in meetings and using AI and at some point, you have to look at the results produced in the in the company, but I share your irritation about the stock price, but just say that the Board of Directors does not do their work. I cannot accept that. Thank you very much. Thank you.

Unless there is someone else requesting the floor, we were about to vote on people propose to join the Board of Directors. Please cast your vote on the Board's proposals. We are going to vote separately on the candidates and the results will then be announced collectively. Moving on to the election of Barbara Frei as a member of the Board of Directors. The vote on 4.2.1 is open. Please cast your vote.

[Voting]

The vote is closed. And finally, we're going to vote on election of Lukas Gahwiler as a member of the Board of Directors. The vote on 4.2.2 is on. Please cast your vote.

[Voting]

The vote is now closed. Waiting for the results. Bear with me. You have elected candidates proposed by the Board of Directors at vast majorities. I congratulate very cordially, Barbara Frei and Lukas Gahwiler on the election. I wish you best of luck.

Moving on to item 4.3, election of the Chairman of the Board. The Board's proposal is to reelect yours truly as Chairman of the Board of Directors. The floor is open for a debate. Anyone requesting the floor? Doesn't seem to be the case. So I would like to ask you to take your voting device and press the appropriate button to cast the vote. Voting time on an election of the Chairman is open.

[Voting]

Voting time is up. We shall see the results in a minute. You have elected me as Chairman of the -- reelected me as Chairman of the Board, and I would like to thank you for your trust.

We continue with the agenda item 4.4, elections to the Nomination and Compensation Committees. As proposed by our Article of Association that the general assembly also elects these members from the Board. The members will be -- of these committees will be voted individually and for the duration of 1 year until the following Annual General Meeting. So again, here, there will be individual votes or election, and then the results will be presented in aggregate after the last election. Paul Schuler is no longer available for the Nomination and Compensation Committee. Therefore, only 2 of the previous members are standing for election -- or reelection and Lukas Gahwiler has made himself available to be elected. Does anybody wish to speak on this agenda item? It would appear not. Therefore, we proceed to the vote.

The Board of Director for agenda items 4.4.1 to 4.4.3. Proposes the election of the following -- the 3 persons mentioned below to the Nomination and Compensation Committee for a term of office of 1 year. I would now ask you to take out the voting device and cast your votes to each respective election. We start with the reelection of Justin Howell. 4.4.1 is the agenda item and voting starts now.

[Voting]

Voting is closed. Next reelection of Gordana Landen, 4.4.2. Voting starts now.

[Voting]

And voting is closed here. And we now come to the vote on the election of Lukas Gahwiler, 4.4.3. Voting starts now.

[Voting]

And the voting is completed. We await the results. You have elected just in Justin Howell, Gordana Landen and Lukas Gahwiler with a great majority to the Nominations and Compensation Committee. We thank you for your trust and congratulate all our colleagues.

Next, election of the statutory auditors. The Board of Directors proposes to elect KPMG AG as auditors for the business year for the financial year 2026. We have been informed by the representatives of the company that they would be glad to continue in this role if they are appointed by the assembly. Does anybody wish to speak? It would appear not. So please use your voting device and cast your vote. Agenda item 4.5, voting starts now.

[Voting]

And voting is closed. The results will appear in a moment. You have appointed KPMG as the statutory auditors also for the year 2026. Congratulations.

4.6 election of the independent proxy. Board of Directors -- also here, this is up for election. So the Board of Directors proposes Mr. Jost Windlin, attorney-at-law and notary at Bright Law, again Zug as the independent proxy until the -- for the duration of a year until the next Annual General Meeting. Does anybody wish to speak on that item? Okay. And then would you please take out your voting device and cast your vote. Item 4.6 is now open for a vote.

[Voting]

The voting is closed. We will see the results in a moment. As a result, you have elected Mr. Jost Windlin as independent proxy with a large majority. Congratulations, Mr. Windlin.

Five, approval of the sustainability report. Sika AG is obliged to submit the sustainability report to the Annual General Meeting for approval. The details are also included in the invite for today's AMG (sic) [ AGM ]. The sustainability report can be found on Pages 38 to 174 in the annual report. The Board of Directors proposes to approve the sustainability report 2025. Does anybody wishes to speak on this agenda item? Be sure you have read the whole report? Good. Let's proceed then. Please take out voting device and press the appropriate button. Voting on agenda item 5 starts now.

[Voting]

And the voting is closed. And here is the exact results. And you have approved the sustainability report 2025 greatly so even. Thank you.

Item 6, compensation. Let's begin with Item 6.1, advisory vote on the 2025 compensation report. The 2025 compensation report sets our compensation systems for the Board of Directors and the group management as well as the compensation paid to the members of both bodies for the reporting year. Compensation report can be found on Pages 194 to 215 of the annual report. The compensation of the Board of Directors comprises a basic fee for work on the Board of Directors and additional compensation for participation in the Board committees.

The Chairman of the Board of Directors also receives a representation allowance. The compensation model for the group management consists of fixed and variable compensation. The variable compensation comprises an annual performance bonus and a long-term share plan, with both variable compensation components being dependent on the achievement of ambitious goals and subject to caps.

You can now see the compensation actually paid out for the 2025 financial year. For the Board of Directors. This amounted to CHF 3.2 million, which folds within the maximum to compensation approved by the general meeting for the group management, it amounts to CHF 16.4 million, which is below the limit of CHF 23 million approved by the general meeting. The Board's proposal is that the 2025 compensation report be approved in a nonbinding consultative vote. Anyone who wishes to speak on this item? Not the case.

So let's take your voting device and press the appropriate button to cast the vote. The vote on item 6.1 is open.

[Voting]

Voting time is up. Let's wait for the precise results. Here they are, you have approved the 2025 compensation report. Thank you very much.

Moving on to item 6.2, approval of future compensation for the Board of Directors. The Board of Directors proposes a maximum total amount of CHF 3.7 million for the 9 members of the Board of Directors from the period from the 2026 Annual General Meeting to the 2027 Annual General Meeting. The details are displayed on the screen behind me.

The amount is broken down as follows: CHF 1.7 million (sic) [ CHF 1.75 million ] for cash compensation, CHF 1.75 million for share-based compensation and CHF 200,000 for social security contributions. Compensation structure remains unchanged from the previous compensation period. The proposed maximum compensation amount is higher than in the previous year because the Board of Directors now comprises 9 members compared to 8 members in the previous year.

With 9 members, the Board of Directors is back to its former size, which provides more flexibility in making appointments for the Board committees and is below the sizes of administrative bodies and Boards of Directors of comparable companies.

The Board of Directors proposes the approval of the total compensation for the Board of Directors consisting of 9 members of a maximum of CHF 3.7 million for a term of office of 1 year until completion of the next Annual General Meeting. Anyone requesting the floor on this item? Not, I would like to ask you to take your voting device and press the appropriate button to cast your vote. Vote on Item 6.2 is now open.

[Voting]

Voting time is up. Bear with me for the results. You have approved the future compensation for the Board of Directors. Thank you very much.

Moving on with 6.3 approval of the future compensation for the group management. And I would like to make some additional comments on that. The total amount proposed for the 2027 financial year remains unchanged compared with a total amount approved for the 2026 financial year. The proposed total is expected to comprise CHF 8.6 million for fixed compensation, CHF 10.7 million for the performance bonus, the actual payment will be made in 2028. And CHF 6.7 million for allocation of rights to Sika shares under the long-term share ownership plan for the performance period from 2027 to 2029. Actual payment in shares will take place in 2030.

I'd like to point out that this is a maximum amount for more than half of the proposed sum that is for the performance bonus and the long-term share ownership plan, actual payout depends on the achievement of targets. Past experience shows as you have seen that we set ourselves ambitious targets. Now moving on to the proposal for the directors proposes approval of the total compensation for the group management consisting of 8 members, of a maximum of CHF 26 million for the 2027 financial year. Anyone requesting the floor to speak on this item? Don't think there is anyone, so please take your voting device and press the appropriate button to cast your vote. Voting time is on now on 6.3.

[Voting]

Time is up. Waiting for the results to be shown on the screen. You have approved the fee compensation for the group management, I would like to thank you for it.

As we have mentioned already, Paul Schuler has decided not to stand for reelection. After more than 40 years of work in the industry, almost as long at Sika, including a stint as CEO from 2017 to 2021, Paul leaves behind a significant legacy his deep understanding of markets, technologies and products as well as his very strong commitment to Sika's values have shaped the company's development over many years. The Board of Directors would like to express it's sincere gratitude to him for his exceptional commitment and his long-standing great contribution to this company.

But I would like to hand over to Victor Balli, who will pay tribute to Paul Schuler's achievements from the perspective of the Board of Directors, Victor, please.

Thank you, Thierry. Dear shareholders, the colleagues, dear employees of Sika, dear Paul, hello. I'm very pleased to be able to say a few words as a fair well from -- for Paul Schuler, from the Board of Directors. I know that I don't need to present Paul to this audience because he was on this podium for many years, a lot of people in this whole I've known him for many years and perhaps a lot better than I know him. And yet or because of that, he deserves recognition and gratitude.

Paul Schuler has had a conventional industrial career. He started off as a product manager for technical products with [ MCV ] and other companies in 1988. At the age of 33, we moved on to Sika. At the time, Sika had sales of CHF 725 million, which we do in 3 weeks today. He remained loyal to this company until this day, no less than 38 years. It's an incredibly long time and a show of loyalty, endurance and deep connection. Paul started off as head sales industry in Switzerland, and he was enthusiastic as early as that, especially working in front-end activities, commercial activities customer relationships, these skills and his leadership were recognized rapidly.

And after only 5 years, he became General Manager of Sika in Germany, company -- an important company in the group. In 2007, he took on the responsibility for the important region of North America and became a member of the corporate management, the group management for 15 years. He was an essential member there from 2013, heading the largest region of EMEA and from 2017, he was our group's CEO. In the 5 years at the helm of Sika, he led Sika to new heights. Sales grew by 50%. Sika's stock price tripled, and he initiated 2 significant acquisitions the employee -- number of employees went from 18,000 to 27,000.

What a performance, of course, due to his team as well. But after stepping down, he became a member of the Board of Directors from which he is stepping down today. But just as important as this impressive career is all as a person, as a private person. And I would like to say a few words that are a perfect match with him. Leadership, Paul is a natural born leader. He does not shun responsibility based on his sound knowledge and great technical skills, he was able to challenge people and promote people. It was impressive to see how he always knew when to intervene and when to trust these people and delegate work to them. Somebody had a different opinion dissenting opinion. He often gave a chance to this person telling them to prove that he was wrong.

Paul had a vision, but also was very pragmatically always wanted to grow, to be better, to be successful, without forgetting his people. So he was a role model for many of us.

Next concept is energy. I never experienced Paul as tired, he was always looking forward, adoer, his energy was addictive, and I can only guess how many times he circled the world in an airplane. It's -- it's -- I know how inspiring that is, but I also know how tiring it is. And he was always focused in all the meetings driven by the objectives.

A people person, next, have you ever traveled to a Sika, venue of Sika location with Paul, and he knows everyone and they all know him. They approach him and he calls them by their names, which goes to show the trust that he deserves and he earns and how approachable is he, he takes care of his people. He is interested in them, and apart from business, there's always time for some personal words. He promoted a lot of talent, a lot of people in important functions with Sika today.

Modesty or humbleness is a better word than modesty. There are the self-centered celebrity CEOs we all know. And there are the ones who are not always self-centered and not always in the limelight, not always have to be in the limelight. Paul always focused on the company and on the team, they were more important than his own person. He is down to earth and always authentic, and that's why he's highly credible. Now with these properties, he practiced the Sika spirit throughout all the years.

Dear Paul, you were brilliant with your knowledge and seek on the Board of Directors and products and markets. We we always relied on your advice, but you were also a good listener and allowed for dissenting opinions. You were always focusing on the well-being of the company. You were a good colleague and a team player. And we always have fun with you and talked with you about sports in general and motorcycle tours. In management positions, but also generally in life, there are moments when you take leave. Now we are bidding fair well to you. And that creates space for new things, new people, new ideas, and that's the natural cycle of life. Even on the Board of Directors, but a farewell is always a new beginning also for you.

So on behalf of the Board of Directors and certainly of all people, assembled here in this hall. I would like to very cordially, thank you for your heart for Sika, your great commitment. We will miss you. I will miss you. And I'm certain we will meet again. Wish you all the best for the future, dear, Paul and stay safe and healthy. First and foremost.

Well, we have to convince Paul to come up on stage. He wanted to do it in his own style and not appear, but unfortunately.

Well, thank you very much. I won't keep you for very long. It was a wonderful time throughout the years, we grew considerably. We heard it from CHF 900 million to CHF 12 billion. We broke many records. We made a difference, which was exciting. But it was always important for me to do that with our people around the world with all the projects and all these sales can only be achieved with our people and to achieve that with the people, that was really the source of joy. And I wish Sika that this spirit, this drive will be kept up to keep Sika successful.

Now of course, as a shareholder, I'm as unhappy as you are, we lost a lot of money certainly. So how many shares I have, I think there's no reason, however, that Sika couldn't go back to its growth course. We've got everything. We've got the best products, we are committed. We are working against a headwind, but I'm convinced we're going to make it. Sika is going to make it. No doubt about it. I wish the management and the Board of Directors a lot of courage and a lot of luck in difficult periods of time. It's going to be difficult, but even in difficult periods of time, it takes the courage to set the right priorities and take the right decisions. I'm convinced. We see the share price going up, and we'll be a very happy year from now. Thank you very much. Have a nice evening.

Thank you very much, Paul. This brings us to the end of the official part of this year's Annual General Meeting of Sika. We've had an Annual General Meeting with overwhelming support from you, esteemed shareholders, and that was evident that was an obvious for this year. I would like to thank you for your loyalty to Sika and your trust in the Board of Directors and the group management, we are committed to continuing to justify your trust in the future.

The next 59th Annual General Meeting will take place on March 23, 2027 once again at this place here, Congress House of Zurich, I look forward to welcoming so many of you here again. Please hand in your voting devices and headphones, either to the Sika assistants who will be passing by or leave them on your seats afterwards.

Following this meeting, there will be a standing reception refreshments on the ground floor. I will warmly invite you to stay a little longer and raise a glass with us. I hereby declare the Annual General Meeting 2026 as officially closed.

[Statements in English on this transcript were spoken by an interpreter present on the live call.]

Excellent. Good morning, and a warm welcome for all here in the room, visible and also a warm welcome to the invisible that are virtually joining our media and investor conference. I think the short video has brought everything to the point, and I will go and bring more, let's say, details into it, but it has been very well, let's say, aggregated here.

But before I start, I would also like to share my sincere gratitude with our 33,000 employees. Many of them are also following this call here, and it is really amazing to see how committed and engaged our employees have supported the company with the many initiatives globally in 2025. And it is also, let's say, the source of the strength of the company in delivering in tough times also outstanding results, shaping for the future with the support of our employees. That's what makes me feel proud to be at the top of the company, but representing 33,000 employees.

Now let's look at the agenda, which will follow the sequence of sharing some of the highlights here of '25 from my side, but also then give some flavor to the strategy execution. And then very interesting, how are we doing on the business implementation, key elements which are driving growth into here as well as into the coming years, also supported then by the regional manager, Christoph, Mike and Philippe, which then will also give us a bit of flavor on what's going on in the regions. Before then, Adrian is going to make a deep dive into the financials of '25, then followed by the outlook for '26 as well as then the Q&A session at the end of the session.

But I think before I go into the highlights, I would like to emphasize here the strong foundation that Sika is built on and is able to also then outperform the markets, increase profitability in the future. And I think most prominent, Sika is the undisputed leader in the chemical construction market by far. This gives us a leading edge access to big project, access across the channels as the brand stands for top performance, top value and is recognized as a clear benchmark. And wherever in a challenging environment where complexity is increasing, Sika is the first source to go to, to help the specifiers, to help the architects, to contractors to overcome those challenges because they can count on us, us providing value-add innovation to overcome the pain points of the industry.

This, of course, is what we bring to the market. Inside, it is this innovation drive, constantly challenging status quo, always look what is out in the market challenging our customers, our contractors, applicators and see how we can remedy those pains with intelligent innovative solutions, helping them to overcome those complexities. This is a key element which we also see represented in the appreciation of our customers when we look at the Net Promoter Score that Sika has, clearly ahead of anybody else in the market.

At the same time, talking about the market, construction market is a market that has a lot of influential elements in there. The higher the confidence in the future, the more investments flow naturally into construction. We are facing a period of a lot of uncertainty. Therefore, let's say, markets are hesitant to invest, not all of the markets, but some of the markets definitely, and it is dampening, let's say, the construction activity short term.

It's a cycle that we see that is influencing, let's say, the markets overall, but this is also an opportunity, a down cycle is an opportunity. And we took this last year, and we installed an efficiency program, a productivity program, providing our organization a leaner and a more agile structure and also investing into digitalization as a key driver of future differentiation potential in the market with a clear aspiration to be in our market, the digital leader. Just like we are the innovation leader, market leader, we drive for digital leadership. And this we took in, in '25, and we will see also how nicely it will generate the potential for us to outperform the market and also to generate margins increase.

The organic growth traditionally ongoing is paired with our bolt-on M&A strategy. We have a fantastic track record over the past 15 -- 10, 15 years with many, many bolt-ons. And we will show later on a bit the flavor of how accretive and how strong the integration power of Sika is. This can be anywhere on the planet. This can be a mature market. This can be an emerging market. We have here clearly also established the skill set to spot the most attractive prospects and then engage clearly based on KPIs that are oriented towards return generation and synergy generation and accelerating growth and, the best one, for transactions.

And then when we close, we instantly step in and drive then the integration and the synergy and the expansion of the business via cross-selling, via channel activation and leveraging our global portfolio. So this is the foundation. This is why we are very optimistic and very confident about our ability to outperform the markets as we have also stipulated in our midterm strategy by 3% to 6% in local currency.

Now talking shortly and briefly about the markets and here starting probably with where exactly probably a year ago, we were guiding before the tariff, let's say, uncertainty was revealed and which had massive impact on the North American but also ripple effects across the globe with uncertainty related to tariffs going up and down. This has been a sentiment that has stayed for '25, which then also triggers into lack of consumer confidence further increasing in China. As you can see, almost 50% of the residential market reduction within 2 years, very much also here linked to the uncertainty of the global markets, which has also then triggered our reaction to the Chinese business.

And towards the end of the year, as if not needed, another element that came with the longest U.S. government shutdown that again was hindering projects to start, waiting for permits, waiting for approvals, which was, again, an element that was unforeseeable. But it is what it is. Overall, we conclude last year's, for us, relevant market had a roughly decline of 2.5% given all these elements.

Nevertheless, that's where we come into our performance. And here, our outperformance of the market, with a 0.6% growth in local currency is a demonstration that even under severe, let's say, weather condition, the company can deliver. Also, on the operating EBITDA, if we take in consideration also the steps we took with the Fast Forward program, only a slight decline in the operating margins, while we, of course, see negative leverage with a low organic or negative organic growth rate. Very obvious here also visible, the strength of the Swiss francs has been, once again, let's say, a translation effect. But of course, when we look at the reported numbers, it is quite heavy with 5.4% FX implication in 2025.

I talked already a little bit about the actions we took. The market is soft, it is muted. But at the same time, this is the time. This is the time for strong companies to act, to prepare. Because every cycle comes to an end. And we took the decision in the second half last year to shape the company not only in China, where we have been rebasing the business, but globally to say this is the opportunity. This is the time where we can and must take proactive steps, making a leaner, more agile organization, also investing into our operational footprint in automation and efficiency to be able then also to kickstart when the cycle turns up and take advantage of ready-to-roll organization.

We paired it also with investments on the digital front as the digital journey can be accelerated, and we took the decision here to fast forward our digital journey with clear elements that we will show later on also in transforming our business more digital and aspiring for a digital leadership in the industry. And all these investments come with a fantastic return, less than 2-year payback and up to 100% return on the individual investments.

Now when we look into the regions and here, if we look at the outperformance of the markets, 2.2% in local currency was the growth in EMEA. In EMEA, very clearly, we have pockets of growth like the Middle East, Africa, Central Asia. We have parts of Europe that showed improvements towards the end of the year, Eastern Europe, the parts of Southern Europe as well. So here, momentum that has built up and is then also demonstrating our outperformance in EMEA.

The Americas, our second largest region, as well had a strong start into the year. So January was fantastic. February, until about the time of the month as now. While still going in the same direction. We had good momentum coming from '24, building up momentum. Unfortunately, that was then softened over the course of the year, and there is also still a prevailing sentiment in the Americas.

But in the Americas, we also have great pockets of growth, like the tech investments. The investments in data center is booming, is, let's say, increasing the commercial construction spend quite tremendously, while other commercial constructions are lagging. So the data center boom and our strong position as a forerunner and as a peace of mind provider to the owners, the hyperscalers give us here a leading edge. And just to give that a bit in perspective, we have been participating in over 4,000 data centers globally so far and let alone 400 last year, thereof 230 in the Americas. So this is a pocket of growth of substantial contribution.

Besides that, Latin America, the markets are more resilient, just like other emerging markets have demonstrated here more resilience to the global uncertainties, which brings me over to Asia Pacific.

Asia Pacific reported a minus 5.2% in local currency. If we take the China construction market out of the perspective, it would have been a growth of 2.9% in local currency. And here, as I mentioned before, very much driven by strong momentum in Southeast Asia, in India that is partially offsetting the weaknesses in China.

Now when we talk about outperformance, outperformance of the market, a market that has been roughly 2.5% down, we compare us to the peers. We have established this peer comparison for quite a while. And as you can see here on the left-hand side, if we take in all the relevant peers and their activities in the construction chemical market, we are outperforming our peers by roughly 2%. In '25, we don't have yet the full set of numbers. So this is still work in progress and will probably also then shift a little bit as Q4 was not only for Sika, a challenging quarter, it was also for our peers a challenging quarter.

But more relevant, none of our peers that are in this list here is really active in China. So when we take, let's say, the comparable geographical spread of the peers and us, then on the right-hand side, you can see the outperformance consistently being almost close to 3% to the peers, which are, in our expectation, also slightly above the market trends.

Now some of the highlights which we are particularly proud of is the increase of our gross margin, our material margin increased to 54.9%. This is a testimonial to the strength in value selling. This is the value that we bring through our innovation into the market. We are recognized as a value provider, and the return of our customers by utilizing our products, our innovation is speaking for themselves and is driving this material margin progression in '25. But as you can see also coming from '23 to '25, steadily increasing our material margin.

I think a particular strength of the company is the strong cash generation also in light of, let's say, lower EBIT in absolute numbers, driven by the onetime effect of Fast Forward as well as the strong currency. But when we look then what the company constantly delivers in the last 3 years, solid double-digit returns in cash, which is almost CHF 1.4 billion that we can then redeploy into investing into our business, giving it back to our shareholders as well as investing into bolt-on acquisitions. So that's underlying, I think, an element of we are also capturing going forward.

Another highlight we have not talked so much about, but our aspiration to be leaders in the industry is not only on financial targets oriented. It is also our employee safety. In '21, we launched a program. We set the high mark and say we want to be a leader on safety for our employees. And as you can see, this is a journey. This is a journey which gradually improves. And in the meantime, we have reached clearly above industry average standard, but we are not stopping. We want to make Sika the safest workplace in the industry, and we are investing heavily together with our employees to create this safety culture, which is progressing very nicely.

It makes me very proud that our employees are supporting this journey as this is not dictated by top-down. This is ground-up supported. And this is also when we look into what it means behind, let's say, the numbers, it means a safer and more, let's say, streamlined and more process-oriented and more, let's say, transparent organization, which leaves less up to chances. And that's, of course, also a value driver for other stakeholders as this is a part of getting transparency and getting efficiency throughout the organization.

Talking about the nonfinancial metrics, I think we can be proud. We are constantly delivering on our nonfinancial commitments. On the greenhouse gas emission reduction, Scope 1 and 2, the ones that we heavily influence, the water discharge reduced by 3%, waste disposal by 5.7% and as mentioned, 14% on the safety side. These are all value-accretive elements, which are transferring into efficiency, into tangible also financial benefits for the company and its shareholders.

Talking about the other element, the organic element, very important, reinvesting into the organization, reinvesting into safety and so on. It's the bolt-on acquisition strategy. We have been able to sign 7 and close 6 of the transactions in '25. I think here, most remarkable also, as you can see, 2 of them in the Middle East. This is a booming area. This is a double-digit growth area where these 2 acquisitions are spot on, not only bolt-on, they are spot on to market demands that are also expected to continue to grow in the near future.

We also made a bold move in Scandinavia transaction, giving us here on the mortar side, a very strong footprint. And as you may recall, we have a very strong adhesives and sealants footprint in distribution in Scandinavia. We are combining these 2 strengths and also aspire to be the undisputed leader in distribution with our strong brands in Scandinavia. Here also a very clear value and growth-driven acquisition, with the others then also supporting mature markets like in Singapore or HPS in North America.

We invest in our own capabilities, our factories. Here, some of them are expansions into demand-driven geographies like in South America, too, like North Africa, Morocco, a booming economy, also here, covering more space in that country. Kazakhstan, as I mentioned, Central Asia, a booming area, but then also in China. And here, maybe I would like to elaborate. Suzhou is our main site. It's our headquarters close to Shanghai. We have opened the factory for adhesives and sealants for the automotive and industrial manufacturing business. We have great success. The plant opened in the second half last year, and we are gaining share with the Chinese OEMs so that we are already now considering a further expansion of the capacity as we see. With this fully automated, with this state-of-the-art, we are having good traction with the Chinese OEMs, bringing them top-level global innovation into their manufacturing processes. And it's just an example of our constant investment also in upgrading our operations, our footprint and gain more efficiency and productivity.

Now let me quickly look in the last 6 weeks. I mean, here, the year just has started, but I think it's remarkable how the year started because in the first 6 weeks, we have opened already 5 new additional plants. And that's just mentioned before, very much demand driven. We have a very strong concrete market in the Southeast of the U.S. So Florida is a booming area. We put the most modern plant down for admixture with fully automated capabilities in the plant near Orlando. We then also expand in Latin America, in Colombia and in Argentina, which is a constant growth platform for us. Bangladesh in Southeast Asia as well as in Africa, with a new plant near the Victoria Lake, 800 kilometers away from our headquarter, also covering this strong growing market there in the East African market.

And then, very exciting. I think we reported that just lately, the acquisition of Akkim in Turkey. Turkey is a powerhouse. It's an engineering powerhouse. It's a powerhouse that is very influential in the Middle East and Central Asia. This company has a fantastic footprint, has also a foot into Romania, so in the Eastern European market. And we are very happy that we are now able then soon to build on that platform, bringing our expertise, our technologies from the construction chemical side together with the sealant and adhesives into the core markets of the Akkim and in reverse also bringing the Akkim products into the Sika world, into Europe, into other parts of the world as they perfectly fit our portfolio for distribution.

And as mentioned before, the seventh transaction of last year, closed end of January. So Finja was a fast-track acquisition, signing early December, closing end of January. And it's a sizable, excellent platform, which we are utilizing now also to drive above-market growth in Scandinavia and utilizing this to leverage our synergies into the market.

