Andritz Stock

Good morning from ANDRITZ in Andritz, the place of our origin 174 years ago and also where our headquarters is, a warm welcome to the ANDRITZ Capital Markets Day 2026, and thank you for joining today. I'm Matthias Pfeifenberger from IR, and I will guide you through the day.

100, actually more than 100; we have 120 registered participants, bankers, analysts, investors and our Board members, and we are really pleased to have this level of participation. Speaking of investors, we have our largest shareholder here in the audience and our Chairman.

Please give a hand to Dr. Leitner. I hope you have enjoyed the corporate video. It's what we do at ANDRITZ and what we stand for. And before I walk you through the agenda, let me highlight what we try to accomplish today. We like to present you ANDRITZ from a different perspective with a focus on the 2 areas that you see on the slide. So please enjoy. I hope you had an espresso pulled because it will be a day of full of information.

And now let me guide you through the agenda of today. I need to click. So first, we're going to start with our Executive Board on a strategy update followed by the financial update. We'll present new medium-term financial targets to you, our positioning in energy businesses and also our digitalization strategy followed by Q&A. We will then resume the morning with a focus on our energy businesses in detail and the deep dives on large Pulp & Paper, our Metals diversification strategy and then end with closing remarks and key takeaways before lunch at 11:30.

In the afternoon, we have the pleasure to open the new ANDRITZ Experience Center for you, showcasing ANDRITZ capabilities in automation, digitalization and AI and guide you through customer value cases and digital solutions and will also have a tour of our manufacturing site. We will divide you into four groups, two of them running on one track AEC, followed by the manufacturing and then the groups will basically reverse. You're already assigned to your group on the VIP cards we distributed, so see the individual agenda items there below. Then we will come back to this presentation room. And you will be distributed farewell presents, and there will be transfers to Graz and Vienna Airport.

Before the AEC visit, there will be a safety instruction and you will also get safety equipment in this room. And now it's an even greater pleasure to introduce our speakers to you. Please welcome with me the ANDRITZ Executive Board, our CEO, Dr. Joachim Schönbeck. Our CFO, Vanessa Hellwing, our CEO, Pulp & Paper, Jarno Nymark. And last but definitely not least, our CEO, Hydropower Frederic Sauze. Yes Click nice for us.

And now it's my pleasure to welcome Dr. Schönbeck to the stage with initial remarks and an update on our long-term profitable growth strategy. Dr. Schönbeck, please join me on stage.

Thank you, Matthias. Good morning, ladies and gentlemen, not too many ladies in the room, but some -- that's very good. So thank you very much for coming all your way to Graz, to join us here for our Capital Markets Day. And if we move now right into the middle of it. We believe that ANDRITZ is relevant and will remain relevant for the industry. We have, I would say, a diversified and well-balanced portfolio through Pulp & Paper, Metals, Hydropower and Environment & Energy. While Pulp & Paper represents about 40% of the business volume, Metals, Hydropower, Environment & Energy fluctuate at the moment around the 20% with Hydropower on a very steep increase in terms of volume and relevance for the group.

What is driving ANDRITZ is the need for electrical energy, for renewable energy, for circular economy and for digitalization. This has been developed over the years, and we believe these will be strong drivers for the business to come. And while we hear a lot many people also investors say that Pulp & Paper is very boring business. Wood biomass, basically is the only renewable raw material that has a critical meaning for the industry. And therefore, we believe being in that business with a long expertise and understanding and developing how much more you can do from wood than just paper is really -- is a key asset. And as we are not -- even though we report every quarter to you, we are -- we go beyond the quarter and we go beyond the year. And we believe that on the long term, a lot of these technologies we are currently developing and have developed will be very relevant.

So we are coming from ANDRITZ. Here is where you are, where the company has been born, but we believe we are a true global player. We don't even have the majority of our employees in Austria. It's 12%. And we are -- I would say, we are regionally well balanced among the globe, 14% in China, 14% in Germany, 15% in North America, 13% in South America. I think that is well balanced. And we are driving -- we are basically driving the trend out of Europe further on, bringing as much value add close to our customers as we can. We have about 30,000 employees in 280 locations in more than 80 countries, which is a strong value proposition to our customers, knowing that wherever they go, we probably are already there and can help them.

We are particularly proud that we managed a couple of years ago to surpass on our manufacturing footprint. The emerging markets have now the majority, and that trend is continuing as we are shifting value add close to our customers into the emerging markets. We are leading a well-diversified industrial group. We do what we do with leading technology positions. We are in attractive niches that are big enough for us to grow and small enough not to attract too many others. We have significant barriers for entries, new competitors through very extensive and good references. And we have a long-lasting customer relationship, which secures a lot of our business model. We -- in each market we are in, we only -- actually, we only have a few customers. So also for us, it's important to deliver, to behave well because we cannot lose the customers. And therefore, I would say it provides a good discipline for us. We have a global setup, which for our business model is very important. We can execute locally, we can source locally, and we can keep a good customer proximity.

Developing the service business is one of the well-proven growth engines. For ANDRITZ, we have now 45% service revenue. We had an increase in service revenues of 8% compound annual growth rates now for many years. This not only provides a closer tie with the customer, but it also lowers the cyclicality of ANDRITZ's business over time. We have a strong balance sheet, and we are financially as independent as you can be in this world. We believe this is a critical qualification to do large-scale projects over significant lead time because also our customers, they want to be sure that the supplier exists not only at the beginning, but also at the end of a project.

We, as I know from many discussions with some of you that what we call the diversification is not always what you really love. But what is holding our group together is, I would say, a good operation model, providing complex custom-made projects to our customers worldwide. And you need to have a certain volume and you need to have a certain also financial stability to do that trustfully and reliably, and that is what our customers what our customers like. bringing complex projects to, I would say, many remote parts of the world requires certain skills, requires local expertise, requires a robust business model, and it also requires that you can -- that you enable exchange of information inside the group because the countries are very different, the industries are different, but also the countries are different. And when you know your way around in Uruguay, you for sure do not know your way around in Chile.

So you need to be aware. And I think we can bring a lot of that to the field. We exchange on joint customer relationship, but also on best practices in project management, supply chains, but also local partners for installation, civil works is a very valid point. So we believe that from that setup that we have, in particular, in that respect, our business and our customers benefit a lot from our, I would say, structured approach into different industries. Our business model has also, I would say, a true financial benefit for our investors. We operate extremely asset-light. And we can convert good margins in a very, I would say, very efficient capital utilization, resulting in a, I would say, very high return on invested capital.

If we compare it to our WACC, it's a very solid gap. But also if we compare it to our peers, I would say it's quite an impressive figure. We have -- we select very carefully on our value-add steps, in particular, in manufacturing. We are heavily engaged in the engineering because this is where we create the value for our projects, for the customers. The margin progress also uplifted the return on the employed capital. And through that, we can generate steady cash and provide significant shareholder returns. So we believe this is -- it is a good model and the variety of industries we are serving is benefiting here in particular. If we look back to our last Capital Market Day in '24, we can see today that the businesses we are in, they are in a, I would say, different cycle than they have been 2 years ago. We are in Pulp & Paper and in Metals, we are basically in the beginning of a cycle, which we believe is good for the future to come.

In particular, in Metals, which is a lot of your concerns, we see light at the end of the tunnel. In Hydropower, we are climbing up. We don't believe that we reached the summit yet, as we see a good future to come. Where we are a bit unclear where the market is, in particular, when it will develop favorably is on the green hydrogen and carbon capture, where a lot of the expectations on future growth has not materialized over the past 2 years, and we will come to that a bit later. As what -- let's say, we did what we could do, we developed technology, and we are ready to deploy that when the markets will come.

What is truly a game changer for ANDRITZ is the, I would say, this significant energy exposure and the demand of the world for electrical energy and for renewable energy is definitely driving our business to an extent. We did not expect couple of years ago. We have approximately EUR 3 billion of our revenue is energy related. Of course, the majority to 2/3 of that is driven by hydro, but also all other business areas have a significant exposure to the energy market. It's Metals, Pulp & Paper, and Environment & Energy. It's -- the business we are doing in the energy is well diversified over several steps in that value chain. It's related in power generation, grid stability, electrification and e-mobility as well as the energy transition, storage and decarbonization. So we can basically -- we can benefit from all these areas and a lot of investments need to go on there. You can see that the share of our energy exposure has increased over time, and we expect more to come.

We will go in a deep dive, we will go into the details what we are doing in which area. Our underlying strategy has not changed. We focus on customer service, digitalization, and decarbonization as the main drivers. We want to grow in revenue, we want to grow in profitability, and we want to grow in our service share. That's very simple, and it's not changing and most probably will not change very quickly. If we see how the growth has been driven in the past, it could be an indication for the future. We definitely see the significance of service, while our total revenue grew by approximately 4% over the years, service revenue increased by average 8% annually. That is a very good trend. The margin expansion over that time by more than 200 basis points, also driven by the strong growth in service revenue. And when we see where does the growth come from, is it about -- it's almost 50% organic and the other 50% coming from M&A.

Disciplined M&A, for sure, is a strong growth accelerator for ANDRITZ. It always has been, and it will continue that way. We basically focus in 4 areas, the first and foremost. And basically, our historical M&A agenda is complementary technologies. So we try to complement our offerings towards our customers to complete the value chain to provide them a one-stop solution and provide them a better service than they had before. That is not only good in terms of the customer that they know us that we have a reputation in those markets, but it's also a significant element for us to derisk M&A processes because we basically know our targets already for many years. We know how they behave in the certain industries. We have a feedback also from the customer side. And through that, we have maybe -- not maybe, we definitely have more successful M&A and less riskier targets than many others.

So we understand their products, their culture and the risks and the risks are lower. We have a good track record with 3 to 5 acquisitions per year. And since 2018, we invested EUR 1.5 billion here, and we believe with a very good return.

The next main area where we focus our acquisitions on is customer service because if we want to grow in customer service, we also have to understand that all customers that have a plant are already serviced by somebody. So acquisition is a very natural way to grow into these markets. You can see that the portfolio expansion is across all business areas. Definitely, a heavy weight is the acquisition in Pulp & Paper, but it's also as it is the largest business area that is very good. We had -- in last year, we had, I would say, a particularly successful year in M&A with 6 major acquisitions that we made this year. Unfortunately, we did not report anything yet.

So growth in service business, as I told you, is a key priority and a key driver of our equity story. 8% compound annual growth rate over the past 7 years is a good track record. We grew over that time, we grew the service share from 35% to 44% of the total -- of our total revenues. We have -- worldwide, we have about 120 service locations with more than 7,000 people dedicated to serve the customers. And what you probably have not been aware of so much, the service market usually is 5x to 8x larger than the capital market. And with the volume, the market shares we have there, it's basically always the opportunity for us to grow. And that is particularly attractive for us as on the capital market with the high market shares we have in many areas, we cannot grow against the market. When the market goes up, we will go up. And if markets go down, we will go down. And that's the burden of being a market leader and having a high market share.

We will grow further. We will grow our market share in the existing fleet. So also the good capital business that we are doing is growing this field. We will move more into operation and maintenance models for our customers, that, I would say, tightens this life cycle partnership. And also our customers more and more understand the value of leaving the maintenance and in some areas, also the operations to the OEM who understands the technology and the design to a very large detail. We employ digital solutions to provide a better service with, in particular, analysis of the assets and also predictive maintenance approaches. And of course, we will continue to look for M&A targets in the service area.

We are serving basically with a strong portfolio. We provide field services for all our customers, on-site repairs, emergency supports, training and consulting. We heavily engage into spare parts and consumables. There is a huge demand, fast turn items, and there are many critical components where we need to be very close to our customers. We do retrofits and upgrades on a regular base as an order of magnitude for industrial assets like we are producing, you usually spend our customers spend usually the original investment amount within the first 15 years once more. So there is a significant business behind that, and that is -- that's also sometimes larger projects we need to run with the systematic of a capital project.

And then what I said, operational and maintenance, we are working on service contracts for the O&M, predictive maintenance and AI-powered digital solutions definitely will provide us in the future a better position in that area than what our customers usually can provide. In the -- if you look to the service revenue share, you see that in Pulp & Paper, we already reached the 59%, which is very high. Partly that's first half '26, partly because the capital is lower than we like to have it. On the other side, also 50% is quite high. If you look at Metals, we are only at 29%, which we can say it's a pity. But on the other side, it's a big opportunity and growing the service share in that market also towards the 50% definitely provides good opportunity to increase the profitability.

Overall, the target midterm is to reach the 50% of our revenues in the service. And you can do your mathematics yourself if we keep the 8%, when we will reach the 50%. But as I said, capital revenue is more fluctuating. Therefore, the numbers are not that predictable. But you can see service revenue share constantly rose over the past years, but also the absolute value of the service revenue increased. And that is what is really important, makes our business more robust, makes the returns more stable and a bit more predictable. Maybe that is something that investors like to see.

On the digital side, we have, I would say, we have 2 different approaches to the digitalization in ANDRITZ. The one is our Vision & Mission for our customers, what we provide for our customers. We want to be a leading partner of our customers for digital solutions, fulfill the customer needs with a final target to enable the autonomous plant and raise the productivity. That is basically what we are focusing and developing around our customer solutions. And then we have an internal perspective to provide the ANDRITZ organization with the right digital setup, the state-of-the-art tools and technologies to provide good solutions to the customer. And that's basically standing on 3 pillars. The one is a secure foundation and that first and foremost is operational resilience and cybersecurity, need to deploy our tools highly efficiently and to create a competitive advantage through what we are doing.

And if we go maybe into a bit of a detail, AI is in everybody's mouth, and I would say, also in ours. And if we would characterize where do we stand between our peers who are -- some of them are, I would say, very AI-euphoric and some are very AI-cautious. I would say we are right in the middle. We are very pragmatic. We definitely are a first mover, but we do everything we do against measurable business value. We have chosen a 4-step approach. We moved in very early beginning of last year to onboard as many of our employees to AI tools. We have now more than 10,000 AI users in the company on a regular base. And we gave a lot of freedom to our people to develop to, let's say, play around with the new tools to see what can be done.

And what came up, we have now more than 10,000 agents that are regularly used, which tells us that a lot of creativity is within the people. We are steering that through our AI competence center. They govern and orchestrate what is being done and they connect the people who are working on similar topics. And through that approach, we could then create some of these key areas where we wanted to really excel and get a competitive advantage. That is what we call the ANDRITZ engineering assistance where a lot of activities have been combined. There is this analysis of terms and conditions from the customer, knowledge preservation plays a big role, field service agent, contract assistance and also the entire area of quality management with the NCR analysis and the lessons learned, vast amounts of data are resting there and probably they are too much for a human to really go through.

And then we have -- in the middle, we have this one step we call Accelerate. This is where we work with our partners, in particular, the software providers in the engineering area because they provide good AI solutions, we can connect and we can work on that. So from that point of view, we believe we are on a good path there. And we -- at least this is what we have been told by others that for an engineering company, we are moving well ahead.

For you, that might be also important to feel safe with what we are doing in our IT that we are -- security is a solid base of our IT system. We basically provide a security by the design of our systems. We have a significant cost advantage if it comes to cyber insurance on retention level and insurance premiums, we are well below industry average. On the certification and compliance, we -- I would say, we are we are really good. No major nonconformities have been reported through these audits, and we are on a measurable maturity level on the CIS 18, ranging from 0 to 5. We have a target of 4, which is considered very high in class for an industrial company like ours. We are currently at 3.5. And by end of the year, we will be at 3.6. So we protect the group and to be sure that also tomorrow, we are able not only to deliver the solutions to our customers, but also on time, pay all the salaries of our people.

Looking to our customers, we're having -- we are looking from -- basically to move our customers on their path from automation to autonomy. We have in our global automation, we have more than 100 locations with more than 2,000 employees, 12,000 installed base systems installed with our customers. And we are focusing on the assets, keeping them productive throughout the lifetime. We want to turn the complex processes our customers are running into stable and predictable operations. And we want to convert the operational data into a measurable efficiency improvements. All that we do with a target to a fully autonomous operation and our experts will provide more details to you in the experience center that we will see in the afternoon.

On the financial side, we talk in our automation business, we talk about roughly business volume of EUR 800 million, which has been grown with 10% approximately over the past 5 years. That's the speed and the growth rate we would like to keep. And we are working in 3 areas. The one is this classical automation and electrification, which is basically the basis you need to set in order to get something moving. We are moving then in with smart products, especially robotics and vision systems. These are the most drivers as well as advanced analyzers.

And then we move to digitalization, Digital Twin solutions, operator training simulators, physics-based simulators to really test new ways to run the operation without risking the assets. So these are the areas that we are working in. To implement that, we have developed an open vendor-neutral automation platform we call Metris. And here, we are running on top of the shop floor level, which is provided by the major automation suppliers. We are running our models for asset optimization, process optimization and operational efficiency. So basically, it's the shop floor level provides the network on which is running, and we are providing the Netflix content to make it better to have an idea how that works.

We are delivering, I would say, a strong customer value through this Metris approach. We -- on the process optimization, we can reduce the OpEx by up to 20%, increase the output by up to 3% through asset optimization and life cycle management and driving the operational efficiency 10 percentage points up. And that is all without major hardware investments. That's only basically through analyzing the data, choosing better set points and decreasing downtime of the assets.

We have our business model, we go through supply contracts. We have performance-based contracts, but we also have Software-as-a-Service contracts. On the AI journey for our customers, we believe we have been early mover. We joined with PSIORI, a data science company from Germany. We took an equity participation already in 2018. We have now machine learning implemented in our Metris all-in-one platform. You will see about that in the afternoon. We have innovative products moving computer vision into autonomous operations. And we are happy that it has been externally recognized when we received this Intelligent Manufacturing Award from Microsoft, which was a nice recognition of what our people are doing.

On our ESG, there is not a lot of new things to report to you. We have set up last year our new sustainability program, enabling the green transition, supporting people to grow and govern with integrity. That is what we want to achieve. And we have set up KPIs to measure the progress on these -- in these dimensions towards 2030. That's E-impact revenue, that's greenhouse gas emissions, accident frequency rates, women in leadership positions. And on the governance side, we have very much focused on our supply chain.

Short update where we are. First half '26, we are well on track in all dimensions. And so we are confident that we will meet these targets by 2030. Also, our ESG performance has been externally recognized. The -- all [ known ] rating agencies have increased their ratings. And in particular, I want to point out this top 5 rating of EcoVadis, which is really a good achievement of our teams. We -- we had high hopes for several new technologies that we have presented to you on the last Capital Market Day. And if we put it in short, we had one of these new products that really met market -- our expectation, that's the synchronous condenser. Here, the market really developed very favorably.

Then we had 3 areas, the side streams, the biomethanol and the textile recycling where we could see a decent market, not a brilliant market, but some progress. And then we had 3 technologies, the green hydrogen, carbon capture and the battery, where we did not see the market developing in a way that we expected that, and we will come to that in a bit detail. So we also provide you today with new midterm targets financially. These are the targets now we have set up for 2029, and we are targeting for revenue of EUR 10 billion and a comparable EBITA margin of 10%.

And you might be -- as you're all quick in mathematics, you might be surprised about the high ambitions we have because it would require stronger growth than we had in the past. First of all, we want -- of course, we want to be -- tomorrow, we want to be better than yesterday. But also we have a particularly strong backlog in our orders. And we also see that on the cyclical side in the markets, we are in a better position than we have been 2 years ago. And just for the books, these will replace the 2027 targets we have put out. But of course, we continue trying to achieve that, but the new targets are now the one for 2029.

On the -- we also reviewed the corridors, the margin corridors for the 4 business areas. And we have uplifted the business areas, Hydropower & Metals, that has been increased by 100 basis points each. So Hydropower now is targeting 8% to 10% comparable EBITA and Metals is targeting 7% to 9%. While Pulp & Paper remains stable, we have harmonized Environment & Energy also to this 2 percentage point bracket, and we have lowered the 13% upper margin to 12%. So that is -- that's -- even though it has been revised, I would say it's still on a very strong profitability side, well above the 10%.

We believe -- why we believe we can achieve that. We have a backlog well above the EUR 12 billion. That's the strongest in our history. We have more favorable positions in the cycles. We see a continuing strong growth potential in Hydropower. And we also see that on the Metals side, we have -- we will collect some fruits and harvest from the heavy restructuring we made over the past years.

That's -- with that, I come to my end, and I would like to hand over to Vanessa, our CFO. She will give you more guidance on the financial strategy update of the group. Thank you very much, and we would be available for Q&A later. Thank you. Vanessa?

Yes. Thank you, Joachim, and warmly welcome here in Graz and also online wherever you are. So we just heard from Joachim that long-term profitable growth remains our key objective. And I would like to start here directly with ROIC steering, we here ensure that our growth really creates value. As many of you know, in the last few quarters, we have focused a lot on ROIC and economic value creation and ROIC is indeed embedded in how we assess our business investments and M&A opportunities. And our metric here is deliberately clean without any adjustments and full goodwill and intangibles.

We are prepared also to accept temporary ROIC dilution when we see a clear strategic or financial rationale behind this. And this is also what you could see in last year '25. What remains important for us here is that over the time, we keep a healthy spread above our WACC on the ROIC level. So in fact, we could increase the ROIC by 550 basis points since 2018. And also increasingly, we use ROIC as a monitoring tool for our M&A targets, which we evaluate in terms of their impact to the ROIC of the group. And I will also come to that later.

So the resilience of the model is very important here. Even in weaker times, ANDRITZ has historically generated substantial returns. And you can see this here on the chart in 2019 and 2020, we had huge restructuring measures. And the impact is seen here also in the gray bars where we are indicating the comparable EBITDA. And even with this, still the floor has always been nicely above the WACC. In 2025, we had quite concentrated M&A spend, as you might know. And you see a bit of a dip from this and already can also see the recovery in the first half of this year is visible. So we think we are operating at a quite industry-leading value proposition also amongst our peers. And our steering will certainly remain focused on this KPI, making sure that we use our capital to grow with sustainable value.

And that also brings me directly to our capital allocation because with our strong returns and the cash generation, this gives us a significant strategic flexibility. Our capital allocation, we actually see as an integrated framework of 4 parts, which over the years are pretty well balanced. As you can see here, we are looking at the combined figures from 2020 to '25 and see here that, of course, the share buyback is naturally the smallest and most opportunistic part of the instruments.

And for M&A, we predominantly do bolt-on deals. However, we do have the balance sheet capacity for larger strategic transactions. But as always here, also the discipline on target selection remains, of course, priority. So we obviously dedicate also a relative fixed part to our dividends with our progressive policy and a target payout ratio of 50% to 60%. And you may remember that we increased our dividend per share to EUR 2.70 in '25, and that was the seventh increase in a row.

On the CapEx side, here, the main part was 40% over the years. As you know, we are quite an asset-light model, and that also means that our CapEx for our maintenance is structurally quite moderate. So what comes on top is basically selective capacity expansion also for service, which is very important for us and then also for IT investments, digital infrastructure, and sustainability or customer-related investments.

We are actually frequently asked about our M&A strategy, and Joachim already elaborated on the strategic criteria. But let me also share some view on the financial perspective here. Generally, we buy, we improve and integrate, we create synergies and thereby, we create value. Synergies and operational improvements can effectively reduce the acquisition multiple in about 3 years. It's what you see here. And the businesses that we acquired since 2018 at the time of acquisition had an aggregated EBITA margin about 380 basis points above ANDRITZ's margins. So these numbers are revenue weighted, not only simple average of the takeover multiples.

And that clearly shows that our M&A strategy has obviously not just added incremental revenue, but has consistently also contributed to improve the margin profile of the group and thereby is our main lever also to profitable growth. You can also see from our balance sheet that we have acquired in a very disciplined manner, leaving goodwill and intangibles on quite a low level of our total balance, especially if you see this in comparison to our direct peers. And this also translates very well back to our ROIC effectiveness. And speaking of strong financial headroom on our balance sheet, this is also, as you can see, much stronger compared to our direct peer group.

Which, in fact, brings me also to the next slide. Financial headroom remains significant with our strong financial position, EUR 600 million net liquidity and close to EUR 1 billion gross liquidity and an additional flexibility that is provided through our revolving credit facility of EUR 500 million. So even theoretically, considering a leverage indication of 1.75x, our additional transaction capacity could be more than EUR 2 billion. And this is ready and available through strong commitments of our core banks. Thank you for this at this time. So we are not indicating here that we will do a large-scale M&A transaction anytime soon. But if the right strategic opportunity comes along, it shows our balance sheet gives us the ability to act.

We have also shifted our focus in the recent quarters to operating net working capital. And our objective here is not to minimize net working capital at any cost. This is to optimize while protecting also our profitable growth, project execution and especially our supply chain security. On the contract working capital, of course, the clear target here is to structurally stay negative over the project life cycle. And this is with strong order intake and advanced payments of our customers very well supported.

Trade working capital on the upper side, we, of course, optimize it, but not to the expense of profitable business and supply chain resilience. You have seen significant supply chain disruptions and geopolitical events in the last years, and we can consider that this also might continue to a certain extent. So therefore, net working capital can deliberately increase here, where we see service activities requiring availability of stock, where geopolitical risk really justify additional safety stock and also where backlog execution requires it. And fluctuations on the backlog that can be about EUR 300 million quarter-over-quarter. That's what we can expect with our business model.

So following frequent conversations in our investor meetings and also in some earnings calls last year, I would like to shed some light on a more structural topic here, which is, in fact, very close to my heart. We have embarked on a global transformation initiative over the last 2 years and have started the 1ANDRITZinSync program last year. So this program is about the enterprise architecture of our support functions and based on actually 3 pillars, which is legal entity optimization, business shared services and also the residual SAP rollout at ANDRITZ. The clear objective is here to maximize the degree of automation based on standardization and global data and financial governance in order to improve accuracy, achieving more real-time data access and thereby also enabling faster financial analysis.

This goes very well hand-in-hand with our overall digitalization strategy that Joachim just introduced to you. So this is not a restructuring program. It is about building an operating and financial backbone that allows ANDRITZ to grow without adding further complexity and to easily scale tools and best practices globally. And I mean, with a history of almost 175 years, a constant transformation actually should be part of the daily operation, especially for the central functions. So we have grown significantly during the last decades and need to reconsider lean structures from time to time.

