Holcim Stock

Good morning, and welcome to Holcim's 9 months 2026 Analyst and Investor Presentation. My name is Bernd Pomrehn, and I'm pleased to be joined by Miljan Gutovic, our CEO, and Steffen Kindler, our CFO. After their presentations, you will have the opportunity to ask your questions.

Moriya, may I ask you to share the technical instructions with us? Okay. I would suggest we start with the presentation by Miljan, and Chorus Call will give us the technical instructions to ask your questions later. Miljan, please.

Thank you, Bernd. Good morning to you all, and a warm welcome to Holcim's 2026 Q3 Trading Update Analyst and Investors Conference. Steffen and I are pleased to be presenting our numbers to you today. And of course, we look forward to taking your questions afterwards.

As you have seen, after a very strong first half, our momentum accelerated in Q3. Our organic growth for the first 9 months was 5.2% in net sales and overproportional 11.8% in recurring EBIT. Better still, in the third quarter, we entered a new phase of double-digit growth in Swiss francs for both net sales and recurring EBIT that we expect to persist into future quarters.

In Q3, we grew net sales by 15.5% in Swiss francs and recurring EBIT almost 17%, thanks to a healthy balance between inorganic and organic growth. This positive momentum in Q3 helped drive a year-to-date expansion in our recurring EBIT margin. In August, we also entered into agreement to acquire Fermacell, an established European provider of walling and flooring solutions. We will discuss this later on.

And building on our strong 9-month performance, we are upgrading our full-year recurring EBIT guidance for the second time after the increase at H1. We now expect 10% to 12% organic growth with further increase in our margin year-on-year.

Turning to the regional highlights now. As you can see in Europe, there was a robust net sales development driven by Germany, Greece, Romania, Spain and also Switzerland. A 5.1% organic growth in recurring EBIT was driven by our strong execution on commercial excellence, cost discipline and, of course, impeccable execution of our strategy, NextGen Growth. In addition to our highlights, which I will say more shortly, we saw a good momentum in circular construction with more than 30% growth in the volume of recycled construction and demolition materials.

The outlook is positive, thanks to our strong infrastructure pipeline from roads and tunnels to power generation. And our integration of Xella is now in full execution. Here, we confirm our expectation of achieving EUR 60 million in run rate synergies in year 3. In LatAm, we delivered 6.2% organic growth in net sales in the first 9 months, driven by Mexico and Central America. Driven by our operational excellence resulting in positive price over cost, our recurring EBIT margin was around 30%. We continue to invest by opening new branches of Disensa to expand our network, which now stands at more than 2,460 stores.

Also, alternative fuel substitution is increasing in the region, reducing our exposure to energy price volatility. For example, our thermal substitution rate in Costa Rica is now above 60%. For the outlook, there is a strong backlog of infrastructure projects across the whole region, and Pacasmayo integration is in full execution with synergies of $40 million in year 3 confirmed.

Going to Asia, Middle East and Africa. Here, net sales were up nearly 8% and recurring EBIT up more than 22% organically. We also saw the margin rose 100 basis points from a year ago to above 26% with positive price over cost. In our Fujairah Cement Plant in the UAE, we successfully launched a pilot project that is now safely and successfully capturing CO2 and transforming it into solid rock using natural processes and breakthrough technology developed by one of our value chain partners.

This is really the first live condition carbon capture and underground mineralization pilot in our industry. The positive outlook in this region is supported indeed by robust government funding for infrastructure construction across North Africa all the way to Australia. We are also seeing investments picking up in Morocco as the country looks ahead to co-hosting the 2030 Football World Cup.

With that, I would like to hand it over to Steffen to talk through the financial details. Steffen, to you.

Thank you, Miljan, and a warm welcome to you all also from my side. It's always a pleasure to be here with you. Turning first to the net sales bridge. You can see that we had strong organic growth of 5.2% in the first 9 months, representing almost CHF 590 million. Total sales in Swiss francs were up even more strongly as the positive net M&A contribution offset a small foreign exchange translation effect of 1.4% or CHF 170 million.

The impact from Forex translation has softened significantly throughout 2026, and it actually turned into a tailwind in Q3. Now although we do not guide on FX, I always get this question, so I anticipate your question now, and I'm going to try to tell that FX is expected to remain flat to slightly positive in Q4.

Next, for recurring EBIT, we delivered double-digit organic growth of 11.8%. There was FX translation effect of CHF 16 million or 0.7% and the CHF 91 million impact from divestments, mainly driven by Nigeria and partially offset by Pacasmayo, Xella, and our bolt-ons. EBIT growth was driven by strong commercial execution, as always, accompanied by operational excellence and disciplined cost management in the countries and at corporate level.