Maybe a short segue into the adhesives business. We haven't talked that much about the adhesives business, but it is underlying representing about 30% of our business. It is relevant or mission-critical in all our markets. It's in all channels, has a very predominant position. It's an enabler. It's a typical enabler to move from traditional bonding techniques to techniques that enable multi-material structures that enable also smart decarbonized buildings. So it is a key element on the journey of all these industries, and it comes with very attractive innovation-driven features where we have here a clear leading edge, providing here state-of-the-art innovation like the Curing-by-Design that is enabling our customers to advance their design and their construction and manufacturing processes.

In the adhesives field, it's all about the brand. If you go from DIY over to the big box, if you go into the professional, it is all driven by a few core brands, and Sika is a core brand on the adhesive side. Sikaflex is standing as a synonym for bonding in many market segments. And so that's the leverage potential which then also enables us to take full advantage in all segments and channels.

Now quickly on the strategy execution. I don't need to go deeply into. You have seen this. It is a reconfirmation from our side to our midterm targets, gaining and outgrow market share in a profitable way. That's, in short, the message as a takeaway also on the financial as well as on the nonfinancial, very clear and transparent journey towards '28 that we have always communicated.

Now in the background, we have a strong position. As I said, we are undisputed market leader with 12% market share in a CHF 100 billion market potential industry. And it is highly fragmented, which means the winner can take it all if you act like. And that's what we do. We take market share out of the position of strength. And when you look into the different target markets, the 8 target markets, you see a lot of differentiation, but there's the one common theme across all of them, this value-add product focus.

In all these target markets, when you talk to contractors, when you talk to owners, when you talk to specifiers, architects, you will hear this common theme, Sika is clearly leading through value, providing exceptional value to the construction to the manufacturing industry. That's what we stand for. That's what we are leveraging. That's our innovation drive.

We're also very well balanced when we look across the different markets, coming from the infrastructure side, the commercial construction, residential construction and then also the manufacturing industry, the automotive and the industry segment, where we have a good share in the global business. Also, when we look at the new construction and refurbish, mature markets are more leaning on the refurb side, emerging markets more on the new. But also emerging markets like China, for instance, are moving very clearly into becoming more and more also refurbishment or renovation market. These are all elements that we balance very well and where we have the competencies to also bring this to the local market situation and bring those competencies to the 102 countries that we have worldwide.

The market penetration, the outgrowth of the market, this picture you have seen before. I talked a lot about the leverage potential that the company has that we are utilizing the cross-selling, cross-selling in simple terms, these projects have multiple needs of solution from waterproofing, from bonding, from sealing. It is here the clear aspiration to make us the one-stop shop for our contractor, for the applicator and leverage our great recognition in the market. The multichannel approach, I mentioned it before. It goes from the direct business all the way to the e-commerce business where the brand is super relevant, where, let's say, the specific solution for specific customer is super relevant. We cover it all, and we benefit here also to leverage that across all these channels.

Go where the money is. In very simple terms, it is a call for action for the local organization. Don't come back and tell us what is not going so well. Look for the pockets of growth, look for the activities that are still going strong and invest there. And here, data centers has an absolutely clear outstanding element, which is happening everywhere, as a go-to, but it is also infrastructure spend is much less influenced by market downturns. Infrastructure spend is a way also to take advantage of the resilience of the infrastructure, spend time there. This is the call for action for our local organization.

Don't explain. Drive business where you have pockets of growth and utilize the group-wide expertise to drive this. Key geographies, it's Europe, North America, China, always in focus, always, of course, key decisive markets for us to be very close to and demonstrate our leadership in these leading geographies. And innovation above everything, I repeat myself, innovation at the core for reason being driving value, driving market share gains and ultimately outperforming market situations, whatever they are.

I like this slide very much. We put this together in a simple term to demonstrate. Innovation is not coming just by saying so, it requires strong commitment and investment. And we are constantly investing into our R&D in our 16 global technology center, which then also are influencing the 100-plus local -- very local R&D facilities, 1,800 chemists, more than 5% of our employees are working on the innovation path and spending substantial money on innovation, CHF 280 million, our annual R&D spend.

This is the investment. What then comes out is innovation, is patents, is unique approaches, which then are converted into solutions, which generate value for our customers, are protected by IP, but are then recognized ultimately when we look at what our innovation power is delivering, it's delivering -- it delivers 3 to 5 percentage point higher gross margin. It represents almost 1/4 of the products with less than 5 years in the market. This is then also showing the power of innovation in our markets.

An excellent example of this is an innovation that we brought just before COVID to the market. It's novel. It's a patent-protected waterproofing membrane, which can be used pre and post applied, to do basement waterproofing in a way that you have absolute peace of mind and don't need to fear any water leakages. This is picking up pace, with a 27% CAGR. It is a highly specified solution. So it takes some time until it spreads, but it spreads very quickly, especially in the Middle East. And I have here the picture of the Al Maktoum International Airport that is under construction in Dubai. This is a huge project, almost 3 million square meters of waterproofing membranes are utilized. We are the sole supplier. We are here also adding another landmark construction building to the success story of the SikaProof A+ membrane system.

Also data centers, I can't talk enough about data centers. We love the owners because the owners love us. They love that Sika gives them peace of mind, that they get the highest reliable performing solutions so that they can execute inside the shell by not having to care about the shell itself or disruption from the roof, from the walls, from the floors. That's why we have been very early the preferred choice as we stand for this reputation. The roofing as a particularly important part, has further advanced. We bring a self-healing membrane to the roof, which means that the roof membrane can also absorb and correct impacts from nature. Hail, for instance, is here a painful disruptive element, but also just the UV sunlight in Arizona is quite different than here in Switzerland. So these are elements that are super vital.

On the other hand, the fibers on the concrete floor, these are taking out carbon emission quite heavily as we can replace steel. We also have lower maintenance costs. We have higher robustness of concrete floors with fibers, and it is very appealing to data center owners to advance here and also contribute to decarbonize their buildings.

Coming back to M&A, bolt-on M&A, I think we have indicated at the last time also how accretive bolt-on M&As are. And as you can see here, we look at the pre-synergies EBITDA multiple at the time when we kick off the integration. And then within the third year of the integration, we achieved a 4x lower EBITDA multiple. So an improvement that builds on our possibility to accelerate growth, top line growth, cost synergies, cross-selling synergies and ultimately, then also drive the EBITDA growth of the acquired company. This is, in our view, a superior way to provide capital returns, and we are lining up more to come in the near future. Akkim, just one perfect example of one that soon is going into the implementation mode.

The big one, MBCC. We like to talk about the big one as it has generated tremendous synergy across the organization. Last year, our second -- let's say, full year after the closing, we generated CHF 182 million. And when you look back when we signed the deal, we had CHF 160 million to CHF 180 million for the full third year as synergy commitment. And we have raised it twice now. And as you can see, at the moment, we are already above the original third year synergy level, and we have increased the synergies by 25% over the last 2 years, which is a testimonial for faster integration and also higher synergy gains on the cost side as well as on the revenue side.

Now business implementation. Looking into some key elements, and I come back to the data center because it's not only, let's say, the roof and the floor, there are many more elements, mission-critical to data centers. As you can see, the flooring solution, the precast, many of them are precast solution where we are with the precast, where we are then also with the joint sealants that are very important to make sure that there is no interference. The concrete itself, the admixtures, the fibers, fire protection, super relevant in data centers. That's why also the roofing systems are preferring our PVCs over other technologies as best-in-class fire protection solutions.

And as mentioned, we have a reference list of more than 4,000 completed data centers worldwide. And here, a fast pace with 400 last year in execution, 230 alone in the Americas and more to come. And you will hear more then also from my colleagues from the region. This is a clear focal point for us to also outperform the markets in general.

Not to forget infrastructure. Infrastructure, megacities are suffering of lack of infrastructures in emerging markets, as we can see here, we have here Brazil as a good example, but you find it in Santiago, you find it in Southeast Asia, everywhere, there are infrastructure construction ongoing. The same happens also in mature markets here, the example from Munich, from the S-Bahn station in Munich, the deepest S-Bahn Station in Germany. Also in Auckland, this is ongoing. And these are high-profile jobs where, again, the reputation and the possibility of Sika to be the, let's say, one source for many solutions make us a premier supplier to those big projects, and it's also, as I mentioned before, an area where there is constantly flowing money as the need for infrastructure upgrade or new infrastructure is endless and growing.

Another important part there are, let's say, the infrastructure in regards to ports. We see that the globalization, as we have experienced, is questioned and more and more ports are built for more regionalized or, let's say, for a new supply chain setup. Here, a good example from Vietnam. Vietnam is one of the, let's say, countries that is benefiting from moving out of China into, let's say, a more neutral territory. So here, a lot of construction ongoing. And when you look also what's going to happen in the near future in regards to the port infrastructure, again, very, very, let's say, high-end construction. Here, we talk about exposure to seawater, exposure to heavy-duty traffic. This is again a field where Sika has a leading edge and is very involved and taking benefit of those momentum.

One that we have talked a lot when we talked about the China expansion of the retail journey. It is still ongoing in China. We will hear that later on. But it has made its way into Southeast Asia. When you look at the chart here, where we were in 2003, we had roughly 80,000 point of sales in Southeast Asia. We had 90,000 points of sales in China when we took over Parex in 2019. China is now at 280,000 point of sales.

But I want to talk about our journey in Southeast Asia, which is already now at somewhere around 170,000 point of sales, and we are rapidly expanding our point of sales across Southeast Asia. And as you can see, it comes with results. It comes with double-digit growth in that segment, and we expect here a good mid-teen growth also for the years ahead of us. And it is not only an Asian topic. You will hear it is also spilling over into other emerging markets in EMEA or in the Americas.

But let's now have the regions give us a bit of flavor of their growth initiatives. And Christoph, if you would like to kick it off with the largest region, EMEA.

So thank you, Thomas, and good morning, everyone. So I think giving a reliable outlook for EMEA for this year is a bit like crystal ball reading in these volatile times. Nevertheless, our main first and foremost target remains. We want to outperform our markets. We want to do better than our competitors. This is what we measure basically every quarter. And here, I would say we don't have to hide ourselves, although, of course, we're used to different growth rates than the 2% that you have seen.

So looking into this year, I would say, for Europe, we will see, but I don't think we will see big, big improvement. Markets -- most markets will remain challenging, although there are some pretty good positive recovery signs, mainly in Eastern Europe, I must say. So we had a very strong second half last year in Eastern Europe. So a lot of money from the European Union flowing east, going into infrastructure mainly. And here, I must say, I believe that we will see a continuation of this.

Also for the Nordics, we expect recovery. We see this already. And here, we're very well positioned with the recent acquisitions that we've done, the mortar companies in Sweden and in Denmark. I think here, we have -- we built here a pretty strong position also in comparison to our competitors.

And also France, I think France comes out of 2 to 3 years of really soft markets, kind of recession also, and we have been suffering there as well. And we see signs of recovering. We also believe that '26 will be a better market because there's quite a backlog of residential housing. People have to live. And there is not -- there are not enough houses and apartments there. So we will see this -- the French market already improving here.

Germany, I must say, we've been pretty positive. Actually, we heard about this EUR 500 billion that the Germans want to invest into infrastructure. We haven't seen so much of this yet. So quite some delays, a lot of discussions, bureaucracy, et cetera. We will see when this comes. We're ready. We're there. This is our second largest market after France in Europe.

We will definitely see continued growth in Middle East and Africa. You've seen it from Thomas. These are double-digit growth markets. And it's -- of course, it's a big pleasure to see how we're doing there. And I think Sika has very strong position in these markets in all of these countries. So where there is investment, we're there. We're having factories, we're having strong organizations. You've seen the Maktoum Airport on Thomas slide. I mean, this is probably our largest purchase order we have received so far from that region, and it's just the beginning.

So overall, we remain humble. I think it's probably the best strategy these days, although we want to do better than all the EMEA markets for sure, but we believe in a gradual improvement over the year with definitely a stronger second half than the first half.

Talking about growth initiatives, how we want to do that. And this is just a selection, but I would say it's some of the key focuses that we have. Sure, infrastructure, this continues. Also in Europe, I must say, there is money. Sometimes I'm wondering, I think European Union flows faster into Eastern Europe than it flows into Germany and France. Bureaucracy here is not really helping, but there are incredible projects going on. I was just in touch with our Romanian friends yesterday, a lot of road repairs, bridge repairs, and these are big businesses for us in Sika.

There is investment into energy everywhere, not just in the Middle East, also in Europe, nuclear plants that are being built, and these are all mega projects for us. Airports, you've seen all the projects. And I would like to mention here also defense. I cannot speak too loud about this, but there is the billions of euros going into defense, mainly in the East, also in the Nordics, the infrastructure project roads, hangars for planes being built. And here, Sika is very, very well positioned. So we're selling, for example, our epoxy flooring systems into these hangars that are being built for all these fighter jets that a lot of companies are buying.

And then a bit of a new topic for us, residential, linked to commercial, there several really large real estate developments happening in the EMEA region. One we have listed here on the picture. It's called Ellinikon. This is a Greek investment, actually. It's a Greek investment company on the old premises of the Athens Airport. This is EUR 8 billion investment. And Sika has already started to deliver several million of euros, and this will take a few years. It's like a bit like an espresso machine. Once you're in, they continue buying from you, and it's -- we have a very strong position.

We're clear #1 in Greece and full range, and we just -- luckily enough, we're just investing in a new -- in an expansion of our plant in Athens. So we will have a lot of capacity now to go after this one project. There are other residential developments like in Ras El Hekma in Egypt at the Mediterranean actually, this is a $35 billion investment from a UAE company. And it's a city, same like Ellinikon, with houses, with offices, marinas, roads. I mean this is just paradise, of course, for us in Sika. We have dedicated people that work only on these projects and try to penetrate these projects to the maximum.

Data centers, you heard it already several times. So right now, in region EMEA alone, we are actively working on 106 data center projects. Each of them gives us sales CHF 2 million to CHF 3 million, some even a bit more. Sika is very well positioned here. These days, everybody talks about data centers. We were -- I would say we were the first company in the U.S. when the data center boom really started. Now it's coming over to Europe, even Africa. Interesting enough, they're building data centers in Morocco, for example. And here, we have all these references. And of course, this helps us to make sure we get -- we participate in these projects wherever they're being built.

Pharma, also independent of the economies, the 30, 3-0 big pharma projects happening in EMEA right now, also in the Middle East. And these are always mega projects for us. And then, of course, food and beverage, also independent of economies and how they're doing, beer companies investing, my famous fish farms, everybody is always making fun of me, but this is a lot of money here for us. A lot of fish farms being built all over Europe actually, and each project has several million of sales potential for us.

And last but not least, retail distribution. Retail actually is doing, has been doing well. Whether there is a crisis or no crisis, people are investing into their homes to cheer them up themselves. And here, our strategy is to transform our professional products into let's say, more consumer products. And I added here one really fun picture from a pilot, which we were doing actually a pop-up truck store. We put the truck during 1 week in front of, I think, 3 or 4 do-it-yourself stores in France, only one product. It's actually a cleaning product for your algae and moss on your terraces. They get green always during winter. You buy this product and fantastic. By the way, we sell it also in Switzerland. So you can clean your terrace, EUR 1 million sales in 8 days. We couldn't believe it. And of course, now this has encouraged us to further scale this up and do this kind of pop-up truck stores also in other countries.

So all in all, our job is to grow and not to be depressed or pessimistic or so. Markets are what they are. It's our job to be optimistic and to beat markets, to beat our competitors. We have it all. We have the range. We have very good people. And that's why I remain positive also for 2026.

Handing over to Americas, I think.

Okay. Thank you, Christoph. Well, it's always great to follow Christoph. We get the excitement going and moving already early in the room. So good morning. It's now my pleasure to discuss the forecast for 2026 in region Americas. So as you know, we saw a very challenging market environment across the Americas in 2025, where markets were really constrained. And this was by economic, by regulatory and trade policy uncertainty. And we say uncertainty. I believe I heard the word uncertainty more from our customers and partners in the last 12 months than I heard in the rest of my life combined. But from tariffs right down the line, we had these difficulties.

This uncertainty will certainly continue in the U.S. and I'd say, to a lesser degree in Mexico in the first half of 2026, while Canada and the rest of Latin America will be slightly more positive to start the year. We've seen excellent growth really throughout Latin America with the exception of Mexico. And Canada was very strong in '25 and really starting the year incredibly strong in 2026, also led by some really nice infrastructure projects and continuing to expand their market position in trade.

We expect the U.S. market and Mexico to also improve in the second half of the year as our backlog of projects start to get released. Now our markets in '25 and now again in 2026 are largely driven by our continued success in mega projects. Now when you say mega projects, we classify these projects as those projects with a value exceeding USD 1 billion. So while we saw quite a soft demand overall in our baseline business really throughout the region, these projects continue strongly and allow us to continue growth. So we've really -- Thomas mentioned go where the money is. So we saw very quickly that our baseline business was not delivering as it should. Now we continue to gain market share. We didn't lose any customers, and we actually sold effectively there. But to really continue that growth platform, we needed new outlets. And these mega projects offered that opportunity.

So in fact, in the U.S., mega projects increased by more than 45% from 2024 to 2025. And this project velocity is actually increasing now, and it's showing in our project backlogs for 2026. And it's everything from onshoring commercial and industrial production, and we see this a lot in the U.S. and in Mexico to massive infrastructure projects going on throughout the region. And we saw this also in Latin America, where previously there was not a lot of infrastructure development. When we see some geopolitical changes happening in many countries in Latin America, we start to see this shift where money -- more and more money flows now into private construction, but also into infrastructure development within these countries. And it really allows us to get into these big projects and continue a nice growth story.

So you see here some really excellent projects we're able to deliver in 2025. And these projects will continue to deliver growth in these segments in 2026. So here, we see the data centers. And like the others, I can tell you, I also really love data centers. I love everything about them. And they were really one of the things, the key drivers to sustain the business and I would say the overall construction industry in the Americas in 2025. I expect that to continue strongly in 2026. So we all know these data center investments, it was and will continue to be a key construction sector driver.

So across the Americas, we delivered I think as you heard already, 230 new data centers in 2025. So this fantastic order velocity is actually increasing into 2026. So we started the year going full out in our data center investment with new innovations and allow -- Thomas showed a bit of the innovation that we do here. It allows us to bring more value to each and every project. So while these are already mega projects, our dollar take per project continues to increase each year. And as we bring new innovative solutions, it's all about speed, it's all about technology. And if there's a good solution, they're very open to these innovative solutions that then allow us to increase the sales and bring value to the project.

So in the middle here, you see the Jacksonville Jaguars Stadium, which is currently undergoing this massive refurbishment. This will take this to really a world-class venue. There's a bit of a competition in many of these countries. We see it in the U.S., we see it in Mexico that every stadium has to be a bit better than the last one and always pushing for that customer experience. And now we see with our innovative solutions for every application from concrete flooring and roofing to engineered joints and sealants.

In the past, we would have really celebrated winning a USD 1 million type of stadium project, and we get very excited about that. Nowadays, with this full line of innovative solutions across the buying sector within these segments -- and again, we have special teams dedicated to the specification of these projects, even some custom solutions for engineered joints. With these new innovations, we're allowed to take the same projects that we used to get $1 million, now we exceed $10 million plus.

So the dollar take per stadium really takes off. And our vertical market approach unlocks these opportunities for growth. We get in early, we specify and then we work on the job site with the contractors, and there's always custom adaptions while you're on the site that allows us to, again, draw more revenue there. And this goes -- we always talk about the big ones, Jacksonville Jaguars, Buffalo Bills, the Raiders, Stadium Azteca in Mexico. So there's always been -- and then many in Brazil, but there's many of these big stadiums. But it's not just the pro stadiums we're looking at. It's the professional stadiums right down to the local sports arenas. And all of these need solutions. And when you really get into the same sector, you'd be surprised how many stadiums are around the world.

Then we talked about, here, at the bottom, you see the infrastructure. Our infrastructure business really continues to bring growth everywhere across the Americas. And again, we see this more and more shift as infrastructure development becomes a key priority, certainly in Latin America, but also now in the U.S. and in Canada. As funding projects continue throughout 2026, we see this nice development of the funding in many of these countries. So we expect a very robust infrastructure business in 2026 as well.

Here in this picture, you see the TBM tunnel project in Santiago, Chile. This is 3 separate metro lines running under the city, where we have a full array of projects -- products on these projects. We also have additional metro lines running in Lima, Peru. We have one in Bogota, Colombia and Sao Paulo, Brazil and a huge project now in Toronto. So these big metros deliver huge sales, and they go on for years. So once you're into these bigs, you have a long-term supply of your portfolio into these projects, but also it continues to generate more and more business because when you're on site with the contractors, there's always new opportunities for innovation.

And then finally, our automotive team, we secured a record volume of new business awards. This ensures really a continued increase of our market penetration and innovation launches. So to really capture the additional content per vehicle. So while the market is really sluggish, the build rates are sluggish in the market, as long as we continue to capture more content per vehicle and find ways to enter these platforms, we can continue a nice market there. The soft vehicle production environment really overshadows a bit the robust opportunity pipeline as OEMs reset their propulsion system strategies, leading to a long-term growth effect.

So while we will continue to win new business and increase our market share across the region, even as the baseline business will be constrained by continuing uncertainty in the first half, we're really looking forward to a renewed vigor in the market in the second half, and I am confident that our outstanding Americas team is ready for the challenge and already running full speed into the year 2026.

Okay. So that's for the Americas. I'll turn it over to my friend, Philippe.

All right. Okay. Thanks, Mike. So back to -- now to Asia Pacific. If you look at Asia Pacific, we see very 2 different trends. On the one hand side, we see China. China is still depressed. The construction industry is decreasing compared to previous years. This is mainly driven by a weakened residential sector. We see here continued decrease in house prices and consumer confidence suffering from that point of view. We don't see any short-term trend reversal, there has to be kind of people saving less and investing in residential again for us to see this trend reverse.

On the positive side, we see some investments in infrastructure. We saw the launch of the 15th Five-Year Plan by the Chinese Government. looking at, for example, urban renewal, was one of the pillars that they want to invest in. This means that all the infrastructure that was built in the past years is up for refurbishment. It's investments in transportation and refurbishment of bridges and tunnels. It's also wastewater treatment and water infrastructure is specifically heightened there. So upside on the infrastructure side, but still looking at a depressed residential market.

Then this is countered by a very dynamic market in India and Southeast Asia. We had a very strong year in 2025 in those markets and see here continued opportunities for us to grow. One of the opportunities was already mentioned by Thomas, also by Christoph is that there is the distribution retail market. Here, we had 170,000 point of sales that we were supplying at the end of last year, 50,000 of which were opened alone last year. So this is a very accelerating area for us.

Using IT systems to track those point of sales, using IT systems to be in touch with more than 7 million end users via WhatsApp or WeChat in China to see their buying patterns, to see how we can activate them buying products from us. So this is a continuing trend that we will push in this year, also in the coming years, also entering new markets such as Bangladesh or places like that to profit from the know-how that we've learned first in China and then in Southeast Asia.

The other area of growth opportunities for us is industrial construction. We see many companies derisking their supply chains, building factories in Southeast Asia. It is manufacturing factories. This also then leads to port infrastructure, like Thomas showed in his slide, but also food and beverage, data centers, of course, here the legwork done by our U.S. colleagues where many of the Googles of this world, they open and build new data centers and specifically in Malaysia, Thailand, where we were able to supply our products as well into those projects.

Large transportation infrastructure. If you look at the mega cities, of the 20th largest cities in the world, 15 are in Asia Pacific. This means congestions. If you're driven through Mumbai or other places, you spend a lot of time stuck in traffic. So these cities are investing in bridges, in tunnels, in subway systems, in water infrastructure, wastewater treatment plants to cope with the growing city around them. And this is happening in India. It's happening in Southeast Asia, in China in many of those places. So we see a lot of airports, tunnels, subway systems being built in cities like that.

The growing refurbishment trend, I mentioned already in China, is an area where we can profit from. as this infrastructure has been built 20 years ago. And we see in the long term or in the medium term even the share of new build versus refurbishment projects going towards the area of refurbishment, where traditionally Sika has more products to sell than in a new construction of a bridge.

Then the other point I'd like to highlight is the automotive and industry part. Here, the focus on Asian OEMs, whether Chinese, we mentioned the opening of the new factory or the domestication of some of the production in our Suzhou factory, but also Korean and Japanese OEMs. Here, we also see the highest growth rates were in Southeast Asia and India. This is then local OEMs like Vinfast, for example, in Vietnam, but also Chinese and Japanese producers opening their factories in those markets and us being able to have the experience with them in their home market, being one in the pole position to supply the products also in these new factories that these companies are building in those markets.

So with that, positive outlook for Asia Pacific, with the asterisk that a big question mark still of how the residential market in China will evaluate, but we have quite some confidence that at some point, this trend will revert. Don't ask me for a specific date because I won't be able to give you that at this point in time.

But nevertheless, I hand now back to Thomas -- or Adrian, sorry.

Thank you. I'll go first. Well, thanks to my colleagues here and also a warm welcome to everybody here in the room and the ones following online. I will now dive a bit deeper into the financial result. And I would say we have delivered quite a respectable set of numbers against near-term cyclical headwinds as we have seen. The result demonstrates here a consistently high cash generation and also how Sika is well progressed in executing its efficiency program as part of Fast Forward.

Here are, again, some of the highlights, CHF 11.2 billion in sales. 0.6% growth in local currency. A decline in Swiss francs, minus 4.8% on quite adverse foreign exchange effects. A further strong expansion of the material margin, to 54.9%, up 50 basis points. An EBITDA of CHF 2.065 billion, or 18.4% on a reported basis, impacted by Fast Forward onetime cost and some operational deleverage caused by revenue weakness, particularly in the second half and particularly in China.

Excluding Fast Forward costs, of CHF 86 million, EBITDA was CHF 2.15 billion and the margin 19.2%, only slightly below the previous year at 19.3%. Reported EBIT, CHF 1.49 billion, 13.3% of net sales. Also here, impact of Fast forward, including here some impairment charges and CHF 108 million included. As well as net profit, CHF 1.045 billion, 9.3% of net sales, also here impacted by Fast Forward.

Very positively, a continued strong cash generation with an operating free cash flow of CHF 1.36 billion or 12.1% actually, a slight increase here in the strong net sales ratio that we already had in 2024. Fast Forward cost measures, well on track with related onetime costs all recognized in 2025. Our Fast Forward program delivers a strong return on investment. with cash payback cost of less than 2 years and is expected to already generate CHF 80 million of benefits in 2025. And then lastly, here on the dividend side, the Board of Directors again proposes an attractive dividend with an increase of 2.8% to CHF 3.70 per share.

Let me now talk about some of the individual elements in a bit more detail, starting again on the top line. Local currency growth of 0.6% breaks down into 1 percentage point of acquisition growth, while organic growth was slightly negative on group level, minus 0.4% for the year related to soft markets mentioned, particularly China and particularly Q4. Acquisition growth was mostly related to the 6 transactions we completed in '25 and contributed this 1%. Foreign exchange impact, as mentioned, significantly negative, -5.4% or a translation of more than CHF 600 million to a reported growth of -4.8% in Swiss francs. Quickly on the regions, Thomas talked about it. If we look at sales growth in region in EMEA and Americas, quite solid 2.2% sales growth across both regions also with organic growth in both regions, while the U.S. saw a negative trend in the second half of 2025, which was also partially attributable to a lengthy government shutdown.