And talking about the development of the last decades, you might have heard that ANDRITZ also celebrated the 25th year anniversary of being stock listed at the Vienna Stock in June this year. And as a reflection of our long-term profitable growth story, we really created substantial shareholder value in this period. So since the IPO, ANDRITZ has increased its workforce 7x from 4,000 to 30,000 employees, revenue 8x from EUR 1 billion to EUR 8 billion and earnings 16x from EUR 40 million to approximately EUR 700 million in reported EBITDA. And of course, we expanded our global presence to more than 80 countries. We generated 6,600% total shareholder return, including 25 dividend payments worth EUR 211 per share in total. So we substantially outperformed also our peers in Austria and European indices and reached an all-time high share price in the anniversary year just 2 weeks ago.

So I could close my part now with this wonderful marketing remark here. But as a CFO, I probably cannot have a presentation on the 6th of October without current trading information on Q3. So let me briefly share this. On a preliminary basis, our order intake in Q3 should have remained on the level of the last 8 consecutive quarters, which is above EUR 2 billion. And we have had the opportunity here to book another large-scale hydro order in Slovakia, very great success. We reiterate here our fiscal year guidance for '26 and see ourselves well between our target corridors for growth and comparable EBITA margins.

So ladies and gentlemen, I thank you very much for your attention, and I would open the floor now for any questions and would ask Joachim to join me on the Q&A.

Thank you, Vanessa. Thank you, Dr. Schönbeck, for elaborations and the strategy update. A couple of statements before we start the Q&A. [Operator Instructions]

We take the first questions from the room.

It's Akash from JPMorgan. I got a couple to start with. The first one is for Joachim. You mentioned that the service market is 5x to 8x larger than new equipment, yet in -- if you look at whole division across, the highest service share we have in Pulp & Paper at 60%, which would indicate, like, either you are having very low penetration or maybe your current offering may not be able to cover all the service opportunity. So maybe if I can ask like the question, like is this -- like what is driving this low aftermarket share compared to the opportunity? Is this the portfolio that may be lagging the building blocks that you might need to capture all or something else? So that's the first one to start with.

Yes. I think it's a very a combination of all. We are definitely not offering all the services we would like to offer currently, but there is also a resistance of our customers to outsource each and every service the assets need. So in some regions, an outsourcing of maintenance is very frequently done. And in some areas, it is considered core competence. So that is definitely driving that. But as I said, there are also many offerings we would like to provide and we do not provide today, and that is the growth opportunity for tomorrow. And our teams are constantly working on that.

So maybe we can say this 5x to 8x is more like theoretical addressable market, not the...

That's the total market considering what is spent on the asset over the entire lifetime. And there is also very some, I would say, high labor-intensive, low value-add, low-margin business, which we probably do not really like to go after. So this is -- but I would say the market is there. And besides profitability view, every activity we do together with our customers is basically increasing our customer proximity and tightening the partnership with the customer, which is also a value. So we are exactly evaluating in our strategic planning with the divisions exactly where to go in, what to invest. We are building new service centers to move close to our customers to do that.

And then maybe a follow-up on your automation business, and thanks for sharing some numbers. I think it was interesting to note that the business has grown at a CAGR of 10% in the last 5 years. And I think if we look at the numbers from automation players, clearly, this is much higher growth than what we have seen in the market in the last 5 years. Maybe a question I can ask, how much of this growth that you have seen in automation is organic versus inorganic so that we can compare with other automation players?

The majority is organic. We have made, I think, 2 acquisitions, if I recall, majority is organic. And if you're starting low, you also know that it's more easy to grow at higher rates.

And maybe last quick one for Vanessa. On the CapEx outlook, I think given the growth in Hydropower, you may need more expansion there. So when we look at the, let's say, CapEx in the next 3 years, should we expect anything different as a percentage of revenues than last 3 years?

Yes. So we definitely have invested or already started to invest in capacity expansion for hydro to cope with the demand that we have. So you will see some increase, but not substantially.

Patrick Steiner, ODDO BHF. Two questions from my side. Firstly, on your 2029 EBITA margin target of 7% to 9% for the Metals division. How much is coming from service revenue growth in terms of a better margin -- better mix from expected market improvements and further from cost improvements and efficiencies? That's the first one.

And the second one, your 6.6% revenue CAGR to EUR 10 billion in 2029. Should we again expect roughly 50% or a little bit less coming from M&A?

We will -- so starting from the back, we will continue our M&A strategy. So we expect to end up also in the same 50-50 share that we had. On the Metals side, I would say majority comes from the much better cost point we have. We have lowered our breakeven substantially through the restructuring. And then we have significantly improved on order execution. So I would say the majority maybe comes from that business.

The service growth has been slow, as you saw it in the -- on the Metals side over the past years. We do not expect that we can accelerate that heavily even though we are pushing hard. It's a -- market is not very easy to accept new offerings as both major customers group, steel industry and automotive industry are themselves under very high cost pressure. And so that also limits us there. So to put it together, 2/3 from the capital side, 1/3 from a different split.

Daniel Lion in the back.

Daniel Lion, Erste Group. Could you -- just a clarification on your '27 targets. Are you canceling those targets, but aiming to reach them nevertheless? Or are you keeping the targets in place in addition to the '29 targets? Just to make sure how you meant your statement.

We think that if we have one target out in the financial market, one should be the official target, and that is what we have now put out for '29. And as I said, we are working on achieving the '27 targets anyhow. And they are well on the way to the '29 targets. So I say that's clear. But I think it's a bit -- would be a bit confusing if we have too many targets out. This is why I said they are replacing the '27 targets.

So you're still expecting to reach them?

Yes.

Even if it's not officially stated? Okay.

And the second one, could you maybe provide a breakdown or a split on automation and service business within the divisions or at least some kind of comparison how automation services may be different in profitability itself? And yes, just to get a better feeling on how they contribute maybe overall?

We'll think about it.

I think we have one question in the conference call, Ben here in the room.

Benjamin Thielmann from Bernstein. One question, if I may. Regarding your 9% to 11% margin range target. You focus on 10% at midpoint. I just wonder what has changed compared to the calculations that you did in 2024 because back then you went out and you initially said EUR 10 billion revenue, approximately 9.5% margin. Now at midpoint, we're at 10%. And also back then, the Environment & Energy business was, I would say, not in an early down cycle, but it clearly is now because of the weakness in your end markets. So I was wondering what gives you the confidence that maybe the Hydropower demand, which is a lower-margin business than the E&E business can get you towards 10% in the medium term?

I would say the major difference is that the growth that we saw in E&E basically came from the new products, which do not provide as much service as we are moving into the installed base and also the first of its kind projects usually don't have the profitability at peak. So this is why we expect now better margins to come. Even though hydro is on the margin side, lower than E&E, it is increasing. We have made substantial, I would say, progress in the restructuring of metals, and that is what gives us the confidence to go for the 10%.

Perfect. Maybe one follow-up question is on the Metals business. You upgraded basically your margin or your midterm margin targets there by 100 bps. I think the restructuring is basically over in, let's say, 6 months. I remember during the earnings call that H1 is going to be over. What -- but at the same time, you mentioned that volumes are still relatively soft. You expect that in the next 2 years, we see a volume trough. So where is the margin improvement coming from, if it's not coming from volumes?

Probably have -- I was unclear. We reported in the last call that we see an improvement in the market this year in steel and by end of the year for the automotive market, and that is basically confirmed. So we see project activity. And usually, that project activity then results also in some orders to be placed. So -- and from that, we have with a lower breakeven point, we have a good basis for this margin expansion.

I think we have time for one from the webcast, I think there should be one.

The next question comes from the line of Sven Weier from UBS.

My 2 questions. The first one is also on the 2029 guidance because you have a point target for the revenues of EUR 10 billion, well understood, but you guide a range of 9% to 11% on the margin. And I was just wondering what's defining the lower end of that range and the high end? Is it that you may be uncertain about the divisional contribution in that year? Or what is defining the range?

And the second question is just coming back on services. You already alluded to Metals and that it's difficult to raise that share. But what about hydro? I remember that there's been also a long-term goal to raise the service share in hydro. Do you think with the shift that you see currently that it will be easier to raise the service share of hydro?

Yes. Vanessa, can you say why we have the range on the EBITDA margin and the point on the revenue?

Yes. So you actually pointed this out quite rightly. So of course, we will also have a shift in volumes and Hydropower is heavily improving and also with this a bit slower increasing the margin. And thereby, we have this range to see how we further develop with hydropower until '29 in the combination with the other segments that we see. Yes. So that's basically the argument here. And on the Hydropower service share, will you elaborate on this?

Yes, Hydropower service share is structurally increasing over the time as I would say, especially in Northern America and in Europe, the increase in hydropower is usually done through modernizations and rehabilitations. So this is where the service margin is -- or the service volume is increasing in Hydropower. New builds mainly happening in South America, in Africa and in Asia.

Thanks a lot. I think this concludes the first Q&A session. We are slightly behind schedule. So I would ask you to come back here at 9:50 and 10 minutes for a short coffee break. Thanks a lot. Thanks, Dr. Schönbeck, Vanessa, for the elaborations.

Thank you.

[Break]

Flexible hybrid solutions, allowing batteries and hydropower that we also offer through our hybrid controllers. The grid stability is also under pressure because there is a huge retirement of traditional fleet from gas, from coal, from oil worldwide, which is putting a lot of difficulties on the grid because all those rotative power, which were massive on the grid, providing inertia are disappearing, are not replaced by photovoltaic and wind, which provide little inertia or short circuit contribution. So although there are some electronic solution to these features, Hydropower is also very well positioned together with our SynCon to give those additional features which are needed in the grid on very sudden basis and the blackout in Spain 2 years ago is a good example of grids which are performing very well, which can fail due to impact on voltage and frequency.

AI data centers are also, as I said, a major driver, even if it's isolated, but that provides some difficult features because they need continuous stable power to operate. And therefore, only thinking that PV will fuel those AI is not sufficient. They need additional features, which are giving by grid operators or by local grids. So triggering a lot of utilization of gas power, and we are also well positioned here because we are one of the top 5 suppliers for generators, coupled with gas turbine from our past, and we have been increasing that recently. I will come back to it.

The aging of the fleet, it's not a new topic. More than 40% of the Hydropower fleet installed worldwide is older than 40 years old. They were designed to operate in baseload power. Well, now the needs of these grids are completely different. They require flexibility. They require storage. So conversion to -- of a conventional plant to a pumped storage, it's quite frequent. There are plenty of needs on the grid, on the system that are there. Funding is not an issue. G2G organizations are very active, giving better facilities for renewable projects and fostering not only the funding and the financing of projects, but also development programs in innovation, again, around grid stabilities and so on. And there is a lot of private funding available worldwide. We connect a lot of our customers with those available funding, and that works pretty well.

What is very important is this Hydropower industry developing market contracting models. So we come only 3 years ago or let's call it, 5 years ago from a traditional buyer to supplier relationships through a contract, which were highly nonflexible to now 2 different things. One is the early contractor involvement. I've mentioned that in the last CMD. We were looking at it as a starting phase. This has increased exponentially. The early contractor involvement is a very nice feature. You will see it on my presentation of pumped storage, reducing lead time, enabling more collaboration and derisking the project significantly for the investors and for us. So this is a win-win situation that more people are taking. It started with Hydro-Québec. Now many utilities in Europe are doing it. And worldwide, India is using it very, very actively.

The second aspect is those partnership. So Hydro-Québec started with a partnership working chunk by chunk rather than buying the full EPC project in one shot, they will buy first the engineering development. Then when the engineering is completed, we move together with the supply part of the contract on open basis where original supplies are shared, decisions are made where to buy what in parallel or not. And this is clearly derisking the project. But the most important part is on site installation, which is always a very difficult exercise to plan in the long run for projects which last up to 6 years, 7 years. And therefore, this is ordered separately. So it started very well. We have benchmarked that with plenty of our customers worldwide, and this is adopted more and more.

The last point is important, digitalization linked to our lifetime asset management. It has been reported before. It's an environment where our customers are widely equipped. They are knowledgeable. They run there, they operate their power plants, they maintain them, most of them being large government-owned utilities. But we see in some aspects with more private investors coming, people with less knowledge about operation, requiring more of those services. We are already using our data from many decades to be able to optimize design to optimize operation mode and predictive maintenance. This is coupled with digital twin that are more and more used to simulate relationship from these power plants with the grid. And this is very useful in this continuously evolving environment.

And I said last night at dinner that most of the headaches are with the grid operators today, more than the generators because they have to deal with all those intermittency frequent variation of the grid, and they need solutions and features for that. Digital twin helps for them to simulate different utilization of our assets. Cybersecurity is at the heart of the worries of the generators or the grid, and we are thankfully from development from the past, able to provide solutions.

So how do we respond to those market trends? If you remember 2 years ago, I introduced the fact that cyclicity of hydro would need us to do something else in addition to prevent that in the future and to enable us to grow. So we introduced this grid solution dynamic, and I will expand that a bit more, coupled with our traditional long-lasting service approach to the market. Our ambition is to grow revenue to EUR 3 billion in this area, which went down to EUR 1.2 billion just before COVID. So this is a strong ambition for the coming 3 to 5 years. But as you see, the results from 2025 are on its way, and this year will continue in that similar positive trend.

In Hydropower Solutions, we are clearly #1 in revenue in number of plants or units or projects sold, our Chinese competitors are well positioned, but they only dedicate their attention to turbine and generator activities. The rest is contracted with other companies, which make them lower in revenue, and they are very much centered in China. Ourselves, we are clearly covering the rest of the market in all continents.

In Grid Solutions, our ambition is to grow this business from a low 300-digit revenue to EUR 1 billion. Obviously, this amount is not included in the EUR 3 billion. This is going through organic development, that we are currently preparing and through acquisitions that we are actively seeking.

And in service, we -- as I said, we have through our global network of representation in more than 25 countries, the local attention region by region to our customers, not only for service, but also for capital project development and cooperation. So going through a snapshot of what are our products and solutions that we offer on the market. First one is pumped storage. We discussed it in the last CMD. It has grown exponentially. As I said, China is ordering between 10 and 20 power plants per year -- pumped storage plants per year. Last year, it was 22 in 2025. They are growing towards 30 plants per year until 2035 at very competitive prices, low margin. We take there some share, very limited compared to what was the share given to non-Chinese companies 5 years or 10 years ago, but we are still present in this market.

Behind China, the rest of the world is equivalent to the Chinese volume. Most of it is driven by India, where we see big plants, mainly driven and invested by private investors compared to what we were used to in the past, the government-owned utility, which was a bit more difficult to work with. So we have a very strong attention to those private investors who are now moving even outside India, a bit more easily than the Chinese investors. And we see a balanced market for the rest of the world. In Europe, it's mainly conversion of existing plants into pumped storage, but we see in Southeast Asia, a lot of push. We are running a very big project in the Philippines, called Pakil. We are tendering significantly in this region. The Americas is a bit slow in the North and in the South, but plants are there, and they will have to get there sooner than later for their grid stability purposes.

So our position is clearly a #1 position. We have commissioned over the last 2 years, 2 power plants, 1 fixed speed in India, 1 variable speed in the Emirates, Hatta working well. We are solving some technology difficulties on some projects, but the evolution of this market is very positive. We are well positioned with standard technology, which give us a mid-triple-digit revenue landscape for those solutions.

What are the solution here? As I said, standardization is key because pumped storage compared to a conventional Hydropower plant is not so sensitive to efficiency. So you can come with a reasonable size of equipment for a given site and implement it on a more standard base. So this is clearly the Chinese market. They are all very standard, 300-megawatt units. But we see worldwide 3 ranges of pumped storage, the big one, 350 megawatt, Europe, which is more 150 to 250 megawatts. So between those 3 stable ranges, we are enabling to standardize, which when you couple that with early contractor involvement and partnership makes the project much faster.

So the clear topic here, I can give you an example of one of the running plant in India, Pinnapuram that we commissioned beginning of last year. The project was a total of 5 years compared with the 6, 7 years that we see for a plant of 4x 250 megawatt plus 2x 150 megawatt. Basically, the first 2 years of technological development for us was made in parallel from the customer closing their permitting side and the financing side. So this time, which is normally sequential was made in parallel at reduced cost for the investor, and we saved 2 years on that.

Then the installation of the 6 equipment, full term team, our customer was taking care of the civils, took 2.5 years, so which is very agile. And when we look at some regulations in Europe, in North America, still a challenge, but this is achievable in a country like India where 5 years ago, we were struggling. And then 6 months for commissioning one unit one by one. So that gives around 5 years of a full project, which makes in terms of competitiveness of pumped storage versus battery, a good start. And obviously, we are investing a lot on reducing those cycles and the costs.

I will move to the next -- sorry, I will skip this one. The next one our Hydropower new-build solutions, still an important player in the market. So what do we do there? -- different kind of Francis runner, Pelton runner that you will see today in this workshop here. Obviously, a lot of run-of river solutions, Kaplan, small size or bigger size. So this is still a very active market. This is basically, again, worldwide. We see more development in Asia, in Africa and in Latin America than in Europe. And so we have very big projects like our Luang Prabang projects on the Mekong River, which are huge Kaplan being installed on a very fast-track project. And we do have a lot of compact hydro solutions, medium-sized that we sell all over Europe, selecting profitable projects. Our position here oscillates between #1, #2, year-to-year, it depends on big projects, but we are clearly on a leading position as well.

The next one are modernization and service. So I group that modernization can be of different style, the very big ones where a plant with 6 units is fully modernized, looking for more output power, looking for more efficiency to produce more megawatts with less water, looking for flexibility because, as I said, Hydropower is not so much anymore used as baseload power, but as regulating power. So the operators require this flexibility to stop and start the units when they want to reduce the load, increase the load in a flexible manner, and this has impact on the design of our equipment, both mechanical, electrical and electronic. This -- the very large projects for us are classified as capital projects. They are quite big, quite long lead time. Customers will give us access unit by unit, not to stop the operation of their running plants. However, this is part of our service attention to the market.

The rest of the market will be more on single system intervention. So we do a lot of modification of automation of turbine generator. And we provide, as I said before, lifetime support to our customers with different solutions, digital and mechanical. Will accelerate a bit. Turbo generators, it's a niche market. Those are equipment running behind gas turbines. So we provide those equipment to some of the gas turbines suppliers, technology suppliers, specifically to one where we have close relationship, and we are developing investment with them, both here in Europe between Hungary and somehow in India to be able to provide those turbo generators in a growing business, which is mainly driven by grid stability first because gas turbines are very flexible, but also by AI data centers. And so the market for gas turbine, you know it, it's mainly centered at the moment in North America, in the Middle East, but somehow starting to expand in other regions of the world.

I will finish with the Grid Solutions. So in grid, we started, and Joachim mentioned it as a growth initiative 3 years ago to use our knowledge on generators technology to be able to design and produce synchronous condenser, which are basically generators working in short circuit on the grid to absorb excess of energy coming from intermittent power in special peaks and prevent blackouts like in Spain. This has started very actively in Australia some years ago, in Brazil, but we are now seeing country by country the growth. We got a significant amount of projects last year in Europe in isolated grid to start with, like Ireland, U.K., but progressively, all countries are developing the investment. We are booking -- we have booked this month projects in Spain. We are actively developing Europe. India, we are -- we have been selected for the first SynCon project in the country, and we will see that, and we are running a few projects in North America.

So this is a temporary device to stabilize our grids, and this is our backbone of our grid strategy. And from there, what I explained is that we are developing organically solutions to attend substations because the use of substation is completely different than it used to be 5 years ago. So that requires modernization in automation system in new device, and this is an area of possible growth through M&A.

So in conclusion, we are attending a booming market that we expect to continue mid run, even long term, mainly driven by this grid stability positioning where Hydropower is the only renewable energy enabling more wind or solar power, driven by security of energy from different countries, looking more at indigenous electricity supply than supply relying on import of gas or other technologies. Then we have a good complementary strategy with grid, as I explained, enabling us to look at stabilizing this level of revenue or, let's say, reaching it on a sustainable manner, even if there is some drop in hydro as we have seen in the past. And then our historical and long-term-oriented service base is our core business. We are continuously investing on that, being close to our customers. And that's probably one of the reasons of our success to listen to the customers and be present when they have capital plan.

So this concludes my presentation for Hydropower Solutions. I will hand over to Jarno Nymark for Pulp & Paper. Thank you.

Thank you, Frederic. Good morning, ladies and gentlemen, and it's my pleasure to shed you a bit of the light of what we do in the Pulp & Paper area regarding the energy business, and this is namely our boiler business and the related services. And if we start, we start with the recovery boiler for the pulp mills. And those who know a pulp mill typically call this the heart of the pulp mill because the heart shall never stop, and this is designed with the recovery boiler.

And we are the global leader within recovery boilers. We have the largest operating boilers. I think the 4 largest are operated by us. And within the last 10 years, we have supplied the market with over 40 recovery boilers. Of course, the recovery boiler size is very depending on the production of the mill. So you have the extremely large boilers and then you have also the smaller boiler and especially the smaller boilers that we are supplying currently to the Chinese market because they are integrated mills. And of course, the delivery project type also varies from our EPCC in Latin America to EPC in Europe to EPS in Asia Pacific and North America. But there is no pulp mill without a recovery boiler today.

And I'm sure that you're all wondering what does a recovery boiler do. It's a simple process. So it takes the black liquor, the so-called lignin from the cooking process, we burn it and we generate energy and also recover the chemicals so that the chemicals can be reused in the pulping process. So as you can see, the recovery boiler can render a pulp mill from a big energy consumer to a net producer of energy and at the same time, improve the sustainability footprint significantly. And if we look at the growth drivers for the recovery boiler business, it's clearly -- you can see it is related to the increase of the production in China, Asia Pacific, but at the same time, also the possibilities for retrofits and looking at the improvements in the chemical recovery, but also in the energy efficiency to produce more from the existing recovery boiler.

And the USPs in this area is like the rest of any of the pulp mills, the key strengths that we have in the recovery boiler areas are the proven technologies, the high efficiencies and the long running times without the stoppages because typically, a pulp mill stops every 15 or 18 months and the recovery boiler has to stay open during that time. And then the ease of operation and the fast ramp-up curves on the boiler. And of course, with this large installed base, there are also potential then for the service business and not just the upgrade, but also the maintenance repair because it has consuming or wearing parts that needs to be changed in each of the annual shutdown.

Then if we look at another boiler type, so let's talk about the power boiler business for a few minutes. So power boilers, in fact, turn a diverse range of fuels into sustainable power, steam and heat. So as you can tell, they are not only related to the Pulp & Paper industry. So this is -- the power boilers are used in a rather diverse set of end markets. And so the power boiler converts biomass, sludge, residuals, waste-derived fuels into the steam, heat and power. And we offer complementary technologies for these various industries. So the type of the boiler varies on what is the fuel that will be burned. And here, we see a market that is expected to continue to grow significantly in the next few years.

And then this is also driven by the decarbonization, the increasing of the plant sustainability footprint and especially also that we have customers replacing fossil fuels with biomass. And this, of course, gives the opportunities for new modernizations of these large conversions. And if you saw in Joachim's presentation with some of the mergers and acquisitions that we have done, for example, last year with the acquisition of Diamond Power, these are products, the sootblowers, which are very well -- or these are the mostly used in the recovery boilers and the power boiler areas.

Compared to the recovery boiler and you compare the power boiler, Here, you have more competition than just a few competitors in this area, but we are among the leaders in this industry in the power boilers as well. And we need to mention again that the power boiler serves multiple industries. Pulp & Paper is just one of these industries, but we work -- also work with utilities, independent power producers with municipalities and district heating for waste and sludge to energy. And we are not just a power boiler supplier. We're actually a power plant supplier because the recent reference that we have done is really from the fuel feeding, combining the automation, electrification and including also the turbine. So we have a leading solution for any type of the fuels to be burned in the power boiler.

And that was a short summary on the Pulp & Paper. Then I would like to hand over to Joachim for the Environment & Energy and the Metals side. Welcome, Joachim.

So thank you, Jarno. And indeed, we can continue with environment and energy and with Metals where we have also significant exposure to the energy market. I would say, first and foremost, definitely what we call clean air technology to clean the fume gases to the level we like to have in order to feel comfortable in the environment of a power plant. And that's basically dedusting the majority, you probably majority here is too young to really remember when it was for power -- for boilers without dusting. But then, of course, desulfurization and denitrification, which are the main drivers for flue gas and clean air technology. So that's a particulate and gaseous emissions control that we are doing.

Then another important part there is the heat recovery because we want to make sure that we can recover as much heat back from the flue gases as possible in order to increase the overall efficiency of the power plant. And then that what has been developed in that division is the carbon capture because that is also something the CO2 from the flue gases can be absorbed and recovered, stored or utilized whatever the lawmakers allow in the various regions. So we are doing that business for many years. We would say we would say that we are -- globally, we are #1 supplier of these technologies. And we are historically, I would say, a very strong position in Europe.

We're moving -- we moved strong into India over the past 10 years. And we have made an acquisition last year in the U.S. also to participate a bit stronger in that market. We see a strong trend of stricter emission controls. So we see potentially a good business to develop. And you might be surprised, but I can tell you against all prejudice we have, these stricter emissions do not origin in Europe, they origin in China. And that is also something very important. If we don't go there and participate in these projects, then we will end up in a couple of years, we will end up with competitors who can reach much stricter emission control limits than we can. So therefore, we like to be also in this Chinese market.

What is our strength? I would say, definitely is a complete technology portfolio, especially if we go to multistage processes like what you need to do with the dedusting and if you have catalytic reactions like you need in denitrification. So there are a couple of challenges to be done. We have an installed base of more than 6,000 units worldwide where we can develop the service, which we started a couple of years ago. So therefore, we see a good way forward. What is definitely the Champions League in flue gas treatment is the waste-to-energy applications, where we also are happy to report that we are -- at least globally, we are the #1. What is particularly challenging here is that at the end, you do not know the fuel. And if you do not know the fuel, you do not know what is in the emission, but you need to be sure that nothing leaves the stack that you do not want to have in the air.