Once again, we delivered positive price over cost in all our regions. And as a reminder, this is the 18th quarter with positive price over cost for the group. Next, let's look at the progression of our recurring EBIT and recurring EBIT margin. The graph you see here shows a continuing margin expansion, again, driven by strong commercial execution, operational excellence and disciplined cost management.

As mentioned on several occasions before, we expect margin expansion on a full-year basis as well. On the next chart, let's look at the regional performance. Organic growth in net sales was strong in each of LatAm and AMEA in the first 9 months and remained at a good level in Europe in Q3.

In Asia, Middle East and Africa, there was excellent organic growth in recurring EBIT in the 9 months to end September. The margin was 26.1% with 100 basis points increase, while we remain at a recurring EBIT margin of 30% in Latin America. The margin in Q3 in LatAm is actually up by 90 basis points year-over-year, showing a progressive increase.

And with that, I'm pleased to hand it back over to you, Miljan.

Thank you, Steffen. Well, in August, we announced that we have signed the strategic value-accretive acquisition of Fermacell, which is an established European provider of walling and flooring solutions with projected net sales in '26 of around EUR 430 million. This is fully in line with our NextGen Growth 2030 strategy to invest in the most attractive markets.

The company's premium brands will expand our high-value Building Solutions, and we do anticipate that run rate EBITDA synergies of around EUR 22 million will be achieved in year 3. Fermacell's net sales are well balanced between new builds and energy-efficient repair and refurbishment market, which is already worth approximately EUR 250 billion in Europe. Closing is expected in the first half of next year and of course, is subject to customary condition and clearances.

Let's take a closer look at the business now. The headquarter is in Düsseldorf, Germany. The Fermacell business has around 1,000 employees, of which more than 250 are in sales, which is adding to our specification and cross-selling capabilities. It is present in 13 of Europe's most attractive markets with 6 state-of-the-art production sites and R&D center.

The acquisition expands Holcim's offering in European walling, flooring and fire protection markets. On the next slide, you can see how the addition of premium Fermacell brand enhances our integrated end-to-end Building Solutions offering from foundation and flooring to walling and roofing. Together, the combination of these brands amount to our genuine building systems for our core customers.

For the NextGen Growth 2030, we are delivering superior performance and margin expansion focused on the 5 key drivers. We are scaling up our sustainable offering powered by premium brands. We are accelerating initiatives for decarbonization and circular construction, which is driving profitable growth for Holcim.

A key part of NextGen Growth 2030 is expanding high-value Building Solutions and with our impeccable track record of value-accretive M&A to focus on the most attractive markets. All of this is driven by our deeply embedded performance culture. Now let's look at this more in details. Our sustainable offering driven by our premium brands, ECOPact, ECOPlanet and ECOCycle continues to be in demand. These premium brands are being used at the scale on large-scale projects. One example shown here is the National Athletics Center in Hungary. The revamped stadium deep foundation and underground structures were all built with ECOPlanet to ensure stability, durability and a long lifespan.

During the first 9 months of the year, we increased the volume of recycled construction and demolition materials by 1/3, accelerating our circular construction technology ECOCycle. Our number of circular construction hubs stands at 136 globally. This footprint now stretches well beyond Europe with hubs in countries like Australia and China and evolving frameworks in Mexico, Morocco and Ecuador. Let's turn to a couple of slides on our growth-focused capital allocation, which is well balanced between organic and inorganic investments, and this helped us to advance our sustainable offering for our customers.

On the organic side, I'll take you to these 2 recent CapEx projects. The one on the left is our calcined clay production line, which is the first of its kind in Czech Republic and which we launched in September and for which we have received funding from modernization fund of the Czech Republic's Ministry of Environment. On the right-hand side is our new state-of-the-art cement production facility in the U.K., which will enable Holcim from early next year to offer the first cement with recycled construction demolition materials inside for the U.K. market.

Both projects enhance our customer offering with a very attractive paybacks of around 5.5 and 7.5 years, respectively. On both of these projects, we will utilize Holcim's PREDICT family of algorithms to optimize maintenance, quality and also the whole manufacturing process. In M&A, we closed 11 value-accretive transactions in the first 9 months of the year, of which 10 were acquisitions and 1 was a divestment.

To strengthen Building Materials, Holcim made 4 acquisitions in France, Romania and Peru, Cementos Pacasmayo. Building Solutions expanded with 6 acquisitions in Belgium, France, Germany and New Zealand as well as the acquisition of Xella. During the third quarter, we also entered, as you know, into the agreement to acquire Fermacell, and we also signed an agreement to divest our business in the Philippines.