Negative growth in Asia Pacific was driven by a significant decline in the China construction business without -- here China construction growth rate would have been at quite a similar level of the 2 other regions and also notably here, foreign exchange impact, the most negative in the Americas, driven obviously by the weak U.S. dollar. Now the development in China in the construction business, which actually declined by 18%, also had an impact on overall group. If you exclude here China again on group level, we would have actually grown organically 1.2% versus the 0.4% on group level reported. Now turning to the P&L and moving down here from the sales line. In full year '25, as mentioned, we have delivered an expansion of the material margin with gross result expanding by 40 basis points to 54.9%. Overall, positive cost price spread was driven by our focus on delivering innovative value-add solutions and also modestly falling input cost here helped by our structural procurement initiatives.

The deflationary environment in China was compensated by positive price contribution elsewhere. The dilution effect of M&A was actually minute less than 10 basis points. Reported operating costs, this includes personnel costs as well as other operating expenses fell by 1.4%. Within these costs, Sika recognized CHF 68 million of fast forward onetime costs. Normalizing for this, operating cost decrease was -3%, continued solid MBCC-related synergies as well as efficiency measures were offset by underlying cost inflation and some operating deleverage, particularly in Q4. On the personnel cost, specifically, which increased by 1.7%. Here, the impact of Fast Forward-related severance cost was CHF 57 million. Without those onetime costs, personnel costs would have decreased by 1%. Synergies as well as operational efficiency measures were not quite sufficient to negate underlying wage inflation of close to 3.5% across the group.

Q4, in particular, saw higher health benefit and pension costs as well as negative accrual phasing impact versus previous year. Underlying organic net personnel cost increase was 1.7% on a local currency basis. Other operating expenses decreased strongly by 4.6%, excluding Fast forward onetime cost of CHF 11 million cost decline was actually faster than the rate of revenue decline at minus 5.2%. Operational efficiency initiatives and synergy delivery were the driver, while Q4 comparison was negatively affected by an insurance payment and also some R&D credits in previous year Q4.

As a result, reported EBITDA decreased by 9% to CHF 2,065 million or the mentioned 18.4%, again, normalizing for Fast forward, 19.2%. In looking here at the EBITDA bridge in '25, starting on the left-hand side with 2024, 19.3 ratio. We delivered an organic material margin improvement of 50 basis points, driven by new product innovation as well as structural cost efficiencies. M&A synergies coming from MBCC contributed 40 basis points. We saw the overall comparison number in terms of synergies compared to prior acquisition. The incremental contribution in '25 was CHF 57 million. And in total, as Thomas mentioned, already exceeded original guidance of overall synergies. On the other hand, foreign exchange, including some hyperinflation effects as well as the impact from a negative fixed cost leverage reduced margins by 20 and 70 basis points, respectively. And the aforementioned Fast Forward cost had a negative impact of 70 basis points to arrive at the reported EBITDA figure.

Now if we look at the bridge here and exclude China, overall, the underlying EBITDA margin would have increased to 19.7%. So a clear improvement material margin by 70 basis points, while the negative leverage reduces here to minus 40 from minus 70. But it is, however, important also to highlight that the China construction business remains a profitable business with clearly double-digit EBITDA percentage numbers. Turning back to the P&L, looking at depreciation and amortization expense, which grew by 2.9% or CHF 16 million. Also here, we have a fast forward impact of roughly CHF 22 million and slightly higher intangible amortization relating to bolt-on acquisitions. But organically, depreciation and amortization expense grew largely in line with sales. This is also the expectation going forward for 2026.

As a result, EBIT was impacted here over proportionately with a decrease of minus 12.9%. Excluding Fast Forward, it was CHF 1.601 billion. If we look below EBIT, net interest and financial expense decreased by CHF 30 million compared to the same period last year. The decrease is largely related to lower debt and also the scheduled replacement of a Eurobond with Swiss bond financing. Also here, expectation going forward for interest cost to continue to slightly decrease. A word to the group tax rate here, an increase to 22.9%. Previous year had a favorable onetime effect on the deferred tax position relating to legal restructuring. Going forward, we also expect about a 23% tax rate overall.

Quickly turning to the balance sheet, which reduced in size in '25. This was driven mainly by 2 factors. Firstly, the continued appreciation of the Swiss franc, particularly versus the U.S. dollar with approximately CHF 900 million of translation impact. Secondly, and in spite of a higher cash position, here lower current assets, particularly related to disciplined working capital management. Balance sheet total fell by 5.2%. The decrease in intangible assets is strongly attributable to foreign exchange as well and shifts within the liabilities is largely related to financing and definancing activities where we repaid a bond tranche and refinanced twice during '25 with multiple tranches in the market.

Shareholder equity reduced by 5.4%, also here translation driven, whereas the equity ratio remained at 44%. ROCE impacted here by Fast Forward costs as well as well as currency-related EBIT impact decreased to 12.3%. Now turning to cash flow, quite a strong development, as mentioned, CHF 1.36 billion with a strong second half performance, given our focus here, particularly on working capital management, 100% conversion of here profit before tax into cash. Main contributors, as mentioned, net working capital management and providing roughly CHF 70 million of cash versus here a consumption of CHF 160 million last year.

Modestly higher CapEx and slightly higher cash taxes accounted for the difference. And looking at the ratio, again, a small increase on already a sizable level to 12.1%. On the leverage, here, while net debt reduced by CHF 300 million, 2025 net debt EBITDA leverage increased slightly. If you exclude Fast Forward at the same ratio of last year. We have a strong investment-grade rating and expect another strong free cash flow performance in '26. This strong cash generation also affords us with some optionality as part of our capital allocation policy, which is focused on high long-term value creation for our shareholders. First priority is supporting organic growth and drive profitability through high-return investment, but also highly value-accretive bolt-on acquisitions where we can demonstrate superior returns through cost synergies and revenue and cash acceleration.

We have here a very well-proven playbook to deliver synergies. We will continue to reward our shareholders with a progressive dividend policy, as you have seen which allows for efficient capital management and steady increasing returns to shareholders. And we will consider share buybacks opportunistically where we have excess cash flow available after other uses, which also includes further deleveraging. The focus is simple, create here the most value possible from these cash flows. And therefore, we will always weigh here which route can deliver the greatest return to our shareholders. Briefly again, on the dividend here, as proposed, a dividend increase of 10 Rappen here proposed by our Board of Directors, an increase of 2.8%, 50% of the proposed payout will come out of retained earnings, 50% out of capital contribution reserves.

Then lastly, before we turn to the broader outlook for '26, a brief recap here of Fast Forward, which is a very strong return on investment and payback of less than 2 years and is well underway. It will drive a leaner cost structure with benefits of CHF 80 million to CHF 110 million by 2028 coming from this activity for which onetime cost of CHF 108 million, including CHF 86 million within EBITDA have all been recognized in '25. And the investment part in accelerated rollout of digital platforms, technology, AI and particularly also leveraging our global data pool will accelerate innovation growth and enhance customer value.

Investments will amount to CHF 120 million to CHF 150 million over the next 3 years and drive benefits of CHF 70 million to CHF 90 million in combination, this is CHF 150 million to CHF 200 million annual benefit by 2028, whereof about CHF 80 million are expected to materialize in 2026 already. With this, we'll come to the outlook for '26, handing back to Thomas.

Thank you, Adrian. And brief one slide, outlook for '26. We talked a lot about all the efforts we have put in place. We are confident that we can deliver on the outperformance of the market, 3% to 6%. We have gauged this with the market condition as we call them muted still in the first half of the year for sure, that leads a local currency growth of 1% to 4%. At the same time, increasing our EBITDA margin into the range of 19.5% to 19% to 20%. This is our commitment, our confidence for 2026. At the same time, we reconfirm our strategic target of the Strategy '28 for sustainable profitable growth for the company. And with that, we would now opening the Q&A, and I hand over to Dominik so that our virtual participants have a chance to be lined up for questions.

Thank you, Thomas. Probably questions -- are there any questions? Alessandro Foletti, probably if you want to start here right in front.

I would like to dive a little bit deeper if you want in the market outlook for this year. Your 1% to 4% guidance implies a decline of the market. You mentioned that in your press release, so would it be possible to go a little bit more in detail along the lines of what you have shown on your Slide 23, where you showed 20% of the business is residential, 30% infrastructure, 35% commercial, 15% automotive. Maybe what do you see in those 4 segments by geography, if possible?

Yes. I think it's a good segue by looking at the 4 segments. And if I start on the residential side, residential is, let's say, is globally challenged, but the biggest impact still will be seen in the rebasing of our residential business in China. So you have heard it also from Christoph and also to some part from Mike, the residential business is, let's say, in other parts outside of China, also, let's say, not booming, but it is kind of also leveling, eventually even showing signs to come back like in France, when we look at the permit level, it seems that there is some movement, but nothing exciting. So the residential out of the 4 segments, certainly the one especially also impacted by China being the most challenged.

When you go over to the infrastructure, I think here, there is a good momentum. This is high in demand. They are big projects. There's a lot of renovation money is still flowing. Now independent of the German complexity and release of money, I think here, it's a fair bet that this segment will provide local currency growth above the others, probably even organic positive growth as there are a lot of activities in this segment. Similar to the automotive and industry sector, the industry is not really booming. I think we have to expect that also the China production build rates will reduce. Heavy incentives have been running out on the e-mobility. But when we look at the total markets, we expect probably slight declines in Europe and in North America when it comes to build rates, but the very strong new book sales and the incremental activity, as I mentioned, also in China makes us confident that this segment will also similar to infrastructure contribute.

On the commercial section, here, I mean, we have the big outlier that's the data center. That's a key contributor that is offsetting many other segments of the commercial construction, but not all of them. There, it's probably to say this is somewhere in between the residential and the other 2 segments. In this regards, we see still some hesitation to put down big investments still driven by uncertainties on where to place factory. The money, the projects, as I always mentioned, is actually available. The projects are ready, but I think we still haven't yet enough clarity on how the new supply chain setup will look like given the changes that occur currently. So this is probably the area where we have some mixed impact.

Just one follow-up, then I pass on the mic. On China, you mentioned, I think, in the slide that the market was down 45%. And then I think, Adrian, you said you were down 18%. Is that correct?

Yes, 45% is just -- within 2 years, we talk here about the new build, the new consumed, not the empty apartment, we talk about the apartment space that has been occupied by new owners that has reduced by 45% with an acceleration in the second -- in '25. So in '25 on itself, it's roughly 20%, 25% decline.

Of the relevant residential market in China, only residential.

Yes.

And you were down 18%.

Yes.

And of this 18%, how much is self-induced by reducing prices and reducing point of sales, et cetera?

Yes. We rebased our business focusing on margin protection, on quality, and that is part of the 18% decline.

Thank you. And next question goes just to the neighbor here, Yannik Ryf of Zurcher.

The first question is about data centers. You mentioned it a couple of times in your slides. I mean, how large is your exposure right now there? How much of total revenue? What do you think -- how large you can get? So that is the first question.

And the second question is more towards capital allocation. I mean, under which circumstances would you consider a share buyback? I mean, if you look today at your share price, do you think you will generate higher returns with those bolt-on acquisitions than doing a share buyback?

Okay. I'll take the first question as data center contribution to the group is quite significant. It has increased from a low single digit to a mid-single-digit contribution in the Americas is even reaching almost a double-digit contribution. It is a momentum that we want to take advantage of as we see that this boom in data center will probably last another couple of years and will probably then also be followed by a boom for energy infrastructure, which is foreseeable as a follow-up to this massive capacity that is built globally that the consumed energy needs to be kind of available and deployed close to those data centers.

I guess on -- here the capital allocation and the share buyback specifically, I mean, I sort of laid out here the elements and also the priority. And if you do look and we look at this really from a return perspective on the bolt-ons, we can clearly demonstrate here that strong returns actually superior here even at this level, but this is a constant reevaluation we do because at the end of the day, it is driven by sort of the most effective use of capital.

There is a question from Remo Rosenau, Helvetische Bank.

On your guidance of 1% to 4% growth in local currencies, which includes acquisitions. The acquisition contribution will most likely be higher this year than last year. You made 2 quite relatively larger deals in January and one is not closed yet, but still it's almost CHF 300 million. You have spillovers from last year's 7 acquisitions. So the acquisition effect could well be around 3% in '26. So this 1% to 4% then translate into an organic growth of minus 2% to plus 1%, which seems not very high.

Maybe here quickly on the sort of the M&A contribution here, and you mentioned the transactions. I mean the one in Turkey is unlikely to close before the third quarter. So I would say sort of currently in that sense, in the bag, if you assume closing at that point is roughly 1.5%. There is not that much spillover. But of course, that is the element that we have currently here on going.

Okay. So in your calculations, you have 1.5%. Okay. Fair enough. Then the impairment, I think CHF 21.8 million was in the fourth quarter due to Fast Forward. In the full year, it was almost CHF 30 million, however, it's not a big number, but what is the difference then?

It's just not related to the program. That is the only difference. It's smaller machinery impairments in other places.

Okay. And then on this peer comparison you did in order to demonstrate that you made -- that you are doing better than your peers. Do you have a list which peers you have taken there because it was not in the presentation?

We do have the list. This is the list that is in the annual report. These are the [indiscernible] peers. And out of those roughly 25, we selected the ones that are closest to our business. So it's roughly 10 out of them are in our peer comparison. It is also important that we have, let's say, reported figures that are related to our business. So this is a selection of 10.

And the big group is available in the annual report.

But this is -- I mean, this is part of the total list.

Next question goes back here on this side again to Patrick Rafaisz from UBS.

Two or three questions. The first one would be on the guidance, right? You already described that H1 will be challenging then hopefully a more dynamic H2. Just wondering how would you define then the organic outlook for H1 and Q1? I'm trying to understand how much catch-up you need in the second half to get to the range.

It's a fair point. I mean we expect that given also the elements from the prior year where we had a strong start in the Americas, especially in the U.S., where we had also, let's say, the rebasing in China not yet taken place. So our assumption is that we are going to see organic negative growth in the first half, more pronounced probably in Q1 than in Q2. But that's then going to turn into positive in Q3 and Q4 given also -- the comp base will be different -- quite different in the second half.

That's very helpful. And then also on the guidance and targets, I think a sensible move to abandon the 20% that was originally formulated, right, putting it into a range. But still, right, if we maintain the midterm plan with the 20% to 23%, is this just pushed out by 1 year? Because I remember in November, we discussed that the Fast Forward program was being implemented in order to safeguard the 20%, right, in the absence of operating leverage. So -- but probably negative leverage was worse. China on top, right, deteriorated. But yes, can you update us on the time line for the 20%?

I think you got it. I mean in Q4, with the events in Q4, we had a more pronounced negative leverage than anticipated, which we also have to consider since the market has fundamentally not turned over new year so that we are here also safely advised to consider still, let's say, some negative operating leverage, even though we have, I think, means in the pocket that are able to offset some of that, but not all of that. That's why we also look at the range from 19.5% to 20% as being a range that is incorporating still some negative leverage, which would -- if you go to the upper side of the guidance, of course, reduce and bring us close to the 20%.

And looking further out, I think this momentum of generating efficiency and generate synergies across the organization, structural savings will continue. And we also expect that this negative leverage that we still anticipate for '26 will also reduce or even turn into a positive in the years to come. So the likelihood, our commitment to the range in the midterm is strong.

So -- but the way I read this is that you remain committed to '28, but you wouldn't say today already that '27 will be a 20% for sure.

It is too early. I can't say what the markets are going to do. I think we have learned the lessons lately announcements about what happens in the Middle East. This is just another year where a lot of confusion comes around. And I can't say how '27 will turn out. Indications I get from my visit to China is that probably '27 could be a turning point in the residential market in China could. I think also when I look at all the activities that are lined up, there could be a tremendous uptick. We see this as a cycle, a short-term cycle. But how long this cycle lasts is really something we have to be cautious in making here predictions and statements. Our outperformance of the market, that's to me the substantial element that we need to focus on and then be a bit more hesitant in making here guidance for the global economical evolution.

And a very quick one on the one-offs. Maybe I missed it in the annual report, but did you provide a distribution across the regions or the segments of the CHF 86 million?

We didn't provide details here in the annual report. In terms of the one-off, it's roughly CHF 30 million each in EMEA and the Americas, CHF 15 million to CHF 20 million in Asia Pacific and on corporate level between CHF 5 million and CHF 10 million.

Thank you, Patrick. And then let's move to the vertical attendancy. We have here Ben Rada Martin from Goldman Sachs, who will basically start with the first question.

My first was just on APAC margins. The margin of the region dropped from 21% 2024 to 18% 2025. I guess post the program changes, is it right to think that there's a path for that -- the region to return back to 20% EBITDA margins? And my second would just be on working capital. Great to see some success there in improvements in 2025 back down to 18% of sales. Is there scope for further improvements there? Or is that the right level of efficiency when we think about working capital?

Yes. Happy to take the 2 questions here. Yes, on the margin, there is a path. Obviously, we talked about the impact on China also fast forward well progressing, also refocusing here on the business. And obviously, China is having an impact here, but also making progress in other markets. That's the clear ambition on Asia Pacific margins. On working capital, yes, I do believe there is more scope also here structurally in terms of efficiency on, let's say, the warehousing, the supply chain side, a continued focus here on receivable collection and management, but also structurally working on the payables, I would say, sort of a stepwise further improvement is clearly targeted.

Perfect. And the next one -- the next question goes to Arnaud Lehmann from Bank of America.

I hope you can hear me. It's Arnaud here. I have 3 questions, if I may. Firstly, on China, it peaked at 11% of sales. I think it's going to be about 9% of sales now. Do you have a level after restructuring how it could look like in terms of contribution? Is it going to be 5%, 6% of sales once you conclude your restructuring and considering the ongoing pressure in the market? That's my first question. My second question is on the price cost outlook. We're seeing some raw materials related to oil and naphtha recovering this year. Are you planning some price increases to offset that? And lastly, you highlighted adhesives as a particular area of interest. Obviously, you've announced the Akkim acquisition. Do you plan to do more acquisitions in the adhesive space?

Okay. Thank you, Arnaud. I take the first and the third question. And talking about China, of course, naturally, with the action taken, our roughly 10%, 11% contribution from China short term will be reduced to 9%, 8%. Please also consider that in China, we have the growing automotive industry business helping to offset. So I don't anticipate a decline further down, but it will be a high single-digit contribution. And once also then the residential market is returning to growth, probably still be somewhere at the same level as before. So here, the China contribution is for us very relevant. Our China business in China is healthy, is profitable. And it is also the base for us to expand with the Chinese players outside of China.

And here, not only the automotive manufacturers that are building factories around the globe, but also the Chinese main contractor that go abroad and that become main contractor on large projects in Southeast Asia, Middle East, Africa. And just as an implication, this Abu Dhabi airport is in the hands of a Chinese main contractor. And you need access to the main contractor. And if you are not with them in China, you are at a strategic disadvantage as you don't have the relation to the decision-makers.

Of course, you need a local presence in UAE to capture on those. But so the China, let's say, aspect is for us of long-term strategic relevance to have a good representation and of course, also grow with the Chinese player as they take more share of the global economy going forward, similar to what we have seen in the '90s, '80s, the Japanese, the Koreans, this is just following the nature of the most competitive players in the market. And then your last question...

Sealing and bonding acquisition?

Sealing and bonding acquisition, yes. I mean this -- of course, we like the Adhesive segment, and we highlighted it, but it is one aspect of many that we consider. And as I outlined, our selection process for the prospects and then ultimately advancing has many more aspects in there. And if we have a choice, then we certainly provide preferences. But in this regards, this has been a fantastic prospect that is now coming to realization. It is not a signal that the next 5 transactions will be in adhesives and sealants. We look where we do have the best return, where we have the best opportunities to make those bolt-ons accretive and value enhancing. And therefore, we don't exclude any of our technologies nor any of the target markets.

Maybe then on the question as to price/cost spread. I mean, on the input cost here, I mean, you mentioned oil price, but of course, it's also quite volatile. Typically, our base case is rather flattish development, but particularly also given geopolitical events can have an impact here also in regards to, let's say, capacity and utilization. But broadly speaking, at least for the next few months. That would be our expectation. As to pricing, we will continue to value sell. We will, of course, also continue to manage input cost increases. In China, we have seen quite a deflationary environment in '25. It's probably going to stay a bit longer, not the same magnitude, but expecting here some price impact in other parts of the world. So slightly positive all in all for '26.

Okay. Two more questions from vertical attendance. This is Pujarini Ghosh, first one from Bernstein. And then we come back and have a final round of questions here for the room.

So I have a few. So could you provide an update on your Fast Forward program? How has it been progressing in the first few months? So basically in terms of the headcount reduction, the capacity optimization in China? And then also how are you progressing on the digital investments and the benefits that we were expecting for 2026.

So my second question is on the margin guidance. And could you potentially talk through the puts and takes for going from the 18.4% margin in 2025 to the guidance of 19.5% to 20% in 2026? And my last question is on the material margin. So you always maintained it in a very close range of 54% to 55%, but it has been steadily increasing. So how should we think about the progress in future?

Okay. Thank you. I'll answer the first question, the Fast Forward question. Of course, this is a program that is not over in a couple of weeks. It has many elements to it. We are in the middle of the cost implementation -- cost-saving implementation, especially with a strong focus on China, also in consolidating the footprint in China. This is all considered into our '25, let's say, cost accrual, the execution, also the closing and transfer of capacity is something that needs to be well managed and is taking place now in the first few months of this year. So this is progressing. Front-loaded activities and again, in China has been the fundamental, let's say, change in the approach to the market.

We have implemented a more agile, a more granular sales approach. We have reduced from 7 layers to 4 layers in making sure that we capture the opportunities in the various provinces, cities with smaller sales team that are also with smart incentives guided away from the former, let's say, top line growth incentives that have been very successful during many years. So here, these things have been implemented. These things are active as we speak, but the more structural elements by the nature of it takes more time. Also outside of China, the elements where also headcount reduction have been included require time to transfer responsibility, but also to respect the legal requirements in regards to union contracts and notice period. So this is still ongoing in the first month of the year, but will then cease and be completed in Q2 of '26.

Good. Then specifically on your sort of margin -- or margin bridge question. Yes, clearly, in '25, I mean, Fast Forward the onetime cost, CHF 86 million in EBITDA did have here an impact. So the starting point will be rather at 19.2%. It will also mean that we have here a structurally lower cost base. So we're expecting about 60, 70 basis points of contribution in '26 from Fast Forward. We'll have a smaller incremental element still coming from MBCC acquisition. The synergies, 20 to 30 basis points. The new bolt-ons should be sort of rather insignificant in terms of the dilution. In terms of material margin, and this is a bit connected to your last question here.

As I was referring to the underlying input cost development and here, a slightly incremental pricing impact also here, a slight potential to increase, although we're sitting here, as you commented, at the upper end of sort of the broad guidance range, but this is not obviously carved in stone. And then last, we have the leverage piece. And here, this is clearly related to the top line fixed cost leverage. If we're at the lower end of the sales guidance, 1%, this will most likely mean sort of a similar type of negative leverage as in '25 as opposed to the upper range where clearly, this would be lower and be commensurate with closer to 20% overall EBITDA.

Okay. Thank you very much. So let's come back. I see there is one last question that we have from virtual. This is Vitushan from Baader Bank. Please come up with your question.

It is clear that the U.S. shut for [indiscernible] '25, notably in the fourth quarter. So however, according to what I understood, most of the projects have been postponed and canceled. Thereby, I was wondering if you have further information on this. I mean this is clear that if the projects have been postponed, there is a big chance for them to materialize in the future. So I wanted to know if you have any further visibility on those, please?

Okay. I think that's a fair question. And to be clear, I mean, the government shutdown hasn't put those projects at risk or changed the mind of the owners. It has delayed the implementation of the projects. And therefore, fundamentally, these projects are going into execution just with a certain delay because also after the shutdown until this backlog is then reestablished, it takes a bit of time. But it's not that these activities due to the shutdown would have been, let's say, now canceled.

So excellent. Thank you very much. So before I give it back to Thomas, let's do a last round here in the audience and the question goes out here on this hand side, please. First one.

I'm Tsitsi Griffiths from Federated Hermes. I have 2 questions. You talked a lot about digital transformation and innovation, but there wasn't a lot of talk about how you're using AI or leveraging -- we're seeing increased opportunities for using artificial intelligence. So could you expand on that and talk about how you see that affecting your position in innovation and digital transformation.

The second question relates to the confirmed targets for sustainability, and it was great to see the performance on your Scope 1 and 2 emissions as well as your water disposal. We've seen quite a few companies in this sector cite a lot of challenges, including high energy prices, unfavorable public policy. We've also seen just general reduction in investment. So it would be good for you to expand on if these factors have weighed in, in your reconfirmation of your sustainability targets, especially in particular to your climate targets as well.

Good. I think we are going to communicate over the course of the year much more on our digital transformation as this is the investment part of the Fast forward that makes us most excited at this structurally changing, let's say, our competitive ability in the market. Most pronounced and most advanced is our ability to work on the innovation side. We have our 16 global technology centers, which in the past used to make their experiments stand-alone and shared outcome, shared fantastic innovation in forms of product formulations.

With AI enhanced tool, we have now the possibility to actually select every single data point of an experiment and put it into the data lake so that every, let's say, effect on experiment level can be utilized for then other experiments and shortening the development cycle, at the same time, also catching effects, which may on the original purpose of an experiment not have been a target, but could be a target in another prospect. So this availability that everything that in the 1,800 chemists go on when they every day make tests and verify, they have a clear target on what they want to achieve. But this system, this centralized system is now collecting all the data that are constantly generated and then they can be, let's say, utilized for different purposes for saying, okay, I need this effect. I have a substrate. I need to bond to this substrate and where shall I start?

And this can then trigger into this massive information that is available to say here have been experiments and you can dial in and you can shortcut massively development time and enhance also the scientists with, let's say, initial staff basis where they otherwise would start at scratch and try to compare through the traditional way in looking into products and innovation that have been established. This is very tangible. This is ramping up. We have here a very strong, let's say, innovation culture in the traditional R&D enhanced with data scientists that are kind of pairing themselves with the, let's say, the nature scientists, and this is having great traction.

And we will come back on that as this is constantly evolving. But this is one of the 3 major transformative elements. The others are on supply chain excellence, ease of doing business, being able to bring the customer the value instantly where needed and shortcutting traditional ways of having inventory through several steps rather bringing it to where it is consumed, which is the construction side at a given time at a given slot and allowing so also that efficiency for our customers is increasing, net working capital is decreasing. These are things on the supply chain, on the automation of our process inside and towards the customer. And ultimately, the sales excellence, so the interaction with our customer, also having much more, let's say, outside in, inside out information to also bring more leads and possibilities to our customer by having all this, let's say, access into the market data and also show the relevance where they probably have the best possibility together with us to win business for them.

So it is an incremental sales aspect instead of waiting for the customer to come to us actually also utilizing our capabilities to bring business to the customer. And these are elements that we are working on. This is in the making. It requires a strong foundation, a strong harmonized database that we also have part of our investments going into establishing the lake, which then becomes then for the machines and for the tools that we want to utilize then the base.

But it is fantastic. We have a market-leading position across the globe, across the technology, across all the segments. We have the strongest inside data lake at hand, and we want to utilize that. And then empower that with external information, which makes it unique towards the market, the value we can provide to our stakeholders, not only contractors, but also architects, specifiers still living in an ever-growing complexity world, and this is decomplexizing the world for them.

And then just a bit on the challenges around your sustainability targets.