So therefore, that is a growing market. It's -- for sure, it's a competitive market. And the waste-to-energy, we see also a structural increase as the restrictions to landfill waste is increasing. It's not only it's growing in Europe, but also other parts of the world. This will become a predominant position. Then we have in Environment Energy, we have developed this green hydrogen. As already said, we had higher hopes for that than what has materialized over the past years. However, we were able to build up a strong technology position over that time. We have been awarded 2 major projects. One is for Salzgitter, it's a steel company in Germany. It's a 100-megawatt unit. We are, at the moment, at the end of installation and starting commissioning. Plant will be operational in 2027, and we have been awarded a smaller unit, 12.5 megawatt from Austrian company, RAG. That's the largest gas storage facilitator in Europe, and they need the hydrogen to buffer what they call in Austria, the Dunkelflaute, which I'm not able to translate with my limited command of English language.

So these 2 projects are important for us. I think we have with these projects and with a good start-up, we will establish a good position in that industry. We are already acknowledged as one of the serious players who cannot only provide technology, but also deliver a project in time and in quality. And as I said, most of the money is spent on our side. We need to get the plants up and running. Whatever happens in the world or in lawmaking or in the society, we can hibernate these activities without too much cost on our side.

But I think the good thing is the technology is ready and whenever the market will come, we are ready to provide it. What is good that what is missing in these markets is more the, I would say, regulatory framework as well as some infrastructure for the green hydrogen. Also incentive schemes are unclear. However, with or without these incentive schemes, there are viable business models for the green hydrogen. I think that is important. But of course, you made the cake even sweeter with some incentives and no investor would like to have that pass by.

Another area where we are -- have a significant exposure to the energy side is our pumps business. And there are 3 main activities that we do on the energy side. The one and probably the most important is the main reactor cooling pump for a nuclear plant. That's a business ANDRITZ is doing for about 50 years. And I think in Europe, we are definitely leading supplier of that technology. You will have the pleasure to see one of these pumps on the workshop tour. And it's really a machine. It deploys several thousand cubic meters per second because if there is an emergency in a nuclear power plant, you better want that the water is moving at high speed. So you will be impressed.

Then the second main application we have is the is the small to midsized pumped storage, where we are supplying pumps and for some of the projects going on in Austria, we are currently having active projects. And then, of course, several auxiliary pumps in the nuclear thermal and hydropower plants. That's also part of our portfolio there. We see that market strongly growing with approximately 30% in total until 2030, and that is significantly driven by the renaissance of nuclear.

On the Metals side, we have 2 main exposures to the energy side. The one is what we call the battery. And to be very clear, we are not manufacturing batteries and we don't want, but we are -- we have moved into the development of production equipment to produce batteries. And we have done this through an acquisition and then on that platform, made some development and innovations. We are currently, I would say, we are one of the leading suppliers of manufacturing equipment for lead acid batteries. We are, would say, #1 for pilot lines for lithium-ion production machines, and we are developing into production equipment for lithium-ion mega factories. We have built, delivered and commissioned one of these lithium-ion mega factories in Germany. It is operating.

However, we have to admit it's -- even though it's what you call a mega factory, it's small compared to what the large Asian providers have built up. And we are also, I would say, behind in technology, what they have. They have we have to admit they are 10 years ahead of us. And now we have to apply what we have learned from the Asian suppliers that we need to start the know-how transfer the other way around because we do not believe that it's good to be fully dependent and not have that production capabilities in Europe. So this was an area where we invested. We had higher hopes and we made a clear misjudgment of the market to come. And also we made a clear misjudgment on how far away and well advanced our Asian competitors are.

We keep that on a development basis for the lithium-ion. We move into service of the lithium-ion mega factories, which are installed in Europe and which are currently operating with more or less problems. And we want to close that gap to our -- to the market leaders in that area. By -- during that time, it is -- these developments are financed by the, I would say, solid development on the lead acid business, which is running well. The second exposure we have in, Metals to the energy side is the electrical steel. As you know or you don't know, electrical steel is a high silicon alloy carbon steel. It comes in 2 ways, grain-oriented or not grain-oriented. The grain-oriented is what you need for steel parts, meaning transformers. The non-grain-oriented, you need for rotating parts, so whatever is connected to a motor. We have about 20% of the world market is grain-oriented and 80% is nongrain-oriented.

We have a strong position for the non-grain-oriented #1 or #2, however you slice down the market. Why are we -- why is our equipment so important for that business? For to increase efficiency in these electrical machines, the reduction of the steel thickness is one of the main drivers of the efficiency. As we have rolling mills that can roll this brittle and hard material to very low thickness better than our competitors can do. We have -- we enjoy a very high market share, and we believe that we can develop that. Just to give you an idea, normal standard for electrical motors you see in cars today is a material thickness of 0.3 millimeters. And we have now one project under execution, one mill to deliver rolling down to 0.03 millimeters. That is a quantum gap in efficiency. And I tell you, handling of that material is not very easy. So we see there is more to come, and we are happy that we are a good partner for the industry.

And by that, I'd like to finish, and I think we have a Q&A now.

Thanks a lot, Mr. Sauze, Mr. Nymark, and Dr. Schönbeck. I'd like to welcome you back on stage, and we conduct the second Q&A session.

First questions may be in the room and then moving to the webcast. Akash?

Maybe a question on growth in Hydropower. I think you mentioned a revenue target of EUR 3 billion in 3 to 5 years. And then I think you also mentioned there is up to EUR 1 billion growth revenue target for grid-related businesses. So that up to EUR 1 billion is on top of EUR 3 billion or is that part of that EUR 3 billion?

Part of the EUR 1 billion are in the EUR 3 billion. This is what we do in synchronous condenser. The rest should follow with our organic development or through M&A. So it's an ambition more than a commitment. That's our vision of how this market, which is huge in transmission and distribution could be attended through that.

Okay. And maybe a follow-up on Hydropower margins. I think we have seen with some other power equipment companies who are investing massively in production because of the strong demand, they all are seeing some dilution on margins because you have to take upfront cost before the new production kicks in. So when we look at Hydropower performance in the next 3 years, are we going to -- like does the target include some kind of dilution from these extra costs that you need to take upfront before the new production comes online?

It does because this is the business model. But as I said, through early contracting involvement and partnership, we managed to derisk that significantly. And obviously, our ambition is to reach the upper side of this band in future.

Additional questions? We have one question in the webcast, I think.

Question from the webcast is from Sven Weier from UBS.

Yes. I got 2 questions, if I may. The first one is on the turbos because there in the slide, you say you expect a book-to-bill of over 1, whereas on the grid side, you have over 3.5x. So I was wondering why you're not putting in a bigger figure for the book-to-bill on turbos given the dynamics in the market?

And the second question I had, you said you're #2 on Hydropower plant. So do you consider Voith being bigger than you on that end?

So turbos are pretty standard models. So we manufacture them upfront, most of the sub part and the lead time is around 1 year. So we managed to have quick turnover of our turbo orders. For grid solution, this is, as I said, mainly related to synchronous condenser, which for us is the hardware plus the systems around into substation, making it slightly longer lead time. So that explains the difference between the 2. One is product, the other one is more solution.

On the margin.

So you don't get the order so much in advance on the turbos than on the growth side?

Yes. So margin side for the turbo are growing significantly because demand is moving up. We are also developing service attention to our own fleet. And therefore, we are seeing gradual increase of margin. It's a very low OpEx business, mainly working on order management.

And market share of Voith and ANDRITZ was asked.

Yes. So over the last -- since the last CMD, we have seen a big increase of market share for ANDRITZ worldwide outside China, as I explained. The main reason is our traditional service attention. So we are organized in 9 regions, which are roughly 4 hours flight from any customer headquarters or power plant. And from this tradition, we obviously, they are very much present to help developing capital projects, selling capital projects and executing them. So I think that's the strategy which position us as clear #1. We also have been successful in the past in on-time restructuring to maintain profitability. And now as market leaders, we drive the profitability increase within limits in the market.

Okay. Any residual questions in the room? Okay. No, that seems not to be the case. So thanks for your interest. We're back on track and continue right away with the deep dives. Thank you, gentlemen. I ask Mr. Nymark to stay on stage. Thank you.

Thank you. So I will now give you a short but deep dive into our Pulp & Paper business, but then especially a focus on the Pulp side of our business. But if we look at our total portfolio within the Pulp & Paper area, last year, we were the largest business area with 38% of the revenue, double-digit profitability and with a large service share of 59% -- we maintained a #1 to #3 position in all of the areas that -- where we are active across. But we see that we are clear #1 on the Pulp side of our business, both in the large-scale mills, but also with the smaller integrated mills in China.

If we look at outside the Pulp capital, we're also strong with our complete service and especially here on our Pulp service side, we see a #1 benefiting from the installed base that we have. But it's also worth to mention that our service on the Pulp & Paper side is not only for our own installed base, but we work with any of the installed base in the market. But also then strong on the non-volume side, but also fiber preparation -- but then very well positioned for the growth also on the tissue and the board side.

And I think on the board side, I mean, there's a lot of discussion about overcapacity on each of the grades. I mean our exposure is not that large to that area. But beginning of the year, we have received an order, for example, in General Emballage, where we will supply a complete board machine, including the stock preparation, and this is basically to the end of the winder. So combining all of the acquisitions that we recently have done in our Pulp & Paper area to supply a complete full line.

And then, of course, last but not least, I mean, our Pulp & Paper automation side, we do not report this separately. It is a part of our project, but also part of our service business. And you will have the possibility in the experience center to learn more about the value-added solutions that we provide to our customers then in the afternoon.

But if we look at the market, I mean, the global megatrends are supporting the volume trajectory in the Pulp & Paper markets. And of course, this is driven largely by packaging and the hygiene sector. So we have the demand of sustainable packaging, replacing plastics and then also the e-commerce and the increase per capita usage also in the emerging markets.

The shift from the mature markets to the more the Southern Hemisphere, especially on the virgin, the pulp production continues. And we also see that short fiber from the Southern Hemisphere is also replacing the long fiber from the traditional Nordic producers. And then, of course, we see also that more and more of the pulp fiber is used in man-made cellulosic fibers like Lyocell, and this is predominantly always the short fiber.

So of course, our Latin American mills are, let's say, the most cost competitive, lowest in cash cost in operation. But clearly, we see that the Chinese integrate is increasing its integration levels extremely fast. And of course, this has actually been an opportunity for us in ANDRITZ as we have a leading market position, and we have a global manufacturing footprint, and we have a global service footprint. So we have been very successful in the recent years with the new installed base in China. And actually, you will see that the market share that we have in the Asia Pacific region is globally, it's higher than what our average in the global is.

And if we look at the Pulp projects, I mean we have a dominant market in the large-scale pulp projects, but also in the smaller mills. We have an extremely extensive reference list. We cover all the major pulp regions. We cover all the major process islands in the pulp mill. And also on the graph, you can see this is an example of the bleached pulp. So in the top, you have mills that are completely supplied by ANDRITZ Technologies. Then in the middle section, you have mills which are a mix of various suppliers. And then you see a small portion at the bottom, where we have a very minority share. And you can see also there that the capacity ranges that we have from the 2.55 million tonnes also down to the smaller mills.

And of course, we see that, as was mentioned also earlier that on the side streams. So it's not only the technology that we have with our process itself that lower the chemical consumption, lower the energy consumption, improve the yields, better efficiency, but then we work also a lot to create additional value streams to our customers from the side streams. So for example, the sulfuric acid, so our sulfur loop, we have our lignin process, take the lignin to create additional value-added products and then also the biomethanol. So for us, it's -- we really target what we call the BioCircleToZero, and we really want to make sure that our customers can produce more without harvesting more trees so that we can create additional values from our Pulp mills.

And then, of course, I mean, it's a lot about technology, but I think that it's a lot about the people and the footprint that we have so that we really have our expertise, as Frederic mentioned on the hydro that we have them locally where our customers are.

And I'm sure that this is a question that Matthias and we get all the time. So we put it here. I mean, what is the -- on the next big project in Latin America. Yes, there are projects ongoing, projects in discussions. I mean, if we look at, for example, the Paracel, yes, we have the contract with Paracel. Of course, the works and investments are progressing, but the financing structure of the mill investment is still unclear. So no change on Paracel. And we won't guide you on any timing, but the project still remains alive. But then we see several projects are alive in Brazil. And some hurdles have been overcome, but the final project kickoff and notice proceed still remains open. And as you will see, the large investments in China, of course, this is then postponing a bit the decisions of our South American market pulp producer because the biggest market for the market pulp is in China.

But we also see outside of Brazil, good project opportunities, for example, in Argentina, where you have good access to a very competitive wood basket. So -- and this will also -- so hopefully, this will also proceed. But of course, we are ready to execute on the mentioned projects in South America. And looking at the size and the concept of the current mills, I think we should be in a very strong position because we have the existing references for identical mills in the region. And of course, once the project goes ahead, looking at a 3-year lead time for the projects and of course, on the margins, I mean, looking at the low single-digit levels, but then a rather large EBITDA contributor to our business.

But with this, I have to be remind -- I'd like to remind that I think that on the Pulp & Paper, we're not doing too bad without having any of these large orders in South America. So I mean, of course, we have a strong service business. We have a big installed base. So we have opportunities to grow. And just to look at -- to show a little bit a proof on some of our recent success that we have had, and this is a project together with Suzano Cerrado. And this was a project from '21 to '24. And we supplied all of the process islands to this -- the main process islands to this mill. And it was an EPCC contract. So we had the responsibility of the civil and the installation. And with the start-up of this mill, we set a new benchmark in the industry regarding the start-up curve of pulp mills worldwide.

So we reached -- within less than 90 days, we reached the nominal production. So the daily nominal production, and this is the mill producing 2.55 million tonnes a year. And the learning curve was reached within 161 days from the mill start-up. And the first year of production reached 92% of the design capacity and the second year will be over the design capacity of the mill. So really after 100% of the annual capacity was reached 3 months after the operation. So of course, this shows our capability to execute large projects in South America. And therefore, we feel that we have a good position for the next mills going forward with the proven references.

But then if we move to China, and as mentioned, our market share in the Chinese pulp mills is running ahead of our global market position. So you see that we are in Asia Pacific, over 70% market share on Pulp, while in the worldwide, a bit less than 60%. And as capacity growth is shifting to China, we are converting these project opportunities into orders. Of course, currently, there is a decline of the use of wood in the construction industry and which has allowed the Chinese customers to invest in upstream pulp mills. But of course, we have to remember also that China actually has the largest forest so that there is forest available.

So currently, approximately 50% of the forest is from their own and 50% comes from chips. This is based on recent discussions I had last week with the customer. So this is how they have it. But we also feel that -- or we see that the growth of imports to China will still continue, but it will be at a lower rate than historically. And we have actually been one of the main equipment supplier to -- or played a very key role in all of the projects that have been executed in China in the last past years.

And I see that our success relies as anywhere in the world on the technology edge, but very much of our local manufacturing footprint and the presence that we have in China. The more projects we complete, the more references we collect. And we feel that there are additional projects opportunities in the market in China and looking forward to convert these also to orders. And irrespective of where the Chinese integration trend will end up, we think that growth in pulp imports will still take place in the future.

Good. Thank you. Short update on the Pulp & Paper side. Now I would like to hand over to Joachim for a deep dive in Metals.

So thank you, Jarno. And after being in the beautiful world of Pulp & Paper, I now guide you to the at least beloved business area, we have the Metals and to finish with that. So where we are with our metals business, just a small recap. We are basically offering the full production line downstream of the hot rolling process for steel and aluminum, the pickling, cold rolling, annealing coating, finishing and welding and then transferring these plates or strips into the presses and from the parts that to a large extent, form automobiles afterwards, but also surround your dishwashers, washing machines or furniture, whatever you have.

We have about 1/3 to 2/3 split of the business between the strip processing and the metals forming part. We have about 1/3 to 2/3 in the volumes between service and capital, as I said, largest potential. We are -- regionally, we are very well balanced. We have 30% Europe, 30% in the Americas. We have 30% in Asia and 7% rest of the world. So it also gives a clear indication that we are basically supplying with all existing and all emerging partners in that industry that it be on the steel side, on the aluminum side or on the automotive side.

And if we see -- look at our exposure to the customers, I would say 30% is -- we are relating to the steel cycle, 30% to automotive, 30% to general industry, and then battery and defense make up another 10% of that business.

We would say we have the operational turnaround in progress, but we see that we reach, I would say, a business setup, a capacity that matches with the markets that we have. We have strong market positions where we play. We are definitely #1 press manufacturer globally and also with an extremely long history.

We are -- on the processing side, we are clear #1. We are on the -- on the cost side, we -- I would say, we came a long way. We are under restructuring, in particular, in Schuler for the last 5 years minimum, maybe even longer. And we have now set up with the right capacity for the European market, for the American market and also for the Chinese and Asian market. That is, I would say, that is good and combining that with the cycle that we see currently in automotive and steel that investment is going to happen puts us in a good position for a solid improvement of the business.

If we look a few years back, we can see that we made significant reduction in our capacities. We reduced in metals forming in Schuler, we reduced headcount by around 30% over the past years. In total, our reduction was 20%, and that's the net number. I can tell you that in Germany, we reduced almost by 30%, but we increased our capacities in India and in China to accommodate the shifts of our markets.

So we believe we're coming out of that restructuring more efficient. We have a lower breakeven point and our cost base is definitely more competitive. What should not be overlooked and makes me also proud to see that over the past 6 years, we could continuously improve the operational margin of that business. And that going on under constant restructuring shows that not only the business model works out, but also the management team in place knows what they are doing, and there is no risk that things are falling apart or flying around. So we believe that we can continue to increase these margins.

Now as that the turnaround has been done, we also complemented the business with some acquisitions, and we believe we have good prospects to grow the margins to the 7% to 9% corridor that I introduced to you.

We have other areas where we can expand and we want to expand the business too. And the first and maybe most prominent like to inform is the defense side. That is clearly a growth market in Europe. We do not see -- in the current environment, we do not see too much business outside Europe there. But in Europe, we see that there is a demand growing. It's an industry we need to get used to, works a bit different than the markets we currently know, but I think we get our way in. At the moment, we see that a mid-double-digit euro business in our metals, and we trust that we can grow it to small to mid triple-digit million business over the next years.

We have a wide -- maybe not a wide, but we have a significant portfolio of products that we position ourselves for the defense. I think it's important to understand we are not a direct defense contractor. So we are not contracting with the Departments of Defense or the supply chain of these departments, but we are supplying capital goods to the defense contractors. That is the -- that's basically the business model we are doing.

And what is currently driving our business is the forging business. That goes first and foremost, to shell line. So that is the outer part of the ammunition, which is a wear part at the moment in high demand. And we need to -- companies need to refill their storages, but there are other engine components for aerospace, composite structures, structures for naval vessels, but also defense energy storage.

As I told you, the battery activities we are doing, the batteries you need in a drone has a complete different characteristic than a battery you need in a car. And also the -- I would say, the appetite of the contractors to procure the production equipment from outside Europe is limited. So that opens some opportunities for us. So that is one of the areas where we are investing, and I think we have good -- we have -- with our exposure to heavy machinery, we are well positioned in that.

If we look to recent acquisitions, we acquired -- very happy that we could acquire a Chinese company, Sanzheng. We acquired 51% of the assets. They are a provider of induction heating equipment. And we believe -- so first, it's a perfect fit. We learned them through a project. As I said, that's part of our derisking M&A strategy. We know the partners. We know what they are doing. We worked with their equipment. We also understood that there is a good cultural fit with the way to do business.

And there are two main reasons that was driving that acquisition. The one is that we see a lot of heating solutions in the metals industry is moving from combustion solutions to electrical heating solutions. And among the electrical heating means induction is definitely on the efficiency side, the best available technology. So that was a strong driver for that. But we also -- and this is how we met Sanzheng. We have developed together with them several crucial heating applications for the production of the silicon steel, grain-oriented, non-grain-oriented. And therefore, we can now provide the entire technological chain from -- out of one hand.

So I think it was a very good acquisition, developing according to business plan, and we are quite happy to have them on board. And next step is then to move also outside China to provide the technologies to our other customers in Asia and the rest of the world.

I would like to finish with a particular, I would say, outstanding project we have done for BMW in Munich. We -- it's the first time in history that a complete press line was refurbished with only using planned downtime of the equipment. It went over a period of a year, but there was not a single minute used that -- where the production assets needed to be stopped. It was a great project, required a lot of planning, a lot of cooperation between BMW and our teams. It was extremely successful, and it really saved a lot of money. If you do not need to stop your production to get that revamp, we believe and also BMW believes, this is the new blueprint for how press lines will be refurbished in the future. And we believe that we are well positioned here.

Having said that, I would like to thank you to your -- for your attention and hope you join me in my firm belief in the future success of the Metals business. Thank you.

Thank you, Dr. Schönbeck and Mr. Nymark for their deep dives on Metals and Pulp & Paper, and we'll now conduct our last Q&A session. I would ask the entire Board to join Dr. Schönbeck on the stage, and we'll take it from the room.

Akash?

Maybe starting first with a couple of questions on Pulp & Paper and Metals. So maybe on Pulp & Paper, I think it's good to see the details on this China win, but I'm more curious on how does the scope of work margins and revenue per unit of output compares in China versus, let's say, outside of China? And on the same topic, could you utilize your factories in Europe for these Chinese projects or everything has to be build locally?

And then on the Metals, it's quite encouraging to see margin expansion or margin upgrade in the medium term. But maybe Dr. Schönbeck, if you can talk about what is driving that improvement? How much of that is coming from Metal Forming versus Metal Processing? Is one part doing more than the other? And how much of that is also coming from some of the new opportunities like in defense that could be margin accretive?

On the Pulp & Paper side regarding on the CapEx, I mean, of course, the projects in China are EPS projects. And so it's really the main equipment. And typically with the Chinese customers, I mean, they're very CapEx oriented. So it's not even the EPS that we traditionally would do in Europe. So it's even a smaller scope on those projects. So of course, I mean, comparing a mill where we have EPC or EPCC, I mean, it's a big difference on the machinery and the equipment. But if we -- and the utilization of our workshop in Europe, yes. I mean, for example, if I take the recovery boiler, we have two locations where we can manufacture the pressure, the bottom pressure parts because this is a critical that you have your own manufacturing for, and this is what we are utilizing, for example, in our workshops in Europe and producing. But majority of the equipment is produced locally.

And Metals?

So Metals, it's a mixed picture. I would say both are increasing, Metals Forming and Metals Processing, and they're increasing nicely. Profit level in Metals Processing is a bit higher than it is in Metals Forming. And I would say the majority comes from lower breakeven point, so a more competitive cost position, much better project execution on the run, not losing as much margin towards the end of the project. And definitely, the mix plays a role with the new businesses, for example, defense also improves the margins.

I would also like to follow-up on the Metal side. Given your guidance raise now to 7% to 9% EBITA margin, is the understanding correct to see the 7% without increasing scale of the business? And what would you expect or require as a revenue level in order to reach the 9%? Or is it rather a question of mix than revenue overall?

I see it as a mix. I also -- this range is a precaution to what is happening in the markets. We're giving you a guidance for '29. I don't know what is happening tomorrow. So there is some uncertainties also priced in. But if the economy runs well, if markets are good, if we get some tailwind, then I see more towards the 9%. If another war starts next week with some further disruption, maybe more than 7%. So I would say that is the range. We do what we can. And as I said, we see project activities. We see project announcements, yes. So we basically -- we continue to be optimistic and prepare for the worst.

And then maybe a follow-up on the defense side. You mentioned that you could grow the business towards a triple-digit business, maybe also '29. Given the long lead times of defense, actually, you should have quite a good visibility on how this business should develop going forward. So what visibility do you really have? And also in terms of margin accretion from this business now into 2030 or '29?

Unfortunately, our visibility is not as good as we would like to have it. That definitely depends a bit that we are new in that market. And as I said, this market, they work differently than the traditional markets we are in. And I think it would be early for me to say that we fully understood all the rules.

Patrick?

Two questions remaining from my side. First of all, what are the most important factors in ramping up a large pulp mill for you? Why were you so quick and successful at Cerrado?

And the second one is on the Metals division. Would you expect a tailwind from a stricter European regulatory environment for steel production? Should this be reflected soon in the order book? Or what's your thoughts on that?

I would say that the start ramp-up curve in Cerrado, of course, as I mentioned a few times on the technology, but I think a lot comes to the project execution and the project execution capabilities and then also a very strong cooperation together with the customer. So I mean, it's we don't do it alone. We do it together with our customers. So I think that, that -- as we have executed with Suzano, we have executed, for example, the Tres Lagoas project really to know the team. So I think this is really supporting that, that to have a fast execution.

So Metal side, CBAM, all our European customers, they connect investment decisions with effective CBAM procedures in place. So I would say, looking for the next 2 to 3 years, it's probably supportive. How supportive it is on the long run, I don't know. Because I believe that if we try to protect the markets to an unhealthy extent that at the end, backfires. And you know that the steel industry is not the most profitable. So I think that is where we have to be -- maybe where we have to look out.

Thanks for the questions in the room. I think, we have Sven on the line.

The next question is from Sven Weier from UBS. Please go ahead.

Just two questions on the Pulp & Paper side. I was just wondering what visibility you have on China, how long this project stands towards integrated mills in China will still continue? And do you see that further delaying the greenfield projects that we have in Latin America?

And the second question is, I guess, globally, we might actually walk away a bit from the integrated model and people buying more market pulp. Do you think that this could then actually accelerate the LatAm projects?

Thank you, Sven. Thank you for good questions. I mean, looking at the projects that we have ongoing in China, at least we see for the next couple of years that we see that there are the activities. Of course, there's a lot of the big producers already in China, I mean, are investing, but there are a number of mills still that are not yet integrated. So we see on that side.