Now turning to the rest of the year. We are once again upgrading our 2026 full year guidance for organic growth in recurring EBIT after a strong first 9 months of the year. We see net sales at the high end of our NextGen growth target at around 5% organic growth. We are upgrading our recurring EBIT guidance and now expect to grow organically by 10% to 12%, which is up from around 10% previously in H1. This will be accompanied by a further increase of our recurring EBIT margin, free cash flow before leases of around CHF 2 billion, and we continue to grow in recycled construction demolition materials by more than 20%.

Bernd, you can now open it for questions.

Thank you, Miljan. We now turn to our Q&A and open the lines for questions. Moriya, can you please again share the instructions with us? Thank you.

[Operator Instructions]

Thank you so much, Moriya. The first question comes from the line from Julian Radlinger from UBS.

So a couple of questions from me. The first one is a short-term one. So 10% to 12% organic EBIT growth for the full year. Can you talk a little bit about what factors would lead you to achieving either the upper or the lower end of that range with only a couple of months left in the year?

Second question, more on 2027. So based on everything you're seeing at the moment and knowing how much you're hedged and so on, what kind of cost inflation would you expect for 2027, thinking about diesel prices, gas, power, et cetera, what kind of cost inflation would you expect? And what kind of price increase would you need to be able to offset that next year?

And then maybe just a third one on LatAm. So it looks like you had slightly negative volumes there once again in Q3 after the same in Q2 already. So it seems a bit like in Mexico, particularly this kind of construction recovery that we've been talking about last year hasn't really materialized properly yet this year. Is -- I'd love to get an update from you guys on whether you expect that to come in the next few quarters or what the status is there?

Julian, thank you for your question, and thank you for joining us. Look, I will -- Steffen can tackle energy question. I'll go with your first and last question. So on the short-term guidance, the only risk is weather in December. We really don't know if the winter will come early this year. But October, November, I'm confident that we are on the track as we -- what we have seen in the first 9 months. So if you're asking on the lower side or higher side, it's simply 1 month, half a month in December.

On the LatAm volumes, well, Mexico had a really strong quarter. Projects are coming. We are securing, we are tendering, and we are seeing more and more of these projects, rail, road, water, energy. So maybe the speed, I would expect actually speed to significantly accelerate in next year.

The 2 countries where we have seen softer market conditions in LatAm is Argentina and Colombia. I am more optimistic on Colombia. We are -- now the elections are over. The new government is already very aggressively announcing the new infra spend. They want to address residential shortage. And if you remember, we did sign the agreement to acquire CEMEX assets in Colombia, where we will increase our market share significantly. So I am very optimistic about Colombia in 2027.

I will stay conservative on Argentina. Fiscal policy seems to be in a better shape, but I'm not sure when all this infra, residential spend will come. So Colombia probably could be significant upside for 2027.

A few items on costs. So I would say raw material quarry, distribution, we're probably going to look at an inflation of mid-single-digit. Energy, mid to high single-digit next year. Hedging ratio currently above 70%. And I would also say that fixed cost is going to be a tailwind like we've done. We are very focused on that headquarter as well as operations. So that should be a low single-digit tailwind.

And if you put all of that together, a mid-single-digit price increase is sufficient for significant price over cost because the price increase is, of course, on a very different basis than the individual cost increases. So that gives you the formula pretty much going into next year.

I'll just add on Steffen's comment on the pricing. Look, we have demonstrated that we have best-in-class pricing discipline at Holcim. However, pricing is one component. What has been driving margin expansion, and we have shown this in Europe in the full year results, is other things than pricing. Our cost discipline, our operational excellence, scaling up sustainable offering where we do have a modest price premium, but we do have a cost upside.

Then every investment we make in decarbonization and also circular construction, this is driving profitable growth. On top of that, M&A, in the last 5 years, we did more than 100-plus value-accretive deals where we are investing in the companies with the high synergies, and we are divesting less attractive markets. So all of that plus pricing will help us overcome whatever we will face in the future.

So just to summarize it, once again, what you saw this morning, the results that we published, it clearly demonstrates that Holcim's business model is really resilient across all market conditions and economical cycles.

Thanks very much, Miljan. And I was going to say to Steffen, that sounds like a pretty good formula to have in mind for 2027.

Thank you, Julian. The next question comes from [indiscernible] from JPMorgan.

The first one is just on the Europe margin decline that we've seen in the 9 months in Q3. Could you maybe split out how much of that was due to scope and like-for-like? And then a word on Latin America. I think you mentioned that the alternative fuels rate is increasing. Maybe just within this division, where are you now? Where can you get to and how much savings you think that will provide? And lastly, if I could squeeze in one on the Philippines divestment, if there's any updates you could provide there.

Thank you for your questions, and thank you for joining us. So on the EU margins, well, basically, it's part of this integration of Xella. This is an outstanding company. We are now in full execution of integration, and we want to do more in a shorter period of time. Company is doing well. So why spread this integration costs over a year, 1.5 years? We want to do it as soon as possible. Steffen, you can elaborate on that later on.