Here, I think it's a fundamental difference between us as we are not energy heavy. We are not, let's say, upstream. We are not on the heavy side. Our own energy consumption, as you have seen, we can steer that quite nicely. Our Scope 3 challenge is a challenge that we actively address with our suppliers as this is the input there. We have it in our hands also to extend the life of our products and therefore, also improve the Scope 3, which is also, of course, the value for the customer. The longer it lasts, the better, the less renovation, the less running cost, a very strong aspect in the ROI evaluation of our customer. And therefore, for us, whatever you see eventually happening at other companies that are scaling back for us actually it's full steam in because it is accretive, it's performance enhancing, and it is also very relevant for our customers.

Okay. Last question, I'll be conscious of our time goes to Martin Flueckiger from Kepler Cheuvreux.

I've got 3 actually. First one is on data centers. You've been -- Thomas has been raving about data center growth. And I was just wondering whether you could put your money where your mouth is and basically reveal what kind of growth you've seen in data centers in the U.S. in 2025 organically? And what kind of outlook you're foreseeing in this market for 2026? That's my first question.

Then my second question is on -- I guess that's for Adrian. It's on the margin bridge again. Just wondering at current spot rates, what kind of headwind from FX do you expect for 2026? I'm not asking you to predict currency movements, just on current spot rates, what you're seeing there and what kind of nonmaterial cost inflation you think is a reasonable assumption for this year? And then my final question is on your statement with regards to expected market decline in 2026. Just curious about how you define that market. Are you talking about global construction output growth or decline? Are you talking about construction chemicals? And if it is the latter, are you talking about the global market as such? Or do you sales weight it according to your own exposures?

Okay. I take the data center question. As you say, I'm excited it is a strong contributor on the commercial segment, not only in the U.S. but across the board. It has a strong double-digit increase over the years consistently, and we expect also in '26 that this will double-digit grow on that side. That's in particular on the roofing side, on the flooring side, waterproofing side, sealant side, all these aspects play here. So this is one of the, let's say, growth engines of our U.S. business. It's very significant. And therefore, it's also creeping up in relevance of the total share of our U.S. business.

Then on your crystal ball question here in terms of exchange rates, of course, and you said it, it's difficult to predict. But let's say, at current prevailing rates, we're basically looking at sort of around 3% to 4% negative foreign exchange impact as a best guess. But of course, this is quite volatile. In terms of overall inflation, the overall expectation would be to come down to let's say, below the 3%.

Obviously, on the wage side, we had a bit more than 3% still in '25. But here, I would assume there is going to be rather a bit of a reduction. So probably around 2.5% in terms of overall inflation. On, let's say, your market question, and this here, obviously, we are operating in many different markets in many different segments. It is what we would consider sort of our addressable market, not specifically sales weighted, although there is a China element in and it's really looking at sort of the most relevant indicators, which may also vary sort of across here the business. So it's an estimation overall, which we're seeing here and which this number is based on.

Okay. But just to clarify, my question regarding FX and nonmaterial cost inflation headwinds were not related to impact on sales growth. I was just wondering, based on the chart that you've shown in your presentation for the EBITDA bridge, whether you could put those bps down to those 2 drivers roughly?

And here, we -- I was showing it's roughly sort of a 20 basis points of additional impact. It was more on the OpEx side, actually not so much on the raw material with the expectation of FX to be not quite as severe. I would also see here that this is rather smaller, if any. I mean, we have overall quite a strong natural hedge in terms of cost base being where we sell. So from an effect on top of translation, I would rather see this as a minor impact for '26.

Okay. Thank you very much for all of your questions. And with this, I'm heading back to Thomas for a final remark.

Good. Thank you very much. I hope you enjoyed the last 2.5 hours and the insights that we provided the granularity and question answered. We are very confident about '26. We don't want to talk so much about the markets as we cannot influence. We can influence many things, but not the market and not the FX. We took decisive actions last year to enable us to outperform the markets also going forward significantly our peers. We like the comparison. We are competitive, but we also see that our organization is moving ahead and gaining market share as a key element also the name of the game in 2026, driven by innovation, driven by incremental value for our customers, for the stakeholders, taking pain out of their let's say, daily life. That's where we are best in.

And at the same time, making sure that we are also benefiting and also our shareholders are benefiting by increased margins as we grow our business in the market. With that, I close our session here, but I would like to invite for all those that are here present and to join us for a quick small lunch, and we can continue to chat. And for those that are virtual, I thank you for participating, and I wish you a nice weekend and see you sometime somewhere in the near future. Thank you.

So good morning. It's a pleasure to welcome you today to our Fast Forward Media Investor Conference. With me today on the stage is Thomas Hasler, our CEO; Adrian Widmer, our CFO; and Philippe Jost, our Manager, Asia Pacific. As well present today, here in the room is our chair, Thierry Vanlancker; and the members of our group management. Thank you very much to be here as well.

With this, I hand over to Thomas to start the conference.

Good. Thank you, and also a warm welcome from my side. And for all the guests from far and near. And also the online participants here, a special welcome to the early birds in the U.S. that have a very long Thanksgiving today. So that's the good part, but it's 4 a.m. to join this next 90 minutes. I would also like to welcome my team, colleagues, employees of the Sika Group, and it is them that enables us here in front to present a strong Sika with clear way forward and clarity on the Fast Forward program that we will comment in the coming 60 minutes.

But I would like also, before we go into the program, talk about the foundation of Sika a little bit. It's a foundation from the past that is also guiding us into the future and key elements in there are very elementary to our success also going forward. We will also talk about China, in particular, and Philippe will take that part. Before we then go into the details of the Fast Forward program on one side with the cost measures and efficiency measures on the other side, I think the very exciting digitalization path that we have ahead of us. And of course, at the end, we then talk -- answer your questions at the final stage.

Strong foundation. At the beginning of this year, we started -- we declared in February, Sika's stronger than ever. And that's absolutely true that the foundation of our strength is delivering. Our Strategy '28 is on track. We are controlling the controllable and we deliver on the controllable. There are elements that we don't control. We don't control the markets and we don't control the FX, but many things we control. And I think we are delivering on that, most particularly on the outgrowing of markets and peers.

Talking about markets. Markets have been challenging the last 3 years, and they are still challenging. But we come back to that in a moment. It's not everywhere the same, and the momentum. I will also comment on the momentum of the market. But the markets are challenged. And the demand -- underlying demand in the market is actually growing, which means the backlog in construction is piling up, which I will also show later on.

On our side, since the markets are the markets, the outperformance is leading then also to safeguarding our profitability, taking action on the efficiency. Also investing in tools that enable us to outgrow also going forward with even more drive. This is all our organic contribution the bolt-on M&A is a key factor in our strategy as well.

So let me show you briefly, this is our strategy. Nothing has changed, except the guidance for the annual growth in local currencies, 3% to 6%. And here, let me clarify very specifically, what has changed. As you can see here on the picture on the left, the 6% to 9% growth, annual growth in the strategy, as outlined at the end of '23, was assuming a market contribution of 2.5%, which has been a long-time average that has delivered over the last 20 years. But the past 3 years, haven't seen that kind of growth.

And this is the part we don't control. But what we control is our market penetration, market share gains as well as the M&A, and they are unchanged. So the 3% to 6% is an unchanged commitment of the company to outperform in the existing markets and also with contribution from M&A. This is not an indication that we assume the markets are going to be the same in the coming 3 years.

Whatever we assume for the annual market situation, we will guide at the right time. And if we have, for instance, a market condition where we assume more normalized growth of 2.5%. This will be additive to the 3% to 6%, which means we are in the 6% to 9% range, as indicated at the beginning of the strategy.

Now top line growth is one thing. The other thing is we commit to 20% to 23% in the strategy starting in '26. And of course, we have different levers contributing to this and growth is a key lever as well as material margin efficiency and M&A. As you can see here on the chart, since the growth is limited, here, we have a gap. And this gap, we are proactively filling with higher efficiency measures that are compensating so that we can, despite, let's say, limited market support still deliver on the profitability and safeguard our commitment to 20% to 23%.

Now talking about the markets, core markets like the mature markets in Europe and in North America. Of course, we all have seen big impacts from inflation, from interest rates, political uncertainty and the residential construction market has been one of the most challenged in these regards. But still, in this residential, there are also market spots, pockets that are outperforming. And here, I think Spain, Italy, France, for different reasons, also driven by energy efficiency program have been stable and helping us also in these countries to offset the overall residential decline in the industry.

On the industrial and commercial construction, also here, we have a lot of demand. Demand that comes from derisking of the former global supply chain, most pronounced in the U.S., we call it reshoring. It is a trend that is ongoing for the last 2 years. Unfortunately, with the tariff discussion this year, this has been put a bit to the site, waiting how the tariffs are going to set the frame for future North American activities. But the derisking of the global supply chain is a topic not only in North America is also in Europe. But in Europe, we are facing also some instability from the political uncertainty that is hindering big investments.

Nevertheless, in this industrial commercial market, we have hotspots like data centers. They grow despite any of the market condition at the high growth rate, not only North America, in Europe, across the globe. It's a fantastic business opportunity for Sika as we have been an early mover and we provide peace of mind in this. Everything that is AI and digital-driven is still going strong.

On the infrastructure side, infrastructure is a market that is more resilient. The limitation in infrastructure is more the budget of the governments to spend, but money is flowing. It's not enough, so the backlog in infrastructure is building, but we also have these nice programs in North America and Europe, in particular, the new German Infrastructure Act that is also stimulating more activities in this market.

Talking about backlog. Housing has a huge backlog that is building that needs to be addressed, that will be addressed also, but it requires here interest and consumer confidence to increase. But you can see here alone in the U.S., 5 million missing in the U.K., 4 million missing. So a huge backlog here on the residential side.

On the industrial side, as I mentioned here, activities are lined up. This is ready to go for most part in North America, but we need clarity on the interaction between the economies in North America. Infrastructure. That's a fantastic business for us. It's there. Every year, the infrastructure ages a year, and it is an old infrastructure.

As you can see, the U.S., U.K., France, Europe, in general, we have an old infrastructure that needs more renovation, but also programs to upgrade our infrastructure, not only road and rail, but also the energy, the power supply is going to be the big topic to support our AI-driven economy in the future. Power is a major infrastructure need going forward.

The investment programs take time, but they are significant, and they are accretive to the normal spend in infrastructure. And in addition to the one in the U.S. and in Germany, also the commitment in Europe to reinvest into defense requires a lot of renovation of existing military infrastructure and new structure that is going to be built in the coming years.

Now this is the mature market situation, but we have also very strong markets across the globe, starting from Southeast Asia over to the India, Middle East, Africa, Latin America. This is the source for us to grow good mid-single digit, high single digit, double digit in Middle East and Africa. So it's not all the same. We have pockets of growth. We have regions that are less impacted by the global uncertainty.

Now let me show quickly what we showed you at the 9 months result, 2.5% is our local currency growth if we exclude the China construction, if we include the China construction, we are at 1.1% growth in local currency. And then the other big, let's say, influencer is the FX with minus 4.9%, which is, again, it is out of our control.

But our control is that the impact of the FX is only a translation aspect and not a transactional aspect. Now how do we measure ourselves against the peer? This chart, I think we have shown for quite a while. We have now added here with and without China, the outgrowth over the last 3 years.

And as you can see, we outgrow our peers by roughly 2% to 3% and constantly over these 3 years. You can also see the impact on the growth from China in '23, a significant contributor to the group growth in '24 and '25 for reasons Philippe will also show then it's being a detractor of the growth. But overall, we outperformed our peers.

On the organic growth, now here, we also show how we outperform our peers on the EBITDA. And the EBITDA outgrowth is even more significant than the organic growth outperformance. Here, we outperformed by 6%, and if we include everything and if you exclude China, even 8.8%, a significant outperformance. So we gain market share and we gain profitability. That's the bolden rule of Sika. That's the secret sauce delivering market share gains with higher profitability.

Now this is the peer comparison. Let's ask the customer. We have done this year the first global survey, customer survey in more than countries, asking how the customer rates us against the peers that the customer is defining. And here, the Net Promoter Score is much higher than the peers, and it is much higher than the industry benchmark.

This is the reason we can outperform because our customers are convinced their businesses with us in better hands and helps them also to create more value for their customer. It's also a clear intent by our customer to buy more from us to expand the share of wallet in the coming 12 months. This is an indication they like what they have and they would like to have more. This is a strong supporter of our outperformance.

Back to the strategy, the levers on the market penetration our strong position that we have achieved over the past years is helping us to leverage that cross-sell using all channels that are available, go where the money is, there is less money in certain parts of the markets. There is more money flowing, data center is a good example, shifting activities into renovation, refurbishment instead of new build.

This is the way how we can agile adjust. The key geographies are the key geographies. They represent roughly 70%, 75%. So the key geographies from Japan, China, India, Europe and the U.S. are core markets for us to build on and then the innovation aspect. That's what customers like us, love us for. We provide tangible value to them through our innovation, leadership position. And then, of course, the acquisition, the yellow part, that is an incremental with the bolt-on acquisitions.

The innovation power I mentioned before is generating 23% to 25% of our net sales with products not older than 5 years. This is a steady source of incremental growth and profitability. This business comes in with higher material margins. This is how we price innovation and how we are also gaining traction with our new products in the market.

And don't forget, construction is a relative conservative market. Products are having a longer life span than in other industries like, for instance, automotive or consumer goods. What we have here, 5% of our workforce dedicated to R&D. Our spend is healthy and is contributing with innovation that are relevant to our customers. And then ultimately, I come back to the very beginning, it's the people.

Our people generate this. It's the outperformance. It is the people's dedication, it's the performance drive of the -- of our organization. Our organization, our people don't want to just play the game. They want to be winning the game. They want to be a leader in the market. They want to be a leader in technology. They want to be leader in digital.

It is coming through the organization, this empowerment that is fundamental to our success that makes us unique with our Sika spirit and that is compared also with the willingness of the company to support entrepreneurial drive. Also having courage, courage for innovation, courage for new business model. This is, at the end, the source, how we can deliver.

Now I hand over to Adrian to talk about the inorganic part of our deliveries.

Very good. Well, thank you, Thomas, and good morning. Now talking about another pillar that is clearly driving value is M&A, is acquisitions, is something which we are driving and addressing very specifically and very successfully, I think, a very strong track record, if you look across the last 10 years, more than 40 transactions on average per year and particularly being sort of highly accretive overall, driven by strong synergies.

It's also the way how we look at M&A, driving additional growth platforms, leveraging capabilities essentially, in the end, driving strong top line as well as cost synergies and resulting on average in about a 4 turn reduction of the original multiple in the full year 3, very strongly driving here superior capital returns, but also strong earnings growth. If you look at acquired profit over the number of years, a clear double-digit increase per annum coming through bolt-on acquisitions.

If you look at 2025, we've already closed 6 acquisitions. This is also based on quite a strong pipeline. A pipeline is also driven a bit by the environment, which, of course, given some of the challenges in the market, also driving quite a healthy pipeline, particularly the small to midsized companies having here more pains in this overall market environment, but we specifically continue to very sort of methodologically and structurally look at M&A, driving growth platforms, try to close selective gaps here, be it sort of market share, market access or also product and system capabilities, driving this strong synergy capture, which we have seen before.

Six transactions, the latest one, for example, in Saudi Arabia, I think also a very good example of here demonstrating how we think about M&A, adding here a specific solution to our offering in this very strongly growing market. Also here, again, being able to drive cross-selling and leveraging capabilities across the board.

But we also do invest in innovation and new business models, also 2 examples from 2025. On the one hand, a joint venture with Sulzer, which is here addressing here sort of the plastic recycling in construction on the one hand, the big pain point of our customers, on the other hand, a valuable source of sustainable raw materials.

Here, we're piloting here a system starting in the German-speaking part of Europe. And second example here, Giatec a minority investment in here also new capabilities, a company that is the leader in digital concrete technology platforms, specializing here in smart testing and AI-driven solution to optimize concrete mixes across here, the value chain also for us here, complementing similar type of capability investments we have done in the past. Also adding here potentially to our offering in the future.

Now when we talk about M&A, we also have to talk about MBCC, I think, particularly the successful integration of MBCC with a very strong realization of synergies, synergies that we have been able to increase in terms of the target by CHF 20 million originally CHF 180 million to CHF 200 million, now lifted to CHF 200 million and CHF 220 million by 2026, very strongly driven by this strong complementarity in terms of solutions, in terms of market channel access, but particularly also a very aligned set of values essentially enabling here a very successful integration and driving value and synergies across the board very successfully being on track here to deliver this strong set of synergies.

And this has already resulted in quite a strong margin improvement. If you look at sort of the MBCC perimeter, if you will, prior to us acquiring MBCC coming in with an EBITDA of around 15% having obviously performed quite well in terms of the underlying business, but adding now all these synergies. We currently have a 12-month trailing months run rate of CHF 166 million, which also means we're pushing here towards the upper end of the guidance of this year coming, on the one hand, from the top line.

Here, this is the profitability contribution. That's about 1/4 of it and 3/4 are related to cost synergies on the SG&A side, operations and footprint but also procurement, including here optimization of formulations, quite a strong development overall as shown. And adding this together, clearly here a very strong performance, driving here profitability of MBCC above 20%, slightly above 20% currently.

And as shown, we're not at the end here of the synergy capture. But overall, a very strong and successful delivery of synergies and in general of the integration. Also, when we look specifically at '25 here another bridge also, well, firstly, on a reported basis, when we look at EBITDA 19.2% reported in the first 9 months, slightly up from last year. Here, separating the impact of China, clearly, a strong underlying improvement to 19.7%.

Driven, on the one hand, by here, M&A synergies coming from MBCC, that's the contribution or the incremental contribution of this year. And but also a very strong material margin development with, let's say, a cost leverage that is slightly negative, but obviously owed too here, the low organic growth overall, given the market backdrop, but also reflected here largely translation here the impact, as Thomas has mentioned, due to a very decentralized cost structure.

We also continue to have a very strong deleveraging profile, where our net debt-to-EBITDA ratio will be sort of around -- slightly higher 2.1, 2.2 at the end of this year, being in line with our commitment of strong investment grade rating, but also showing here, if you look a bit back in time, the larger investments Parex, for example, MBCC, at least initially, increasing here leverage quite significantly. But at the same time, in a very brief period of time, over 2 to 3 years, clearly being able to significantly delever driven by a strong cash generation.

This is also reflected here in our capital allocation policy, which is obviously strongly linked to our strategy, firstly, first pillar investing here in the business with obviously strong returns on the one hand on the CapEx side, where we have sort of around 3% of sales invested in capital expenditures, but also the bolt-on acquisitions driving here these superior returns as shown.

Secondly, here also the commitment to an attractive dividend to a progressive dividend policy that is typically in line here with earnings growth and then, of course, a healthy balance sheet, strong investment-grade rating with a net debt EBITDA leverage commensurate with it. Here, 1.3 to 2.3 turns as here shown before, our targeted range, very much supported hereby the strong cash-generating profile.

And of course, should we be below that range, and we should not find here acquisitions that drive that superior return on an opportunistic basis. Share buybacks is a possibility, but we clearly look at this from a risk/return perspective overall.

Good. I think with this, we look specifically at China, the situation there, but particularly also how we're addressing here the current challenges in China. Over to you, Philippe.

Thank you, Adrian. Good morning, everyone. Thomas and Adrian mentioned China a couple of times. So please allow me to spend the next 5 to 10 minutes to give a little bit more context on our business in China and the Chinese overall construction environment. If you look at China contributed approximately 10% of our group sales today.

If you look at the split of our business in China, we have about 20% of this sales are in our Automotive and Industry business, about 80% in construction. Deeper dive into the construction numbers shows that we have about 70%, which we do mainly in our distribution business, mainly focusing on residential construction and about 30%, which is the industrial and infrastructure part of the construction business.

Same as in the rest of the world, we also position our products to offer benefits to our customers and position them at a higher price point than most of our competitors in the market. This allows us to have a very profitable business in China with a solid double-digit profitability and also generating healthy cash flow.

If you look a little bit deeper in those 3 areas, the construction business on the distribution side here, as mentioned, focused mainly on the residential construction Sika is today #1 in the tile adhesive sector, for example, in that segment. We built up over the years, also through the acquisition of Parex. When we acquired Parex, they had about 90,000 point of sales that they were servicing.

We've grown that network to roughly around 280,000 point of sales across the whole of China. We also have an end user engagement where we engage with people that use our products, craftsmen, contractors and grow that network to over 6 million users that we interact with digitally through WeChat and other channels.

The products that we sell here are mainly tile adhesives, waterproofing and sealing and bonding solutions. Then the construction -- the direct part here, we're dealing with contractors, applicators, mainly in industrial construction, these are manufacturing facilities, warehouses, electronic manufacturing, food and beverage plants, warehouses, data centers and the like, where we mainly offer flooring and roofing solutions but also sealing and bonding and waterproofing refurbishment, all the other products that we have in our portfolio.

And then infrastructure construction, these are transportation, airport bridges, the water infrastructure, but also investing into green energy. We have a lot of business with on and offshore wind power plants that we supply with our grouts and other products. So a very broad basket of products that we have here in the direct sales offering to the customers.

Then the last part automotive and industry very similar to the rest of the world, where we have the sealing and bonding dampening solutions that we offer here to car manufacturers, both Western and Chinese. We have transportation, buses, trucks, but also supply our adhesives for the wind blade adhesives, also sealing and bonding products that we supply into solar panels in the Chinese market. So a very broad portfolio that we offer here, and this puts us at the 1 of the top 3 players with very advanced technological solutions in the Chinese markets.

If you look now at the different parts of the business, how the underlying market is performing. I'm sure all of you read some news a few years back about bankruptcies of companies like Evergrande as a residential developer in China. You see here 2 numbers on the chart. On the 1 hand side, you see in the gray bar, you see the new starts of housing.

This is when the building starts to being built, the basement, the structural concrete part of the building and then you see the new completed. And as you remember, the products that I showed on the slide before, the main activity of Sika in this construction is linked to the completion of interior finishing of those buildings.

And you see here, this is a pretty stable output, even though you had a peak in 2019, 2020 of completion -- of starting of houses, the completion of the residential structures is more stable over the years. We were able in the years 2021 to have a strong double-digit growth in this stable environment also last year with about a 25% drop.

In conclusion, we were getting very close to being on the same par in sales that we had prior year with a very slight decline. But you see this year another 40% drop in house completions, which is very difficult for us. So overall, the decline is more than 70% in housing starts. We also see a drop in house prices, which leads to a weak consumer confidence, very high savings rate that the Chinese consumers have and the government policy trying to encourage and revive this sector have so far been -- had limited success.

We expect that this is a market that will start to stabilize in 2026. We see, for example, land sales that we track as well as one of the leading indicators, starting still slightly negative this year, but starting to bottom out. And we then expect the market to stabilize and recover in 2027, '28. But -- so overall, I think we also -- if I talk to our Chinese colleagues, they are convinced that with the launch of the 15th 5-year plan of next year, there will be some further government actions to try to have a strong start of that new 5-year plan.

If we then jump into the industrial and infrastructure construction, industrial construction is -- after COVID and many companies had this China Plus One strategy, meaning that their supply chains were affected heavily as the country shut down, and they started to diversify by putting other manufacturing plants in countries like Southeast Asia, India or other parts of the world to have a more stable supply chain this led then to drop in foreign direct investment, which mainly then was in the industrial construction part.

But at the same time, also the trade tensions continue. This effect, but at the same time, large national companies increase their investments and gravitate and kind of fill the gap for some of those missing foreign investors. Here we see the main opportunities that we see still growth is electronic manufacturing plants, semiconductors, but also food and beverage and data centers.

The infrastructure construction part of those years was the only one that we had continued growth, even though it has slowed a little bit, but this is still a key part of the Chinese government to continue to invest also in the 15th 5-year plan that I mentioned, there is continuous mentioning of infrastructure, communication networks, water infrastructure, waste water, freshwater and also green energy, wind and solar are areas where the government continues to invest in those infrastructure.

The other area of growth and optimism for us is refurbishment you see here that about only 15% of those investments last year were into refurbishment. This is expected to grow as the infrastructure that was built is aging to 40%. If you compare that to Western countries, Europe, North America, that number would be around 70%. So there's still a lot of opportunity for us with the products that we've developed over the years for Europe for America to have similar products that we launch in the Chinese market to address those needs of refurbishment of infrastructure.

What does it mean for us? We've grown in China high double-digit growth over the last 10 years. So this is a very successful story for us. But with this growth, both organically and through acquisitions, we've built a network of over 30 plants over those years. You see they're very dispersed, but you also see clusters in 3 geographical areas in the Yangtze River delta around Shanghai, the Greater Bay Area with Hong Kong, Macau, Shenzhen, Guangzhou, and also then in the Chengdu-Chongqing area in the western part of the country.

So looking at this footprint, it isn't -- there are some actions that we are now accelerating with consolidating some of the decentralized production combining small volume plans into the larger plans, increasing some -- in-sourcing some of the toll manufacturing volumes that we had in some of the more remote areas, automation and efficiency but also looking at using the historically low raw material prices that we have in China to use China as a hub to export products into the rest of Asia Pacific. So we've seen, on the left-hand side, very hidden in the left corner, you see the graph here how the volumes that we're exporting from China into other parts of Asia Pacific have increased significantly.

Of course, we're also optimizing the organization, readjusting the team size is reflecting the different businesses, how they've developed over the years. But the plan is then in a couple of years to end up with a footprint that is more efficient with about 25 production sites as we go forward.

We also, of course, have actions on the commercial side. Here, you see the distribution part working with distributors that we have in wholesalers. Here, we're looking at increasing our share of wallet. The penetration to Tier 3 and Tier 4 cities here, we still have a conversion from site mixed mortar, meaning that the mortar is done by the contractor on site mixing sand and cement in a small mixture and wheelbarrow on creating the mortar themselves.

Here, we're pushing into those areas offering prebagged mortar solution. This has worked very well for us over the years, increasing this in the Tier 1 and 2 cities. And as we're going into more cities. Tier 3 cities still is cities with more than 1 million inhabitants. So this is not a small market in China.

The other part that we see here is the home decoration companies. This is an area that is growing rapidly in China, where it's about refurbishment of apartments. And this is a turnkey supplier. You go, it's like a huge store but they then refurbish everything from one hand. So you pick a new floor, a new wall, new furniture, new fittings and everything and they come install this with the contractor network that they have.

This is a very attractive market for us because it's a high-end market. We're talking here tile adhesives that are very high performance because the trend there in China is to go towards tiles -- large tiles, and this is not 60 by 60 centimeters, but meanwhile we're talking 120 by 180 centimeters. So huge tiles that go on the walls for decorative purposes.

Also on the industrial construction, we hear, as I mentioned, FDI is going down, but we increased our activities with Chinese owners, developers and contractors and really prioritize the high-growth segments, whether they're in the green energy transition or in some of the industrial manufacturing plants that are going up. specification selling, of course, same as everywhere in the world is a key area for us.

And then, of course, as I mentioned before, we also go both in housing and residential as well as in infrastructure. We're going towards the growing refurbishment demand that we see in that market and specifically launch products for those areas as well.

So the last topic I want to address why China is extremely important for us in the group. We see more and more Chinese companies not only focusing on China, but focusing on being successful in the rest of the world. So on the one hand side, this is main contractors that we work with. They currently -- if you look at the top 10 international contractors, meaning the business that they do outside their home country, 4 of those top 10 contracts are Chinese contractors.

This has changed radically over the last 5 to 10 years. So they have a project value of USD 2.5 trillion, 64 major projects and 167 industrial projects across the globe. But the other part is companies like BYD, Sunwoda and other companies that you're probably very familiar with, they also start expanding outside of China. So here also, we're tracking 63 industrial projects with those companies outside of China with those Chinese owners and contractors.