Of course, that's a typical discussion that I have every week with our South American colleagues and customers. I mean, how long will this continue in China and what is -- so for sure, this is delaying some of the decisions. But as we saw, I mean, the market pulp of virgin fiber, it is growing. The consumption is growing because you have also other application than just the hygienic or the tissue and the board. So I mean, with the growth of man-made cellulosic fibers, lyocell. So you have other applications which are growing as well on that.

The last question is I did not fully understand on the market pulp.

Yes. I think when we look at our recent Pulp & Paper meetings we had, we get a sense that some of the integrated mills globally might actually start buying market pulp rather than being integrated just because of the pulp price being relatively low. I mean, do you think that's then obviously helpful for taking up some of the market pulp capacity, I guess.

Yes. I guess this varies and depends a lot in what region that we are discussing. And I think it also varies a lot to which are the grades that are integrated. Is it unbleached long fiber, short fiber. So I think this varies a lot on that side. So I cannot just give a general overview on that topic.

Akash?

Thank you for a couple of follow-ups. The first one is on data center. And I ask one of my colleagues to count how many times you mentioned data center in presentation. And apparently, it's more than 15x, yet I haven't seen you talking about data center being as one of the key growth driver of Andritz story. I mean, there is some mention here in revenue target where you do see like pockets of significant growth in data center among a few other end markets. But maybe it's just to talk about like when we look at from this data center AI, holistically, what sort of opportunity do you see there? Because I guess there may not be direct benefit, but there may be indirect benefit. So maybe if you can talk a bit about how do you see the growth prospects, thanks to the data center CapEx growth that we see out there?

And then the second one is on M&A. I think we have seen very limited action this year. And now we are in an environment where interest rates are going to go up, which may have an impact on the value of some of the assets out there. So like what needs to happen for us to see a bit higher M&A activity? Like could we see in back end of this year? Or it will be more likely next year when we see a meaningful step-up on inorganic growth?

You take, data center.

Yes. Data center, as I mentioned, relies on stable supply of electricity to operate continuously. And therefore, they have difficulty to obtain the supplies from the grid. And they -- at least as backup, but very often as main generation source, they invest in their own power generation supply, which is mainly gas turbine driven today.

When we look at the financials of our gas turbine technology supply worldwide, data center represents less than 20% of their supplies today. And most of the supplies go to the grid environment, grid stability, so flexible power generation, more than data center. At the moment, the growth, as I mentioned, is mainly North America and in the Middle East. with very strong visible investment. Still to be seen in other regions of the world. Is this a short-term bubble? Is it a long-term continuous investment for this, as I said, we rely on the gas turbine supplier market.

Maybe if I can ask you a follow-up here like, we have seen some hyperscalers are paying premium to utilities for expensive nuclear power [indiscernible] Sorry, just to -- so we have seen like some hyperscalers, they are paying premium to utilities for expensive nuclear power in Europe. I guess here in Europe, we also have a lot of hydro resources, and there is a big opportunity to increase overall performance or like the capacity of those. So do you see those type of projects coming in your pipeline where maybe some utilities are more keen to go ahead and refurb their installed base because they can increase amount of power they can generate and then they can sell it to data center customers at a premium above the current wholesale prices?

Yes. So for massive concentration of data center, nuclear supply baseload can be considered for sure, in some specific areas where they have access to this energy. As I mentioned, hydropower is the renewable power, enabling to regulate the other intermittent renewable power from wind and solar, which are growing, but not necessarily highly reliable to supply quality, stable energy to a data center. So I don't see a link so much with hydro between hydro and data center. This is for us mainly through our turbo generator business.

M&A? So we constantly look for targets that fit, which targets fit I explained to you. But you need somebody who wants to sell the asset you like to have and you need to agree on the price. So it's a bit difficult sometimes on the timing. We see the rising interest rates, but -- and we expect that probably would have a positive impact on the M&A market at the moment. The expectation on the proceeds on the seller side are still very high.

And we have a history of discipline to M&A, not to overpay. If it is -- if we are talking about a must-have acquisition that would harm Andritz if it comes into the wrong hands, then we definitely would be also ready to pay a premium. But if it's -- don't get me wrong, if it's a nice-to-have acquisition that would be a good addition, then there is no need for us to spend a premium. And if we have too much money, we initiate a share buyback.

We have another question in the webcast. Daniel?

One more on AI. Could you maybe give us a rough split of how much you supply directly to clients in terms of turbo generators and how much indirectly? And what does this change in economics? And what's the strategy actually going forward? Do you want to increase actually your direct share? Or are you fine with supplying basically through the two market leaders here?

Okay. It's 90-10. So most of our contracts are with gas turbine technology companies. So it's indirect sell. We are plugging our generator behind their gas turbines. The growth is -- the 10% is likely to grow through, let's say, emergency supply of generators in case of failures through service, as I mentioned before, but still in a very reduced manner, this direct business. Because at the end, you need the full turbo generator island to generate electricity. So it's -- you cannot sell a generator on its own.

And would you expect the profitability to be margin accretive for the whole segment going forward?

It's still a very competitive segment with many solutions, global solutions. So I would expect similar to what I've mentioned for new hydropower plant builds, some improvement, but probably this is the segment with less opportunity compared to pump storage compared to some grid solutions, which are of better opportunities.

One call from the -- one more question from the webcast.

We have a written question from Emanuele Sartori from Kepler Cheuvreux. You described synchronous condensers, as in some respects, a temporary solution for grid activity. How do you think about the longevity of this market? Could grid-forming inverters or other power electric solutions eventually reduce the need for synchronous condensers and over what time frame?

So yes, it's definitely potentially a temporary solution because at the end, it's evacuating excess of energy on the grid, and this is not efficient and markets will look at better utilization of those excess of electricity like storage or like more electrification of other processes. As I mentioned, there are two ways to regulate the market for absorption of over energy. The SynCons are more the electromechanical ways to do it. And then there is a power grid, grid forming approach made of inverters and batteries, which we are also looking at. This is part of our growth potential for our grid solution environment. So this -- I see that complementary still for a reasonably long period of time, because until the power generation, new form of supply stabilized, the grid still needs this evacuation of energy systems. So both for SynCon and for grid forming, this will be a long-term run.

Okay. I think this concludes our first part of the Capital Markets Day. I'd like to thank the audience in the room and on the webcast for the attention and the interest and our Executive Board for the very exemplary presentations. We will now have a well-deserved lunch. I expect you back here at 12:30 for safety instruction for a very interesting tour on the afternoon in our Andritz Experience Center and Site tour.

And I would like to hand back the word to Dr. Schönbeck for final remarks on the first part.

So Matthias, thank you. Yes, we provided you update on our strategy, how to increase the service, go further on the digitalization and develop new technologies for the decarbonization area. We gave you the prospect that we will not change our path on our M&A. So that will be part of our growth machines. We provided new targets for '29, the EUR 10 billion revenue and 10% comparable EBITA margin.

And excuse my short thinking on that. As we have 2 percentage margins on the business areas, the mathematics conclude that -- and this is why we have given the guidance there around the 10%, but the target is the 10%.

Vanessa explained to you on our capital efficiency and our well-balanced capital allocation, which we also will stretch out to the future. And Frederic and Jarno gave us impressive presentation of the exposure to the markets in the energy sector. And I think the good development and also the good outlook in hydro really is exceptional, and Andritz is in a very good position to capture on that.

On the deep dive in Pulp & Paper, I think the main takeaway is that there is a good business, a very profitable business and a well-managed business in Pulp & Paper even without a large order from South America. The large order we received was 2021. The outcome is this Cerrado project, Jarno explained about. It provides not only a good basis for further service business, it also provides a comfort for the customers that they know that we can achieve things.

On the Metal side, I have the -- I'm brave enough to tell you that the restructuring is done, will be finished in the course of next year and that with the regained competitiveness, we can increase and improve the margins further.

And with that, I would say, enjoy the afternoon where you can see a lot of tangible products in the manufacturing and a lot of intangible values communicated to you on the automation and digitalization.

And from that, enjoy your lunch. Thank you.

Ladies and gentlemen, welcome to the ANDRITZ Q2 2026 Results Conference and Live Webcast. I'm Sergen, the Chorus Call operator. [Operator Instructions]

At this time, it's my pleasure to hand over to Matthias Pfeifenberger, Head of Investor Relations. Please go ahead, sir.

Good morning from Graz, and a warm welcome from our side. It's my great pleasure to host the Q2 earnings call and webcast with you today. With me, I've got the CEO, Dr. Joachim Schönbeck; and our CFO, Vanessa Hellwing. As usual, we'll guide you through the Q2 highlights and key CEO messages, followed by the financial performance, followed by an update on our business area performance, the outlook, and we will then conduct the Q&A session.

And now it's my pleasure to hand over to Dr. Schönbeck for his initial remarks.

Thank you, Matthias. Good morning to everybody, and thank you for joining us in this early call, and thank you for your interest in ANDRITZ. We are happy that we can report good results for Q2. We moved to another record order backlog after the very strong order intake in Q1. This year, we had a very solid Q2. Growth was driven by Metals and by Pulp & Paper. And we could see in Metals strong demand increase from the steel industry, and we could also see first signs of stabilization from automotive.

We -- with a solid backlog we have, we are confident for the next quarters to come. The revenue growth accelerated, supported by disciplined execution of our order backlog and then a further increase of our service revenue share. We had a very good growth in profits and profitability. We had a significant increase in EBITDA, 15% up to EUR 182 million, and we had an expansion on the operating margin from 8.4% to 8.9% EBITDA margin in Q2. And this was driven by improvements in 3 out of the 4 business areas. And also 3 out of the 4 business areas are in the half year results inside the 2027 margin corridor that we have given.

The guidance for 2026 for the full year is confirmed. Going to the details. We have a good order intake, EUR 2.3 billion. It's down 3% from previous year, but we had -- last year, we had several large orders and the EUR 2.3 billion are very, very solid, no large orders included. So we are quite happy with that result. Revenue on EUR 2.1 billion, up 8%. That is very good. And as I said, comparable EBITA to EUR 182 million, 8.9% EBITA margin. Net income, up 7% at EUR 109 million.

Looking to the first half year, order intake accumulated to EUR 5.9 billion, book-to-bill at 1.5, very good drove order backlog up to EUR 12.9 billion. And for the first half year, we are on EBITA EUR 330 million, 8.6% EBITA margin compared with 8.3% in the previous year. So -- and net income up to EUR 201 million, that's up 5% from the previous year. I would say, overall, that is looking good. Project activity now remains at high level. We have the seventh consecutive quarter with an order intake above EUR 2 billion. And we do see that the markets remain active on that high level. Book-to-bill 1.5, I already mentioned. So I would say we are well prepared for any uncertainties to come.

Going through the details of the order intake, you could see that in Q2, order intake growth was supported by Pulp & Paper and Metals. Pulp & Paper, 16% up to EUR 880 million, very solid activity, mainly driven by paper and textile, large paper order machine for -- order for a paper machine from Algeria. And in metals, very nicely up EUR 573 million for the quarter, mainly driven by higher demand from steel industry. But as I said, we also could see good first signs of stabilization.

Hydropower dropped in Q2, no large order booked looks a bit difficult, minus 27%. But if we look to the first half year, we are up 82%. So I would say it's more a matter of timing of booking than of lack of performance. Environment Energy, down in order intake in Q2, 10% to EUR 300 million. We definitely see a very cautious investment climate across several industries. Many of that related to uncertainties also in this energy transition. However, project pipeline remains very active. Therefore, we would see this probably more a transient problem.

Going to the revenue, nice increase, 8% up in the quarter, 9% in Pulp & Paper and Metals, 16% in hydropower. Here, you can see now the effect I was referring to in the last quarters that hydropower due to the long execution time of the project, needs a certain time to convert the backlog into revenue. This is starting now. And I would say the machine is rolling. Environment Energy, due to the reasons I just mentioned, down 2% in Q2, also down 2% for the first half year. In total, in the first half year, revenue grew by 5%. So that's, I would say, we are on a good track there. If we look to the order backlog, EUR 12.6 billion, a good record level. 50% is now in hydropower. I would say that will -- is also proof that the backlog will remain for a bit longer as the execution times in hydropower are the longest of our businesses that we have.

Looking into the EBITA, EBITA margin, nicely up comparable EBITA and margin from EUR 303 million to EUR 330 million in the first half year and the margin up from 8.3% to 8.6%, definitely improved in order execution despite the high backlog. The low-margin legacy projects are phasing out. And for sure, the restructuring efforts are now bearing fruit. We have accounted in the first half year for EUR 18 million of non-operating items and that's on the majority, the restructuring costs we have in metals and some of the rightsizing we are still doing in Pulp & Paper and Environment and Energy.

The service business is growing as we like to see it, record high on service share, 46% for the first half year, which is an extremely good value, 1 percentage point up compared to previous year, 6% year-on-year growth in service. And I would say we are growing organically as we are building more service centers close to our customers, but also through dedicated M&A activities that we executed last year.

On the ESG side, we are happy that our performance is recognized by the external rating agencies. So we could see improvement from MSCI, from ISS ESG and from Sustainalytics. As you know, we have reviewed our carbon dioxide emissions with Science-Based target initiative. And we had redefined our ESG targets along with their guidance. And you could see that we are basically on track in all dimensions with all KPIs. You could see 2 ticks means that we are already at the target level of 2030. We need to keep it or on others, when we only have the one tick, we are on track. So with 6 of our KPIs, we are already in the target range and with 4, we are on a good track. The others, we only have annual values, and we will report that with our annual results. And that is from my side so far.

I hand over to Vanessa, our CFO, and to have a detailed look to our financial performance.

Thank you, Joachim. Yes, ladies and gentlemen, warm welcome also from my side. With many details already shared by Joachim, I will keep my general comments brief and focus on the key takeaways. So we delivered a strong second quarter with accelerated revenue growth, improved EBITDA margins and net income. And at the same time, our order backlog reached a new all-time high, providing a solid foundation for future growth.

Overall, the first half of '26 reflects strong operational execution and demonstrates thereby the strength of our business model. So from a CFO perspective, first half year confirms that the growth we achieved comes with very strong financial quality. Operating cash flow increased to EUR 291 million. This is 72% above last year. We also increased our net liquidity position by 15% to EUR 593 million on a year-on-year perspective, maintaining a strong financial position. At the same time, we produced -- we reduced our financial debt position also to manage our interest result, which obviously is rather long term with respective lagging effects. We will come to that later.

Return on capital has recovered to 18.5% following the M&A-driven temporary decline from last year, 25%. That is still well above WACC, implying substantial value generation. Operating net working capital improved sequentially for the third consecutive quarter to EUR 874 million. And having reached a new record order backlog, the increase in prepayments is still outpacing the increasing need for trade working capital. Also this we will see later. So let me now walk you through the EBITDA to net income bridge on the next slide.

Our usual earnings bridge shows that the higher revenue base translated into a strong EBITDA increase to EUR 404 million and further improved EBITDA margin of 10.5%, which is compared to last year with 10.3%. Depreciation increased slightly due to M&A and increased CapEx spending, but remained relatively stable as a percentage of revenue. IFRS 3 amortization remained flat, and we would expect around EUR 55 million at year-end from status quo. The financial result was lower than prior year, and this is due to lower interest income on slightly lower gross liquidity as well as, at the same time, higher interest payments on our financial liabilities. In addition, we faced higher expenses also for leasing.

And as a reminder, first half '25 last year included a positive EUR 8 million valuation effect related to our Armis investment, while the total positive onetime impact for the whole financial year '25 amounted to EUR 36 million. So consequentially, we would encourage the analysts to consider these effects when modeling the numbers for the financial year '26. So while the tax rate remained stable at 25.3%, net income increased to EUR 201 million, and the net profit margin remained solid at 5.2%, which is confirming a resilient profitability despite a lower financial result.

So moving to our EBITDA to free cash flow bridge, starting from EBITDA of EUR 404 million. The main operational improvement in operating and free cash flow generation came from a significantly lower net working capital outflow, minus EUR 114 million last year compared to plus EUR 4 million this year. Income taxes paid and interest received remained broadly stable and reduction in provisions and other items reflect the normal project life cycle, the maturity of the projects and expiry of respective warranty periods. So summing up, these effects result in a strong improved operational cash flow of EUR 291 million. CapEx went up year-on-year by EUR 33 million to EUR 131 million that was spent on growth, service, digitalization and innovation. After that, free cash flow reached EUR 160 million, a very satisfactory level and significantly above the prior year period where we reported EUR 70 million.

In first half of '26, there were no M&A transactions and the M&A CapEx of EUR 38 million fully reflects the residual outflow of the deals that were closed in '25. So coming now to the working capital development. We saw an increase in operating net working capital in the course of last year '25, reflecting a larger service share and the consolidation effects from our acquisitions. We can now report the third consecutive decrease in operating net working capital in absolute and relative terms from Q3 '25 onwards, reverting back to a level of 11% of revenues currently.

While operating net working capital management remains a focus going forward, I will now explain the moving parts in contract trade working capital and yes on the next slide. So the more detailed working capital overview here on this slide shows the diverging movements. On the contract working capital side, you see another sequential increase in prepayments and contract liabilities in Q2 alongside the good order intake reported. The trade working capital remains flat sequentially and decreased slightly as a percentage of sales, influenced by a typical seasonal buildup in Q1 and to Q3 as well as the high service business and the general strong order intake.

Structurally, the shift from larger overtime projects towards more midsized and completed contract orders leads to an increase in work in progress. So disciplined inventory management will definitely remain central. However, with ongoing geopolitical influences, I can let you know from my CFO focus, this is much more important to minimize the order execution risk than minimizing inventory to the very limits.

Overall, you can see we remain in a really good shape. As you can see here on the next slide, quarterly operating cash flow remains volatile as quite typical for our project business. Q2 operating cash flow of EUR 202 million was supported by better operating profit and lower net working capital outflow. The longer-term message is that higher top line, good margins and well-managed cash conversion are sustaining a structurally strong cash generation profile.

So moving on to our strong financial position. Our balance sheet remains one of our key strengths and provides significant strategic flexibility. While net liquidity increased by 15% compared to the first half '25, it decreased from EUR 713 million at year-end '25 to EUR 593 million sequentially, driven by also the dividend payment of EUR 265 million in Q2 and higher CapEx. Operating cash flow remains strong at EUR 291 million in the first half '26. So we also reduced our gross liquidity by repayment of financial debt position in Q2. And keeping please in mind our EUR 500 million revolving credit facility, which is untapped for now. That means ANDRITZ is well positioned to continue executing its capital allocation strategy while maintaining a very strong financial profile.

Return on capital recovered in the first half of '26, reaching 18.5% after the acquisition-related temporary dilution in '25. Higher operating earnings combined with a stable average invested capital supports the increase. And this confirms recent capital development is translating now into satisfactory returns with ROIC remaining above WACC and firmly supporting a strong value creation profile.

Well, to summarize, the first checkmark is on long-term profitable growth. Strong development in order intake, another new record in order backlog and a book-to-bill of 1.5. This is supporting the revenue trajectory while margin improved further. The second checkmark here is on financial discipline and flexibility. Operating net working capital improved again sequentially. Operating cash flow increased significantly while the net liquidity remains solid. That brings me to the third checkmark that sits on value creation. So ROIC remains significantly above the average cost of capital, implying substantial value creation. While we have recorded accelerated growth sequentially and a step-up in profitability in the second quarter, I really would like to also remind you that the higher hydropower share is leading to a longer backlog conversion. So many thanks for your attention here.

And I will now hand back to Joachim to provide an update on the business area performance and outlook.

Very good. Thank you, Vanessa. Let's have a quick view on the business areas in more detail. Pulp & Paper, I would say, overall, very good development. Order intake up 16%, revenue up 9%, EBITA up 12% and EBITA margin from 10.2% to 10.5%. So that's all looking very good. Order intake has been driven by paper and textile that was suffering for a long time. So we're happy about that development and this upstream integrating trend in China and for the -- in the pulp industry remains solid intact. And we also believe that there are more projects to come. Revenue is now accelerating. So the order intake from the previous quarters is now executed. Good growth in service business and service share, a very nice level of 59%. It's really good. And also market is -- has a positive outlook.

Metals, I would say you considered your problem child, also improving good. The activities that management is doing is definitely bearing fruit. We are up now 9% in order intake. We are 9% up in revenue. We are up 37% in EBITA and EBITA margin increased from 5.3% to 6.6% for the comparable EBITA margin. Order intake, I would say, solid demand from steel industry, a big stainless steel complex in Turkey, a large processing line in India were definitely the, I would say, the highlights. But we also can see stabilization in -- on the automotive side, increased project activity -- so our view that we might see the end of the trough and towards the end of the year remains positive.

We have a nice growth in service share from 28% to 29% on a 9% increase of the revenue, and that will further stabilize our profitability. We are now for the first half, we are in the margin corridor for 2027. I would say that's good development. Hydropower, as you know, is working in a -- I would say, really exciting market. Even though order intake is now down for the second quarter, 27% to EUR 570 million. We had several large orders booked in the Q2 of 2025. And this is why I would say this drop is more administrative drop than a real drop. If you look to the full first half year, we are up 82%.

And as I said in our last call that some of the bookings we were able to book prematurely to what has been planned on the project side. The revenue is nicely up 16% compared to last year and the EBITA is up 47% to EUR 35 million, and the EBITA margin is now at 9%, up from 7.4% for the Q2. We are profiting from the high demand on renewable energy, but also the grid solutions now play more and more a very decisive role and industry has realized that a lot of work needs to be done as the amount of the unsteady renewable energy from wind and solar is increasing. Also turbo generator business is developing well. Several midsized orders, maybe worth to mention Strandfossen hydropower plant in Norway from Hafslund, Norway's largest energy provider, I would say, showing the good and solid partnership we have there in this country.

The profitability is moving nicely up, and we are in the -- for the first half year, we are now in the -- in our margin corridor we have announced for 2027. Looking into Environment and Energy, order intake dropped by 10%. We definitely see a subdued investment climate across several industries. I already mentioned that before. However, we see active project pipelines in many areas. So we are not too pessimistic for the midterm outlook.

And we have to -- now we have to see where the -- I would say, where this demand is not temporarily, but more long term, whether we have to take some actions to reduce our capacities. The revenue declined because of the lower order intake. However, in Clean Air and Feed & Biofuel, we have solid development. And I would say, even though with the decline in the revenue, margins are still satisfactory despite the decline and still within our corridor for 2027.

What is a few words to our external effects, we do not have under full control. Happy to report that we have no adverse impact from the increasing trade barriers as well as from the war that are going on. I would say our teams are working hard and apparently very effectively to keep these impacts still low and financially to very limited amount. We are happy that the FX changes stabilized, and we did not have any more FX headwind in Q2 for the first time since several quarters. So I think that is good news.

However, despite the good Q2, we confirm the guidance for 2026. Project activity will remain stable on the high level that we have reported. The revenue will be between EUR 8.0 billion and EUR 8.3 billion, and we expect the comparable EBITA margin being between 8.7% and 9.1%. We also confirm our midterm targets for 2027, revenue between EUR 9 billion and EUR 10 billion and comparable EBITA margin above 9%. We have discussed that.

And I would like to end that we have now reached for -- in the first half year, we have reached to have 3 of our business areas in the margin corridor that we have announced for 2027. So we are confident to get that going. And this is where I want to end. Thank you for your attention. And if there is anything you'd like to ask, we are happy to provide the answer. Thank you very much.

[Operator Instructions] We have the first question coming from Akash Gupta from JPMorgan.

I'll start with a couple and then come back later. The first one I have is on pipeline for large orders. I think you define large orders as more than EUR 100 million volume, and there was no large order in Q2. And despite that, you had a very good level of order intake. So the question is that when we look at for the rest of the year, next couple of quarters, can you talk about the pipeline for large orders? How does it look versus, let's say, last few quarters that we have seen? So that's the first one.

Yes. So on the large orders, we could -- we can say that we are working on large orders with our customers. However, we are not in control when they really get into force. So there are large orders. As I said, we will not repeat the Q1, I would say, accumulation of these large orders. We don't expect that. I would say the key takeaway should be that even without the large orders, we are -- we have been able to sustain a very good order intake, solidly above the EUR 2.3 billion -- solidly above the EUR 2 billion threshold. I think that's a very good sign.

And my second question is on 2027 revenue target. I mean we have seen good order intake, and you have been flagging about increased duration in backlog, particularly coming from hydropower segment. We have 6 more months or 5 more months from today to come to close the year. You guide at bottom end, EUR 9 billion revenues for next year. So the question is, do you think you can get there with -- organically with the portfolio do you have today? Or do we need to see any incremental M&A to hit EUR 9 billion mark? And if we have to do any M&A, any commentary on what could be the potential timing that we should be looking for?

So on M&A, as I said, we do not plan for that. And we believe that we can -- that we reach the EUR 9 billion revenue target. And I would say, a normal small M&A activity is always part of our business model.

The next question comes from Sven Weier from UBS.

First one is on the Metals business where you saw a nice sequential improvement in the order intake against the previous quarters. I was just wondering, are you confident to maintain that run rate? Or is it also a bit like you had it in Hydro in Q1 that there was a bit of a pulling forward? That's the first one.

Project activity in metals is good. And we do not -- this is not an accumulation of events like we have seen that in. So we see that the market will continue on a good level, yes.

Sounds good. Second question is more like a strategic question. I mean we obviously saw that Valmet is considering a potential breakup of the company. And I was just wondering when we look at your business portfolio in terms of potentials for spin-offs, I mean, how do you look at the situation? Do you consider all the 4 divisions and the structure of the company absolutely core and no changes will be made?

That's what we do. We believe that we are the best owner of all 4 business areas. But if we come -- because we are assessing that on a regular basis, if we come to the conclusion that we are not, we definitely will investigate that, and then we will let you know in due time.

And I mean, my understanding, obviously, is when I think about the Pulp and Paper automation business, right, it's an integral part of your Pulp & Paper division, while Valmet seems to want to spin that off. I mean, what do you see as the biggest advantage as having it as an integral part rather than like a separate business?

Yes, we are running our business model in all business areas that we provide integrated solutions, including mechanics, electrics, automation and also digitalization. We think that is a good model. And we see from the trust our customers place with us that they also confirm that.

Do you see that as an opportunity to win market share once the business is spun off from Valmet and they don't have it integrated anymore?

We always try to win market share regardless what our competitors are doing.

The next question comes from Daniel Lion from Erste Group.

Let me follow up on what Sven has just touched, maybe not only focusing on pulp and paper, but from a shareholder perspective, it definitely makes sense to like sell parts of the companies completely, but at least float them individually. Just doing some of the parts reveals actually sizable discount in valuation when valuing the business line separately. So this also not worth a thought.

Yes.

We keep the majority, obviously.

I mean, as I said, we are reviewing that regularly. And if we believe that somebody else is a better owner than we are, we will sell it. And we have done this last year with our Otorio joint venture because we have developed the products we wanted to have on cybersecurity, but we also understood that we could not -- we were not the right platform to scale it. So we sold that to Armis. Armis has then been acquired by ServiceNow. And what we have developed as a product still is a valuable value proposition from ServiceNow. So I think that's what we do. And rest assured that we will review this on a regular base. And if we come to that conclusion that we will act accordingly.

Okay. Another topic, could you maybe give us a flavor of how the margins develop within Hydro roughly when thinking about synchronous and turbos and the normal Hydro business like equipment services. How do they compare in general? And how do you think this is going to develop?

Yes. The business model of the 3 products basically that you mentioned is a bit different. I would say, the normal Hydro business is this very long project business, execution times between 3 and 5 years, usually large orders over a long time, while Synchronous business and turbo generator is a bit shorter cycled. So this is where the differences are. On the margin improvement, all 3 main product lines contributed on a fair balance.

Okay. And then lastly, you booked some restructuring charges now in the second quarter. What should we expect for the second half year in this respect?

I trust that we will stay on the run rate because we will finish the main restructuring activities in metals by end of this year, latest Q1 next year. So I would say, take or less the same run rate we have in the first half year.

The next question comes from Patrick Steiner from ODDO BHF.

Basically, one question left from my side, and I think I didn't understand this a bit due to some kind of technical issue. In Environment and Energy, we saw a low order intake, a bit lack of momentum. But can you give us a bit more information on which parts of the segment performed below your expectation? And if you think that this is more of a temporary downturn or issue in your view and if there's more to come in terms of rightsizing the different businesses of the segment?

Yes. We see weakness in order intake. We see in the new technologies we have developed for the green transition, green hydrogen and carbon capture. I would say, here, we have a very solid project pipeline. We also have a very, I would say, solid level of letter of intents. So basically contracts that if the customer make a go decision will be awarded to us.

But the go decisions are pending. And in separation, we can see across several industries that investments are postponed and shifted, especially, I would say, special impact comes from chemical industry, where on our customer base in Europe, the high energy prices and the outlook is definitely, I would say, subduing the investment climate. So that's, I would say, the others in pumps and Feed & Biofuel and in Clean Air, I would say that there we see not a significant growth, but a stable market.

The next question comes from Christoph Blieffert from BNP.

I have 2, please. The first question is on the packaging/containerboard market. I'm just wondering when you expect an uptick in client demand for new machinery business, but also for services following the pronounced downturn we have seen over the most recent past. Secondly, on Hydro, please, could you give us some insight on the revenue or order intake contribution from pump storage to annual performance? That would be helpful.

So on the packaging and board, I would say the market situation has bottomed out, but we do not see signs of increase. That's, I would say, we see utilization rates of our customer increased. I would say, in Asia more than in Europe. But frankly speaking, not to the level that huge investments are foreseeable in the near future. It can change rapidly, but that's the current assessment. I would say Europe and U.S. is a little behind. Utilization rates seem to be still a bit lower than what we see in Asia.

On the Hydro business, I cannot -- I do not have the number at the moment to give you the revenue share of the pump storage. What we could see over the past 3 quarters was that pump storage increased in order intake proportionately to the rest of the group. So as revenue builds up a bit later, I would say it is growing, but I cannot provide you a value. But our IR team can reach out to you and provide you some more background information on that.

We have a follow-up question coming from Akash Gupta from JPMorgan.

I have a follow-up on automotive end market. I think in your prepared remarks, you talked about some stabilization in that market. I mean maybe you can talk about which customer group are we talking about? Because when we look at these European carmakers, they are still lowering their guidance and seeing very significant Chinese competition in many markets. So if you can give us some more clarity on which type of customer groups you see more activity going forward in automotive?

Basically, we see it in all customer groups. We see it in North America. We see it in Europe, and we see it also in China. In China, still the market -- the local market is active. We also see the Chinese manufacturers moving outside China into Europe and around Europe. But we also see with the European carmakers, even though they are still in restructuring, it looks like they have made their plans on their capacities, on the volumes, on the models they want to place.

And this is when project activities with capital goods suppliers like us start. And this is now what we see, these discussions start, and we know this will finally go into sooner or later into investments. And that is what we see. And so we believe that our estimate that towards the end of this year, we will have reached the end of that tunnel is a fair assessment.

And then maybe one more on U.S. We have seen that some companies have started to benefit from refunds of IEEPA tariff, the reciprocal tariff that was turned down by the U.S. Supreme Court early in the year. I'm just curious if there is any benefit that you may have seen in Q2 or you are expecting in second half that might benefit your margin or cash flow?

Sorry, I'm not sure I really got the question. Can you please repeat?

Yes. This was the IEEPA tariff in the U.S. that President Trump put in place last year, reciprocal tariff. And these tariffs were deemed illegal by U.S. Supreme Court early in the year and then companies have started filing for refunds. And we have seen some companies in capital goods sector have seen benefit already and some are guiding for benefit in the second half. I don't know how much tariff you paid in the U.S., but just curious if there is anything we should expect on your performance this year?

So fortunately or unfortunately, we will not see any benefits from that. The goods we have imported to the U.S., they have been subject to the tariffs. and all the tariffs were duly paid by our customers. And we have then asked for refund to the U.S. government, which has been granted, but we passed it on to our customers. So therefore, you will not see a net impact on the upside or downside in our balance sheet.

The next question comes from Lars Vom-Cleff from Deutsche Bank.

So first of all, congratulations for you testing your all-time high share price again this morning. I guess, well deserved given the performance. Two questions, if I may. Order momentum remains very strong with the backlog at a new record. And while I appreciate that group revenue conversion is slowing due to Hydropower in H1, you have already reached 47% of your '26 sales guidance at the midpoint. Would it, therefore, be fair to assume that you are currently aiming more towards the upper end of your '26 sales guidance range?

I'm not in the details of this accounting. The band is so narrow. So when we end in there, this is what we assume. And in today's world, being in a project business that we are doing, I would say, being more precise would be a misguiding. So I would say we stay with that range.

Fair enough. And then secondly, I know that you explicitly highlighted the positive valuation effect from Armis on your '25 EBITA. Excluding this, I calculate a negative margin impact of around 50 basis points. Is that what you're trying to tell us that we should rather take 8.4% as a starting basis to forecast profitability for this year?

Yes. The hint was simply that last year, we had a EUR 36 million onetime impact positively, which is not repeated this year. So this is what you should consider when modelizing your numbers for this year.

There are no more questions at this time. I would now like to turn the conference back over to Matthias Pfeifenberger for closing remarks.

Okay. Many thanks to our C-suite for their elaborations and for your interest in ANDRITZ, and we'll return back to you for the Q3 results. Many thanks for participating.

Ladies and gentlemen, welcome to the ANDRITZ Q1 2026 Results Conference and Live Webcast. I'm Sergen, the Chorus Call operator. [Operator Instructions] And the conference is being recorded. The presentation will be followed by a Q&A session. [Operator Instructions]

At this time, it's my pleasure to hand over to Matthias Pfeifenberger, Head of Investor Relations. Please go ahead, sir.

Good morning, and a warm welcome from ANDRITZ for Q1 earnings call and webcast. Thanks for your continued interest in ANDRITZ and your participation today. It's a great pleasure for me to present your presenters for today's call. I have with me our CEO, Dr. Joachim Schönbeck; and our CFO, Vanessa Hellwing, I'd like to pass over to Dr. Schönbeck now for an overview of our Q1 results.

Please go ahead.

Thank you very much, Matthias. Good morning to everybody. Thank you for joining us on our call for the Q1 results 2026. And I would happy to provide good news for Q1 in '26 despite some, I would say, geopolitical tensions and surprises, we can report a very good quarter. We had a record high order intake that was mainly driven by Hydropower and Pulp & Paper. And I would say Hydropower was -- had an extraordinary quarter with cumulated bookings of several midsized orders, but also a very strong quarter for Pulp & Paper. We could see a stable development in Metals. We could see a further decline a bit in the market in the automotive, but we could see, I would say, a trend -- reverse trend in steel, where we could see good growth in order intake and also increasing project pipeline.

Environment & Energy, we could see a small decline. But on the other side, we also see that the structural demand drivers remain intact, but I would say, economic uncertainties also delayed some of the decision-makings. So however, the high order intake should not be extrapolated for the coming quarters, even though we are not too pessimistic on the markets we are in.

We could grow in revenue despite another time quite a negative foreign exchange impact, and that growth is also sustained by Hydropower and Pulp & Paper. We could see a slight growth in EBITA and a stable profitability. The growth is driven again together with the revenue by Hydropower, Pulp & Paper, and we could see stable EBITA margins for Metals and Environment & Energy despite declining revenue. So we are, I'd say, that's a good -- that is a good sign.

Key figures in summary. Order intake at EUR 3.6 billion, revenue at EUR 1.8 billion, so book-to-bill at 2. It's easy to calculate. Record high order backlog, EUR 12.4 billion, up 22% compared to previous year. EBITA, as I said, stable margin, 8.2% and EUR 147 million on a comparable basis, and a net income of 5.1%, EUR 92 million.

If we look to the quarter -- to the quarterly development of order intake. You could see a record high, 3.6%. And on the quarterly 12-month rolling average, now we are moved above the EUR 2.5 billion per quarter. So it's the sixth consecutive quarter with an order intake above EUR 2 billion and I would say, gives us in uncertain times a solid base for the time to come.

Going in the details, we could see a strong quarter for Pulp & Paper, plus 3%, above EUR 1 billion for the first quarter. In Metals, as I said, we saw a small decline, resulting of a further downturn in automotive and then increased order intake from the steel industry. Hydropower, sensational first quarter with EUR 1.9 billion in order intake. But as I said, it was a bit this accumulated bookings. We had, as you might remember, quite a weak quarter 4 in Hydropower, I think, around EUR 650 million at that time in the Q4 last year.

So we had some orders which could not be fully booked as they have not been enforced. And so some of the projects went into force in March quite early, a bit earlier than we expected. So it was, I would say, a bit accumulated in March, these bookings, which resulted in this very high order intake. But we are happy with what we have in the backlog we can execute, and I think that's very good. And Environment & Energy, a drop to Q1. However, we do not see that there is a fundamental decline, but we rather having an optimistic view on the quarters to come in these markets.

On the -- if we have a quick look on the regions, you can see that we have a significant increase in Asia and in South America, and that is mainly driven by the steep increase in Hydropower. I'll come to that in more detail later. If we look to the revenue, as I said, revenue growth by 2% nominal. If we add this foreign exchange translation impact, we are at 6% up compared to first quarter of last year. So I would say it's on a good track. The growth is driven by Pulp & Paper and Hydropower, while Metals and Environment & Energy, we see a slight decline.

The backlog, as I said, record backlog, EUR 12.4 billion. Never been that high in ANDRITZ's history. I would say two significant effects that should be recognized. The one is Hydropower now basically represents 50% of the backlog. And that also turns, I would say, extends the backlog a bit longer. So the conversion rate is decreasing as the hydro projects have a longer average execution time than, for example, Pulp & Paper and Metals.

If we look at the EBITA, EBITA on a comparable basis and on a reported basis have increased by 2%, respectively, EUR 3 million. We would say, have the order execution has been improved, restructuring measures that we that we had initiated last year, especially in Metals and Pulp & Paper, now bearing fruit. And I would say we are on a solid track on the profitability, 8.2%, respectively, or 8.1%, stable compared with the previous year.

Service business is nicely growing. Share of Service revenue now is 45% for the last 12 months, 46% for the first quarter of '26. So that's an all-time high. Also, the Service revenue could see a growth of 4% year-on-year in Q1. So I would say we are on a good track there, further stabilizing our revenues and increasing also our profitability.

So somebody took away my control, and that's probably intended because now I hand over to Vanessa to give us the details on the financial performance. Vanessa?

Yes. Thank you, Joachim. Good morning, everybody, and also a warm welcome from my side. So Joachim already shared many details and the record order intake has been already pre-released in the news. So with respect to your time, I will keep it short and focus on the key messages for today.

To briefly resume what Joachim already remarked, order backlog at a new all-time high, driven by a remarkable order intake that led us to a book-to-bill of above 2. And as the momentum is driven by our strong hydro business with typically longer execution cycles, the backlog-to-sales conversion will change. And therefore, this is not triggering an immediate impact on our sales guidance for this year. So nevertheless, revenue continues on an upward trajectory despite the negative FX effects and our profitability remains stable.

So looking at the key figures from a CFO perspective. Q1 confirms that the growth we achieved comes with very strong financial quality. Operating cash flow increased to EUR 89 million, 22% above last year. And at the same time, we kept a strong liquidity position of EUR 724 million despite the elevated CapEx and despite our remarkable M&A activities from last year '25. The ROIC recovered to 19.5%, well above WACC, while operating net working capital improved sequentially again to EUR 961 million, showing that cash discipline is now really visible on our balance sheet.

The earnings bridge shows that the higher revenue base translated into a modest EBITDA increase to EUR 190 million and a 10.6% EBITDA margin, as you can see. The depreciation and IFRS 3 amortization moved up only moderately, mainly reflecting a CapEx and acquisition effects. With a tax rate which is improving to 24.6%, net income also increased to EUR 92 million. And the net profit margin remained stable at 5.1%, confirming actually a resilient profitability despite a slightly lower financial result.

Turning to free cash flow. We are starting from the EBITDA of EUR 190 million. The main operational improvement in free cash flow generation came from a much lower net working capital outflow than last year, also improved cash taxes are compensating for other project provision related and hedging effects and enabling operating cash flow to rise to EUR 89 million.

After EUR 15 million higher CapEx than last year spent for growth, service, digitalization and innovation, our free cash flow reached EUR 25 million, moderately above the prior year period. So last year, we have acquired LDX in Q1, you might remember. And this year, we have taken it a bit more easy for the first quarter. So no acquisitions. But the payment for our latest acquisition, Sanzheng, that was closed in Q4 '25 was processed in Q1. So the payout is also included here.

Looking at the operating net working capital that remains lean at around 12% of revenue and has improved sequentially again following the seasonal Q4 '25 cash release. The general increase compared to the exceptionally low levels seen a few years ago reflects a more normal business mix, the larger service share and also the consolidation from acquisition. The key message is that net working capital is back in the recent run rate corridor and remains, of course, a management focus for 2026.

The detailed split shows two different moving parts. And we have the contract working capital, on the bottom part, continues to improve, supported by higher contract liabilities and prepayments from the good order intake in Q1. And on the upper part, the trade working capital increased seasonally in Q1 and is also influenced by our service growth and also the recent acquisitions. Structurally, the shift from large overtime projects towards more midsized and completed contract orders is increasing also the work in progress. And so disciplined inventory and project execution will, of course, remain central for us.

The quarterly operating cash flow remains also volatile. You know this is very typical for a project business. And as mentioned in Q1, operating cash flow of EUR 89 million was supported by better operating profit and lower net working capital outflows, allowing for higher CapEx. The long-term message is that higher top line, improved margins and also a better cash conversion are sustaining a structural stronger cash generation profile here.

Looking at our net liquidity. This remains a strategic strength, I would say, even after the deliberate reduction of our liquid funds over recent years driven by higher CapEx and M&A spendings that was, of course, especially remarkable in 2025. So compared with the year-end '25, net liquidity improved slightly to around EUR 724 million, supported by stronger operating cash flow, as shown, and a lower M&A cash out for Q1. Considering also the EUR 500 million revolving credit facility, which is unutilized for Q1, ANDRITZ retains substantial financial flexibility for dividends, organic investment and disciplined bolt-on M&A.

Turning to the ROIC. As indicated in our last earnings call, ROIC recovered to 19.5% in Q1 '26 from the acquisition-related dilution seen in '25. The recovery was driven by improved NOPAT so that we -- last year, we had only the pro rata acquisitions included. Now we have, of course, the full impact also from the acquisitions and the NOPAT. And it was also from lower invested capital, showing that the recent capital deployment is really being absorbed without weakening the value creation profile. So with ROIC still materially above WACC, ANDRITZ continues to generate returns well above its cost of capital.

And to close on the summary. Our first key theme remains resilient growth, yes, record order intake, record backlog, a book-to-bill above 2,, supporting the revenue trajectory even through a higher Hydropower share that will lengthen the backlog conversion. So the second key theme is financial discipline and flexibility. Margin remains stable. Operating net working capital improved sequentially and cash flow and net liquidity remains solid, thereby giving ANDRITZ certainly the room to fund for growth and business development whilst staying financially strong here. And the third key theme is value creation coming from the ROIC that has recovered and that remains industry-leading level, implying substantial value creation significantly above our WACC. Yes.

And for the overview of our segments and some details, Joachim will now guide you through again.

Thank you, Vanessa. So let's have a quick look on the segments. Let's start with Pulp & Paper. I think we are happy to report that we are -- that the growth trend that was basically initiated in Q4 last year continued. So I would say we are back on a solid growth trend in order intake, backlog, revenue and earnings. So that is quite good.

We could book 2 large orders with exceptional size in Q1. One was a biomass power plant in Europe and a large paper machine in Africa for General Emballage will be the largest paper machine in Africa. So we are quite proud that customer has picked ANDRITZ to supply that very important machine.

We could see in Q1 a very, very nice growth in the Service business. Now for the first time, we have surpassed the 60%. It's now 62% of our revenue came from Service in Q1 this year. So I would say if we look in total, we are, I can say, solid strong performance in Pulp & Paper even without these mega projects from South America.

If we turn to Metals. As I said, it's a bit of a split view. From the market side, we saw a downturn in automotive and we saw an upturn in the market in steel. We look to investment sentiment in the steel industry. I would say this would continue to improve over the year. And for automotive, we could see towards the end of the year a recovery also there.

So we are -- we need to continue to size our capacities accordingly because the changes in these markets are, I would say, quite fundamental, and we need to adjust ourselves to stay competitive there. But on the other side, you can see that we do that. We are on the EBITA margin, we are stable, 5.3% comparable EBITA margin despite the ongoing adjustments. So I would say we're on a good track. We are solid in order execution.

Looking to Hydropower, I would say we have only good things to report. To the order intake, EUR 1.9 billion, already said. So we can expect that we will have this year also, I would say, have the sixth consecutive year in a row where we will grow order intake and revenue compared with the previous year. As I told you already in previous calls, this is a long -- this is a trend of growing demand in electrical energy and in renewable electrical energy. And we do not see that there will be a prompt end in this demand. So project outlook is strong but less strong than in Q1 if we look to order intake.

On the regional distribution, I would say that we are quite happy to report that this huge order intake is nicely spread around the regions. So a lot of orders from Asia, that's mainly India and New Zealand and the Philippines, but also very strong in South America. So for us, it's good that we -- that basically we can provide the execution through separated supply chains. And we are quite self-sufficient in engineering, manufacturing in Asia and also in South America so we do not need to pass by the Middle East with a lot of goods, which definitely makes us a bit robust to the political surprises coming from that region.

So the backlog, with the EUR 6 billion will take some years to bring that down. But we see from that, we will continue to grow our revenue this year and in the years to come. You can see from the employees that we need to continue to build up capacities there in order to provide the projects on time to our customers. Service revenue slightly declined, but I would say it grew, but capital business grew a bit further. Profitability further increased. So that gives us the confidence that we move the profitability in Hydropower to the target level that we communicated.

Environment & Energy, I would say, is a mixed picture. We have a low order intake. But on -- we see on the market side, we see quite a stable development. So we expect to recover that over the year. On the profitability side, we remain stable on the comparable EBITA margin despite the decrease -- the slight decrease in revenue. So we have a good share of service of 50%, and we are quite confident to keep in that business area on track. If the uncertainties in the investment climate for topics on the energy transition will be removed, then we definitely see a bit better future here.

If we look to the guidance, so impact of trade barriers, basically no news to tell you. I would say very limited impacts from the war in the Middle East from our side. First of all, as I said, we are quite independent in our supply chains in the Asian market, especially in Hydropower, which is now growing. However, indirect impacts from increased energy prices and constraints through inflationary trends, of course, we cannot run away from that.

Foreign exchange translation impact has been quite heavy also in this quarter, EUR 71.6 million. But we expect that this trend will be significantly smaller in the quarters to come as the main strengthening move of the euro compared with the major currencies like U.S. dollar, RMB and Brazilian real will not be as significant in the quarters to come as it was in the previous 4 quarters.

So guidance for '26 is confirmed. As we reported, revenue between EUR 8 billion and EUR 8.3 billion and comparable EBITA margin between 8.7% and 9.1%. And we also can confirm our midterm targets for 2027 with a revenue between EUR 9 billion and EUR 10 billion and a comparable EBITA margin above 9%. So that is basically what we wanted to tell you, no changes on the comparable margin targets for the business areas. That's what we wanted to tell you.

Now we are available for any questions you might have. Thank you very much for your questions.

[Operator Instructions] And we have the first question coming from Akash Gupta from JPMorgan.

Dr. Schönbeck, Vanessa and Matthias, I got a few and I'll ask one at a time. My first one is on Hydropower. I mean, your orders are quite strong and most of them seems to be new projects. So maybe if you can start with, how does the margin in Q1 orders compare with what you have in your backlog at the end of 2025?

Second part of that question is that when we look at hydro orders at your competitors, we don't see a same level of strength. So it indicates that you may be gaining market share. Can you confirm that? And if that is the case, what is driving this market share gain? So that's the first one to start.

Hello? Can you hear me?

Yes, I can hear.

Very good. Akash, thank you for your question. So I would say the margins, I would say, are good. The market is good. And so therefore, we could also -- I would say, we could book at good margins despite the large, huge volumes. On the market share, we -- I believe that we have gained market share. I can confirm that we see a very strong growth in India, and I believe we have, I would say, more than average market share there because we are the only supplier who is fully localized with their own workshops for turbines and our own workshop for generators. That makes us very competitive. And so I would say we benefit over proportionately from the growth there.

And the second question I have is on large pulp orders. How do you see prospects for large pulp order awards? You're not promising a lot before the war in the Middle East broke out. But in general, is there a risk that customers may need more time to decide given the uncertainty? Or do you think that may be irrelevant given the lead times in large pulp projects are like more than 3 years, and therefore, this near-term uncertainty could be a noise?

I would say on a rational thinking, you could think that this impact, the short-term impact might not influence. But when you make investment decisions of that size, usually, I think people do not like to do that in uncertain times. So I would say we rather see a further delay to see the outcome and also to have a better assessment on the time, how long this conflict may last.

And as I said, we do not take any position about the timing of the investment decisions for large pulp mills in South America. What we see is that the trend in China in the paper industry to backward integrate their papermaking activities into pulp making, that this continues. These projects are smaller in size for us, but they continue.

And my last one is for Vanessa on M&A. If we look at last year, we had quite good activity on M&A in the first half and then we had a bit of a slowdown in second half. And I think we have seen the same slowdown in first quarter of 2026 as well. So maybe if you can talk about what is driving this slower activity? Are you looking first to integrate the companies that you have acquired in early part of 2025? And how shall we think about prospect for bolt-on M&A or maybe even larger M&A in the rest of the year?

Akash, thank you for your question. Well, I mean, I would say, let's see. We definitely continue on our bolt-on M&A strategy and we are still on this. So it is about the targets. Of course, we firstly integrate and focus on this, but this does not mean that we stop our activities to screen the market and take further action. It depends on the targets that are available and that we see as a good fit to our company. So there's no deliberate slowdown. It's just rather on selecting well.

The next question comes from Sven Weier from UBS.

The first one is also on hydro because especially on Brazil, we obviously saw the major power auction in the Brazilian markets earlier this year. And I was wondering if the orders that you received in Brazil were related to that. Or are you still expecting more to come? That's the first one.

This was related to that auction. At least it was related to auction, whether it was related to the auction that you're referring to, but our customer won a majority in one of these auctions. And so that drove the order intake on our side.

Okay. So that's basically fully reflected in Q1 already?

Right.

The other question I had was just on Pulp & Paper and the paper order you got, which, I mean, that's a board order, right?

Yes.

And which, I mean, you -- I think at the CMD, last CMD, you kind of announced that you wanted to become a stronger player in the board market. I mean, is this like now the biggest order you ever had and really the first major one? And how should we look at this from here? Also maybe in terms of project risk, I mean, if this is kind of the first in-kind big one that you do, what is the kind of typical project risk that you would see on the project?

Yes. Thank you for that. So I would say, for us, it's the first order of that size that we execute in that region basically out of Europe. On the risk side, we are not too concerned as there are no elements in that we have not built a couple of times, but this was mainly done in rebuilds where our strength was over the past years converting printing paper machines to board machines. So I would say on that side, we do not see a risk.

But I would say it is definitely paying into our strategy to become a stronger player in the paper and board market. And also we can demonstrate that we can make a new build machine which, at the end, is less complex and less complicated than to make a rebuild of a printing paper machine into board machine.

Is it fair to say that, in general, the pipeline for board projects is still a bit tough given the situation in the market? Or...

Yes. I mean, you probably know that the paper and board industry is, I would say, still in a difficult situation with low prices and high capacities, and we see -- especially in Europe, we see closures. But also in China, we have a rather low utilization rate in this industry. Therefore, we are very happy that we could -- that we have been selected for, I would say, the only new investment in this part of the world for the past years.

And is it fair to say that probably very competitive against Valmet and Voith in that situation? Or are you happy with the margins of the contract?

Yes. We are happy with the margin of the contract, and we are happy to see that we are competitive also for these new machines. Yes.