Just to give you 2 examples here, on the industrial infrastructure projects. These are examples even outside of Asia Pacific with projects in Latin America, the Metro Bogota, and also in Saudi Arabia, where you have Chinese companies being selected as the contractor to deliver on those projects. Having worked with those contractors in China and having the contact, having Chinese-speaking teams that work together with those contractors puts us as Sika in a premium position to service those projects.

There's many projects that I could have mentioned in Southeast Asia and the strong growth that was shown before that we have in Southeast Asia, of course, is also linked to a certain extent to being able to capitalize on these projects with those contractors. The other area is Automotive and Industry, Sunwoda was expanding to Thailand. We have BYD with projects in Brazil, Indonesia and Hungary.

And also here, we see the benefit of being there, helping them providing products from our construction portfolio in building the plants, but also then having products for us from our portfolio in automotive and industry that they're used to work with in China and also work with them in countries outside of China.

That was short excursion to China. So I'm going to hand back to Thomas to go back to the Fast Forward program.

Okay. Thank you, Philippe, and definitely, China is a place to be. China is a strategic economy for Sika. And as just outlined, for the Chinese companies, China is not large enough. So the expansion into the rest of the world is going on at full speed. Just like we have seen it from other economies like the Japanese, the Koreans, many years back.

So nothing new, but we want to be with them and in their home turf as well as in their expansion, as I said, 40% of the main contractor. And you see that very actively in Africa, in the Middle East, in Southeast Asia, they are everywhere, and they need support. They need support just like the other main contractors, the international need support, they need support because those constructions are built to international standards.

The owners of those constructions are international. This is the play field, and this is our access into that business with the Chinese companies. Besides the automotive that are also doing the same as the Koreans and the Japanese have done many years back.

But let's now talk about the Fast Forward program. And a quick introduction before I hand over to Adrian to give some more, let's say, scale and numbers to the program. I think here, it's very important. We have seen the growth level is not as strong as anticipated because of the underlying market. So we are offsetting that with more efficiency. And one way to drive more efficiency is just to squeeze more efficiency into an organization.

That's not that smart as you are exhausting. You have to provide tools to enable to accelerate tools which are digital tools to elevate and automate internal processes and also interactions with customers. So the investment part of Fast Forward is much more significant in the long term for sika as it transformed Sika also on the digital side into a leadership position in the markets that we serve. And here, this will lead to overall benefits already within the next 3 years of CHF 150 million to CHF 200 million, but it comes also at 1 time cost expense as well as mentioned investments.

But first, I hand over to Adrian to give some more clarity on those elements.

Thanks, Thomas. And I think very important here Fast Forward is indeed designed here to strengthen performance now, but particularly in the future and obviously talking about benefits here, the investment part will clearly have benefits beyond here the 3-year time frame, which we have here given to that program.

But it does consist of an element that is more shorter term, more related to cost measures, but particularly driving here accelerated efficiency also compensating some of the missing growth leverage at the moment, but particularly also here putting the ground here then not only for shorter-term optimization, but then really also in combination with our digital investments here, driving long-term efficiency, long-term value also for our customers and across the value chain where we will talk about more details in terms of what this is and what will be driving here the impact.

The first part here more on the cost side, the shorter one here also comes with an element of one-off cost. I'll come to this. It is, on the one hand, as said designed to further here optimize here also our footprint and supply chain, some capacity measures, for example, as in -- or primarily in China, but also some simplification on parts of the portfolio overall.

And in generally, here, aligning your operational staffing levels also to of the market prospects really taking here the opportunity to drive efficiency and basically also prepare the ground here then for investments that will be starting. There's about an CHF 80 million to CHF 100 million one-off cost attached to this part. About 80% of it is EBITDA relevant. The other 20% is then write-downs or impairments of assets.

This will drive about CHF 80 million to CHF 110 million benefit over the next 2 years with a large portion already being -- or having effect in 2026. This is also reflective of the fact that, particularly when it comes to the organizational side, also to the personnel side where quite well advanced. It's also not something that has just materialized over the last few weeks here, preparation have been ongoing for a while, and we have already addressed about 60% here of the reductions already.

So being well on track and making strong progress. The investment part clearly related to an accelerated digitalization to drive long-term value. On the one hand, on the customer side simplifying our interactions with our customers, providing leaner processes, but also increasing here in some areas, and we'll talk about this specifically later on here our time to market.

And then across here, the supply chain and the organization, driving structural efficiencies through digitalization with some more foundational projects as we called them, for example, a worldwide ERP rollout acceleration, but also particularly building here a system to effectively use the wealth of data we have for various use cases to drive efficiency but also to generate additional business here within the time frame, but obviously, this will go beyond.

But within the 3 years, we're expecting here a CHF 70 million to CHF 90 million benefit gradually increasing, obviously, starting relatively slow as this is related to investments and buildups and rollouts, but providing a very strong foundation here coming with investments of about CHF 120 million to CHF 150 million over the 3 years.

We will now talk about some of the specific here initiatives and elements, and I'll hand back over to Thomas for that.

Okay. Thank you. Adrian and now we come to the, let's say, most exciting part of the program, the investments, the investments which will make us in the industry, the digital leader. We are a market leader. We are a technology leader. We are an innovation leader, and this is our opportunity to become the digital leader.

Digital leader in 3 aspects, we would like to emphasize or 3 buckets here, digital leader in creating customer value. Customer direct or indirect customer are facing an increase -- a massive increase in complexity to deal with this with regulation specifications with demand from owners and so the engineering part or specification part becomes enormous complex. And here, digital tools make life easier for those stakeholders.

Contractors are facing difficulties in executing for various reasons as well. Here, again, we can provide ease of doing business, simplicity, also faster response, less lead times to serve our customers. And it is also a mean to elevate our own operations, our own processes to make, let's say, redundancies in repeat operational steps automated instead of human or manual. This is a great opportunity to streamline our supply chain and drive more operational excellence.

And the third the most exciting part is driving through data's innovation, innovations into the market innovations also in our processes. And we want to show you in 3 blocks, these elements, and I start with the first one, customer value. Before I start with the customer, I talked about our people are everything. We have and we will, and we do invest into the skills, the digital skills of our organization.

We are all exposed to digitalization in our private life in our business life. But here, we also want to empower and provide the skills that the organization, as mentioned before, can also, on a digital journey, be entrepreneurial, they know their procedures, they know their processes best. The interaction with the customer. But for this, we also have to give them the confidence and the ability to embrace the full power of digital.

This with trainings, of course, with communities, but also selective additions. We need scientists, we need chemists, engineers, but we also are looking for data scientists to also bring us this angle in and onboard them. As mentioned, this is to simplify, automate as much as we can and then leaving, let's say, the human brain and the human factor for the real creativity and interaction with the customer.

AI is a buzzword everywhere, AI is, in many ways, already implemented, but it's more to come when we have also the tools in place. And I will show a few examples there. But here on the digital journey, value creation with our customers. We have a digital excellence in China. Philippe was explaining that a little bit this ecosystem end to end.

This is coming from us, from our supply chain into the distributor with the 280,000 point of sales and then 6 million applicators. And in China, it's even going further with 8 million homeowners that are also on our platform. as the homeowners in China are involved in selecting the materials to finish their apartments. Homeowners in China are very different than in the rest of the world.

They are used to fake and cheap, and they want to have quality and they buy the interior finishing the tiles that Philippe mentioned, the big ones, eventually coming out of Italy, coming out of any place they want to be sure that they are not fools, but the installation of the waterproofing of the tile setting.

Nobody cares about that in Europe or in the U.S. You take it for granted. Nothing is granted in China. And if you don't watch, you will be fooled. So this system that the Chinese have established several years back, is a system that we are rolling out across Asia, but also then other markets as well.

I talked about the complexity for our designers, specifiers the environmental footprint is becoming more and more relevant across the globe, you need data points, you need to verify. This is very cumbersome if you do it in an analog way. This can take months and months to have validated numbers that are credible and can be used with the automation tools that we have in place or soon have in place, we can automate that and can have thousands of data sheets, credible data sheets in a very short period of time, enabling then also our specifiers and the contractors to have here a tool to be faster in their work. The Carbon Compass that we recently launched is one element. It's one of many more that will follow to provide here platform, the EPD next year.

It is also an opportunity inside the organization to accelerate. And I will have here the example of our lab catalyst by utilizing data across the globe to speed up the time to market by speeding up our development process. Nuage is the name for this tool. We have more than 500 chemists already on the tool. They put their data every day into the system. The system is then available for everybody.

All experiments that go into the system can be read and can be retuned through machine learning, also to new requirements or adaptations in a foreign country where you can benefit from learnings in other locations. So the retail journey that I mentioned in China, this is the network that is connecting all the dots in the whole supply chain from us through the through to the end customer. Visualized here our own logistics going out, the distributor in the middle and then the applicator actually using our product.

In an analog world, we have a very strong connection to the distributor. We have then only limited access to the applicator. The applicator is then through promotions, trainings, eventually, but you only can go so far, you don't have all the applicators handy. With this program, we have all the applicators. We see them daily where they are, where they are working, what they are working, what they're not doing, and we can steer our information and our marketing and promotion directly to the people that make the election with which product they are working, supporting also our distribution channel, giving them the data where the demand is also making them more effective.

This is the picture of the journey as it is in Asia Pacific. Thank you, Philippe. This is the transformation of the Chinese way into Southeast Asia. And as you can see, we are already at 150,000 points of sale in Southeast Asia. In various countries. Our aspiration is to reach 300,000 points of sales in Southeast Asia. That's the amount -- that's about the amount that we have currently in China.

And on the upper right, you see this leads to significant double-digit growth. This works, this is in full rollout mode and this is also what we want and will bring to other markets in the Middle East, into Eastern Europe, into South America relatively soon. This is working. This is enabling us to perform the markets and the peers.

Okay, I hand over quickly to Adrian to talk more on the inside benefits in supply chain and efficiency.

Of course, here, the customer value being most important, but very strongly related to this, it obviously what we do in-house, I mean, the full sort of value chain, supply chain and operational excellence, also extremely important to ultimately drive customer value.

And I think here, the program through digitalization will, on the one hand, enhance resilience, drive efficiency, but particularly also here further improve quality and add transparency to drive also new and improved solutions for our customers. There is an element of what we call sort of foundational investments, if you will, one being here a full ERP rollout across the group, accelerating and leveraging here some of the integration activities we do with MBCC with a clear target at the beginning or by the beginning of 27 to have this rollout being concluded across the group being able then to fully sort of leverage here the benefits of aligned processes.

The second element, very importantly, and I touched upon this briefly in the beginning is really the ability to make use and sense and monetize the wealth of data we have. We collect on a daily basis through the buildup here of in internal data lake and the system that essentially allows here to increase transparency on the one hand.

Also again, benefiting here our customers, but also making sure we have full visibility on the various touch points and also in the various areas of quality, of delivery performance, for example, but also then driving here on the cost side, for example, through harmonized transport management system, which we have now piloted and will start to roll out at the beginning of '26 also here, driving efficiency across the value chain.

This will also drive further optimization across the network, particularly here on the factory side, and this is one specific investment part of that bucket is basically the digitalization or scale-up of digital capabilities across our factories essentially to drive optimization also to more autonomous production, for example, but also being able to capture here the wealth of data that is being generated, and to use that through a full connectivity here of the production environment, linking it to our system, our data lake.

Also, at the same time, improving and increasing here security. That's also a big topic today to fully sort of have a fully integrated process landscape and at the end of the day, being able to drive efficiency and safety. Sustainability and performance across many areas in terms of inventory tracking in terms of preventive maintenance, for example, but also process improvements overall, which ultimately will lead to faster growth, but also to optimization and cost reduction when it comes to logistics and operations cost.

And last but not least, also addressing here the optimization of our working capital, particularly on the inventory side. Also here, we have designed basically that program in '25. We're currently piloting it in a couple of factories and we'll start with a more full-blown implementation here in '26 with targeted 40 plus factories, including some of our key factories to be implemented and in '26 and gradually go on from there.

Now for the innovation part, the last element here, I'll hand back to Thomas.

Thank you, Adrian. And yes, if we keep the best for the last so the digital innovation. I talked about Nuage. This is utilizing, as I mentioned before, all the test data that are collected globally, accelerating incremental product improvements. And here is an example of a mortar that through this tool can be much faster brought to the market can reduce also the efforts in R&D by 75% less experiments.

This is significant in enabling us to go faster in incremental innovation. The database is collecting all the results of so perceived failed and successful trials as any failed trial can be the source of a feature for the performance demand of a future product that can help to get faster to incremental -- not incremental, fundamental innovation, which is the potential of this tool going forward.

The more data we have in this system, the more R&D hubs are onboarded. The chemist will always be the ones that are handling the system, but they are supported by the machine learning, benefiting from all experiments worldwide. If you have ever been in a lab, you see this magic black lab book where every chemist is scribbling down whatever the trial shall be and what then the outcome was, this is all electronically now available or becoming available for machine learning.

And first, fundamental improvements that we have seen is for cement additives. Cement is changing quite a lot. We have here calcinated clay, LC3. We have new elements in there where incremental optimization of former know-how is not successful. And this tool has enabled us to be here much faster with fundamental innovation because of learnings across the whole organization, it doesn't need to be from the cement.

It can be also from the mortar side, which influences them and helps us to generate more powerful new additives for new cements as they come forward. This is an example of Nuage. Patricia is leading this and here much more is to come. And here, we invest heavily. But we also are exploring with outside data coming in, you remember we have the tools in place, [ Citra ] to measure concrete from the mixing until it is on the site poured, we can control the performance of the concrete. This gives us data, real-time data point of uncured concrete.

Now we -- with this data, we can also optimize the mix of the concrete, but we can now go even further. We can also measure when the concrete is poured and cured how the concrete is aging with sensors. Here, we have a collaboration with a start-up DuraMon, to be able to stay with the construction, not only during the build, but also post the build during the lifespan.

This is also on the roof with sensors that are measuring the effectiveness or let's say, the leakage potential in a roof. So we get data, real-time data already today back from the roofs that we can then also convert into refurbishment jobs, which we can also convert back into customer confidence that our system is the best system in the industry, giving real-time data during the life of a construction structure or building.

And this is the beginning. This is ultimately the vision that we not only are involved at the build and the renovation that we are in between. Waterproofing is a key aspect that is driving renovation needs. Sealing is another key element that is driving innovation refurbishment needs. This can be watched, monitored and optimized through digital means. This is innovation to come.

This is also reflected in our interaction with external partners. Tulsa has been mentioned. Construction waste, especially plastic waste is huge issue. And this is not only in Europe, this is globally an issue. Here, engaging and finding new ways to steer these waste and make out of waste, new input material for us, but also for others, this is the drive that we have here in the partnership that we have established, creating new business models.

And lastly, I think as a global leader, we know 100-plus markets. We have the technology leadership. We have the best customers. We have all the data, our data there in our data lake. We can connect them. In the past, we had connections through an ERP. We had connections through CRM. We had connections through our sales organization, we can connect everything in our data lake.

The data lake of Sika is the most powerful data lake in the industry and we want to fish, we want to fish in this data lake. We want to make this connection. We want to use here models -- machine learning models to give us benefits out of this unique data pool that we have in our hand. Adrian talked, we are building the foundation, we are connecting, but this is going to be a key additional competitive advantage of Sika besides the innovation, the R&D, the technological expertise that we provide to our customer.

And with this, I hand over to Dominik for the Q&A.

Thank you very much, Thomas. We start now with our Q&A. The people that are in the live screen stream they have as well the opportunity to ask questions. We installed a chat. But the first questions, of course, go now here into the room. So please raise your hand if you have any questions. And let's start over there directly with Cedar, please.

It's Cedar Ekblom from Morgan Stanley. I'd like to dig a little bit into China. You put up a chart there that showed that housing sales had actually started to decelerate around '21, '22. And the sales in China have actually been relatively resilient for the group. Can you please unpack what the strategy has been in China in the last 2 to 3 years? Whether you have been introducing products that might have supported the revenue growth at the expense of margins.

And I ask this question because there is a very clear intention now to size down the China business in order to support the margin profile of the product mix. So that's the first question. Give us some color on what the approach has been in the China market. And we're not at the beginning of a downturn. We're well advanced and now there is the strategic shift there. So that would be helpful to understand the journey.

And then if you could just reflect on, say, the last 2 years, I know that you've been very clear that you've been controlling the controllables. What do you think you could have done differently or maybe more rapidly? Obviously, we've got to a point now where obviously the business is addressing some of the margin headwinds, et cetera. But I'd just like to sort of get a perspective on -- with retrospect, which is obviously a perfect or with hindsight, which is always perfect science, where we could have responded quicker or otherwise?

Okay. Thank you, Cedar. And on the China, I think the China chart is very important that you look at the yellow bars that are indicating that's the actual consumed residential housing square meter in China. And it has been almost constant for many years while the gray bars indicate the overbuild, the speculative overbuild that ultimately led to this, let's say, dilemma that there's so much, let's say, empty capacity in the market.

But the actual consumed square meters in China have been kind of very stable over many years, indicating that the urbanization need and the movements in China are supporting such a level. 700 million square meter is the number. In '23, this is the last year where we had this, we came out of COVID, and it started to pile up and that's when also the consumer confidence into the housing market started to deteriorate.

But to your question, what happened, how were we able to have significant outperformance in this 700,000 square meters, is very clear. The geographical expansion we moved from Tier 1 into Tier 2 and Tier 3, we expanded our distribution network as indicated by Philippe, from 90,000 point of sales at the year 2020 to 280,000 point of sales. We also have a Chinese maturity level in this application field, which is far lower than in other parts of the world.

As Philippe mentioned the wall. The wall is a sensitive application for tile. In China, this is done today at the prefabricated level of about 70% because this is sensitive. The floor is only at the level of 25%. This has also helped us that this conversion from on-site mix to a more mature approach is -- has been driving exceptional growth in China in those years. And this is also continuing.

This is also to your -- the second part of the question, how can we outperform now in a very challenging volume reduction with the square meter being so down. It is the value aspect. It is this -- the high-profile application where the owners and where the requirement of the applications are high. That's the focus. That's what Philippe indicated. That's where we are also proactively expanding.

And we have growth in those segments, but we have on the lower entry-level side, we have more let's say, challenges where we have local players that try to penetrate where we have made a decision that we put margins over volume as the Chinese competitive landscape is very different. It's the first time they have this situation, and they try as hard as possible to continue to grow while deflationary effects are making that very disastrous when you look at the profitability that companies result in with going down that path, and we don't want to go down that path.

Okay. Next question goes to your neighbor, Pujarini, please?

So in terms of the one-off costs, is there any risk that some of it might spill over to next year based on one of the charts that you were showing?

And then related to that, the benefits that you shared, is there a possibility of deceleration.

And then going back to the question of optimizing your product portfolio and your plant footprint. Could you give us some more color into exactly what kind of products you're trying to skew towards and more color around the plant optimization?

Yes. On the onetime cost, I mean the CHF 80 million to CHF 100 million, I think there is a very sort of limited risk that there will be an amount in '26, I mean it could be a few million, but I don't expect this to be significant. As mentioned, we're well progressed here with here the program and also defining and communicating exactly what it is. In terms of the benefits, and that's sort of the logical answer to that given that we're well on track. I think that's also well confirmed. I think there is no risk that this will decelerate.

Good. And then I've seen questions over here. Patrick, please. Yes.

It's Patrick Rafaisz from UBS. Maybe have a follow-up to Cedar's question. If we look at China, Currently, there's a conscious decision to rightsize the organization, bringing in tolling products but also maybe some limited points of sales cuts, right? I think you alluded to that with the Q3 call.

And this process will take until mid 26, right? I think that's what you said. By Q3, this will be washed out. So if you fast forward to that point, where are your China sales compared to, let's say, 2019 when Parex was fully included I'm just trying to understand, right, you had a period of relative outperformance, but now we're going into relative underperformance. So where do you stand?

And then a similar question on MBCC. Adrian, you showed us the chart with the synergies, the implied margin for MBCC. If we took the same approach for growth how has MBCC tracked versus Sika on organics in that period?

Maybe on the -- I'll take the MBCC one. I mean here on top line growth, the synergistic element and obviously, the underlying performance. I mean together, the -- let's say, the MBCC, including the synergies is over now is basically low to mid-single-digit growth, including here the synergy element, which essentially means that, let's say, the underlying organic performance, if you will, is pretty similar to, let's say, the overall group.

Good. And then on China, to your question, where are we next year compared to 2019. We are substantially higher than 2019, even with the rebasing that takes place. We had significant growth in the years before. And if I add this up, this is absolutely still the case that we hear have almost doubled the business in those years, including the rebasing.

So this -- just to give the magnitude of how much we have been able to achieve in -- when you look back in these yellow bars, in a more flattish. We have outperformed with the point of sales with the distribution network with our retail journey, and I'm absolutely convinced also that when this yellow bar moves back into more normal ranges, we will have here a very strong growing business.

But this rebasing is not over from a build rate, so this confidence in the Chinese economy from the consumer needs to be improved. But in absolute term, it's absolutely still very significantly higher and it is profitable. But just to be very clear, our China business is a profitable business. Many of our international players exited China because they couldn't make money in China. We are profitable, and we preserve this because we believe in the long-term future of the China economy.

And then to your question, the point of sales -- the point of sales, 280,000 point of sales we are not aiming at reducing that significantly. We are replacing some of the distributors that are not effective by other distributors. So for us, it is crucial that we have the reach into the point of sales because this is a very fragmented market. These are small applicators across China that are doing this job. So the point of sales, I would rather say stays on this is eventually even increasing, but the distributors behind there, we have movements in directing those that have more success and those that have less replacing by new ones.

Okay. Further questions? Priyal, please.

Priyal Woolf from Jefferies. My first question is just on capital allocation. There was a slide there where you said right towards the bottom, you might consider buybacks if there's not much else to do effectively. Is there a nuance there in terms of strategy.

Obviously, you're still targeting the 1.5% to 2% from bolt-on M&A, but is there anything to read into that in terms of maybe some of the larger deals will be slightly smaller or there's less of an appetite to do some of those bigger deals, and therefore, we could see buybacks coming through?

And then the second question was just in terms of the FTE cuts. It looks like it's fairly evenly split across your 3 regions? I just wondered outside of China, are there any particular regions or operations where you've seen those cuts coming through?

Maybe here on the capital allocation and the M&A side. I mean, clearly, on the M&A, we see strong possibilities. And I think I've also demonstrated that they are highly accretive. That is the clear focus. I think we have also said that for the time being, this is the clear focus as opposed to let's say, looking specifically at very large transactions. I mean, this being said, I mean, there is obviously also bolt-ons that are slightly higher, which can be very strongly value creating for us in that context.

So I think that's one element. I don't see a change there. The other one is the overall leverage consideration. Obviously, we have here sort of moved into sort of that range we're targeting. I think it will take a bit more here also from an overall perspective driving them. But -- and this is essentially to say not excluding here the possibilities as specifically, we haven't done in the past, but there is also no let's say, clear plan to do so. But it is an element that is really related to risk and return.

Thank you, Priyal. And now we have some questions from the live stream. Christine, you formulated them and kindly read.

We have a few questions, and I tried to bundle some of them. One is, since you now take out the -- or you exclude the external market growth in the 3% to 6%, can you please give a view on your expectations on the underlying markets over the next 3 years in the different regions?

Okay. That's a fully loaded question, the crystal ball again. But it is -- let's start where we are today. We have a lot of confusion starting from this tariff discussion, the geopolitical tension. So we have seen that North America has put some projects on hold in regards to the reshoring, we expect that there will be relatively soon clarity on how the tariffs in North America will turn out.

I'm sure it will be the best deal ever that will be defining the NAFTA trade agreement, and this will provide companies clarity in then allocating substantial CapEx either in Texas or in Mexico or in Canada. That's what these investments are waiting for clarity. And I think those discussions are going to take place in the next 3 to 6 months. So this will be a boost clearly, in North America, which I anticipate rather in the early part of the next 3 years that we have here in North America.

We are back to this reshoring and we are back to -- besides also the, let's say, the continuation of a very strong data center investment and infrastructure investment. Europe, I think here, we know we have a lot of issues here in Europe Lately, we talk about potential peace talks for Ukraine. This is, I would say, from the sentiment point of view, a very important part to bring back some stability to Europe.

I think Europe has a good opportunity to advance in these 3 years. A few elements need to come back. I think also from a political clarity, I think the German government is helping to bring some more business-oriented decision. The Infrastructure Act is one. We expect more to come. So also in Europe, we expect within the 3 years, again, that we go into a growth mode. We already see now that Eastern Europe, for us, is a place where there is growth visible. It has built up over the last 3 quarters.

So in Europe, it's not all the same. Spain is doing very well given the circumstances, so Europe has absolutely also a possibility to advance I talked about those strong markets, LatAm, Africa, Middle East, India, Southeast Asia. I expect here a continuation. They do much better than the mature markets. Some of them extremely well. Our business in the Middle East is in a double-digit mode of growth. This will continue.

Also Africa is on an expansion, double digit. India is close to double digits. Also that is to be expected under the current government to continue. So we are confident on that. China, we talked a lot about '26 to be a transitional year for us, the rebasing year, but China is a huge market. construction super relevant, housing is relevant. So things will also come back. This cycle will not be forever, but it's going to be a difficult '26 for the economy.

So I think here, we will articulate that and more precise when we guide for next year's expectation. But we are very clear, our 3% to 6%, the outperformance the market penetration in our hand, the acquisition in our hand, we are fully committed to deliver and how we then based in the markets and add that to our own, we will then define early next year.

But I see elements that bring us rather more back into normal terms, the 2.5% of construction growth over the last 20 years has only been disrupted during the financial crisis, and it came back rather strong. Now we have several elements in a short sequence. But as we call the backlog is building because we are in a relevant field.

This is tangible, and we need infrastructure urbanization, the mega trends are continuing with or without challenging market condition, this is for us absolutely a perfect, let's say, market to be, a market that will also recover how quick I have to be a bit careful because we have indicated in the original strategy, 2.5% as a base, the base has been, let's say, become questionable. But overall, the 2.5%, my strong conviction in the next 10 years, the 2.5% will be realized. In some years, we'll be clearly above that to catch up with the unserved demand due to uncertainty and consumer lack of confidence.

Thank you, Thomas. And maybe one more question from the live stream.

Could you please expand on the initiatives in America and Europe, which represents 2/3 of the split? How are you making those production footprint and product offerings more streamlined?

Okay. Yes. That's a very good and valid question because when we talk about automation, digitalization, I mean, scale is of relevance. And here, in these mature markets, these open markets, we have still, let's say, technologies in our footprint that we can consolidate. That's less reduction in sites.

It's rather a concentration of expertise, bringing scale of similar technology in one factory and moving things into another factory so that we can then also absorb the investments into automation and digitalization by having more, let's say, technologically-oriented factories instead of territorial factories because a few of our products don't travel far. Many of our products within Europe, within the U.S. can travel, and this is part of the consolidation that we less like in China, are reducing production sites, but rather consolidate competencies and then allow for more significant investments into automation.

Thank you very much and being mindful of the time, maybe two more questions here in the room. Yes, please.

[indiscernible]. I just want to come back to the discussion on capital allocation. If you look where your share price is trading at now relative to the last 10 years, it's the lowest valuation, 5% plus free cash flow yield I mean it seems like the best investment you can possibly make is buying back your own shares. Why not prioritize that over M&A?