And then my final question, maybe for Vanessa, on the advances because you obviously had this huge order intake. Contract liabilities went up EUR 200 million-ish. But I suspect this was not the total amount of advances that you are going to receive on the back of the EUR 3.6 billion order intake. Is that fair?

Yes, of course. I mean, that's kind of mixed and we will see some more in Q2. So some -- it depends really on the order and on the contract. Some orders get enforced with the advanced payment, and some, we received the cash somewhat later. And some, even don't have it. So it's a mixture. It's not all in Q1 directly related to the order intake.

The next question comes from Christoph Blieffert from BNP Paribas.

I would like to start with Pulp & Paper. Can you give us some insight into the operating trends in the Service market and contrast revenue and order trends in pulp service versus board and paper service market, if there are any?

Yes. I would say, in general, the paper service market is still down. Utilization rate is low in China, in Asia, in Europe, also in North America. So that is where we see also, I would say, pressure on the volume there. On the pulp side, we see growth. We see growth because we are expanding our service offerings, some of the acquisitions last year, but also organically.

And on the pulp side, we definitely benefit from the increased market share we had on the capital side, especially in South America but also in China, where the, I would say, the fundamental demand for service parts but also smaller modifications and repairs is increasing. So these are basically the two driving trends. Once the market in paper turns up, we will, of course, also significantly benefit there.

And the second question is on hydro. Can you remind us on the contract structure and your ability to pass through rising input costs to customers, please?

Yes. Due to the long execution time of these hydro contracts, we basically have in all or, let's say, 90% of these contracts, we do not have fixed price contracts but we have price adjustment schemes in that are related to, I would say, regionally developed formulas on input costs, labor, inflation, material. So we are, I would say, well protected there.

The next question comes from Patrick Steiner from ODDO BHF.

Patrick Steiner speaking. Congratulations to the good results. Two questions remaining from my side. First of all, after this very good order intake in Hydropower in Q1, how should we think about the order intake run rate on a quarterly basis going forward?

And secondly, I mean, you've discussed already the Iran war impact, but I would also be interested what you see on the customer side and if you see any kind of supply chain issues in Asia.

So as you know, we do not give outlook and guidance on order intake. But maybe two comments. The run rate per quarter in hydro will be lower than Q1, but we expect that the order intake will be for the full year higher than last year.

And on the impact on the war in with Iran. As I said, we are -- with the orders we booked recently, we do not have a lot of traffic of goods need to pass the Middle East, which, I would say, gives us quite a good level of comfort that we will not see direct impacts from whatever is happening there. But as I said, we cannot take ourselves out of these indirect impacts.

Okay. And the Q1 order intake, would you see this like more as a one-off? Or should we expect higher quarterly demand compared to '25, for example?

As I said, that's for sure is a one-off and it's more, I would say, accumulation of bookings. As I said, some had been delayed from Q4 and some were then become effective a bit earlier than anticipated. So it's for sure, it will remain an exceptional quarter.

The next question comes from Daniel Lion from Erste Group.

I would like to ask you about the development in hydro and its impact on your improving pricing power and actually also the backlog levels and revenue developments. So first, how do you see the trajectory that revenue will gradually catch up with the backlog level trends going forward?

And the second is, obviously, maybe slightly premature because we are not yet in the margin corridor that you guided. But given the pricing power that is improving for you, what does this mean for margins in 2, 3 years when the current orders start to materialize?

So I would say, and I communicated that last time when we presented Q4 results in March, that we are very confident to move Hydropower into the margin corridor of 7% to 9%. We have better price quality in the recently booked orders compared to the legacy backlog and as the legacy backlog is moving out of the backlog gradually. So we see a trend and we see this trend remaining upwards. So that is basically -- yes, that's what we see.

And the first question was about how we work down the backlog or what? I didn't fully get your question.

Yes. Actually the question also relating to historical development. Usually you have backlog to revenues of roughly [ 2 ]. Now we are moving, actually, it's above [ 3 ]. And there's a big gap for revenue to catch up to the strong backlog that you currently have. I was just wondering how quickly you expect this to happen. And also relating to your capacities, what is actually realistic to generate based on capacities you have in place and expect to build up going forward?

We only take orders that we can deliver. So that is for sure. And I mentioned that we are building up capacities. You could see that on the employee side. We had invested and we are still investing quite extensively for the hydro business. At the moment that's happening in Austria, but also in India, in Brazil, and also in North America. So in order to prepare ourselves for these projects. And as I said, we will see that the backlog will turn a bit slower into revenue. Then you could see that for the previous years as the share of the hydro backlog is higher, and execution time for hydro projects are between rather 3 to 5 years than 2 to 3 years as we know it from Pulp & Paper.

Okay. And last one on restructuring. Can you provide us a number that we should expect for the current fiscal year?

A number for what?

Like how much would you expect to invest into restructuring, especially for Metals, maybe also slightly in Pulp & Paper...

I don't have that number on hand. But I would say it's probably fair to be that it will be in a similar order of magnitude than '25.

The next question comes from Akash Gupta from JPMorgan.

I have a more of a high-level question. I think it's been almost 2 months since we had this Middle East crisis and still the situation is not resolved and we are having a major energy crisis. And Dr. Schönbeck, I mean, you have a lot of businesses that are quite relevant in this whole debate on energy transition. You have hydro, you have biomass boiler, you have automotive business, and I think there are growing optimism on EV sales, EV electric vehicle sales uptick as people might force to switch from ICE engine car to electric cars to bring down their cost.

I wanted to ask, as we had -- has there been any change in your conversation with customers on demand in some of the customer industries? Like are you seeing any change in behavior already, that they are probably keen to go ahead and do something sooner than later? Or is it still a bit too early?

I would say it might be a bit too early. But of course, we see that in a general trend that high energy costs or high energy prices is driving this energy transition. That is for sure. And it reminded everybody that if we have decoupled Europe from Russian gas, and we went into huge contracts with Qatar, that if Qatar cannot supply, we still are in a difficult situation.

So I think the key drivers for the energy transition are still there and to provide a solid diversified portfolio, I think, is needed. And I would say, industry politicians and our customers have understood that. So having said that, I would say project activities are there, but decision making has not happened yet.

And just a housekeeping on Metals. What is the rough split between auto and steel for the segment in revenue terms?

I would say it's about -- let's say, it's 40% automotive, 40% steel and 20% other industries.

Ladies and gentlemen, that was the last question. I would now like to turn the conference back over to Matthias Pfeifenberger.

Yes. Thanks a lot to the Management Board for their elaborations and to the audience for the excellent questions and your continued interest in ANDRITZ. We, of course, remain available for follow-ups after this very excellent quarter.

And I would now like to pass on the word again to Dr. Schönbeck, our CEO, for final remarks. Thanks a lot.

Thank you, Matthias. So I would say, as I said, we are happy with the first quarter, one of the most troubled quarters we could see in geopolitical developments. Confidence of our customers remains strong to trust ANDRITZ also in these times to provide orders for us, and that helps us to look to the future quite confident based on the high backlog, strong improvement in the Service business and also improvements in our profitability. So we also can expect that next crisis, we also can take on quite proactively.

That's about what we wanted to say. Thank you once more for your attention, and then talk to you in 3 months from now. Thank you very much.

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

Ladies and gentlemen, welcome to the ANDRITZ's Full Year 2025 Results Conference and Live Webcast. I'm Sergen, the Chorus Call operator. [Operator Instructions] The conference is being recorded. [Operator Instructions]

At this time, it's my pleasure to hand over to Matthias Pfeifenberger, Head of Investor Relations. Please go ahead, sir.

Good morning, and a warm welcome from ANDRITZ out of Vienna this morning. After preliminary headline results a few weeks ago, it's my pleasure to welcome you to the final full year earnings call and webcast. I have the pleasure to present to you our CEO, Dr. Joachim Schonbeck; and our CFO, Vanessa Hellwing. The earnings presentation will be structured as usual. We will present the CEO highlights, followed by the financial performance, followed by the performance across the business areas and then ending up with guidance. We'll also conduct a Q&A session. [Operator Instructions].

And now I'd like to pass on to Dr. Joachim Schonbeck for his elaborations.

Thank you, Matthias. Good morning, everybody. Thank you for being with us this morning on the disclosure, not the disclosure, but on the details of our last year's result. If you look back to the year 2025, we can say the world has been cautious on investments, but rich in geopolitical surprises. For ANDRITZ, this means we go back to what we can do best, giving out our clear priorities and executing with a high discipline. And I'm very proud how well our team achieved what has been asked to do and the dedication they put into it to achieve the results we finally came up with. The trust of our customers helped us through this difficult year, and we are happy that they showed the confidence with the many orders they placed with us.

We definitely came back to growth in order intake. We had a strong order intake in the full financial year, strongly driven by hydropower and by -- but also by Pulp & Paper. We saw a slight decline in Environment & Energy, where I would say, investment decisions were pending and postponed. But structurally, we believe demand is okay. And in metals, we definitely are faced with broader structural issues in the industries in automotive as well as in the steel and metals industries where investment was not at highest priority for the last year.

Our revenue declined a bit, but due to our disciplined execution and cost discipline, we could keep the comparable EBITA margin stable, very happy that this turned out very well. We compensated a significant FX effect translation and through the improved order execution on the one side, and the timely implemented capacity reductions, we could protect the bottom line very well. We even saw margin progress in hydropower as well as in metals. All in all, we are confident to propose to the general assembly to increase the dividend to EUR 2.7 per share, up from EUR 2.6 per share in the previous year. And the payout ratio increases from 52% last year to 58% in this year. So that's all well in line to what we have promised to you how we want to manage that part.

If we have a look to the Q4 in more detail, the order intake reached the EUR 2 billion. That's down from the previous year. Revenue at a high EUR 2.3 billion, up 3% from the previous year. Order backlog reached record high in ANDRITZ's history, EUR 10.5 billion at year-end, never had that, 7% up from last year. EBITA margin in the fourth quarter at 9.7% and at EUR 228 million. The reported EBITA was at 8.5%, EUR 200 million, and the gap is basically all costs for restructurings that have been done and that will are prepared for this year. Net income is at 6.6% and EUR 154 million.

If we have a look to the full year order intake, a bit shy of EUR 9 billion with EUR 8.9 billion, up 8%. Revenue, EUR 7.9 billion, so very positive book-to-bill ratio. Order backlog, as I said, 10.5% (sic) [ EUR 10.5 billion ] and the comparable EBITA margin for the full year was at 8.9%, exactly where it has been last year, EUR 698 million. The reported EBITA is down at 8.2%, down from 8.6% at EUR 648 million. So here, the gap is the cost mainly for the restructuring that we are -- that we have done in the year '25 and that we will do in the year '26. Net income is with 5.8% at a good stable level, EUR 457 million.

The Project activity, as you can see, is on a considerably high level, now 5 quarters in a row with more than EUR 2 billion order intake in a quarter. And with the project, I would say, pushovers from Q4 into Q1, we expect also that trend not to break. If we go into the details of the business areas, you see nice increase in order intake. If we look on a quarter-to-quarter base, we increased to previous year in all 3 quarters, but in the last quarter where we dropped by 21%, that was driven by a very large order we booked for hydro business, the project Cahora Bassa in the fourth quarter of 2024. So that's, I would say, more a onetime effect.

If we look to the business areas, you can see a very nice increase in Pulp & Paper and Hydropower; 20% up for Pulp & Paper and 16% up for Hydropower, while in Metals, it's down by 13% for the full year. Environment & Energy, basically 3% down. So I would say, Pulp & Paper, very happy to have -- to be successful on the, let's say, this wave of investments we saw in China for backward integrating the paper industry. In total, we received 5 orders for complete pulp mills in China, very, very huge success showing that we are really well positioned in the market itself, but also technological-wise.

In Hydropower, strong demand on renewable energy, but also our new offerings around grid stability, energy storage and turbo generators is picking up. So I would say, overall, it's the energy demand and in particular, the demand in electrical energy is really supporting us. In metals, the investment climate is down. And basically, we saw the third year in a row where the market declined, and that is true for the steel as well as for the automotive industry. Environment & Energy, we saw interest in the market for these new green technologies for the green transition of industry, namely green hydrogen and carbon capture but we did not see investment decisions in the markets where we are in, namely Europe and North America.

Regulatory uncertainties playing definitely one role. High energy prices still in Western Europe or in large parts of Western Europe play another role. But I would say on the positive side, we had received many orders for engineering studies, both for carbon capture and green hydrogen. So we see there is a demand. Industry is preparing, and we ANDRITZ, we seem to be a trusted partner for these endeavors.

Looking to the revenue. We see a decline compared with the previous year of 5% year-on-year. And you can see that we had a decline in the first 3 quarters, and we had basically the turning point in the fourth quarter where we exceeded the revenue of the previous year's quarter. So also here, we believe that this trend will continue in the upcoming year because the good order intake and the significant backlog we have will definitely help us there.

You could see in the fourth quarter, all 3 business areas, Pulp & Paper, Metals and Hydropower increased their revenue compared with the previous year; on Environment & Energy, dropped a bit. And over the full year, only Hydropower could increase the revenue. That's basically in line what I've told you in the previous calls that we had together that in the Hydropower, the large order intake that we have takes a bit more time than in other businesses to turn into revenue. But as we execute disciplined and in time, this revenue will come. And you see this trend starting now, and it will prevail.

One word to the, I would say, significant impact on the revenue side is definitely the FX translation, which was EUR 85 million in the fourth quarter and EUR 222 million for the full year, significant impact, a strong euro, and we will see what this impact will be for this year. The backlog, as I said, record high, EUR 10.5 billion at year-end. And you can also see that the historical balance between Pulp & Paper and Hydropower is now largely driven towards hydropower, now 43%, almost 50% of our entire backlog from Hydropower. And therefore, we can drive the revenues out of that very effectively over time.

Looking to the EBITA. Comparable EBITA margin remained stable. The absolute EBITA went down by 6% along with the revenue. I would say we are quite happy that despite the downturn, we could keep the margin. Main drivers for that is timely implemented and executed capacity reductions in the area where needed, namely in Metals and in Pulp & Paper, but also significant improvements in project execution. And there, I can specifically name Metals on the one side and Hydropower on the other side, we really made a strong improvement on that discipline. I would say, looking a bit forward, while Pulp & Paper, some residual capacity adjustments need to be done, but it's mainly rightsized for what we see to come. In Metals, we will continue the restructuring this year because we see the markets will demand it. And we also see that the business is really capable of delivering good operational results at the same time when they are restructuring. So very happy to see that.

Turning to ESG. We have finished our ESG program, which was targeted for 2025, I would say, with a very satisfactory result. We reached all but 2 goals. And these 2 goals, I would say, we missed only slightly. The one we missed was the share of green products. We wanted to have 50% of our revenue based on that. We ended up with 47%. Still, it's a record high level for ANDRITZ. And I believe, for sure, targeting in the right direction. And we significantly increased the share of women in the workforce. You also see it in this panel. We are not -- so -- but in total, we are not on 1/3. So we wanted to be at 20%. We ended up with 17% at the end of 2025. Maybe the target was a bit too ambitious, but that is the way it is. So we see we are moving in the right direction. And as it was well executed this program, we gave way to a new ESG program for environment, social and governance. We want to enable the green transition, and we still believe there is demand, and we will -- we can cope with that.

We want to support people to grow, people in ANDRITZ and outside ANDRITZ, and we want to govern with integrity. That's -- these are our commitments for the new ESG program. We have targets laid out for 2030 on the environment, the social and the governance. I don't want to go through with you in all the details. No major differences to what we have done before. Maybe one of one main difference is that on the greenhouse gas emissions, we got certified and approved by SBTi. So our reduction targets on greenhouse gas emissions is now fully supporting the Paris climate targets. That is good. On the social, we focused on excellent frequency rate because that everybody returns safe from working in hundreds is still one of our key priorities. So we want to go below 1 ambitious targets, but I believe we have the tools in hand to do that.

We're focusing on women in leadership positions. We want to move above 15%, and we want to keep the voluntary turnover below 4%. Very important employee engagement index. We want to stay there above 75%. We believe in a people's business like we are doing, that's very important to deliver to our customers what they expect when they engage with ANDRITZ. On the governance, we put a focus on supply chain as you rightly expect that we ourselves will govern in full compliance. And so therefore, we have moved the targets into the supply chain, supplier social audit, supplier prequalification, supplier rating on sustainability by third parties. So that's the area we are focusing on.

In the excellent work of our teams in the ESG has also been recognized by the outside world and the top rating agencies all rated us up with very nice results. We moved to the science-based targets. So I believe we are -- we have made up the gap that has been communicated to us in the previous years. So I would say we are on a good track there. We had a very successful year in 2025 regarding M&A. We had made 6 major acquisitions. I think they all have been communicated individually anyhow. 2 acquisitions that completed our portfolio. The one was the Salico Group, in metals, basically being fundamental closing of the gap between the metals processing and the Schuler part of our metals business. We have a portfolio completion done on the paper side. We acquired A.Celli in Italy. They are strong in supporting our business on the tissue machines, but they are particularly strong on the winder technology that was one of the key technologies we were missing.

On decarbonization, we acquired LDX Solutions in the United States. That's an engineering company offering a clean air technology, ideal addition to our product portfolio technology-wise, but also excellent addition for our strategy to increase our local content in the United States, and we are now well positioned there to support the industry for their environmental investments. In China, we acquired Sanzheng. It's a technology provider for induction heating technology. They are specialized in induction heating for cold strip. So ideally, a combination with our metals processing group. We know them from -- already from several projects we have done together with them inside and outside China. And so therefore, we believe it's an excellent acquisition and can really give us a more complete offering to the customers in an area where they really are looking for a single-source solution from us.

On the customer service, we have made 2 acquisitions, both acquired from Babcock & Wilcox in the United States. The one is Diamond Power, sootblower company for boiler cleaning. And the other is a material handling company, taking care of the ash that is coming out of the boilers. Both are very good. We know the companies very well. Diamond, they are, I think, 130, 140 years old. It's an ideal fit not only that we know them from the industry, but also culture wise. So we are very confident all 6 acquisitions will fully deliver what we expect from the business plans that we have concluded. Service business reached another record level, and that is very exciting, especially if we know about the decline we have in the -- on the paper side in the paper business and with the paper machine utilization around the globe, not above 60%. Also the service revenues are down. So we are very happy that we could increase revenue once more and keep the growth stable in that very important area.

We did not only reach all-time high in the service revenue. We also increased the relative share to 44%. So you see we are moving closer and closer to the 50% we all wish that could be.

Having said that, I hand over to Vanessa to learn about the financial performance. Thank you.

Thank you, Joachim. So also from my side, a warm welcome. And based on the good overview that Joachim just gave, I would now like to walk you through the financial details of our results from '25. But let me first start with some key highlights from the CFO perspective. So ANDRITZ has generated a strong operating cash flow again. We closed with EUR 653 million for '25, which is 3% above last year. Throughout the year, we have used our cash to expand spending on M&A significantly, as you have seen, to EUR 329 million outflow. And despite that, we continue a very strong financial position. We have actively reduced our net liquidity by almost EUR 200 million in '25, while generating quite remarkable cash flow in the fourth quarter of almost EUR 340 million. And that way, we managed to increase our net liquidity sequentially.

Therefore, we follow our focused capital allocation by proposing higher dividends to the AGM this year. With EUR 2.70 per share, this is not only representing an attractive dividend yield, but also implying a significant increase in dividend payout. We will discuss our performance on the operating net working capital and return on -- sorry, and our ROIC in more detail in a minute. But to give you a quick preview already here, with an increased management focus on working capital, we have improved our net working capital as a percentage of sales sequentially and leading to a strong cash inflow in Q4. Our return on invested capital decreased in accordance with our M&A activities. However, it remains strong on an industry level and still substantially above our average cost of capital.

Turning now to our usual EBITDA to net income bridge for 2025. Our EBITDA margin remained relatively stable at 10.4%, while absolute EBITDA decreased by 9% to EUR 823 million, which is in line with the decrease in revenues in the course of the year. Depreciation remained flat year-on-year, resulting in a reported EBITDA of EUR 648 million. Reported EBITDA margins slightly declined year-on-year to 8.2%, which is based on higher net NOI, so nonoperating items, summing up to EUR 50 million in 2025 compared to EUR 30 million in the previous year '24. IFRS 3 amortization increased to EUR 65 million, naturally driven by our enhanced M&A delivery. The amortization of Xerium, you might remember a large acquisition done in 2018 amounted to EUR 18 million in the fiscal year and was now fully amortized in Q4 '25.

Our recent acquisitions, on the other hand, have been adding EUR 25 million to annual PPA amortization. In the financial result, you see a big swing from minus EUR 15 million in '24 to a positive EUR 16 million in the recent -- in '25. This comes basically from decreased interest income by EUR 26 million based on a lower interest rate in combination with the reduced gross liquidity that you see. And furthermore, we had seen the negative impact of EUR 24 million from the deconsolidation of OTORIO already in 2024. I hope you remember that. In the meantime, we have sold OTORIO to Armis and received a consideration in Armis equity. We have now divested our Armis shares, which resulted in a positive net effect of EUR 36 million that we have gained from the transaction in the course of '25.

And just to recall, ANDRITZ has sold its stake in OTORIO to Armis, which is a leading supplier of cyber exposure management and security. For ANDRITZ, cybersecurity is certainly a key element of our business, but it is not part of our core activities. And that way, with this sale, we will continue a close cooperation with Armis and participate from their high innovative services. And here to complete the picture of the net income elements, the tax rate slightly increased by 0.5 percentage points to 23.7%, which is basically reflecting also a one-off effect that we have already reported for 2024.

Summing up, the decline in net income to EUR 457 million in '25 is caused by the revenue and consequential EBITA decline as well as higher nonoperating items. Our net profit margins, however, as already mentioned by Joachim, remained solid at 5.8%.

So on the next slide, let me walk you through the free cash flow calculation for 2025 and start again with the EBITDA at EUR 823 million. Our enhanced focus on working capital management has paid off. And therefore, outflows for net working capital are quite decent for '25 compared to an impact that we had with minus EUR 115 million in the previous year. Cash outflows from income taxes remained broadly flat year-on-year and changes in provisions and others were slightly higher with minus EUR 17 million compared to last year, generally driven by personnel-related provisions for pensions and severance payments. Also to mention provisions on projects remain stable here.

Adding up the items mentioned, it leads to a slightly improved cash flow from operating activities of EUR 653 million for '25. So deducting higher CapEx of EUR 270 million, we arrive at a free cash flow of EUR 383 million, which is slightly below the EUR 399 million from the previous year. As Joachim reported, our M&A delivery exceeded recent year's levels with a number of deals that we have signed. Our M&A CapEx significantly increased to EUR 344 million compared to only EUR 76 million in '24. And this spend was well covered and digested by our free cash flow in 2025.

Now let's turn to the net working capital development. Here, we focus on the quarterly development of the operating net working capital. As you can see, we are pretty lean overall with current run rates of some 12% to 13% of revenue. And just to recall once more, for a project engineering company like ANDRITZ, the operating net working capital consists of the typical trade working capital as well as contract assets and liabilities and prepayments related to our POC orders. What you can take from that picture is that operating net working capital has increased somewhat over the last few quarters coming from a level 3 years ago where we received several large projects with respective prepayments. The structural increase in operating net working capital also results from the growth in service business where generally higher inventory levels are required.

The good news is that after the increase throughout the last year, the operating net working capital has been well reduced in Q4 '25 after the all-time high that we saw in Q3. And important, this also includes working capital from acquisitions. It has been reduced in absolute terms, but also in percentage of sales. 12% is now in line with the average of the last few quarters again with the increased management focus on net working capital in general and the full consolidation of the acquired revenues in the course of this year, so '26, we will continue, of course, to monitor that KPI very closely.

To discuss the sequential improvement in Q4 in more detail, let me now turn to the next slide. As you already saw, we have split the operating net working capital into its 2 components. Trade working capital on the upper blue part of the chart and contract assets and liabilities with advanced payments, and those are displayed in gray at the bottom of the chart, reflecting our project cash flows, which are rather typical for us as a project engineering company. On the prepayment side, we have seen a constant improvement over the last few quarters, which created additional contract liabilities, of course. On trade working capital, we achieved a sequential improvement in Q4. This reflects stronger management focus and also normal seasonality. Typically, we see a buildup in the first 3 quarters followed by a release in Q4.

And as mentioned on the last call, on the Q3 call, the full year increase was largely acquisition-driven. Revenue from acquired businesses are included only on pro rata basis, while the assets are fully consolidated from the first day of consolidation. And this creates a temporary distortion, especially in relative terms. One structural factor is also shaping working capital and sales conversion, we actually see a shift from large-scale projects to more midsized and smaller orders. And as a result, we have less POC business and more completed contract orders. This leads to lower overtime revenues, but also to a higher work in progress that needs to be managed here in the working capital.

So here, I would now like to turn your attention to more details on the development of our operating cash flows in '25. Operating cash flow amounted to a strong EUR 339 million in Q4, supported by the working capital improvement mentioned before. For the full year, operating cash flow also improved year-on-year to more than EUR 650 million, which is a reasonable achievement considering the absolute EBITDA decrease. Also here, our increased focus on operating net working capital is becoming visible.

In general, we are still seeing a usual volatility in operating cash flows on a quarterly basis, which is very typical in the project business, of course. Important to emphasize here again is the overall high level of operating cash flow that we are maintaining compared to the historical level. This is driven by higher top line levels, better margin and also improved cash conversion. It becomes evident when we look at the right side of this chart showing not only the absolute level of operating cash flows for each year, but also the 3-year rolling average that you can see in light gray. And 2 to 3 years actually reflect the average execution cycle of our capital business.

On this slide, we turn our focus from generating cash to allocating it properly. And I'm very happy to present here again our dividend proposal for the fiscal year 2025 to you, subject, of course, to our 26th Annual General Meeting. To highlight again, EUR 2.70 per share proposed does not only represent the fifth consecutive dividend increase, but also a significant increase in our payout ratio to 58% coming from 52% last year. And this is in line with our progressive dividend policy and with our 50% to 60% target corridor for the payout ratio. And despite declining earnings per share, we are here proposing to exactly balance it through higher dividends once more.