Shall I?

You can, yes.

I think our cash flow is above 10%. I mean this is also a consistency that we are aiming at a healthy cash flow so that we have cash that we can allocate. I think what Adrian also demonstrated is that we have a very good return on our M&A investments. I think the -- this is significant. We have strong benefits from our credit rating. We have very favorable conditions for our company stability. But the deleveraging is still a priority for us.

But at, let's say, the next 12 months, 18 months, this question that you raised is a fair question. It will, of course, also depend where our share price will be in that period, and that's why we call it optional. That's absolutely something to consider. But we cannot anticipate now where we will be, but the stability of the credit rating and the deleveraging our current priorities as well as the bolt-on investments that are very accretive to the company. But the cash flow is not 5%, but 10%.

Okay. Further questions? If this is not the case, thank you very much. Thank you very much for coming. We have now lined up a light meal that we will have up on the Riverside. And if you will as well join us in this meal, and this would be, in fact, very welcome. Please take all your belongings with you because we have afterwards, we have another conference here for other investors just following that one. Thank you very much.

Ladies and gentlemen, welcome to the Sika 9 Months 2025 Results Conference Call and Live Webcast. I am Mathilde, the Chorus Call operator. [Operator Instructions] The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Dominik Slappnig, Head of Communications and Investor Relations of Sika. Please go ahead.

Thank you, Mathilde, and good afternoon, everyone, and a warm welcome to our 9 months results conference call. Present on the call today is Thomas Hasler, our CEO; Adrian Widmer, our CFO; Christine Kukan, Head of IR; and Jomi Lemmermann, IR Manager. We are excited to share with you the highlights and key messages for the 9 months. Earlier today, we published our results and made the investor presentation available on our website. With this, Thomas Hasler and Adrian Widmer will provide further details on the results and the outlook. Afterwards, we will be ready to take your questions.

I hand now over to Thomas to start with the highlights of the 9 months.

Thank you, Dominik. And also from my side, a warm welcome to this afternoon call. And let me quickly summarize the publications of today and some highlights underlying that we would like to share with you this afternoon. Sika has delivered a resilient performance in the first 9 months in a market that has -- remains to be dominated by uncertainty of various kinds. We have been able to increase our sales by 1.1% in local currency despite a heavy impact from our China construction business with a double-digit decline. Also this year, we are facing an unprecedented foreign currency impact. It's almost 5% and primarily due to the weaker U.S. dollar.

But let me summarize a little bit our regions. And here, starting with EMEA. EMEA has seen for the whole year so far, a very nice double-digit growth in the area, Africa and Middle East. This is in line with the trend we have seen from last year, and it's strong also to continue. At the Eastern Europe business, we see green sprouts of growth. Eastern Europe is moving back to growth. It's mainly coming from the residential, so from the retail side, but it is clear this has picked up in pace and will also support the future evolution in EMEA. The region overall has reached 1.5% organic growth in the first 9 months.

Americas on the other side, offers huge opportunities in the U.S. Here, we are collecting everyday data center opportunities that are unprecedented and growing and are not impacted at all by the uncertainties that are influencing other segments. The data center business has become a cornerstone of our direct business in the U.S. Just similar to our infrastructure business, which is doing very well in the U.S. Also here, we see more and more the impact of the Infrastructure Act that is delivering us opportunities from the East to the West Coast.

We also see that the U.S. currently has some uncertainty that holds back on the reshoring. But here, plenty of these projects are ready to start, and we are also expecting that soon there will be more clarity and then production or construction start -- can start soon. We also see in the mature market of North America, a huge backlog in refurbishment, which is an opportunity to come soon as this backlog cannot pushed out very long.

When I come to Asia Pacific, this is the region which has been most challenged, mainly influenced by the decline in our China construction business. If you would take the China construction business out of the equation, actually, the region, Asia Pacific would have been the region with the highest growth -- organic growth of around 4% in local currency. This comes from Southeast Asia and India with high single-digit growth. But as I mentioned, the China business is challenged and also we have taken here decisive measure to take here the margin and profit orientation above the volume orientation.

But let me now move further into the P&L. And here, I would see the material margin increased to 55%, a significant demonstration of the synergies that we have been able to further increase from the MBCC and other acquisitions, efficiencies in our operations, and also a good cost management on the input cost side. This has also then trickles down to the EBITDA margin, which has rise by 10 basis points to 19.2% compared to prior year. Also here, the bottom line impact by the FX is quite significant. It is almost CHF 100 million when we look at the EBITDA alone.

As mentioned before, we are taking decisive actions. This is in line with our manage for results key principle. We introduced our Fast Forward investment and efficiency program today, which builds on our leadership position. It will enhance customer value. It will improve operational excellence through digital acceleration and therefore, drive growth and profitability in the future. This program is built on a few blocks like investments CHF 100 million to CHF 150 million in the coming years. It is also coming with a shorter-term oriented structural adjustments in markets where we see ongoing weak momentum.

Here, the China construction most pronounced, where we are making adjustments, which come with one-off costs of roughly CHF 80 million to CHF 100 million in '25 and the workforce reduction of up to 1,500 employees. The program overall will drive annual savings of CHF 150 million to CHF 200 million per annum with the full impact to come then implemented in the year of 2028.

But now I hand over to Adrian to provide us more details and flavors to the financial 9 months performance.

Thank you very much, Thomas, and good afternoon, good morning to everybody attending. After Thomas' highlights, I would like to now put additional insights here to the financial results. In a market environment that remains challenging, as we have heard, we have achieved a modest sales growth in local currency of 1.1% in the first 9 months of the year, driven by acquisitions, while organic growth was flat year-to-date, owing to a minus 1.1% decline in Q3, driven by China. Without China, organic growth year-to-date in local currency was 1.7% or close to 3%, including acquisitions overall.

Acquisition growth primarily came from the initial contribution of the 5 transactions we have consummated this year, including some residual impact of last year's bolt-ons, overall adding 1.1% of additional growth in the first 9 months of 2025. Sales were clearly adversely impacted by foreign exchange effects, especially as mentioned, related to a weak U.S. dollar, but also the RMB and the general strengthening of the Swiss franc. Overall, adverse foreign exchange effects reduced local currency growth by 4.9 percentage points in the period under review with a Q3 impact of minus 5.9%, slightly improved from a more significant impact in Q2, but still above the overall run rate. Corresponding growth, therefore, in Swiss francs was minus 3.8% for the first 9 months.

Looking at the regions, region EMEA showed a similar Q3 trajectory as in the first half year, growing 2.1% overall, 1.5% organic and 0.6% through acquisitions. As Thomas has highlighted, business performance was particularly strong in the Middle East and Africa, where we recorded double-digit growth, but also with a good momentum in Eastern Europe. Here, foreign exchange effects at minus 3.3% year-to-date remained unchanged in Q3.

Sales in the Americas region increased by 2.9% in local currencies, while Q3 growth was in line with Q2. Overall, year-to-date organic growth was 0.8%, while acquisitions continued to add 2.1% of growth in the period under review. While the business year got off a good start, U.S. trade policy measures triggered the mentioned uncertainty in the markets and slowed down momentum. While this caused Sika's growth in the U.S. and Mexico to soften, performance remained solid in Latin America overall, but also in the U.S., as highlighted by Thomas, some strong momentum in several areas. Here, adverse foreign exchange effects were most profound and reduced local currency growth by minus 7% in the region in the first 9 months, driven by particularly here the strengthening Swiss francs against the U.S. dollar of more than 10% starting in Q2, but also the devaluation of the Argentinian peso.

Sales in Asia Pacific declined by minus 3.9%, while organic growth was minus 4.3% for the period. This result is mainly attributable to the challenging deflationary market environment in the Chinese construction sector for which we are focusing here on protecting our margins and driving efficiency. If we exclude here the impact, sales in the region would have been around 4% in local currencies. And also here, most -- or the strongest market was in India and Southeast Asia and also in Automotive & Industry, where Sika continued to expand its share in its technologies in both the local as well as international manufacturers. Also here, an M&A impact, namely the acquisition of Elmich contributing here 40 basis points of growth, an adverse foreign exchange impact at minus 4.6% reduced here local currency growth to minus 8.5% in Swiss francs in the first 9 months.

Now turning to the full P&L and looking at material margin. Here, we have, as highlighted, driven up gross result by 30 basis points year-on-year due to also a very strong Q3 expansion, 55% of net sales in the first 9 months. This is also in spite of the deflationary environment in China and a small dilution of 10 basis points coming from M&A, but also overall material cost in recent months, also driven by our procurement initiatives showed a slightly declining trend.

Reported operating cost this year, including personnel costs as well as other operating expenses, decreased slightly under proportionally in the first 9 months of the year versus the same period of 2024. Here, continued strong MBCC-related synergy trajectory as well as efficiency measures were offset by ongoing yet reducing cost inflation, currency impacts as well as initial onetime cost of around CHF 18 million in Q3 related to our structural cost reduction program.

In looking at personnel costs specifically, which were down by minus 0.3% year-on-year on a reported basis, we have seen continued underlying wage inflation at around 3.5% per annum on a like-for-like basis. This is partially and increasingly being offset by cost synergies as well as operational and structural efficiency initiatives, but negatively affected by this initial fast forward severance expenses. Other operating expenses decreased strongly over proportionally by minus 6.5%, driven by accelerated efficiency measures and MBCC synergies.

Overall, the integration of MBCC is largely concluded, while strong delivery of synergies is ongoing. Realized total synergies amounted to CHF 130 million in the first 9 months of '25 an incremental CHF 41 million versus the same period of last year, representing an annual run rate of CHF 166 million and therefore, well on track to push towards the upper range of the increased guidance of CHF 160 million to CHF 180 million for this year. Overall, EBITDA margin, as highlighted, increased by 10 basis points to 19.2%, up from 19.1% in the first 9 months. Absolute EBITDA decreased under proportionally by minus 3.3% from CHF 1.702 billion to CHF 1.645 billion due to foreign exchange translation effects, broadly in line with the effect on the top line also here highlighting our strong natural hedge and decentralized cost base in line with invoicing currency.

Depreciation and amortization expenses were virtually flat in absolute terms at CHF 407 million or 4.8% of net sales as favorable translation effects were offset by PPA effects on the intangible side as well as a slightly higher depreciation rate. As a result, EBIT ratio decreased by 10 basis points to 14.4%, while absolute EBIT also was impacted by currency translation effects. If we turn below the EBIT, here, net interest expenses decreased and continued to increase significantly by CHF 16 million to CHF 105.5 million in the first 9 months. This compared to CHF 121.6 million in the same period of last year. Decrease is largely related to the scheduled repayment of our first Eurobond in Q4 '24 that was taken out for the financing of MBCC. And in addition, other financial expenses also showed a favorable development, representing a net income of CHF 10.2 million, up roughly CHF 7 million compared to the same period of last year, unfavorable hedging cost development, lower inflation accounting effects and also higher income from associated companies.

On the tax side, group tax rate increased from 21.5% to 23.8% in the first 9 months. This is largely related to a positive onetime effect in the previous year. This is primarily the deferred tax benefit relating to a foreseen legal restructuring. And this year, we had also higher withholding tax on internal dividends distributed in the second quarter this year. As a result, net profit ratio was modestly down to 10.1% of sales. This is 20 basis points lower than last year. And also here, absolute net profit of CHF 870.9 million was impacted by currency translation effects.

On the cash flow side, operating free cash flow in the first 9 months was CHF 630 million, which continues to be about CHF 220 million lower than cash flow in the same period of last year. However, cash generation in Q3 was strong and in line with last year. And the reduction here is primarily due to unfavorable currency movements compared to last year, particularly impacting here hedging of intercompany financing, but also partially due to a modestly higher seasonal increase in working capital slightly higher CapEx as well as higher cash taxes. For the full year, we expect to partially close the gap in Q4 and full year operating free cash flow in line with our strategic targets of higher than 10% of net sales, additionally supported by group-wide working capital initiatives.

With this, I conclude my remarks on the 9-month financials and hand back to Thomas for the outlook.

Good. Thank you, Adrian. Yes, let me be short and brief on the outlook. We have published our outlook, and we confirm for '25, our expectation of modest increase in net sales in local currency for 2025. And our EBITDA margin of approximately 19%, including the one-off costs from the Fast Forward program, which I referred to earlier. The medium-term guidance, we confirm our profitability and cash flow expectation with reaching the band of 20% to 23% EBITDA in 2026. And we have created here a new guidance based on the revised growth assumptions for the market of 3% to 6% local currency net sales growth for the period of '26 to '28.

We are -- with this, basically, we are now opening the line for your questions, please.

[Operator Instructions] The first question comes from the line of Ben Rada Martin from Goldman Sachs.

I have three questions, please. My first was on, I guess, the annual savings you've introduced today, the kind of $150 million to $200 million amount. Could you maybe break down the source of these between the two programs being the efficiency program and investment program? The second would just be on pricing growth. I assume you're starting to have some conversations around 2026 pricing. Could you maybe just give us a steer on what kind of level of pricing growth you expect at the group level? And then finally, on China construction, thank you for the disclosure today around that business. I'd be interested for our kind of housekeeping side, what share of the China business would be in construction at the moment? And what would be the split between, I guess, the channel side and the project side within China construction?

Yes. Thank you, Ben, here for the question. I'll start with the first one. We will provide more granularity here on, let's say, sort of the breakdown and the content of the impacts here then in November. But maybe at this stage, we expect about CHF 80 million out of the CHF 150 million to CHF 200 million to hit the P&L in a positive way in 2026. On maybe the pricing, and I'll take this one here, too, we had about 0.6% price increase year-to-date here, excluding China. China in a negative environment with negative pricing, but about 60 basis points for the first 9 months, which we're expecting to sort of roughly stay at that level for the full year basis.

Good. And to the third question in regards to our China business, our China construction business is about 70% of our China business. The remaining 30% is related to the automotive industrial manufacturing business, a business that is growing nicely in line also, let's say, with the transformation to e-mobility and the increased volumes overall. The 70% of the construction-related business, the larger portion, also roughly about 70%, 75% is the indirect business. It's the business that is related to the tile setting business in the residential area. And then the 25% direct business is especially strong with sensitive infrastructure programs and with the foreign direct investments of multinationals building in China.

As we all know, the residential business in China has some challenges with huge inventories still being around and the foreign direct investment business has declined this year substantially, roughly 25%. These are the two drivers for the very soft business that we are facing and also then mandating that we take here decisive steps to structurally adjust to this condition as we don't see that quickly to resolve in the near future.

The next question comes from the line of Priyal Woolf from Jefferies.

I just got two actually. So the first one is just on the rebasing of the midterm local currency sales growth. Would you mind just reminding us what the contribution was from market growth back when the target was 6% to 9%? Was it around 2.5%? And I'm just asking that in the context that you've obviously cut the midterm target by 3%. Are you effectively now implying that market growth will be flat or possibly even down for the next couple of years? Or is there something else sort of buried in the target cut today in terms of lower outperformance or lower pricing or lower M&A. And then the second question is just on the CHF 120 million to CHF 150 million investments that you're talking about. Is that CapEx? Or is there some sort of P&L cost involved with that?

Okay. Thank you, Priyal. I'll take the first one. And here, you are absolutely correct. Our former guidance was built on a 2.5% market expansion. And our current or our adjustment is basically correcting for the current, but also for the foreseeable future and here is more neutral or slightly negative. The elements of the strategy, the market penetration and the acquisition are from our side, unchanged, but the market has changed substantially longer than anybody could have anticipated. And therefore, we made this readjustment, but it's mainly -- or it is the market that really is unpredictable at this point, and we have taken that down to a neutral, slightly negative level.

Then the second one here, Priyal, on the investment program, the CHF 120 million to CHF 150 million. This is largely CapEx. There is about a 30% OpEx element as this is also relating to implementation of platforms, ongoing support digitalization, also training activities and so on. So about 30% of this is ongoing here OpEx, which we don't see as sort of onetime costs, but really sort of ongoing implementation and support cost.

We now have a question from the line of Paul Roger from BNP Paribas Exane.

It's [ Anna Schumacher ] on for Paul today. I have two. Does the rightsizing China suggests you believe the slowdown is structural rather than cyclical? And will it impact your distribution strategy in the country? And secondly, when do you expect to see any benefits of reshoring in the U.S.? And how meaningful could it be? And what are your expectations for U.S. infra next year?

Okay. Thank you. Yes, I think on -- we have to differentiate in China between the two segments. I think the residential market expectation also for the next 1 or 2 years are still on a very low level. So this overbuild is not being addressed and it is also of less a priority for the Chinese government. So here, this is a market that will remain challenged probably for a year or 2 longer. And therefore, our, let's say, adjustments are structural in nature by now serving the reduced volumes with our market leader position that we have in that segment and also adapting the portfolio to the key application, the tile setting and waterproofing area, where we have a dominant position and also, let's say, discontinue low-margin sections of that market.

The distribution channels are well established. They are the backbone that we serve. Here, actually, we are adapting that distribution channel to increase the spread and be able to further get closer to the market. So here, actually, we are increasing, and this is also helping to get better coverage and build on our market leadership in the segments where we have very good margins and where we also see possibilities to outperform the market. The construction direct business is a business where we believe that this is cyclical in a way that this foreign direct investment has an impact. But at the same time, we have in China also a more maturing, let's say, base infrastructure in place that requires more refurbishment and renovation. We are working in building up this in China with our competencies.

So here, I would say the foreign direct investments, not that speculative how fast that will normalize, but we have there also possibilities to offset. And here, we are structurally adjusting also to be more dominant in the refurbishment, which when you look at mature markets like Europe or the U.S., this is the core of our business in construction. It has been relatively small in China so far, but that's a great opportunity for us to offset some other weaknesses.

And then on the U.S., I'm always optimistic about the U.S. market. The U.S. market has seen a great start into the year. It has then been challenged with uncertainties and unpredictabilities, which many projects for industrialization or reshoring have been put on hold, ready to go. These projects have been, let's say, engineered to the level where it can start digging and building. And this is now a bit speculative question when will enough clarity be there. But I think with the tariff discussions, things are more and more becoming, let's say, not predictable, but it is easier for corporations to make conclusions. And I expect that we see in '26 on the reshoring, some nice progression as this holdback of projects as we see at the moment, will probably then be overwhelmed by also serving the increased demand. The consumption in the U.S. is not that bad. And I think this is a bit artificially pushed back. And here, I'm more optimistic that this will take place going into'26.

The next question comes from the line of Elodie Rall from JPMorgan.

I have three, if I may. First of all, on the China restructuring, you're talking about reducing headcount by 1,500. So can you give us a bit of color about how much that this represent as a percentage of China headcount? And also how much does this represent versus the CHF 80 million to CHF 100 million total cost savings? How much is China from there? And how could we think about China growth in H1, therefore, next year, given still the hard comp, I believe. So all the growth will be H2, I believe. Second, you talk about other weak markets driving this midterm growth outlook cut. So maybe you can elaborate on what they are? And lastly, on dividends, I was wondering if you would aim to protect the dividend level given additional cost savings -- costs this year.

Okay. Let me start with the China restructuring. The 1,500 employees and the largest portion from a single country comes from China. And it is a substantial reduction. It's a double-digit reduction of the Chinese workforce that is ongoing. This is something we are implementing without any further delay, but this is substantial. But we also have other markets that are -- or segments of markets is maybe the better way to put it because it's not countries or markets. It is actually segments that have softer performance. And here, this will then, in some, come up with the 1,500 employees.

You asked about the China impact in H1 next year. it is clear that we will have some spillover from this year into next year as the effects that you have seen in Q3 and that we also expect to be significant in Q4 will, of course, compared to the base of the first half of '25, still be negative, but it will then also turn in the second half of next year and the impact will also, let's say, reduce. And as I mentioned before, Asia Pacific has a strong performance. It is the strongest if we exclude China. So here, we're also confident that Asia Pacific will contribute to the overall group growth next year, having strong engines in Southeast Asia and India. Then the dividend, maybe.

Well, maybe on the dividend, obviously, this is then a decision by the Board. This has not been taken yet, but I'm not expecting here that, let's say, the program will have a negative impact here on our dividend policy.

And sorry, just to come back on China. How much does this represent in terms of the overall CHF 80 million to CHF 100 million cost savings -- cost this year, cost restructuring?

This is a bit too early. I mean we are going to really make an effort then in 4 weeks' time to give you more granularity about the program in regards to the investments, but also in regards to the cost split and so on. But it's clear, it is significant. I mean that's -- but it would be premature now to go into the details, but China is a large portion of the structural adjustment.

And just to finish up on my previous question, what are the other markets that you have identified as weak?

Yes. The point is, as I mentioned, markets are soft. Weak is something I attribute to segments, segments where you see that, for instance, in Europe, we had a very good initiative on energy savings initiative coming from the Green Deal. These are fading. These are implications that we are, of course, considering also in our business. But the markets overall are soft. Europe is soft, but we see Eastern Europe is coming back. We also see that the northern part of Europe. So here, when I look into '26, I'm quite optimistic that we will see positive trends.

We now have a question from the line of Ephrem Ravi from Citigroup.

So two questions. Firstly, given the reduction in the overall growth target to Priyal's point, 2.5% was the market. But does this change your view on the market going forward? Or this is strictly a function of the fact that last 2 years, the growth has been less than your 2023 to 2028, 6% to 9%. So you're just resetting for the -- for what's already happened and your medium-term actual view in terms of how the markets are going to grow hasn't really changed. So it's just mainly a mark-to-market of what's already happened in terms of local currency growth so far?

And secondly, China, I thought it was about CHF 1.2 billion of sales last year. And if it is down double-digit percentage, probably goes down to closer to CHF 1 billion. So given the low base, do you expect that to kind of be less of a drag going forward? So in theory, you should see faster growth just because of the mix effect of China not being a drag being on the numbers?

Yes. I think what is very important in our adjustment of our midterm guidance, this adjustment is related to our assumptions of the market compared to the original assumption. For us, most important is the outperformance of the market wherever they are. And this is in our strategy clearly outlined with the market penetration. We have not changed our ambitions on the outperformance of the competition and the market. And we also haven't changed our approach to be the consolidator in a very fragmented market through our acquisition activities, which I think also this year, we see with 5 transactions and the full pipeline of prospects. I think we are very confident on those elements where we have it in our hands.

The markets, we had to reflect and also consider that there is also not a balancing act between the regions. We have a situation where actually softness is a global topic, with a few exceptions like maybe the Middle East, but not so relevant in the global scheme. So here, it is -- this is the driving factor for the adjustment is that we do reduce the market aspect, but do not change our commitment to outperform organically and then also on the acquisition, we will deliver as we originally have indicated.

The next question comes from the line of Martin Flueckiger from Kepler Cheuvreux.

Martin Flueckiger from Kepler Cheuvreux. I've got three questions. And I suppose I'll take one at a time. Firstly, I'd just like to go back to your statements regarding pricing in the 9-month period. If I understood you correctly, you were talking about 0.6% up year-to-date, excluding China. Now I was just wondering what does that mean for the group overall because that's really the number, I guess, that interests most people. That's my first question. I'll come back with the second one.

Yes. I mean, this means overall, it's pretty much a flattish picture for the group overall.

Okay. And then secondly, you were talking about -- I think Thomas was talking about data centers being ramping up pretty rapidly in the U.S. Can you -- if I remember correctly, in the U.S., data centers account for about 8% of sales -- construction sales. Has that number changed in the 9-month period? And what kind of growth do you expect from this vertical in 2026? That's my second question.

Yes, you are right. This is about the magnitude. And this is the fastest-growing segment in construction and therefore, also logically, the contribution to the overall construction business in the U.S. is increasing, but it's about 8%. And what makes us very optimistic, I mean, these are also projects that are lined up. They are executed. They are actually rushed in execution whenever possible.

So the lineup of projects that we have visibility gives us high confidence for the next 18 to 24 months. So this is a business that we like very much as it is also a premium business. It is driven by customers that buy not, let's say, products or systems, they buy peace of mind. They want to have undisrupted operations 24/7, 365. And that's a key element of our unique position in that market. Not only in the U.S., this spreads all over the globe because the owners of the data centers have very similar names at the end, and they don't want to take risks when they go abroad. And therefore, we are also leveraging that very much into Europe and other parts of the world.

Okay. But sorry, just to clarify, when you say it's the fastest-growing segment in the U.S., I guess that's not really surprising. But I was just wondering whether you could tell us what kind of growth Sika is expecting from data centers in the U.S. in 2026. Do you have any broad idea at this point in time?

Of course, I have. And I would sum it up this is double-digit growing and this is significant. So it is not 10% or 11%. It's really a business that has drive and where we also put full focus on. This is the time.

Okay. That's helpful. And then finally, my third question, could you talk a little bit about competitive pressures in construction chemicals this year, what you're seeing on the ground and whether it's intensifying or whether it's stable, whether there are any particular regions apart from China where you're seeing competitive pressures easing or worsening?

I think here -- I mean, China is a particular case, and I think Adrian indicated, China is, of course, price is super relevant. And as he mentioned, the overall group is at 0.6% without China. With China, we are at neutral. So China is a market in itself. But when I look at the rest of the globe, you can say -- when you have a booming market, pricing is probably less pressures because it's about getting the jobs done. We don't have booming markets everywhere. Therefore, I would say this is a normal situation where price is of high relevance, but nothing exceptional. Nothing -- would you say this is kind of strange. This is a normal behavior of markets when volume are slow, and this comes from small, medium, large. This is nothing in particular, nothing has really changed.

But of course, when you have soft markets, then here, the tendency is that you have more pressure on price. But I think our performance in the first 9 months demonstrates we do have pricing power. We have here a leadership position that we can. This is probably for small players, midsized player, a bit less convenient as they are suffering more in soft times.

We now have a question from the line of Cedar Ekblom from Morgan Stanley.

I've got some follow-ups, please. On the growth for 2026, the exit rate at the end of this year is likely to be breakeven, maybe even modestly negative if trends don't really change in your core markets. I'd like to understand how we get to 3% in 2026. I think Elodie touched on this question, but I'd like to hear explicitly if you actually think 3% is the right number for 2026 based on what you see today, appreciating that things can change or if in 2026, we should actually be anchoring around a number below that range within the potential for growth to accelerate into '27 and beyond. So that's the first question.

And then the second question, just in terms of the guidance on year-on-year margin improvement into 2026. So this year, I think it's 19.5% to 19.8% without the costs. And then if I've got the moving parts right, you have CHF 80 million of cost saves from the program next year. You have CHF 40 million synergies still to come if I look at the midpoint of what you're guiding to. So that gives me about 100 basis points of margin improvement. But I'd expect your leverage is still going to be negative. I mean, if I look at that chart on Slide 8, I think it is, you have negative operating leverage this year with growth that's probably not dissimilar to what the growth is going to be like next year unless anything doesn't change.

So what other levers should we be thinking about into next year that actually allow us to see margins rise? Is there something we should be thinking about on gross margins improving? Is there some other kind of cost initiative that we should think about beyond this CHF 80 million program, just like sort of ordinary course of business efforts that's sort of coming on top of the CHF 80 million sort of special program? So those would be the two questions. Exit rate on growth is clearly below the 3%. How do we get to 3%? And then how do we actually get higher margins year-on-year even withstanding the 100 basis points or so of improvement that comes from this program plus synergies not yet come through from MBCC.