Since last year, we are providing transparency on our capital allocation, and we can now add 2025, which somewhat alters the historical average that we have presented. In the last years and especially in '25, we have increased capital allocation significantly. And this actually while keeping a strong financial position and sufficient net liquidity. Our cash was allocated especially to the M&A side, where we have used '25 to close a much higher number of value-accretive deals compared to previous years. And we have talked about the dividend increase just a minute ago. But also on the conventional CapEx front, we have increased our investment in service, in green solutions, in digitalization and also in R&D. And we are planning to provide more disclosure on this going forward in the course of the year.

Our capital allocation strategy remains balanced across CapEx, dividends and M&A. And we also might also place some opportunistic share buybacks as a more flexible option on top of this. And we can say capital allocation at ANDRITZ remains internally funded. Our aggregate cash outflows in the last 6 years have been more than covered by operating cash flow generation. And in my opinion, that's a very sound picture.

So let me now turn from capital allocation to our strong financial position and walk you through the changes in our net liquidity profile. Over the last 3 years, we have steadily decreased our liquid funds by termination of bonds and promissory notes. We still maintain a strong financial position, especially when including our EUR 500 million revolving credit facility. Our net liquidity declined further from EUR 905 million at the end of 2024 to EUR 713 million by the end of '25. We saw lower net liquidity levels also in the course of the year. As you remember, due to the outflow of the purchase price for acquisitions and also for our annual dividend payment in Q2.

Net liquidity has been restored again towards year-end, and that was driven by the strong cash flow generation in the fourth quarter. So as mentioned, FX also had a negative effect and this also on liquidity, of course, with roughly EUR 50 million, which is translation effect only. And before you ask, yes, of course, we do hedging on all our projects where relevant. With EUR 700 million net liquidity and more headroom from our revolver from our RCF, ANDRITZ continues to hold a strong financial position with sufficient liquidity as part of our DNA.

Following these details on capital allocation and net liquidity, let me provide you a quick update here on our ROIC performance. To recall, ROIC is our main metric monitoring the value generation over the long run. It has been increasing since 2020 and stands at a substantial margin in our -- at our cost of capital. So the ROIC has started to decline somewhat in the first half of 2025 and now also for the full year to just under 18%. This is, in fact, still an industry-leading level considering it is post tax and including all restructuring costs. On the one hand, this is obviously driven by the organic EBITA decline. But more importantly, this is because of our recent acquisitions with purchase price allocation leading to higher goodwill and intangibles, of course. Nevertheless, ANDRITZ's balance sheet ratio of goodwill and intangible is still very low in industry comparison and our equity position remains strong.

And also important to keep in mind that EBITA from these acquisitions is only included on a pro rata basis. If we would adjust the acquisitions for '25 entirely, our ROIC would remain close to 20%. However, our aim is to restore ROIC in the future, of course. At the end of my presentation, let me quickly summarize the development of our headline financials again. So our main leading indicators are still pointing upwards. Order intake increased notably in '25 by a plus 8% year-on-year, resulting in a book-to-bill ratio of 1.13. Order backlog stands on a record level for the year-end. The notable increase in order backlog in the last year to this record level already secures material part of the next year's revenue generation. As a consequence of high revenue recognition from the completion of larger orders in '24, our revenue trajectory is still pointing downwards, but we have reached the inflection point as consistently addressed in the course of last year. And so we returned to revenue growth in the fourth quarter despite the significant FX headwinds as outlined by Joachim before.

And even though not stated in our official disclosure, I would like to proudly mention here that we reached a historical high monthly revenue volume in December only of EUR 1 billion, indicating the capability of our global organization and management. Along with lower revenues and restructuring expenses from capacity adjustments in Pulp & Paper and Metals, our reported EBITA decreased, but we were able to maintain our comparable EBITA and net profit margins stable on a high level. Operating net working capital and ROIC remain in high focus going forward. The development this year was obviously impacted by the many acquisitions we had. And our enhanced capital allocation and higher M&A delivery support value creation and have reduced our net liquidity position, as mentioned. And as mentioned, FX has been significantly headwind, especially from March. And also the tariffs have still not impacted our key end markets so far. We will provide further details on that later in the presentation.

And for now, I thank you for your kind attention, and Joachim will now focus on the key developments across the business areas.

Very well, Vanessa, thank you very much for this detailed overview. Now let's move to the business areas. So Pulp & Paper market recovered on the pulp side, still flat on the paper side. We were happy to really benefit from the move in China in the paper industry to backward integrate into pulp mills. As mentioned before, we had been awarded 5 complete pulp mills in China, and we see this trend continuing in the year. So we are -- in Asia on that side of the world, we are quite optimistic on the investment climate. And we usually also see that the Chinese industry is then moving ahead with a good order intake and the good references we have, we believe that we also will take our fair share of the market.

We have a strong momentum last year in power boilers. Basically, these are not only boilers, these are small power plants, a sludge incineration in Germany with special focus on phosphorus recovery. Here, we have a special technology, and we took 100% of the market in Germany. These were 3 small power plants, very, very good achievement of our teams. We also saw momentum on the pipe side picking up in the U.S. So smaller modernization started, and we might see more to come on the -- for sure, investment environment and climate in U.S. is definitely also a bit influenced by some of the political decisions taken.

On the revenue side, we believe that we gone through the valley, and we can grow that. The good order intake of '25 will now go into revenue this year. And we are happy to see that although steep decline in revenue that through the timely capacity reductions we have done in Pulp & Paper, we could keep the margin on a nice level. We dropped from 11% to 10.8%. So I would say, a rather small drop on a very good level. Also, of course, supported by the strong increase of the service share now up to 59% of the total revenue.

In Metals, I can tell you the industry is in a difficult situation. However, I can be really proud of our teams, how they coped with it on the few projects that have been on the market, they have positioned themselves very well. So we got the trust from our customers. And that is true for Asian market as well for the European and the North American market. We went through significant restructuring taking out around 500 employees in the past year, closing several locations in Germany. So really protecting the bottom line through some cost discipline and very happy to report that it's not only an increased profitability for the fifth consecutive year, but with a 6.1% EBITA margin, the first time in our profitability target for 2027. So we're very proud how that develops in difficult times.

Hydropower, I would say we're also very proud, very good development. But here, we, for sure, have a support from a market, strong demand, I would say, worldwide on renewable energy, on -- but also our new offerings for grid stability, energy storage and turbo generators support that strong growth. We could increase the order intake for the full year by 16%, could grow the revenue by 12%. And on the EBITA margin, we moved up from 6.1% to 6.8%. So very close to the targets we have set. We see this trend continuing.

Environment & Energy. Here, we, I would say, faced a surprisingly subdued market, which, frankly speaking, we did not expect. And this is why we also were not, I would say, in time with our capacity adjustments that we have done. On the green transition side, a lot of interest. We received many orders for engineering studies, but no orders for equipment and plant deliveries. Clean Air developed very well, both in Europe and in North America. And in our separation and pumps business, we saw many projects delayed, a lot of exposure to the mining business and also here, uncertainty on the green transition definitely have played a role. So at the end of that, our margin dropped from 11.1% to 10.6%, still on a high level, still within our target margin. But here, you can see the effect that we had been prepared for growth and started with our capacity adjustments a bit too late.

What is to say on tariffs and FX, I would say we can confirm no direct impact on the tariffs yet on anything we should report and can report. So we will, of course, monitor that. We cannot allocate the indirect effect. So -- but I would say no direct impact on the FX translation we have mentioned several times. Strong impact for the year increasing over the year -- now let's see how the euro develops in this year, but you see that's basically -- that's a nominal loss of EUR 222 million in revenue. But at the end, it's not a loss, not a single equipment has been supplied less and not a single customer has not been served.

So that's a pure financial effect. 2026, what can we expect? I would say, project activity, we expect to stay on that level. We would expect from that revenue growth. And for sure, it's supported by growth on service, which we believe we can continue, but also our record backlog will help us. We will further improve profitability and restructuring is ongoing in Environment & Energy and in Metals. So we guide for this year a revenue between EUR 8.0 billion and EUR 8.3 billion and a comparable EBITA margin between 8.7% and 9.1%.

The midterm targets basically have been confirmed. And in looking to the time, no need to repeat that. Instead, give me 2 minutes here. You see we have now Environment & Energy in the target margin range. We have our, let's say, child of special attention, the Metals business area for the first time in the target area, we believe the trend that you see here on improving profitability will continue. This is why we continue the restructuring. And you see the Pulp & Paper and Hydropower, they are only 0.2 percentage points out of the range. So we are confident that we can grow in that direction. We have learned that even in difficult markets, we can do that. And if there is anything left, you want to know, we have not told you so far.

Now we are ready for questions and answers. Thank you very much.

[Operator Instructions]

And we have the first question coming from Akash Gupta from JPMorgan.

I have a few, and I'll ask one at a time. My first one is on growth. So when I look at your guidance, EUR 8 billion to EUR 8.3 billion, maybe if you can help me with what is the implied organic growth we have in this corridor. The starting point is 7.9%. I think you may be having some exchange rate headwinds already embedded given we saw higher exchange rates headwinds in second half? And also, you may have some carryover effect of M&A. So first one is on what is implied organic growth in 2026 guidance?

And then the second part of the first question is that if we then take the midpoint of EUR 8.15 billion, what level of organic growth would you need in 2027 in order to hit the at least EUR 9 billion revenue target for next year?

Akash, thank you very much for your question. We have not in detail provided our planning and our guidance, what is organic and what is not organic. I would say, as a general rule, we also know from the history that we grow 50% organic and 50% through M&A. That is still true. with, I would say, with the good acquisitions we made, we might expect now next year a bit more on the M&A side, but that's, I would say, only that's more marginal. We are working and we are preparing ourselves to continue the growth on the service side as we did even in the last difficult year. So we expect further growth. We had an annual track record of 7%. We believe that we can return to that. And on the capital side, we do not have the growth exactly in our hand because we also depend -- we depend on the market there. So this is why we gave out that guidance, and I hope this clarifies a bit what you were asking.

And second one is on automotive in metals as well as Environment & Energy. So yesterday, European Commission adopted Industrial Accelerator Act, where proposals to increase demand for low-carbon European-made technologies and products. I wanted to ask if you are seeing any optimism on project activity on the back of these regulatory changes in Europe? Or if not, then how long it might take before we see any activity on your end?

For sure, this will help our customers. And usually, if it helps our customers, it at the end helps us. as I have explained, we see both in automotive and in metals. We see now 3 years in a row, a shrinking market, which means that basically, the industry is overrunning their equipment a bit. It's a traditional business. If you run it 24/7, there is a lot of where you only -- you come to end of lifetime. You can always push it a bit. So from being in these industries long enough, we are quite confident that the market will increase, and we are very confident that we will take our fair share. And for sure, these legal acts from Europe will definitely help and protect a bit the European automotive and also maybe the European steel industry. I'm not aware of that Act in detail.

And last one is on CapEx in Hydropower business. So when we look at your competitors and especially in broader power generation market, almost every company is increasing quite substantial capacity. So can you talk about what sort of CapEx need do you anticipate in 2026 in Hydropower? And would that have any impact on total CapEx for the year?

The majority of our manufacturing CapEx for 2026 will be for hydro. There is a strong demand on the turbine side as well as on the generator side. And -- but it will not exceed our natural cash flow. So we will invest, and I think it's wise to invest because for you, as you know, it's still the cheapest way to spend our money into growth.

And the overall CapEx level last year, it was around EUR 200 million. Do we expect it to increase or stable in 2026?

Increase.

The next question comes from Sven Weier from UBS.

The first one is just wanting to go through the order pipeline because you said it's stable on a high level. As usual, I'm particularly curious on Pulp & Paper because you also alluded to China.

Yes. What's the question? We cannot hear you.

I think we lost Sven Weier. Could you turn to the next question, please?

Yes, of course. The next question comes from Patrick Steiner from ODDO BHF.

Patrick Steiner speaking. Three questions from my side. The first is a bit of a follow-up on the previous question basically. Could you provide us a bit of a bridge for -- regarding your revenue guidance to '26 and '27? I mean what are the major drivers behind the less dynamic expected revenue development to '26, including M&A effects and the expected better dynamic from '26 to 2027?

It is driven by the strong order increase we saw in Pulp & Paper and in Hydropower on the one side. And from the project structure itself, Pulp & Paper will turn more quickly into revenue. So what we see in order intake in '25, we will see a significant amount of that already in revenue in '26. While on Hydropower, it takes a bit longer. So it's a buildup more over time. And this is why the outlook is a bit cautious. As we have reported, we had a decline in order intake in Metals and Environment & Energy. And this is why we do not see particular growth there. This is why the outlook is a bit cautious. This is also why we go to capacity adjustments in Metals and in Environment & Energy to protect the profitability.

Okay. That's very helpful. Second question, you had a very good slide in operating net working capital as a percentage of revenue. Could you elaborate a bit how this is going to look like in 2026 after the acquisitions are fully included for full year basically? And also how this would change with -- if you receive a larger project?

Well, the acquisitions are already in fully fledged on the net working capital, as you can see here. It's only the ratio that is a bit blurred due to the pro rata revenue recognition of the acquisitions done in '25. So it's just that the percentage might decrease further on. So if we would receive a larger project, we usually see this in combination with larger prepayments, which would, of course, have a positive impact on the overall net working capital.

Okay. Last one for now. Capital allocation has not been fully funded by operating cash flow in the last 2 years. Should we expect this to change in '26 and '27? Or are you comfortable increasing net debt if favorable opportunities to deploy capital occur?

Well, so we will continue our capital allocation on quite aggressive path on this. So it depends a bit, of course, on the opportunities that we see from M&A. And of course, we will not just shoot on targets that are not value accretive to ANDRITZ overall. But furthermore, as mentioned, CapEx spend will continue even slightly increased. And yes, I mean, the dividends, of course, we will keep also our path here. So we actually see that we continue the picture that you saw the last 2 years or 3 years to really spend our capital -- spend in capital to further manage our net liquidity well, but still keep, of course, a substance for ANDRITZ as this is part of our DNA and necessary for dealing with large projects in an engineering company like we are.

So if we think about CapEx maybe slightly increasing, dividends increasing and in terms of M&A and share buybacks, more of an opportunistic stance for 2026, this would make sense, right?

Yes, exactly.

The next question comes from Lars Vom-Cleff from Deutsche Bank.

Maybe quickly starting with a follow-up question to Akash. I understood that with regards to the reported revenue guidance, you're not willing to split between organic and inorganic. But would it be fair to assume that included in your revenue guidance, you are calculating with an FX headwind that is comparable to last year?

That's what we do.

Okay. Perfect. And then you already mentioned order intake rather driven by midsized orders at this stage. If I remember correctly, on the Q3 call, you said there are no major project negotiations in Pulp & Paper currently, but in Hydro. Is that still the case? Or could we hope for a large greenfield order in Pulp & Paper this year?

The hope never dies. We have -- as I told you, what we can be pretty certain of is that this backward integration in the Chinese paper industry continues. And as that continues, it also impacts a potential greenfield new pulp mill in South America because that's one of the major markets. So we cannot see these 2 topics independent. And I would say, as it is said in many areas of this world in [indiscernible].

Perfect. And then quickly staying with the order intake, order backlog at records or at least close to record levels, nice book-to-bill in '25. We could also hope for a book-to-bill exceeding 1 again for '26 if momentum continues. or am I wrong here?

If momentum continues, you are right. Yes.

Okay. Perfect. And then maybe ending with -- you also said on one of the recent calls that you're seeing increasing pricing pressure from pulp and paper peers. I guess that also has not changed much recently given that everyone is fighting for juicy projects.

Yes, you are right on that.

The next question comes from Daniel Lion from Erste Group.

I would -- could you maybe elaborate a little bit on the adjustments planned now in '26? How far are we actually in the Metals division? And what would you expect to come in the E&E division? Maybe overall, how much should we include in our models for adjustments?

So we expect in total, I believe we are talking about 700 to 800 people.

And this is already provisioned to some extent or...

To some, but not fully.

So for the NOI in '25, about 50% were accruals for this year. So we will cover a lot with what we have digested already in '25, maybe some more to come.

And how long would you expect to have this impact the figures? Will this be done in the first half already? Or will we have to expect some impacts in the second half year as well?

Second half year as well, it's 700, 800 people, you don't do overnight. It's a process you need to negotiate. And depending on which country, majority is Germany, takes long time. And so I would expect we need the year to work through that. But as you could see from the previous year, we can do this in parallel to do good order execution. So from that point of view, I think we are on a good track.

Okay. And then maybe also, again, slightly focusing on '27, what kind of revenue -- what kind of order intake or backlog would you expect roughly that is required in order to reach EUR 9 billion in revenues next year?

I have not made the calculation, but we do not step back from the targets we have for '27.

So anything that would need to happen on the way there, something sizable or like, I don't know, big picture greenfield contract in Pulp & Paper or in order to make the guidance happen?

It would definitely support, but we do not believe that we need a large greenfield mill in South America to reach our targets.

[Operator Instructions]

We now have Sven Weier again from UBS.

I hope you can hear me now.

Yes. Perfect.

So going back to the Hydro business, I was wondering if you could go through the turbocharger business a bit more in detail, how sizable it is? What kind of growth rates you see? So any color on the turbocharger business you can give? Would be appreciated. That's the first one.

So turbogenerator business is, I would say, medium-sized 3-digit million business. Growth rates double digit at the moment. We do not -- of course, we do not know how this will continue. That's a business we are selling to energy engineering companies in the energy business and not to the end customer. So we have, I would say, it's a bit of a different feeling for the end market. Prognosis is good for the years to come. So currently, that's the volume we can report. And this is why it definitely supports the Hydro business.

And when you say 3 digit, is it like in the low 3 digits or get a better feeling?

It's in the mid-3 digits.

Okay. But you're not selling to the turbine makers directly, but basically to those guys who install the whole project.

No, no, to the turbine. We sell to the turbine makers, but not to the users, not to the utilities, not...

And those are kind of the known names like Siemens Energy and GE or...

Potentially.

Okay. And then, I mean, the pipeline in Hydro in general, I guess, probably also looks pretty promising based on what you said for 2026.

Yes. I can only confirm that. Yes.

And then you said you had some spillover into Q2 from Q4, if I understood you correctly on orders. Does it mean that you think Q1 orders should be higher than Q4 overall because of that spillover?

Could be. We definitely had some decisions that have been pushed over the year-end. We cannot tell you whether they will be pushed across the next quarter, but there are feasible projects that have been pushed. And so I would say we are not -- with what we see on the project side, we are not pessimistic.

So it won't be lower, let's put it this way in Q4.

Yes. We can agree on that.

Frank but good. The final question I had was just on the M&A because obviously, you kindly provided the revenue details, the money you paid, so I can calculate the kind of EV sales multiple. But I was just wondering if there's also kind of an average profitability across those targets that you bought? Are we talking like average 10% margin roughly.

I don't have the figure in my head, but in average, higher than what you see from ANDRITZ in total.

There are no more questions at this time. I would now like to turn the conference back over to Matthias Pfeifenberger.

Okay. Thanks a lot. Thanks for the presentations of the Executive Board and the extended interest in ANDRITZ and in this call. And we wish you a good day and see you next time. Thanks a lot.

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

Ladies and gentlemen, welcome to the ANDRITZ Q3 2025 Results Conference and Live Webcast. I'm Sergen, the Chorus Call operator. [Operator Instructions] And the conference is being recorded.

[Operator Instructions] At this time, it's our pleasure to hand over to Mr. Pfeifenberger. One second, Mr. Pfeifenberger. Please go ahead, sir.

Good morning, and warm welcome from ANDRITZ from Vienna. I'm Matthias Pfeifenberger from Investor Relations. It's my pleasure to host with you the Q3 earnings call this morning. And also have with me our CEO, Dr. Joachim Schönbeck; and our CFO, Vanessa Hellwing.

We'll start the call as usual with the CEO highlights and the headline figures, followed by a financials overview and then go back to the developments in the business areas and the outlook, followed by the Q&A session. Make sure you register for the Q&A with full name.

Thanks a lot, and it's my pleasure to hand over to Dr. Schönbeck.

Thank you, Matthias. Good morning, ladies and gentlemen. Thank you very much for spending your Thursday morning with us. We are happy that we can report rather good results. We had a strong order intake in the fourth consecutive quarter. We could now benefit from the increasing project activity. The order intake in Q3, I would say, like in the entire years was driven by continued strong demand for power generation, and that materialized in the business areas, Pulp & Paper, Hydropower and Environment & Energy.

Although we had a slight decrease in the revenues compared with the previous year and the previous quarter, but we could protect the bottom line and stable comparable EBITA margins as we have, I would say, early enough initiated the cost reduction measures to adjust our capacities to the slowing market demands. We had a negative foreign exchange revenue translation, which basically is in line with what it was in the second quarter, very strong euro against the main currencies we are trading in. There's still no direct tariff impact on our business.

Very good. The project execution improved, and we have seen a continuing margin progress in Hydropower, both definitely helped us to save our profitability.

We made significant forward movement on sustainability. We achieved two major milestones. EcoVadis lifted our rating from Bronze to Gold. Now we are in the top 5 percentile in that arena, which is very good. And in summer, we got SBTi approval for our greenhouse gas emission targets, now fully in line with the targets of the Paris Agreement. So, I think that is very good.

If we look to the numbers itself. Major KPIs. Let's go first Q1 to Q3. Our '25 order intake now is at EUR 6.9 billion. That's up 20% from previous year. The revenue at EUR 5.5 billion, down 8% to the previous year. Order backlog nearly on a record high, EUR 10.8 billion, nicely building up, also a good cushion for the next months to come. That's up 15% from the previous year.

If you look at the comparable EBITA margin, we kept that constant 8.5%, and that's EUR 471 million. And the reported margin dropped to 8.1%. That's EUR 449 million. The difference is basically the restructuring cost to severance, mainly the severance payments that were included there. Net income is stable at 5.5%, EUR 303 million.

If we look at Q3 alone. The order intake went nicely up 15% from last year Q3 to EUR 2.2 billion. Revenue dropped by 8% to EUR 1.9 billion. Order backlog went up 15% from last year Q3 to EUR 10.8 billion backlog we just reported. And the comparable EBITA margin is at 8.9%, nice solid figure, same level as the previous year, EUR 168 million. And the reported EBITA margin dropped to EUR 160 million, that's 8.5%. That's on the same level as last year. Net income, also here stable, 5.9%, EUR 111 million.

We see project activity is increasing. We have here, you see this on a rolling 12 months level, you can see a strong growth for the fifth consecutive quarter. And order intake is significantly above EUR 2 billion for the last 4 quarters with contribution from all business areas and also book-to-bill above 1 for the fourth consecutive quarter. So, we feel that is in the, I would say, a difficult environment we are facing at the moment, that is a good sign. It gives us a good view towards what is coming in the next months.

Going to the details of the order intake. You can see, if we start with Q3, that all business areas contributed to the growth in order intake except Metals, which had a significant drop by more than 50% compared to last year, but this quarter and the last year contained a significant large orders. So, we are at a run rate without any large orders in Q3 with EUR 300 million. We are, I would say, online with the volume we can expect from without any significant orders.

In Pulp & Paper, we jumped by 94% to above EUR 900 million in the Q3. Excellent result. Hydropower was growing on already very high level to EUR 525 million. And we were also very happy that now Environment & Energy started to grow again, 25% up from the Q3 last year to EUR 424 million. That is very good.

If we look to Q1-Q3, you see a mixed picture. Pulp & Paper, strongly up 36%. Hydropower, very strongly up by 50% to almost EUR 2 billion in three quarters. That's very good. Metals is down by 10% to almost EUR 1.2 billion, and also at EUR 1.2 billion is Environment & Energy, down by 4%. We are very happy that the Pulp & Paper market response is very good. Even without large Pulp net orders in South America, we can make that business grow.

In the Metals, definitely, we see a particular uncertainty. You know that steel and aluminum is one of the main targets of the tariffs. That definitely creates uncertainty about investment plans. And the automotive industry is really in, I would say, a critical situation on where to go, where to invest and where the markets will be for the next years.

Hydropower, definitely supported by strong demand on energy, strong demand on green energy. But also grid stability, energy storage and turbo generator business for the data centers is definitely lifting up our business.

Environment & Energy, the strongest growth here comes from flue gas treatment businesses, and that again is originating in demand for power generation.

If we have a quick look to the regions. You can see that -- it might be a bit of a surprise, the strong growth in Europe, growing to 37%; North America is stable at 23%; and China and Asia both are up. Significant drop in South America, and I think that reflects what is happening in the world today.

On the revenue side, as I already mentioned, we see a drop in revenue by 8% on the quarter and on Q1 and Q3. Several reasons for that. We have a foreign exchange translation impact coming from the strong euro. That's the currency we are reporting on to you. But a lot of the businesses, as you know, we are doing local for local in the other currencies, which weakened. So, that's basically not taking any business or any market share from us.

In Pulp & Paper, the increase in order intake started in Q4 last year. And now we are in, I would say, very -- in the project cycles, we are at a very early stage. So, the revenue growth is not there. But backlog is building up nicely, projects are on track. So, that's not a major concern. It's not a major concern at the moment.

In Metals, we saw some decline and we saw also some delays in the projects, because of tariffs going on and off. So, deliveries has been switched back and forth.

Hydropower is apparently not affected. It's a continuous growing business and the energy sector is basically not affected at all by any of these economical uncertainties.

Environment & Energy is slightly growing also in the revenue. So, it's a mixed picture. The foreign exchange translation impact is almost EUR 60 million in Q3 and amounting to almost EUR 140 million in Q1 to Q3. And we do not see that this trend will change in Q4.

So backlog, as I said, is building up nicely. Now for the fourth consecutive quarter, building up majority, as you know, from our business in Pulp & Paper and Hydropower. We expect that 2/3 of that backlog can be converted to revenue within the next 12 months and 1/3 after that.

EBITA development. As I told you, on a profitability, comparable EBITA margin remained stable at 8.5%. And the reported EBITA margin dropped down to 8.1%. The gap are the restructuring costs, which we had mainly in the Metals sector and in Pulp & Paper.