Okay. Thank you, Cedar. And I take the first question, and it's probably the most difficult question because it is clear. We don't know what's going on to happen next year. So let me phrase it in a way. This is not a guidance for next year. But if we assume everything equal, China, Europe, North America and so on, your assumptions are correct, that the exit rate at the end of the year will be low modest growth going into next year. We will still have spillovers from China. We will have benefits from trends that are supporting, but the magnitude to the lower end of our midterm or our adjusted midterm guidance is still there. So this is not yet a guidance, but it's also not a promise that every year of the coming 3 years will be within that range.

I think the first year is probably the one that has, let's say, the highest challenge, but we also anticipate that there's a good likelihood in '27, '28, where we can substantially also move on that depending on how markets are evolving. So here, I think we have to be clear. This is not a straight line. This is also a line of recovery, which we can drive to some degree ourselves. I think we have a healthy acquisition pipeline. We see there some opportunities. I think also when we look at the pricing power that we have and also expecting that China is going to, let's say, be less impactful. So we have this element as well. But this is not a guarantee at this point of time that this 3% to 6% will be applicable to every of the consecutive years. Over the 3 years, we are very confident. But going into next year, we will assess the situation, of course, we will assess the markets and then we will establish our proper guidance for 2026.

And on the, let's say, the elements here of the margin improvements, and it's essentially the ones we're driving. I think there is also an opportunity on, let's say, the material margin, the gross margin to continue to drive. I mean, you have the synergies, as you mentioned, there will be another 30 to 40 basis points. And our improvement, let's say, bucket, which will clearly be driven here by Fast Forward program here, let's say, the sort of the CHF 80 million impact plus the ongoing activities we have, but there is not going to be an additional, let's say, program on top of it, but really sort of driving the different elements to an EBITDA of above 20%.

We now have a question from the line of Arnaud Lehmann from Bank of America.

Could we talk a little bit about the gross margin? I guess that was quite a solid performance in the third quarter. I think a 5-year [indiscernible] when there was back in Q3 2020. So is this the new normal? Is 55%, you believe the new normal going forward for Sika and into 2026? That's the upper end of your historical range? Or do you think there could be upside to this?

My second question is coming back on the Fast Forward plan. Is it something you've been thinking about in the last years or in the last months, let's say, was it something you were going to do anyway? Or is this more of a reactive move on the back of the recent decline in Chinese volumes or maybe a little bit of both? And the third question and last one on -- you hinted in the previous question around M&A activity. Considering the slower trends in underlying markets, do you think you could ramp up M&A activity while remaining within the criteria of your A- credit rating?

Let me take here the first one. Thanks, Arnaud, for the question. I think here, of course, the 54% to 55%, that's is for us clearly sort of also a range where we sort of monitor and steer the business. I mean it's never been sort of a very sort of dogmatic, let's say, hard target. And I think there is several elements obviously impacting here material margin, which, again, for us is an important element to steer the business.

I think we're obviously here that the pricing element, selling value, driving innovation, also being able for us to position our solutions at the higher value point is important and an ongoing activity. I think on the input cost side, we have more recently seen, I would say, a more favorable picture also driving here clearly initiatives to improve it. So I think there is obviously a bit of upside here on the material margin, although this is influenced by many sort of different elements. So I think it's obviously something we actively steer as one of our here profitability buckets overall.

Okay. Then Arnaud, on the Fast Forward question, it's an interesting question because it has both elements. Digitalization is something we have highlighted as a megatrend in our strategy. And we are doing quite well in progressing. We are doing -- we bring digital solution. We just announced this week our Sika Carbon Compass. You can say, yes, we do. We are implementing SAP across the globe. But honestly, the speed of adoption, the speed of implementation is, in my view, not the speed that I would like to see. Digitalization has a different speed than construction industry and the construction industry is our great opportunity to be here the unprecedented leader in digitalization.

So this has been, let's say, something I have observed over a longer period of time than 2, 3 months. And I see this as a great opportunity here to make firm steps, invest into the customer value. The customers are challenged in many different ways. Digitalization can ease, let's say, those complexities, can make business easier to execute and focus on core things. I think this is something that we want to drive, and this is the opportunity to integrate it also into this fast forward program. We have done great. I mean, Sika has a unique data pool. It's the leader in the market, the innovation leader, it's the market leader. We have data all over the globe. We are creating a pool that we can exclusively use to do data mining and leveraging those competencies.

So for me, I'm a big fan of this digitalization, and I'm happy that Fast Forward gives us now also the possibility to accelerate substantially, let's say, on the tools, on the solutions, but also upskilling our organization that we also here can adopt much faster than in a regular environment.

The other part, let's say, the China, the restructuring in general is something that has become in line with our, let's say, guidance adjustment for the midterm. Markets are soft, markets, we cannot change them. But in markets that are soft, this is the best time to make substantial adjustments. This is the time to act because when you act at this time out of a position of strength, you can then -- when backlogs are worked off, when markets are turning, you are in the strongest position to benefit from a boom in construction that will come, that has to come. The underlying demand is there. It's not served.

So it is also a point that came to our realization over the course of this year and then more pronounced in the second half, which ultimately results in this Fast Forward program with the two elements that are super relevant, short term improvements, but of course, then also more midterm, let's say, benefits for the customer, driving our growth and utilizing the unique, let's say, digital footprint that we can have and that we want to have going forward. This is something I consider these digital capabilities, a key competitive advantage that we are going to achieve. Here, size matters. The globalization matters. We have a global input. We have it from Japan, China, India, Middle East, Europe, North and South America. Now all these bundled together gives us huge opportunities, which I want to tackle with our Fast Forward in an accelerated way.

And on M&A?

Sorry, M&A. I think here, I come back to the prior question. I mentioned smaller and midsized companies are more challenged when it comes to pricing power in soft markets. And we see here a clear, let's say, pain level reach for small and midsized player that they are considering selling their companies, even so it is probably not the best time to get the best price, but they hang in there and they consider selling much more now than maybe a year or 2 ago.

And yes, we do have here also opportunities to, let's say, to acquire for attractive multiples business that maybe a year or 2 ago would have rejected to entertain. And I do think with our strong cash generation that we also have the ammunition to serve those increased possibilities. But it's also -- I think as always, every challenge has its opportunity. The opportunities on M&A are excellent, and we have the power and the will also to take advantage.

The next question comes from the line of Ghosh, Pujarini from Bernstein.

So I have a few. So my first question is on the EBITDA margin guidance for this year. So without the restructuring costs, you have not cut your margin guidance. And in 9 months, you've done 19.2%. So to get to the bottom end of the range without the restructuring, you would need to do something like 20.5% in Q4. And looking at the historical trends, we've never seen such a big jump between Q3 and Q4. So could you explain why this year might be different and the various levers that you could pull in Q4 to get close to your target?

And my second question is just a housekeeping. So what is your current guidance on the tax rate for the full year and for future years? And finally, coming back to the China restructuring plan. So could -- so of the CHF 150 million to CHF 200 million cost savings, could you give the split between how much of this would come from the restructuring in China and how much from the investment program that you're going to do?

Thanks, Pujarini. I'll take here the question one by one. On the 2025 EBITDA guidance here, I think a couple of points. On the one hand, you're right, the 19.2% here in the first 9 months. As I mentioned here before, we have about CHF 18 million of here one-off costs already included in Q3. So that's one element that basically puts here, let's say, the anchor at 19.4% and also in terms of, let's say, the one-offs we're guiding for the CHF 80 million to CHF 100 million, not everything is EBITDA relevant. We have about 25% to 30%, which is more sort of write-downs and impairments overall, which obviously then for Q4, yes, means, of course, a solid profitability quarter to, let's say, get at least here to the lower range here of the 19.5% to 19.8%.

On the tax rate, here we had in previous years as reported, also one or the other positive impact, one-off effect. I'm expecting here for this year sort of around 23% in terms of the overall tax rate, which is also the level here of the next years to be expected roughly. And thirdly, on the question here of, let's say, sort of the China impact and the breakdown, again, I would like to defer here the answer and more granularity then to our November event where we will provide more sort of granularity on the various aspects of the program.

We now have a question from the line of Patrick Rafaisz from UBS.

Two questions. One is on your cash conversion targets. You confirmed the 10% plus for this year. I was just wondering with the extra spending for the Fast Forward program, both on the cost and the CapEx, would you already fully commit to a 10% plus cash conversion also for '26? That's the first question. Maybe related to that, can you also talk a bit about the phasing of these investments? And then the second question would be on China and the portfolio adaptation you talked about. Can you add some color around the share within the China business that we are talking about that you are exiting due to the maybe market conditions or too low profitability? And also how long that will take to implement?

Good. Well, let's -- thanks, Patrick. I'll take the first two on the cash conversion, yes, clearly also confirming for '26 here, the targets to remain in place in terms of the cash conversion of at least 10% of net sales. Obviously, here, there is an additional element of CapEx, but that will be within that threshold. Second one on the phasing, again, I'll try again to convince you that we will provide more granularity then on the various sort of elements of the program, also the impact and the phasing then at the end of November.

Good. And then Patrick, on the China business. Our China distribution business is built on exclusive distributors all over China. And with the start of the softness of the market, our China team has tried to introduce, let's say, lower-margin trading products to support our distributors so that they can take a bigger share of wallet. And this came, of course, at the backside that the top line was then still showing some progression, but dilutive on material and profit margin. And this came then to a level where we had to say this needs to be reversed.

So this has been a rather short-term element that has been introduced, and it is also something that we can flush out relatively soon. But it will be visible this year and next year as we -- some part is still in this year from the first half, and it will be out in the second half next year. So we will have some comps there that are maybe not so clear to read, but this is rather something that has been used tactically, but had to be revised. And that's what I mean with the core range. The core range, which is our tile shaping range and waterproofing range, which we produce ourselves and not tolling products that are adjacencies.

The next question comes from the line of Alessandro Foletti from Octavian.

Just on the automotive business, maybe we don't speak much about it. Obviously, it has been growing strongly in China, but how is it doing in the other regions, particularly also, yes, Europe and the U.S., I would guess.

Yes. I take that lately. I think, yes, we haven't talked much. But as you have seen, our growth in the industrial area is at organically 0.8%. It is doing better than our construction organically. It has here support from China, but also our business in Europe and in North America is holding strong despite a declining volume situation. And also, especially in Europe, we have still, let's say, a bigger, let's say, variation of models in the market, which means we are carrying more complexity serving, let's say, our customers.

And despite that, we can still have above the build rate top line and especially also maintain a very healthy bottom line in that business. It is having a different direction. I think in Europe, we see also going forward, probably a comeback of the incentives for the electrification. This will be very positive. Germany is considering this for the years to come. So I'm on the automotive side in Europe, with the conversion, we will have more contribution. We have more opportunities. So I think we will see a positive trend in Europe.

And in North America, we have there a bit the holdback with the tariffs. The automotive business in North America is highly, let's say, linked between the three countries with the supply chain. We serve the market out of Mexico and of the U.S. But also here, there's a different demand. The electrification is less of a relevance. It is truck and SUVs, pickups are relevant. These are for us higher contribution vehicles anyhow. But we also expect that when the new North American trade agreement is finalized, which hopefully takes place by the beginning of next year, then there will be also clarity and investments in automotive so that they can come back with competitive offerings to the end market, which at the moment is hesitant to buy in North America.

I'm optimistic. I mean the business also in Brazil is doing very well. The business in Southeast Asia is doing very well. They are, of course, of smaller volumes than the three main markets. But I think we will have year-over-year, nice contribution from the automotive or industrial side.

Right. But I'm not sure I get it right. It seems from your talk that maybe both in Europe and the U.S. is maybe still slight negative or flattish?

Yes. Yes. I mean the build rates are minus 3%, minus 4%, the car build rates. And we are flattish in Europe and slightly below in North America.

We now have a question from the line of Yassine Touahri from On Field Investment Research.

Just two questions on my side. We've seen oil prices coming off over the past couple of months. Does it mean that we should see limited raw material inflation in -- at the beginning of 2026? Or -- and also a relatively muted pricing environment? Should we think of the coming quarter being close to what we've seen with relatively prices up a little bit and costs broadly in line with this pricing?

And then my second question would be on the competitive landscape. Do you see -- I think some of the largest building material company in China, CNBM and [ Conch ] have started to invest in mortar, in construction chemicals. Do you see competition in China being tougher today than it was 5 years ago? And another one on this -- on the competitive landscape. I think Kingspan in the U.S. is planning to open a PVC roofing membrane next year. Do you think it could have an impact on your activity? Or do you believe they will target different segments?

Okay. I think the first question was on oil prices, right?

Yes. And whether it means that we should continue to -- we could continue to have an environment with limited price increase and limited cost inflation.

Yes. I mean we -- this is quite volatile. It is low at the moment. This is, in general, for us a positive. But I would say it's limited. I mean, this is also what we have talked about this year. There is -- some commodities have some softening, but others are still increasing cement, for instance. So I think on the input side, I think we are having here as far as we can predict, we have a relatively stable environment. So that is giving us also the possibility to make our price adjustments in line with our margin expectation. So I'm not concerned. But of course, things can change if one source comes unavailable and prices could rapidly move upwards. But at the moment, it's not a major concern.

The -- and the second question was on the competitive landscape in China. I mean, here, you have to see that we are the only remaining sizable international construction chemical player in China for years. This is not just yesterday or the day before. This is our position in China. We have an exclusive position in the direct construction market. This is -- these are the higher-end construction. I talked about the multinationals, but I also talk about, let's say, sensitive infrastructures, nuclear power plants and others, airports and so on.

So we have been able -- I mean, there are thousands of players in China and super aggressive in all aspects, but we have been able to hold strong in this market. And I believe our possibility to benefit through our, let's say, global excellence in a market that is maturing in a market that is also demanding higher building codes. The government is pushing for higher building codes as they see the adversal effect of cheap, let's say, infrastructure built 10 or 20 years ago. And we have a reputation in China that is outstanding, and we can also enlarge our addressable market in China through this trend. So this is on the direct side.

On the indirect side, I talked about our distribution. I talked -- but you have to see that this is an application where our company has a market-leading position in China. Our brand, our international brand stands for reliable products to the homeowners. Homeowners, they buy, let's say, expensive tiles from Italy and homeowners do care that they are installed with a brand of trust. That's our unique -- of course, our products are up to the highest standards. But it is also our network that involves not only the applicator, but also the owner bring across this value.

And this is very difficult for, let's say, the mainstream Chinese competitors to attack us. They attack themselves. So it is Oriental Yuhong and Nippon Paints that are crossing each other's way left and right and through brutal price war try to steal each other's market. Our market is much more protected through our unique positioning with our brand in China. And then...

Kingspan, yes.

I think -- I don't know if I should comment. I mean, I don't see it as a threat, not at all. I mean the North American roofing market is huge, and it has sizable players. I mean, sizable. And we are active in a very, let's say, clear designated area with large commercial buildings, where we have a reputation, where we have specifications, where we have applicators, I feel well protected. I have no fear.

But if you go in such a market where there are the big boys playing, I would say I have respect for the courage to go into that market, but that's not me to comment and it's not me to make assessments there. It is an attractive market. I agree. It is for us, a fantastic market. But I think we have here also a unique position with our focus on the high end on durable and sustainable solutions with owners, with the focus on clear commercial large-scale roofs.

Thank you very much. I think this brings us to the end of our call. We take this opportunity as well to highlight the date of our Fast Forward Investor and Media Conference on November 27. The conference will be held in Zurich, Tüffenwies, and it will start at 10 a.m. CET. So for all these who would like to fly in and out the same day, I think this will be possible.

With this, we thank you for listening to our call and for your interest in Sika. We wish you all the best.

Thank you.

Thank you very much. Bye-bye.

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

Ladies and gentlemen, welcome to the Sika Half Year 2025 Results Conference Call and Live Webcast. I am Shari, the Chorus Call operator. [Operator Instructions] The conference is being recorded. [Operator Instructions] The conference must not be recorded for publication or broadcast.

At this time, it's my pleasure to hand over to Mr. Dominik Slappnig, Head of Communications and Investor Relations of Sika. Please go ahead.

Yes. Good afternoon, everyone, and a warm welcome to our half year conference call. I'm delighted to be joined today by Thomas Hasler, our CEO; Adrian Widmer, our CFO; and Christine Kukan, Head of Investor Relations, plus Jomi Lemmermann, IR Manager.

We are excited to share with you the performance highlights and key developments for the first half of the year. Earlier today, we published our half year results and made the supporting presentation available on our website. Thomas and Adrian will shortly walk you through the main achievements, financial results and provide insights into our outlook. Following their remarks, we look forward to answering your questions.

At this point, I will pass the floor to Thomas, who will commence with an overview of our key highlights.

Good. Thank you, Dominik, and welcome also from my side. And I would like to start the half year reflection with where we took off in January, February, with momentum that continued to deliver as expected and in the Americas as well as in EMEA and with a softer market in China. Through the duration of the half year, we have seen input factors that have been very challenging and unprecedented in regards to the global economy and the applicable tariffs and the relationship between the main players in our industry.

I believe when we look back and consider all this uncertainty, Sika has demonstrated its resilience to all weather conditions. It has gained, in difficult markets, market share and it has also been able to do this in a profit margin increasing way.

Let me now go a bit into the key elements that we have seen and how that has contributed. I think when you look at the EMEA evolution, it's very nice to see that besides the strong markets in the Middle East and Africa, we also see a continuous growth momentum in Europe, here starting in Eastern Europe, but also soon moving over to the other parts of Europe. So EMEA, a region that has demonstrated its consistent improvement.

The Americas, strong start, a bit confused by the tariff discussion with the Canadian and Mexican countries, but then the escalation with the Chinese government, we could clearly see towards the end of the first quarter that this confusion has also confused our customers. Our customers took a bit sideline step, and we're kind of holding, and waiting for how the dust is settling. And this has, I think, to quite a bit of a large degree now been done. I think the China escalation has cooled down. Japan is clear. The U.K. has an agreement. And finally, also just recently, the European situation is clearing up the sky. And this is probably the most relevant aspect that clearing up the sky means the predictability for our customers is now better and activities that have been put on hold or have been postponed can now restart in the second half.

So this is just as to the situation in the Americas, where we also have a continuation less impacted by the tariffs in Latin America where we have good growth momentum, similar to what we see in other parts of the world. When I move over to Asia Pacific, Southeast Asia, India has a very strong momentum. But as mentioned, China with the escalation with the U.S. government also having difficulties to regain momentum and having deflationary elements still impacting the recovery.

But moving now over to the consolidated numbers. I think we have demonstrated that we can outpace. We have 0.6% local currency growth, which comes from price and from volume in a declining overall market condition. We have been able to safeguard our material margin on a very high level of 55.1%. And we were able also to offset lower volume growth by efficiencies and synergies. And here especially also we would like to outline the increase in our MBCC synergy targets, which we have raised by CHF 20 million for the ongoing year as well as then for next year, which is the final year of the full integration of MBCC.

At the same time, we see that these market conditions are offering great opportunity for consolidation. We have been able to close 4 acquisitions -- bolt-on acquisitions, small and midsize in nature, in roofing, in building finishing and also in an expansion in Qatar. This is just indicative of a market that has been in the recent 6 months demonstrating more opportunity. And for us, a great opportunity to also consolidate this fragmented industry furthermore in the coming months and years ahead of us.

On the EBITDA margin, we were able to expand our margin by 20%, to 18.9% as mentioned, several elements that contributed to this. Also, our CapEx spend has been well positioned into locations where we are investing into future growth. In Singapore, Kazakhstan, Morocco, Brazil and China, we have done substantial allocation that is also fueling future demand with most efficient and innovative products that we can produce locally in all these markets.

But with that, I would now hand over to Adrian to go a little bit deeper on the set of numbers.

Thomas, thank you, and good afternoon, good morning to all of you in the call. As said by Thomas, I will now go into a bit more granularity here on the financial results.

Starting at the top, as mentioned, in a market environment that continued to be quite challenging and volatile overall, we posted a modest sales growth of 1.6% in local currency in the first 6 months of the year. Organic growth was 0.6%, which means we have again outgrown the market that continues to be negative. And acquisitions, namely here, the small residual impact from last year's transactions as well as the initial contribution of the 4 transactions mentioned by Thomas this year have added 1 percentage point of additional growth in the first half of 2025.

On the other hand, sales were adversely impacted by foreign exchange movements, especially in Q2 where the Swiss franc strengthened by 10% against the U.S. dollar and a number of other currencies. Overall, the adverse foreign exchange effects reduced local currency growth by 4.3 percentage points in the period under review, but particularly in Q2, where the foreign exchange impact was more than 7% in isolation. Corresponding growth in Swiss francs for the first half year was minus 2.7%, owing to these foreign exchange effects.

On regional level, we have seen different trends in H1. Region EMEA grew 1.9% at constant currencies. Organic growth was 1.4% in with a slight recovery and improving trend in the second quarter, which was in isolation, plus 2.4% in local currency. And Sika recorded significant double-digit growth and increases in Middle East and Africa. Construction markets are also showing the first signs of recovery in Eastern Europe.

Acquisitions added a small additional increment. This is namely the Cromar acquisition in the U.K. Foreign exchange effects at minus 3.4% were also here negative. Sales in the America region also here, as outlined, grew by 3.5% in local currencies. Organic growth was 1.3% for the first -- for the half year period, down from the first quarter. After a good start to the fiscal year, the mixed signals in U.S. trade policy unsettled many market participants, which also somewhat slowed the market momentum in the U.S. and in North America.

While this caused Sika's growth in the U.S. and Mexico to weaken, the positive growth momentum of the previous year continued in Latin America, while investments in data centers and government subsidized infrastructure and commercial construction projects continued to also support the U.S. construction market. And the 4 bolt-on acquisitions done in the region last year, and in the first quarter of this year added a further 2.2% to local currency growth, and as highlighted, adverse foreign exchange effects were particularly profound in that region and reduced local currency growth by minus 6.5% in the Americas in the first half year, particularly driven here by the weaker U.S. dollar, but also for example, the devaluation of the Argentinian peso.

Sales in Asia Pacific declined by minus 4.7% in the first half of '25 with organic growth being negative at minus 2.1% for the period. This result is mainly attributable to the challenging deflationary market environment in the Chinese construction sector for which we are focusing on protecting margins and driving efficiencies. If we were to exclude here the negative development in China, Sika would have achieved a lower single-digit growth in the region in the first half year.

Market development in that region were particularly dynamic in India, Southeast Asia, but also in the Automotive & Industry segment where Sika was able to further expand the share of its technologies in vehicles from both local as well as international manufacturers.

M&A. And here, this is the acquisition of Elmich contributed 40 basis points of growth. Also here with adverse foreign exchange impact at minus 3.2%, reduced local currency growth to minus 4.9% for the first half year.

Turning now to the full P&L and looking at material margin, where year-on-year, we have been able to maintain gross result at consistently high level, in line with previous year at 55.1% of net sales, here in spite of the deflationary environment in China and the small dilution minus 10 basis points coming from M&A, where material costs were broadly flat in the first half year.

On the cost side here, reported operating costs, which include both personnel costs as well as other operating expenses, decreased over-proportionally in the first 6 months of the year versus the same period in '24. This was driven by continued strong MBCC related synergy development as well as increasing impact of operational efficiency measures largely offsetting ongoing yet reducing cost inflation.

In looking at personnel costs specifically, which were basically flat year-on-year on a reported basis, we have seen underlying wage inflation at about 3.5% per annum, coming down closer towards the normal 3% increase year-on-year, which we typically see on a like-for-like basis. This was partially an increasingly offset by cost synergies as well as operational efficiency initiatives, which have accelerated in Q2.

Other operating expenses decreased strongly over-proportionally by minus 6.6%, is versus a top line decline of minus 2.7%, also here driven by MBCC synergies and accelerated operational efficiency measures.

Talking about synergies from MBCC. Overall here, the integration of MBCC continues to go very well. We've realized total synergies in the amount of CHF 79 million in the first 6 months of 2025. This is an incremental CHF 26 million versus the same period of last year, pushing here total expected synergies for the full year beyond the CHF 160 million upper range of our previous guidance, allowing us to increase the full year guidance to CHF 160 million to CHF 180 million for this year, but also then lifting the guidance for the overall synergy target to CHF 200 million to CHF 220 million by 2026.

As a result, EBITDA margin here, as highlighted by Thomas increased by 20 basis points to 18.9%. This is up from 18.7% in the same period of last year. Absolute EBITDA decreased under-proportionately by minus 2.1% to CHF 1.070 billion due to foreign exchange translation effects, in line with the effects on the top line here also highlighting strong natural hedge and decentralized cost base in line with our invoicing currencies.

Depreciation and amortization expense was virtually flat in absolute terms or 4.8% of net sales, as favorable translation effects were offset by purchase price accounting effects on the intangible side as well as a slightly higher depreciation rate. As a result, EBIT ratio remained flat at 14.1%, while absolute EBIT at CHF 798 million reduced by 2.9% from last year, again here due to unfavorable currency translation effects.

Turning to below EBIT items. Firstly, here on the interest expense side, interest -- net interest expenses decreased by CHF 10 million, down from CHF 79 million to CHF 69 million. The decrease is largely related to the scheduled repayment of the first Eurobond in Q4, '24 taken out to finance the MBCC acquisition. In addition, other financial expenses has also showed favorable development, representing a net income of CHF 10 million, up roughly CHF 9 million compared to the same period of last year on favorable hedging cost development, lower inflation accounting effects and higher income from associated companies.

On the contrary, group tax rate increased from 22.4% to 25% in the first half year largely related to positive onetime effects in the previous year, and higher withholding tax on internal dividend distribution this year. And also here, as a result, net profit ratio was largely unchanged at 9.8% of sales while absolute net profit at CHF 554.4 million was also impacted by currency translation effects and down from last year.

On the cash flow, talking about cash generation here in the first half, cash generation was broadly in line with the multi-year average but operating free cash flow of CHF 181.9 million was lower than the exceptionally high previous year, which was at CHF 401 million. The reduction is partially due to a stronger seasonal increase in working capital, higher investment in future growth and efficiencies, and higher cash taxes, as well as an impact of unfavorable currency movements compared to last year, particularly relating to hedging of intercompany financing.

For the full year, we expect operating free cash flow in line with our strategic targets to be above 10% of net sales, as cash generation is heavily skewed towards the second half of the year, and will additionally be supported by group-wide net working capital initiatives. In comparison to December 2024, the balance sheet saw the normal seasonal development in terms of net working capital balances, but at the same time, a shortening of the balance sheet relating to the strong appreciation of the Swiss franc, particularly versus the U.S. dollar.

In March, we entered the Swiss capital market with a triple tranche straight bond issuance in the total amount of CHF 500 million at favorable rates, reducing drawdown of our RCF facilities, and partially replacing higher coupon Eurobonds that were repaid as mentioned in November last year. Revolving credit facility drawdown stood at CHF 1.064 billion out of CHF 2.2 billion at the end of June, and net debt-to-EBITDA leverage stood at 2.5x, slightly down compared to June last year, but up versus year-end, owing to seasonality and the payment of the dividend at the end of March.

With this, I conclude my remarks and hand back to Thomas for the outlook.

Thank you, Adrian. And as I started the year with the unpredictability on the markets, I think we have some better visibility now. But still, we have to be cautious about the next 6 months. And therefore, Sika is clearly committed to continue its outperformance of the markets to grow in difficult markets, at the same time, focusing on margin improvement so that our market gains are turning into profitability improvements.

For the top line, we are guiding for modest sales increase in local currency for the full year. For the EBITDA evolution, we reconfirm our former guidance of an EBITDA margin of 19.5% to 19.8%. At the same time, we are fully convinced about the implementation of our strategic midterm targets, which are demonstrated in our Strategy '28 for sustainable and profitable growth.

With this, we then move on into Q&A.

Okay. We are now opening the line for the questions, please.

[Operator Instructions] The first question comes from the line of Ben Rada Martin, Goldman Sachs.

I just had two, please. My first was on price over cost dynamics as we go into the second half of this year. I'd be interested in some of your updated thoughts on the pricing contribution for the last 2 quarters of the year, and whether you're seeing any deflation when it comes to the raw materials side of your cost base?

And secondly, it would just be on China. Adrian, you mentioned you're focusing in the region on protecting margins. I'd be interested in what kind of strategies you're developing to do that? What kind of cost growth, or cost out are you looking for in the region? And can you give us an update on how you're seeing the China channel opportunity develop? I know that was an area where you potentially saw some revenue opportunities?

Yes. Thanks here for the questions. I'll take the first one. In terms of price over cost, as I mentioned, input costs have been, I would say, broadly flat with some volatility, I would say, and more lately, probably more sort of downward pressure at least a slight one. So going into the second half year, we don't expect sort of big movements and potentially a slight here tailwind.

In terms of pricing, we have seen really a very sort of marginal contribution in Q1, a bit more in Q2, which was partially offset also by this deflationary environment in China where there is more, let's say, price pressure in terms, let's say, the net impact in the first half year, it's been about 30 basis points on a net basis in terms of in terms of pricing. I think also here going forward, we will continue to be focused here on value pricing of our solutions going forward here into the second half year.

Maybe to give also a bit more granularity about the China business. Since I visited them 2 weeks ago, we have to see here clearly differentiation between our, let's say, residential retail-driven business that has the biggest challenge as there, there is a deflationary element that we are adjusting through selective price increases and efficiency improvements.

On the other hand, we have the direct construction business that is holding strong when it comes to pricing and also to efficiency but has some volume impact from a 25% decreased foreign direct investment volume in this year.

And then thirdly, I think we also have to note and share that our A&I business is really going very strong. The market is strong. The electrification is in full, let's say, conversion mode, and we participate and we can almost double-digit growth in China in that segment. And it is also one of the areas where we believe China is very relevant market for us to be.

Things can change quickly. 10 years ago, the auto industry was dominated by European and American players. But now the Chinese have turned this around, and we are there together with them, and we're also ready to expand with them into other geographies. And in construction, we see similar tendencies that Chinese main contractor also want to go abroad into Southeast Asia and other parts of the world. And for us, this market is great to be in. It's challenging. At the same time, I think we have a strong performance drive, and we'll also bring that to the result as expected for the second half.

The next question comes from the line of Martin Flueckiger, Kepler Cheuvreux.

I've got three actually, but I'll take one at a time. First one is on your -- Thomas your statements regarding market share gains and outperforming, or outgrowing construction chemicals markets in H1. Just wondering whether you could put some numbers or estimates on your part to this claim, and also the regional or geographic markets where you believe you've gained market share? That's my first question. I'll come back for the second one.

Okay. Yes. Here we have clear signs and also our own assumptions from the regional or from the -- actually more than geographical main centers. When we look into Europe, Europe still has, when it comes to production or construction output, very challenging situation. We see we can overcome this, and we have a gap of about 3% between the market as we see it addressable for our chemicals versus our own performance.

So we have this continuous 2% to 3% outperformance, but also in North America, where we had a very strong start, where also the underlying market demand was moving in the positive direction, this has slowed down. And we have kept our gap towards the market also in the U.S.

The same in a bit a different way is the case in China. The main competitors in China are facing 30% to 40% declines, in profitability up to 90% declines. Here, also clear outperformance, but it's a bit special situation with the challenges that the Chinese market is providing.

Okay. That's helpful. And turning to the focus on the U.S. commercial market where you've said it, and you're not the -- Sika is not the only company saying that you've been impacted by the trade tensions.

What are you seeing -- judging from the leading indicators that we've seen coming from the U.S. recently, construction confidence seems to be on the rise again. Are you seeing that on the ground? And what are the latest insights you're getting from customers in the U.S. commercial market?

I mean on the commercial market, it's very clear. We have a fantastic momentum with the data centers. This is really flying. This is one of the elements that we also consider for the coming years to be on a strong growth [ traction ]. But on the manufacturing side, this wait-and-see element has been impacting, started in end of March until now.

When I look at our, let's say, start into the second half, I think we can see here some comebacks. We see some activities when we look into our concrete business, when we look into our roofing business, there are signs that this may now be a bit overcome, and we move back to where we started the year, where we had very good momentum on this. I think this reshoring has been a bit put at pause. But now the tariffs are more clear and we expect also that we see here more momentum coming.

And then it's not, let's say, on the commercial, it's more on the infrastructure side. That's also a business that has demonstrated very nice resilience compared to other segments and has also helped in Europe as well as in the U.S. for consistent market outperformance.

Great. And then my final question, then I'll step back in line, is regarding your new synergies that CHF 20 million that you've identified. I was just wondering whether you could provide some granularity. I mean this is not the first upgrade. I think it's the second, if I remember correctly, of the synergy potential. What is the additional source of these synergies? And yes, in what areas, please?

Yes. Maybe I can add here some granularity. I mean, on the one hand, you have clearly seen here the traction we have been, let's say, delivering over the last 18 months, 2 years on here the synergy capture. And it's actually quite broad-based. But on the one hand, on the cost side, we have, over time, also seen more opportunities to drive here synergies and efficiencies, that's the one side. And this is really a bit across the board here, particularly also relating to, let's say, operations, if you will.

And secondly, it's also the contribution from, let's say, the joint solutions we have been able to develop and deliver also here, let's say, more impact from top line synergies translating here into profitability. So actually quite broad-based overall highlighting here the strong also complementarity in many of the areas.

The next question comes from the line of Ghosh Pujarini, Bernstein.

So I have two questions, one a slightly longer term. So if we take your 2025 guidance of modest sales increase and have to move to the 6% to 9% local currency growth by 2028. I wanted to know what kind of assumptions you are baking in, in terms of market recovery, market outperformance, pricing and so on? Could you give some color maybe for your most important markets like U.S., China, Europe?

And the second question, shorter term. So we've seen a very big decrease in your operating free cash flow versus H1 of 2024. So some of the elements like higher CapEx, higher taxes are well flagged and understood. But could you explain some of these other moving parts, like the provision release, some hedging outflows and also on the net working capital?

So on the net working capital, it would be good to understand that the increase versus last year, should that unwind over the rest of the year? Or should we expect higher net working capital at the end of the year versus FY '24?

Yes, Pujarini, thank you. I'll take the second one here on the working capital. And yes, compared to, let's say, last year, which was actually a record for the first half year. The first half year typically is a lot smaller in terms of overall contribution compared to the second one due to seasonality.

But if we break down here, let's say, the lower cash generation into its elements, as you rightfully pointed out, on the working capital side, there is about a CHF 50 million sort of increase or higher increase, compared to last year. And yes, here, I would clearly see this to unwind if we look at the drivers here in the first half year. One is relating to accounts receivables where particularly towards the end of the year and at the beginning, there has been, let's say, more support to our distributor clients in China with a bit extended terms, which were actually very, very low. This is something we will be sort of gradually dialing back here in the second half.

Also an element that this is more broadly across the board of, let's say, inventory levels, which were geared to somewhat higher volumes, it takes a bit of time to also dial that back. And I think there is clear focus and opportunities on the payable side as we're sort of driving this across the board. So I think in terms of working capital, you can clearly assume this will be reversed out in the second half year.

And the other elements in CapEx, I mean, clearly here, this is related to here, let's say, growth investments, particularly also on the efficiency side, somewhat larger projects, also a bit timing on the cash flow. I do not expect this, let's say, increase over last year to sort of linearly continue. But we will also see here CapEx, which is probably going to be slightly above the 3% of sales for the year.

On the tax, also here, I mean, this is particularly the one-timers, and we will see, given the one-timers for the full year, a higher tax rate, but also here, the expectation is clearly not that we will continue, let's say, with this sort of linear increase of cash out on the tax side.

And the last bit, and this is about CHF 60 million in terms of impact is relating to, let's say, the currency movements. I mentioned here the intercompany hedging where given how the currency moves, we actually had a positive cash effect last year. This year, it's negative. Also here, not a linear picture, obviously, given the volatility in the currencies is difficult to predict, but this is also not a factor that should be linearly extrapolated.

So in a nutshell, clearly, the expectation and the target, obviously, that we will here meet or exceed our target of 10% of net sales in terms of operating free cash flow generation.

Good. And then on our midterm guidance confidence. I think our strategy has a very strong base. The megatrends are valid, super valid in all regards. The urbanization is taking place. The digitalization is on the move, but what we see is an artificial backlog in implementation.

When I look into Europe, we see some movements to address this. I think the German Infrastructure Bill is a clear sign that this backlog is tackled, and it has also reached across Europe to revitalize and put money back into the infrastructure as such. Also Europe is going to further roll out the legislatory green deal implementation, which also means that the solutions need to adapt. We talk here about the low-carbon solution, which are increasing, and we see here also that these movements to higher end, higher performing materials and solution is ongoing.

The same in the Americas, we see a clear trend that with the execution of the Infrastructure Act that has been released, the projects are going to deliver in the coming years. But then in addition, we have all the reshoring activities, the industrialization that will further be taking place in the U.S. will drive also exceptional growth in the U.S.

And when I look into China, China has also very clear midterm targets. The targets are to move into more quality construction, and also into leading global manufacturing abilities. This is most pronounced with the electrification, where they are clearly a forerunner on the electrification. And as mentioned before, we also see that the Chinese main contractors are building the muscles to also participate in other parts of the world.

And in simple terms, our guideline for the midterm of 6% to 9% has a lot, which is, let's say, in our hands with the acquisition contribution of 1.5%, with the outperformance in the range of 2.5% to 4%. But of course, also some, let's say, market growth is considered in there, and the minus 2% to 3% that we have seen last year and also this year, that's not the norm that is going to move towards a 0, that's going to move into a 2% growth ratio within the midterm target time line.

So all the elements are absolutely valid and reconfirmed, and we should not, let's say, take this short-term disruptive elements as an underlying change in demand and in the outlook.

The next question comes from the line of Patrick Rafaisz, UBS.

Can I follow up firstly with the comment around the midterm. And I understand all the structural trends and drivers that you described. But if we stick to the explicit time frame to 2028 and assuming that modest growth means H2 is somewhere similar to H1, let's say, 2% local currency, you would need to see a massive acceleration in '26 already to get close to that target at the lower end.

So is your confidence both on the explicit financial targets or just on the, let's say, rolling midterm opportunity? That's my first question.

I'm not sure if I get your question. I mean, we are moving -- this year, we're indicating 3% to 6% as kind of a step up from -- given the market condition. Now we are guiding for modest growth, which is probably in the neighborhood, as you mentioned. But we expect that the underlying demand will bring us safely into the 6% to 9% in the coming years.

Of course, we can't predict all the market evolution, but the market demands are very clearly set. It is -- as demonstrated before, it is based on the needs. It's based on the evolution of the solutions, the performance drive, the sustainability drive, the new opportunities, and the 6% to 9% is, therefore, as a growth aspiration for the years ahead, absolutely realistic.

Okay. Good. Then the second question would be on China. If we assume that the current run rate that you're seeing is maintained, what would that mean for Q3 and Q4, especially Q4, where the comps appear to be getting very easy given the prior year performance? Do you think you can get back to breakeven or positive by Q4? Or is it still implicitly negative at the current run rate?

I think here in China, it's very clear, and I think it was also signaled by Adrian. We have some areas where we are focusing on streamlining, bringing our net working capital, our pricing in line. We have seen that the Chinese market is, let's say, first time facing such a situation, and also, our organization has, to some degree, let's say, compromised on some of our key metrics. And this is, let's say, on the pricing side.

Yes, concessions are required, but cautious application, net working capital, accounts receivable. So we are on the way. We have started this at the beginning of the year. So we expect also that this will positively contribute and change the picture quite substantially in the second half compared to the first half.

Okay. Great. And then the last question, a follow-up on China. You mentioned, I think, pricing for H1, 0.3%. Would it be possible to provide some color on pricing in China and ex China for Q2 and the first half?

I mean the color is that as I mentioned that here outside of China, it was a bit above half a percentage point. And in China, your pricing was negative given the overall environment. That's the sort of overall composition. So let's say, the price component was here impacted by obviously the deflationary low volume environment in China.

The next question comes from the line of Cedar Ekblom, Morgan Stanley.

I just wanted to go back to costs because I think we debated quite a bit where the medium-term growth may or may not settle. There was a little bit of improvement on sort of personnel and other OpEx costs, which was very welcome after a couple of quarters of not great operating leverage.

Can you talk a little bit about how we should think about those two buckets moving into the second half of the year? And then also more medium term, how we think about those two buckets into next year? Can we hope for a more accelerated pathway of cost out in those two items?

Thanks, Cedar. I was kind of expecting this question as we obviously have talked about. But on a more serious note, I think overall, the trajectory is positive. If you look at, let's say, the overall contribution here on, let's say, the nonmaterial cost side, it is at least slightly positive, including here the synergies from MBCC. And as said, I mean, we continue to see good traction. We had about 40 basis points, let's say, improvement here driven by here synergies.

On the other hand, sort of the residual, let's say, cost dilution of 30 basis points is, I would say, sort of underlying as we need about 3% of organic growth to have, let's say, operating leverage per se, given, let's say, inflation and the residual cost increase we need to drive the business at that growth, and would basically be about sort of 70, 80 basis points cost dilution, which we have sort of offset by about 40 to 50 basis points coming from here.

Efficiencies, which going into the second half, I actually am confident that we will see sort of a further bigger impact of, if you look at, let's say, Q1 to Q2 evolution. I mean, this minus 30 basis points in Q1. They were probably closer to sort of minus 60 or so. So there is a clear progression here on, let's say, the cost efficiency side and synergies will continue also to contribute.

I mean, going forward, here, the buckets, we will see another impact of synergies next year, probably also in the sort of amount to 30, 35 base points. On the efficiency, also based on the measures and initiatives where we're taking also here confidence that we will be able to add another, let's say, 40 basis points here of improvement. And then obviously, on the leverage side, requiring sort of the same level of organic growth as in the past to, let's say, be neutral. But to the extent we will move back to sort of above 3% growth, we will also here actually potentially see a bit of a positive rather than a negative impact.

Was that clear enough?

It was. I didn't have any other follow-ups.

The next question comes from the line of from Ephrem Ravi, Citigroup.

Two questions. Just to follow up on Cedar's question on costs. The personnel costs, in particular, did go up although the other OpEx did come down. Is there like a change between sort of in-house personnel versus outsourced personnel for that kind of cost bucket to go up while other OpEx costs came down? And is there like a limit of percentage of revenue in terms of personnel costs like 20% or 21%, where you would kind of seriously think about sort of more radical measures at cost change?

And second question, just on the North -- the Americas business, U.S. is clearly about, whatever, 60% of the revenue of that business. But despite kind of a relatively weak U.S. market performance, at least from the commentary, the revenues there are up pretty decently. So is it a disproportionate contribution from other countries like Argentina, Brazil, Mexico? And if that is the case, could you quantify that a bit?

On the second one, you were asking foreign exchange impact? Or what was -- I didn't get the first part of the second question.

Yes, why the Americas revenues grew about 3%, while U.S., it looks like it was relatively flattish within that? Is that correct? And if that's correct, what would the growth in the other U.S. markets be like?

Yes. And maybe the first one here on the personnel, or on the cost in general. I mean, there wasn't, let's say, a clear switch. But of course, on, let's say, the outside employees or temporary workforce, obviously, on a time line, it' quicker to reduce. If you look at the sort of underlying personnel cost, let's say, inflation, I was mentioning 3.5%, which is sort of coming down now to, I would say, sort of more normalized level, which is sort of around 3%. And I think here, we have seen sort of a move towards there. We were at sort of around 4% at the end of last year.

We have additional, obviously, also personnel coming from M&A. So we're at sort of a 4.5% underlying, I would say, sort of like-for-like including scope changes. And we have here reduced that by about 1 percentage point through efficiencies, sort of underlying, if you take currency apart, there's about a 3% increase on the personnel cost. While on the other OpEx, a stronger reduction also related to obviously sort of more variable cost elements. But also on the personnel cost, this will increase the impact in the second half year as we continue to drive here efficiency and new cost effectiveness measures.

Good. And then on the Americas growth [ traction ], I think when looking at the U.S. that started into the year with an almost mid-single-digit growth momentum. This has then slowed down to a low single-digit number. Canada, more or less also impacted like Mexico by this tariff dispute. They have been flattish, while Mexico has been negative. But correctly spotted, we have fantastic markets that are providing us a good healthy single-digit growth rates in Brazil, in Colombia, in Ecuador. We have in Argentina a significant double-digit growth.

We also have some challenging markets like, for instance, Chile. But overall, LatAm is in this first 6 months also adding to the overall solid performance of the region Americas.

The next question comes from the line of Elodie Rall, JPMorgan.

I'll have two. I first would like to come back to your guidance, but this time on EBITDA margin. So you reiterated 19.5% to 19.8% this year, despite the higher MBCC synergies. So I was -- my question is, when do you expect this EBITDA margin to be above 20%? And what kind of volume growth do you need to get there? I understand cost is being flexed a bit, but what reasonable volume growth you need to get to that 20% margin target? So that's my first question.

And my second question is -- sorry to come back to 2026 outlook a bit. But I was wondering if you can reasonably return to the Strategy '28 target as soon as next year. For example, consensus is at 6% growth for next year. So do you feel that you can catch up some of the underperformance from this year and meet that consensus hurdle rate at 6% as soon as '26?

Yes. Thanks, Elodie. I'll take the first one here. The 19.5% to 19.8% is sort of alluded to, obviously, here the key drivers on, let's say, the synergies, but also on the cost side where sort of efficiency will have a stronger impact in the second half, and also in combination with, let's say, on the material margin, where we here are driving at least, let's say, a slight improvement over full year of last year. So these are the elements driving here 19.5% to 19.8% EBITDA as under these assumptions here, the top line guidance here, the pure leverage as mentioned, will be negative.

And going forward into '26, I mean, clearly here, we stand to our guidance and commitment of a 20% EBITDA. And if you think about, let's say, the impacts and the respective buckets, we'll see another element or the residual impact of the synergies coming from MBCC, as mentioned also here, continued impact on, let's say, the efficiency side. And then obviously, the leverage element is on top. But being here quite confident that we will continue to be able to drive here into that margin band as guided.

Then Elodie talking about where we will be next year? Our aspiration is very clear going forward. At the same time, we are taking it quarter-by-quarter. But looking into what we see also this year coming, let's say, in favor is the ongoing recovery in Europe. So here, we have a steady growth.

I would also point your attention to the, let's say, industrial manufacturing evolution, which has been challenged very much in recent years with the automotive industry in North America and Europe. But when you look into that, here, we have a clear reversal. We had a negative trend in Q1, minus 1%. In Q2, it's plus 1.6%.

These things, they can accelerate. These things when we talk about Europe and stimuli allocation to the decarbonization if we have, let's say, clear guidance, not only on the infrastructure side from Germany, but also in other parts, there are good chances that the markets are going in the direction that the guidance -- becomes a guidance for next year.

We also have, not to forget, our growth engines in every region, and we talked about LatAm, which is clearly there where it needs to be in regards to the midterm guidance. We have the same in Southeast Asia. We have the same in the Middle East and Africa even beyond.

And then I would also point the attention towards the acquisition. I think we have a chance also on the acquisition side to bring it a notch up. There are more opportunities we see, especially small, midsize owners, family owners that are engaged to see an exit as they see the market is not recovering at their desired pace and we are going to take advantage of that as well.

So it is certainly too early to provide a guidance for next year. But it doesn't take too much to bring us in line and also demonstrate in '26, not only the crossing of the 20% EBITDA margin, but also to have the substantial growth from organic as well as inorganic side pushing in the right direction.

So I'm optimistic about the second half. It's not yet perfect. If next year is perfect or not, we will see and we will guide probably then later in the year. But the underlying elements are all there. And if this confusion is removed, I think we will also see more activities coming our way.

And if I could squeeze in a follow-up since you mentioned M&A, and you did say that you closed 4 bolt-on acquisitions, that market conditions were good for consolidation. So if you could just let us know if you expect this pace to continue or accelerate in H2? What kind of contribution from acquisition you are forecasting for this year? And if you're looking at any larger transactions arising on the horizon?

I think it's less that we are indicating larger transactions. It's more the bolt-ons, the small, medium size. As outlined in the PowerPoint, these are the CHF 50 million plus/minus top line acquisitions, which we did 4 of them this year. And of course, you cannot predict the exact closing. Therefore, I'm a bit hesitant to already give an increased guidance for this year, but we have increased opportunity pipeline, and this may then materialize this year, next year, but we see that it is an attractive market opportunity. And we are also considered a very attractive owner especially for family-owned businesses that also want to see that their business is becoming a platform for growth and not the consolidation target for other purposes.

So we have here very good discussions. In numbers, I have to be a bit cautious, but this is giving me a clear indication that we can expect more to come. Whenever that materializes, we have to see then with the progress of the individual prospects.

The next question comes from the line of Yassine Touahri, On Field Investment Research.

Two questions for me. First, CRH announced today the purchase of a company called Eco Material in the U.S. which I understand is the largest supplier of fly ash in the country. What do you think this could mean for the ready-mix industry in the U.S. and for Sika? Do you believe that CRH and the other cement companies could push more aggressively for blended cement, now that they control most of the U.S. fly ash? Or do you think there's still a lot of resistance against blended cement and that this could drive the ready-mix producer to rely more on independent import?

If I understand correctly as well, the more blended cement, the ready-mix concrete producer use, the more admixture they use and it would be good for Sika. That would be great to get your view on these developments.

Yes. I mean this is an area where the U.S. has been forever an OPC market where cement was kind of standardized and the concrete mix was then relatively, let's say, uniform and simplified. And absolutely, with the introduction of blended cement, I should say, L1 cement that has been introduced recently has been, from my perspective, a very good sign. Ultimately, what has -- what other markets have done for very long is now also taking place in the U.S., and it offers for us two streams of additional incremental sales.

One is this blended cements, of course, also have, let's say, more variability. So we need -- or let's say, the cement producers need also to equalize the blended cements in their manufacturing. So we have this as a value stream. And then downstream with fly ash and blended cements and then also with aggregates, which are becoming more, let's say, challenging, we have further increase in demand for admixtures for concrete to be expected.

So these are, for us, let's say, long overdue initiatives and momentum in North America that we believe is helping and boosting also our business in cement and cement additives as well as concrete additives.

And so your view would be that the acquisition of Eco Material by CRH could go in this direction?

I mean, others have also done acquisitions. I think Heidelberg did some acquisitions. I think it is the new theme of the cement players that they are trying to secure. They are not only aggregates, but also, let's say, supplementary materials to be able to then also play in this field and use it for their own downstream ready-mix operation, but as well as the possibility to blend their core product, cement, with this. So this is not unique. This is just the most recent move in this direction.

And very last question. Could you comment a little bit on the very latest volume that you've seen in your recent -- in your geographies in July, if you already have some idea? Any improvement or deterioration versus what we've seen in the second quarter?

I would say, look, July is a summer month. So when you look at Europe, nobody wants to work, but we compare to last year, and we can see that the second half starts a bit like the first half has ended. I think the real, let's say, science will become more clear when we have a full month. And August still will be a bit mixed. And this is about Europe. And I mean in other parts of the world, people are working in August.

But -- so in Europe, we have a trend that I talked about, that is also continuing. In other parts of the world, we will see. China especially also with the initiatives we took, how that materializes. I'm confident for the second half. I'm absolutely convinced we are going to bring the guideline -- the guided profitability and on the top line, the modest growth is giving also an indication that not growth at every cost is on our radar. It is clearly also here balancing and we can offset. I think Cedar's question was going in this direction.

We are confident we can manage our costs in line with our guidance on the profitability and the top line trends, I expect North America to demonstrate that in the coming months. But more about that then when we talk about the Q3 results.

The next question is the last question from Harry Dow, Rothschild & Co. Redburn.

I think just three questions from me. Just firstly on European stimulus. I wonder whether you could give any idea when you think that might flow through to volumes for Sika? Is it something that you're having discussions with customers already on the availability of products into the end of this year, and the start of next? And also whether you think it might be a benefit to pricing as well as volumes?

And I also wondered in relation to that, but also maybe more on the defense side of things. Obviously, there is a part of the business that's non-construction kind of the industrial, part of which is automotive, but also wider industry. I wasn't sure if there's any exposure to actually direct defense manufacturing in terms of adhesives or coatings?

And then just finally, a follow-up on M&A. I wondered if, obviously, you talked about the pipeline being quite healthy, but I wonder whether it is the market getting more competitive? And whether you could give us an idea of what the multiples, the current sort of market look like relative to history, whether it's sort of higher or lower, and whether the same amount deals sort of conversion ratio are making it across the line today, again, relative to the last kind of 5 years?

Okay. I think on the -- especially on the German stimuli in regards to infrastructure, yes, our organization is heavily preparing and engaged here, first and foremost, on the short-term activities, which are related to renovation. This is going to become visible probably towards the end of this year when first money flows. But certainly next year, we will see more activities in renovation. This is, of course, also something which is steered by the federal agency for the rail and for the roads.

So here, a key element is that this increased project activities must be done with, let's say, limited increased labor and time constraints. So here, the acceptance of new solutions is better than ever. Also the sustainability angle that this, let's say, renovation work needs to be done with lower carbon footprint material is helping us at this stage to get ready for the implementation of the renovation in Germany.

The longer term, let's say, new infrastructure activities, we also support with the architects, with the engineers and also then creating this longevity targets for the new construction that is planned. Also there, I mean, our discussions with them is indicating very clearly. This is great that we can spend so much money. But we do not have, let's say, the labor to plan and execute. And therefore, they are looking for simplified solutions. They are looking for systems where they can bundle things more likely going forward than in the past, where individual items were sourced and designed.

And here, we see also a possibility to leverage our competence and provide these bundles to make those plannings and the execution easier because this is -- we are talking here about the massive increase in spend that is a concern for the engineers and the contractors how to execute if we continue the same way we have built the infrastructure in the past.

On the industry side, I think I indicated we have there a momentum that is very encouraging. The automotive industry outside of China is very challenged, but we can increase. This is an industry -- also industrial manufacturing of home appliance and other transportation means is challenged and is seeking support to get more efficient, to use more advanced solution. So the time is actually perfect. When they are low in volume, they are investing into efficiency, upgrading their processes. So we are very active, and we see first results of this in this change of momentum on the industrial manufacturing side. And this takes place everywhere around the globe. This is an efficiency-driven industry. Performance must increase, but cost must come down, and that's where we are engaged, and we also believe that's going to drive future growth in the future.

And on the M&A side, I think what I mentioned before, of course, it's always a competitive market. But as mentioned, the exit or the increased exit desires of private owner doesn't come at a higher multiple. It's rather that we have chances here also to make good deals going forward. So it's -- the numbers are higher, but let's say, the multiple pressure is rather less than when it's a high season.

Okay. Thank you very much. This brings us to the end of our call. Thank you for joining this conference call, and thank you for your sustained interest in Sika. We wish you some wonderful summer days ahead, and goodbye.

Thank you.

Thank you. Bye-bye.

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