What did support the margin and protected our bottom line was definitely the improved project execution. We could see that a certain amount of the low-margin legacy projects in Hydropower are phasing out and that restructuring efforts are now bearing first fruits, which definitely had helped us a lot.

So, as I told you, we have been uplifted on our ESG rating from Bronze to Gold. We basically had achieved our ESG targets for 2025. So, we announced -- in the summer, we announced new ESG targets. And you have an overview here. In some areas, they are quite different. In some areas, they are basically continuing what we have already been targeting for. The E-impact revenue, higher than 50%. That's basically the revenue with our green products.

On the greenhouse gas emissions, we are now -- I have said, the SBTi targets are now our new targets for 2030. That's reduction in our own operations of 42% and on the value chain of minus 25%. We will keep our former KPI, this greenhouse gas emission related to our sales, because we believe that is a very good indicator and probably much more feasible to handle for you than the absolute values. And then we turned our water usage. We concentrate on water use and water stressed areas that was recommended, and we have plans to reduce that by 25%. Same is for the residual waste.

Our accident frequency rate, the LTIFR, we want to keep below 1 over that time. We want to increase our women in leadership positions, lifted above 15%. Voluntary turnover below 4% and the employee engagement index above 75%.

On the governance side, we concentrate on supplier prequalification, supplier social audits and sustainability-rated suppliers. And then, we also have a certified Sustainability Management Index. That's basically an index that reflects how well our operations are covered by certifications like the ISO 9000, ISO 14000 and so on.

So that's, I would say, a new set. We are very confident that we can reach these targets. I already said we could get improved ratings from, I would say, biggest in EcoVadis. But also the other rating auditors had improved their view on ANDRITZ, I believe we are in a good way there.

So, we are continuing our successful M&A strategy. We made some four very, very good acquisitions this year, excellent fit to our businesses that we are doing: two acquisitions in the USA, LDX and Diamond Power, strengthening our local footprint there with local for local and also local manufacturing and service teams available; and then, we have made two acquisitions in Italy, one to support our Paper business and one to support our Metals business. We trust that there might be more M&A on the way.

Service business has a good development. It's at 41% of the total revenue in '24. In the last 4 months, it even jumped up to 44%. And in Q1-Q3, we moved that up to 44%. So, we see -- I would say, we see a bit of a mixed development on the Service side. While the revenue is rather -- is growing more slowly. We could see a good jump in order intake in Service in Q3, but also in Q1 to Q3, and that gives us a good indication that we are on the right track to keep our target to continuously increase our Service revenue, and to keep, let's say, the fluctuations in our P&L small.

So, that's a short overview from myself. I'm happy to hand over to Vanessa, who will explain to you and lead you through our financial performance in the first 3 quarters. Vanessa, please.

Yes. Thank you, Joachim. And hi, everybody. Also a very warm welcome from my side here from Vienna. Before going into the financial details of the third quarter results, let me shortly highlight again the key cornerstones of our strategy of long-term profitable growth.

I really love this long-term chart that you can see in a minute, yes, as you can see, as it reflects that ANDRITZ is growing well across the cycles with only a few down years with rather moderate revenue declines, like you see currently, but also the performance trajectory of 400 basis points margin expansion over the last 2 decades. And quite a low margin variance from peak to trough in these respective mini cycles.

As outlined last time, this resilience is basically achieved by our well-balanced portfolio, our asset-light and flexible cost base, our strong service growth as well as our successful M&A strategy. I would not like to present the same slide to you without at least one additional aspect. So, if you focus on the last 5 years only, our compound annual growth rate of 5.6% on revenue compares to 12% on comparable EBITA. So, that proves profitable growth is really a cornerstone of our strategy.

Let me now walk you through the key components of our EBITDA to net income bridge for the first 9 months of '25. Our EBITDA margin remained stable at 10.4% despite higher non-operational items, while the absolute EBITDA decreased by 9%, in line with the temporary decrease in revenue that we are undergoing in the first 9 months of this year. Depreciation was marginally higher, resulting in a reported EBITA of EUR 449 million with reported EBITA margins declining slightly year-over-year to 8.1%. This is on the back of the higher NOI, while on a quarterly comparison, the margin remains at the same level with 8.5%.

Purchase price allocations from the recent acquisitions have lifted IFRS 3 amortization to EUR 51 million. This will normalize again somewhat in the fourth quarter due to the final phaseout of PPA amortization for Xerium that was acquired in 2018. Xerium is contributing to IFRS 3 terms with EUR 18 million in '25 so far, but will be 0 from October onwards.

While -- And that comes in addition now, our recent acquisitions show a higher PPA amortization usually in the first year and leveling down thereby by next year, especially LDX which is part of ANDRITZ since Q1, impacts that number with about EUR 11 million as of September.

In the financial results, we see a big swing to positive EUR 9 million from this year from minus EUR 10 million last year. Obviously, the reduced interest gains, again, status that picture with an impact of about EUR 20 million due to lower interest rates on the one hand and, on the other hand, reduced liquidity generating interest.

Furthermore, we see the effect from the deconsolidation of OTORIO last year with a negative impact of EUR 20 million, the recent fair value adjustment of Armis shares accounting for plus EUR 21 million this year. As a reminder, ANDRITZ has sold its stake in OTORIO to Armis, a leading supplier of cyber exposure management and security. And ANDRITZ received a consideration in Armis equity that generated the fair value gain that I just mentioned.

And to complete the picture of net income here, the tax rate decreased by 0.2 percentage points to 25.4%.

Summing up the net income for the first 9 months of 2025 at EUR 303 million is reflecting the revenue and the consequential EBITDA decline as well as higher non-operating items, while our net profit margins actually remain solid at 0.5%.

On the next slide, let me walk you through our free cash flow calculation and start again with EBITDA at EUR 578 million year-to-date 9. Outflows from net working capital have continued at EUR 86 million in the first 9 months of '25, and you will see more details later on our working capital slides. Cash outflows from income taxes were a bit higher than last year. This rate is in the first place attributable to foreign tax related to project execution. As mentioned already, with the swing in the financial results, also here we have a cash related negative net effect from interest gains and expenses.

Provision releases deducted from the operative results were higher than last year and mainly reflect personnel-related payouts of almost EUR 30 million for pensions, severance payments and termination, while the remaining impact is project related.

The personnel accruals released were mainly built last year in Q3 for restructuring reasons in Metals and Pulp & Paper, so that also explains the year-over-year big swing that we see. Adding up all items mentioned here brings us to a cash flow from operating activities of EUR 340 million for the first 9 months.

Deducting a somewhat higher CapEx of EUR 164 million for the first 9 months '25, we arrive at a free cash flow of almost EUR 150 million, down from EUR 248 million last year.

As Joachim already mentioned, our M&A delivery exceeded last year's level with 4 larger deals signed so far in '25, increasing our M&A spend significantly to more than EUR 300 million within this year compared to EUR 61 million last year, sorry.

So, talking about capital allocation. Here, you can see a clear focus this year is on acquisitions, further feeding our remarkable ROIC on a long-term perspective.

At this cash bridge, you can also easily deduct the sum EUR 250 million dividend payments from April this year and will almost get to the liquidity development that you will see at one of the following slides.

I would now like to turn your attention to more details on the development of our operating cash flows. Operating cash flow amounted to EUR 145 million in the third quarter '25 and EUR 314 million for the first 9 months. We are gradually improving our operating cash flow quarter-by-quarter, not reaching the high last year's levels. In general, we are still seeing the usual volatility in operating cash flows on a quarterly basis, which is typical in the project business and also driven by the actual processing of large and midsized orders.

However, please keep in mind that we are still running high levels of order intake close to the all-time high order backlog without mega projects and respective also without mega down payments that we have -- that have often boosted our cash flows in the past years. Important also to emphasize here again is the overall high level of operating cash flows we are maintaining compared to the historic level, driven by higher top line levels, better margins and improved cash conversion.

That becomes evident when we look at the right side of the chart showing the 3 years' rolling average. And as you know, 2 to 3 years actually reflect the average execution cycle of our capital business.

So, let me now turn from cash generation to liquidity and walk you through the changes in our net liquidity profile. Over the last 3 years, we have steadily increased -- no, we have steadily decreased our liquid funds by termination of bonds and promissory notes. We still continue a strong financial position, especially when including our EUR 500 million revolving credit facility, which is not added here to the gross liquidity.

In 2025, our net liquidity declined further from EUR 905 million at the end of 2024 to EUR 413 million by September '25. As outlined during the Q2 call, this further reduction was expected and is driven by ongoing purchase price payments related to our recent acquisitions. The dividend payment of EUR 254 million deducted in the second quarter was also a major part of the EUR 492 million reduction in net liquidity during the first 9 months of this year.

Again, our reduced operating cash flow at EUR 314 million. We had outflows for slightly higher normal CapEx of EUR 170 million as well as significantly increased M&A spending of EUR 305 million paid out for the acquisitions until Q3 and maybe some more to come in Q4. Despite that, ANDRITZ continues to hold a strong financial position with sufficient liquidity as part of our DNA.

Let's now -- let's turn to the net working capital development on the next slide here. And here we focus on the quarterly development of the operating net working capital. As you can see, we are still pretty lean overall with current run rates of some 12% to 13% of revenue.

Just to recall once more, for a project engineering company like ANDRITZ, the operating net working capital consists of the typical trade working capital, means inventory receivables and payables as well as contract assets and liabilities, including prepayments related to POC orders.

What you can take from that picture is that operating net working capital has increased slightly following the period in 2022 when we received several large projects and therefore large prepayments. A general increase in operating net working capital also results from the structural exposure of ANDRITZ. We have increased our service business and, therefore, also our inventories to provide an optimum of service and spare parts availability to our customers.

Following the increase throughout last year, the operating net working capital has been slightly reduced in Q2 '25 after the all-time high in Q1 in absolute terms, but also as a percentage of sales. And to discuss the renewed increase in Q3 that you can see, let me turn to the next slide for more details.

As you already saw, we have split the operating net working capital into its two components, trade working capital, you can see on the upper blue part of the chart; and contract assets and liabilities and advanced payments, and those are displayed at the bottom of the chart, reflecting here our project cash flows. This is a typical management element for us as the project engineering company, as you might know.

The trade working capital remains relatively stable at about 16% of revenue on a long-term average. And our net contract liabilities and prepayments usually fluctuates between 3% to 10% of revenues, depending on where we stand actually with the execution of several thousands of our projects. This fluctuation is especially driven by large projects where we typically receive significant down payments.

To discuss the easy part of the slide first, the bottom gray, on the prepayments received side. We have seen a constant improvement over the last few quarters, which created additional contract liabilities. With the increase in our trade working capital in Q3, but also after the first 9 months in 2025, the drivers here are multi-folded. In general, we have a typical seasonal trade working capital buildup in the first 3 quarters of the year, which is typically followed by a slowdown in Q4. Then we have higher levels of inventories, like I just mentioned, for supporting the expansion of our service activities. And certain payables decreased in large projects from the past years that are getting closed out now.

Lastly, but most importantly, the net increase in our trade working capital was impacted by our acquisitions this year. Especially also in relative terms, the target revenue are only accounted for on a pro rata basis, resulting from the individual date of the first time consolidation, while on the other side, the assets of the acquisitions are accounted for in full.

And this is why, we also see a relative jump in the related percentage numbers from 18% to 21%. So, we can say broadly, we have the full working capital of the M&A targets included but only a part of their revenues, which clearly has an impact here in this overview.

Following the details on our capital allocation, let me provide a quick update on our ROIC performance. To recall ROIC is our main metric, quantifying value generation over the long run, and it has been increasing since 2020 and stands at a substantial margin to our cost of capital. And above 20% is actually an industry-leading level. So, you can see, ROIC has declined in the first half of '25 and now also further in Q3 to just under 19%.

On the one hand, this is obviously driven by the organic EBITA decline. But more important, this is because of our recent acquisitions again with purchase price allocation leading to higher goodwill and intangibles, but EBITA from the acquisitions is still only included on a pro rata basis. As mentioned before, also relevant for the working capital ratios. So, this is a very typical effect that comes along with the first-time consolidation of acquisition targets in the case that closing happens intra-year and not as a year -- to a year start.

So, at the end of my presentation, let me quickly summarize the development of our headline financials. Our main indicator is still pointing upwards. Order intake significantly increased by plus 15% in Q3 and plus 20% year-to-date. Again, worth highlighting once more, we now delivered growth in order intake and book-to-bill ratio above 1 for the last four consecutive quarters, as already mentioned by Joachim before.

Order backlog missed the all-time high of ANDRITZ's history by only EUR 23 million. It was only higher in 2022 when the large Pulp & Paper orders, OKI and Bracell were booked.

The significant increase in order backlog over the last few quarters to this record level already secures a material part of the next year's revenue recognition. And in margin development and order intake this is very positive and strict risk management is improving project execution. As a consequence of high revenue recognition from completion of larger orders last year, our revenue trajectory is still pointing downwards on a comparison base, but we are gaining ground and especially when adjusting for negative FX translation effects.

So, please keep in mind, even we are an Austrian company, we have major local business -- local currencies. And when reporting globally in euro, this obviously has some reporting effects when FX rates are changing, And that's what we can see here and also referring to what Joachim said before. So, along with lower revenues and restructuring impact from capacity adjustments in Pulp & Paper and Metals, our absolute operating and net profit decreased, but we were able to maintain our comparable EBITA and net profit margins on a stable level, as you can see here.

Operating net working capital and ROIC remain in high focus going forward, with the development in Q3 obviously impacted by the recent acquisitions we have made. Our enhanced capital allocation and higher M&A delivery, and support value creation and has reduced our net liquidity position consequentially. And last but not least, the number of employees is quite steady at group level but with variances, of course, across the business areas.

While restructuring measures significantly reduced headcount numbers, specifically in Pulp & Paper and Metals, this effect was offset by hires, on the one hand, in growing business areas, but especially with 780 employees who joined ANDRITZ this year through our acquisitions. And as mentioned, FX has been headwind in the first 9 months, but tariffs have still not impacted our key end markets. And we will provide further details on that later in the presentation.

And with this, for now, I would like to thank you for your kind attention and hand back over to Joachim, who will now present the key developments across our business areas.

Very good. Thank you, Vanessa. And if you allow me having a quick look on the business areas, starting with Pulp & Paper. We are happy with the business development in Pulp & Paper, looking at the order intake, looking on the well acceptance of the market, of our offerings in a, I would say, definitely difficult time for our customers, in particular for our customers in Europe, but partially also in North America.

Demand clearly driven by power generation. So, the hunger of the world for electricity is definitely driving it on the one side. And there is also a trend in the Chinese Paper industry to backward integrate in order to better prepare themselves for the fierce competition in the market. And so we could book in total -- now in the last 12 months, we could book -- we received order for four complete pulp mills, all technological islands supplied by ANDRITZ in the Chinese market. So that's a really strong sign of the customer confidence in our technology.

On the revenue side, we are down compared with the previous year. As I said, especially here in Pulp & Paper, we are in a very early stage of the project execution. You could see on the other side the order backlog increased by EUR 500 million. Projects are stable. And so, this volume will definitely and securely turn into revenue and deliver also to the bottom line.

We have initiated a restructuring program. Vanessa explained that little bit. That is on its way, and we are now in the budgeting phase for the next year, having a very close look to what we can expect to the markets to see whether we really are on the right size or whether we need to take some further actions.

On the Metals side, as I mentioned, the situation is definitely more challenging as both major industries, automotive and steel industry, are facing severe economic uncertainties. The order intake, I would say, with the EUR 300 million is on the low side. But from a steady business alone, nothing to be too concerned about. But customers do not invest. They do not spend money. They need to keep their spendings low as both markets are a bit down and the high energy costs in Europe definitely pose also, I would say, strategic questions for our customers in the Metals industry in Europe.

The restructuring is going on. You can nicely see already, I would say, positive effects of that. If you look to the comparable EBITDA margin, we are now in Q3, we are at 6.4%, so within our target range, which shows that the restructuring has already shows effect. And particularly here, we know that the market will not recover and we will continue our rightsizing and further look that we adjust the capacities to the level to keep -- to maintain competitive.

Hydropower provides, I would say, a good view, a happy news across all KPIs. Strong growth in order intake, 50% in the first 3 quarters. Very, I would say, solid growth in revenue and over-proportional growth in the bottom line. You see that we are at a comparable EBITA margin. We are at 7% now. It's in the -- that's within our targets.

In Q3, EBITDA increased by 48%, while the revenue in the third quarter increased only by 8%. So, strong working, better margins, better prices hit the bottom line, good project execution and particularly phasing out of the old legacy projects.

And I would say the trend for renewable energy, strong demand for grid stability, energy storage and also turbo generators. We have quite a positive outlook for the next years to come. What's also very good is that this growth is not only attributed to the capital project, but the service is growing in line. So, we see a nice development in the service both on the revenue side, but even more on the order intake. Comparable EBITA and profitability, I already commented on that, very positive.

Development on Environment & Energy. We see several effects. We are happy that we could turn around the order intake now in Q3 by a solid growth of 25%. In total, full year, we are still down 4%. Growth is driven mainly by several midsized orders in flue gas treatment. So, that originates also in power generation. Why we are positive that this is a trend continue for some time to come. Slight growth in revenue to an all-time high. We also could grow service revenue, and that's on a good way. And the EBITDA is very stable on a, I would say, good, high level.

If we come to the outlook. On the trade barriers, no news on the left side of the chart. It's basically what we explained to you last year. The negative foreign exchange translation impact now on the Q3 is EUR 58 million. And on the right-hand side on the pie chart, you see how the total negative impact to EUR 173 million is split by the various currencies we are doing business in, largest portion from the Brazilian real, followed by the U.S. dollar, the Chinese renminbi, Mexican peso and then 1/3 is to the others. So, the strong euro here really plays the major role.

We confirm the guidance that we presented to you beginning of the year. And we repeat that on the revenue side, we will be at the low end. So, we expect total revenue at EUR 8 billion for 2025. And on the margin side, we are positive that we will be in the range.

Midterm targets, also confirmed. On the margin side, with the restructurings we are currently having underway and with the increase in the Service business, we definitely can protect that. On the revenue side, we are definitely depending on also the markets. So we are careful, but we think we can confirm the EUR 9 billion to EUR 10 billion. I think, you know that, that also includes some acquisitions.

On the comparable EBITDA margin targets for 2027, we at least can report that we are in the target ranges for the Q3 results now for Hydropower and for Metals, which have been below our targets for a very long time. So, please take that as a positive sign, and we trust it's a trend and it's not a one-off.

Environment & Energy is also with a 10.3% comparable within the targets. And Pulp & Paper in Q3 was 10.8%, is just very short of the target for 2027. So I would say, if we look in total where the global economies are, we are not unhappy with where we stand and we see also good opportunities to improve from where we are.

So, that's from my side. Thank you very much for your attention. And I hand over to Matthias to moderate the Q&A. Thank you very much.

[Operator Instructions] And we have the first question coming from Sven Weier from UBS.

They are largely around the Pulp & Paper business. The first question being if you could give us an update on the large greenfield contracts given latest development in Pulp pricing and demand, whether you still see bigger tickets going ahead maybe in the next 12 months? And let's maybe start there.

Thank you, Sven, for the question. I mean, we don't know on the decision makers of our customers. We are working -- several projects are under preparation. For our business, we are not planning with the decision in the next 12 months. But we are working on engineering to prepare the projects.

And I mean, of course, Pulp is not the only business with big tickets. I mean, how do you see it maybe on the Hydro side? Do you see scope that in this business, you have some really bigger projects in the pipeline that could go ahead?

Yes. Hydro, I would say, is definitely a strong driver. We have several large projects underway, under negotiation. And we can expect larger orders also for next year. Yes, that's very clear.

And then maybe coming to the Service business that you thankfully outlined in the presentation. I was more wondering about Pulp & Paper specifically here again, because your peer yesterday reported about further softening of Pulp & Paper service revenues in the quarters ahead. I mean, are you observing similar trends? Or are you better off because you're maybe not so exposed to the Board market?

I believe you hit the point right away, yes. Paper & Board is definitely hard hit by the low utilization of the assets. We also see that. But our exposure is not that big. So, we do not see a decrease in service. On the contrary, we see -- overall, we see a strong growth in order intake and service in the first 3 quarters of this year.

And for the Pulp & Paper business specifically?

What I said now was for the group. But even in Pulp & Paper, we see a growth in order intake, yes.

Okay. Good to hear. And the final question from my side is just on pricing, because here, again, Valmet said yesterday that they will reinvest some of the cost savings out of their program into gaining share. I mean, is that something you observed in the capital equipment decision, that there's more pricing pressure from your peers?

Yes. I can confirm that observation.

And I mean, what's your position on that? Do you rather walk away from the business? Do you think your technology is better anyhow, so you don't have to compromise on price? What's your strategy there?

No. We fight for orders. We believe a low investment is a huge benefit for our customers. So, I think that's good. That is what competition is made for, yes. And we take it on. And this is why also we need to look to our cost base constantly. So, we do not walk away from any opportunity.

The next question comes from Daniel Lion from Erste Group.

Can you maybe outline a little bit your expectations now in the Environment & Energy markets? Do you think we've seen a sustainable turnaround on demand in the third quarter, maybe now especially supported by another rate cuts, potentially good talks between the U.S. and China on solving trade issues? How do you see the development going on there?

On Environment & Energy, I would say our largest hope for growth is clearly related to the green products and to the products that Europe has planned to use for the energy transition, green hydrogen, also carbon capture, recycling and all of that. Some of that we could see with some of these flue gas orders. They go in that direction.

I believe that this RED3 directive from the EU is significantly hurting the green hydrogen market in Europe. All the investments are basically stuck there. It's basically regulation. Carbon capture, we give a positive future. Specifically in the Nordic countries, there is a huge interest and they are moving a bit faster than Central Europe in the regulations.

I would say on the midterm, I have no concerns there. I cannot give you satisfying guidance on the timing. But that has not so much anything to do with interest rates, but with regulations that is in the hand of the politicians, I would say, here specifically in Europe.

Okay. And maybe digging a little bit deeper. Austria wants to actually invest quite heavily in green hydrogen in the coming years. There are several projects ongoing. How are you reflecting on these investments? What would you expect in terms of volume that could fuel your business part? And yes, leave it like this.

Yes. So I'm happy to hear that and I'm embarrassed that I'm not aware of that. So, thank you for that information because I should know rather than you about these investments. We have one project under execution in Austria. I believe there is more. There is -- and we feel good positions with the technologies we have.

Next year, we will have industrial plants in operation, which gives our customers, I would say, a good feeling and security that they will invest in a rather mature technology with us. So, I think if these investments will come, I believe that we will have a fair share of that.

Okay. Perfect. And maybe a last one. You just published a few days ago, I guess, a bigger order on synchronous condensers. Could you maybe put some kind of a volume tag on that? Northern Ireland.

Northern Ireland, I would say that's in the lower to mid double-digit million range. If we take that with several orders from in Ireland and Northern Ireland, if you refer to that, yes. So it's good volume. It's -- but these are not these mega projects, at least not in Europe, yes.

The next question comes from Christoph Blieffert from BNP Paribas Exane.

I have two, please. The first one is on Hydropower. Given that your order backlog has grown nicely, can you give us some insight into workload and capacity utilization in the division as well as on pricing to get a better idea about the revenue growth potential for 2026?

So, I think we can say that all capacities are loaded. And pricing is that we are trying to push prices up, which is in the bidding structure of the highly regulated areas, not as easy as it's usually done in, I would say, private markets. But you can see, and I think that is what we are reporting for the last quarters, you can see a constant improvement on the margins. So, the better prices also reached the bottom line, but also over absorption contributes to that.

Okay. The second question is on Pulp & Paper service revenues, and I have to come back to Sven's question. According to my math, service revenues are down mid-single digit in the first 9 months. Can you maybe walk us through the reasons behind that? And can you explain how you want to grow service revenues in Pulp & Paper in '26 and also maybe elaborate a little bit on potential self-help measures?

Yes. So, we have been -- the service revenue is correctly calculated by you. It's down in the first three quarters. The main driver is the low Paper & Board consumption. I would say the overall utilization in that area, our customers is not higher than 60%. So, then service and parts are not needed. So that is driving us down.

What gives us a good feeling is that the order intake on the service is up compared with the previous year. That will give us some workload for the next year. We're expanding our service offerings on the pulp side. We just made this acquisition with Diamond that will contribute -- that's basically 80% to 90% service business that will contribute to the Pulp & Paper service. And we have ongoing restructuring in paper service, because the low market demand does not require these capacities that we have. So, capacity reduction in the market areas where there is no demand and expanding our service offerings on the pulp side, that is basically our recipe for going forward.

And one follow-up question. Can you give us a brief idea or rough idea about the revenue split in services between Pulp & Board/Paper?

I cannot. Sorry for that. Not that I'm not willing to, but I don't have these numbers.

[Operator Instructions] There are no more questions at this time. I would now like to turn the conference back over to Matthias Pfeifenberger.

Akash from JPMorgan, who was not able to join the call. The question is, can you tell us about activity you're seeing in synchronous condensers for the first 9 months? What is the book-to-bill in the business? At the last Capital Markets Day, you said this is about EUR 100 million business. How fast do you see this growing? And can you talk about investments in this business?

So, synchronous condenser book-to-bill is significantly above 1. I would say a very solid pipeline of projects to come that is across all regions. The more renewable, especially the more solar and wind is installed, the higher the demand on synchronous condenser. I would say the market outlook we gave at the Capital Markets Day of EUR 100 million share of ANDRITZ, I would say, is probably rather on the low side.

Perfect. I think, if there are no more questions, this concludes our today's Q3 earnings call, and I'd like to hand back once more to Dr. Schönbeck for concluding remarks. Thanks a lot for joining.

Yes. So, thank you very much for attending the call. I appreciate your detailed view to our business. The questions you asked point out that you probably know ANDRITZ even better than I do it. Yes. So thank you for that attention, and looking forward to deliver to you also a solid and good Q4. And see you then next year. Thank you very much.

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