On LatAm and alternative fuels, look, just 1 example, I was recently in Costa Rica. Alternative fuel story was for Europe, and this is where we -- September was the best month I have seen ever when it comes to alternative fuels in Europe. I mean, we are achieving really next level of usage of alternative fuels. But even in developing markets like Costa Rica, we are 60%-plus. We can probably go to closer to 80% in the next 2 years.

And alternative fuel in this country in Costa Rica is between 30% and 40% lower than traditional fossil fuel they use, which is a pet coke. So potential upside is indeed significant. And the last on the Philippines, we expect nothing has changed. We are progressing. We are getting all the regulatory approvals. So H1 is the closing. Maybe if you want to expand on the margins in EU.

Thanks, Miljan. Good morning from my side as well. So Europe margin would have been slightly up by probably 2 percentage points. And as you mentioned, you're absolutely right. It has to do with scope M&A. The biggest one here being Xella, who, as Miljan completely correctly said, we're anticipating integration costs. We're accelerating the integration. We're pulling a lot of things forward.

This is going extremely well. Also very encouraging, the margin in the third quarter of Xella, the profit margin are now already coming up to a business plan level. So this is all very encouraging and it's basically what we expected it to be at this point in time or slightly better even.

The next question comes from the line from Benjamin Rada Martin from Goldman Sachs.

I just had 2 questions, please. Maybe the first on pricing into 2027, those mid-single-digit comments that you made previously. Are there any geographies which you think will contribute more in 2027 from pricing relative to that target? I'm not sure if there's geographies with greater energy inflation or maybe more of a focus on value over volume worth highlighting?

And then the second question would just be on solutions M&A. I guess with both Fermacell and Xella now announced, I'd be interested if the Europe solutions strategy is broadly complete and whether when we're thinking about the progress towards the 50% of sales from solutions, which geographies we should keep in mind to make up the rest of that kind of growth?

Ben, thank you for joining, and thank you for the question. On pricing, yes, we will have some geographies. I would just maybe Egypt or Argentina, where will see overproportional price increases. But Ben, value over volume remains our key priority. I think mid-single-digit, the aim is good. We have proven in the past that when it comes to pricing discipline, we have -- we are the best-in-class. So I'm confident that pricing increases planned for 2027 will offset everything else, cost inflation and so on.

On Xella and Fermacell, well, I think now we are -- we do see a few white spots in Europe where we can build up on this walling offering. We are looking into it. But for me now, it's going to be about LatAm. It's going to be about the expansion of Disensa, where we will be bringing Holcim in-house produced products from flooring, walling, sealant adhesives, waterproofing, roofing. Ben, remember, our goal is to reach 5,000 stores by 2030. We are now slightly below 2,500. So this will drive the momentum in Building Solutions in LatAm.

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

I wanted to ask a little bit about growth and capital allocation in the medium term. So last year at your Capital Markets event, you spoke about potentially CHF 4 billion to CHF 6 billion, which you could allocate to sort of strategic M&A or buybacks. And by my count, you've done about half of that. And if I look at the markets that you're in now, if we're thinking about sort of larger, bigger deals, it's not obvious to me that there's anything left for you to acquire in LatAm and in Europe.

You've done a lot on the light side of things, but I don't know if there's anything big you can do on heavy sides. And so my question is, when we think about where your multiple is relative to other heavy side Building Materials businesses, not just in Europe, but also on a global basis, and we think about the cash generation and we think about the flexibility on the balance sheet, is there any reason why you wouldn't go and step into a market that you're currently not present in, say, for example, the North American market, which I know we obviously had the separation of the business last year, but the North American market remains a very attractive market, high margins, long-term structural growth drivers?

And it doesn't sort of escape me that you're not in that market anymore, and your multiples in a position today where maybe stepping back into that market is an opportunity. I'd just like to hear your perspective sort of on where you allocate strategically going forward?

Cedar, thank you for your question. So I'll start on M&A front. What do we have on heavy side in Europe? I'm still very excited about the opportunities we have in aggregates and recycling of construction and demolition materials. We talked about this many times. The number of deals that we did in aggregates in Eastern Europe, where we have consolidated our position in Greece, Bulgaria, Serbia, Croatia, Romania, even in Poland. Now these businesses are generating overproportional EBIT margins, and they are growing. So I do see many, many opportunities for further consolidation in aggregates.

West Europe, it's going to be more into the recycling of construction demolition materials, and that's Belgium, U.K., Germany, France. We have established ourselves Switzerland. We have already established ourselves as a market leader, but it's a highly fragmented market, and we see great potential for consolidation and also for synergies.

So in addition, I like a part of the whole offering. We have expanded in insulation with acquisition in Poland and previously in France. So this is the area in Building Solutions where we still can grow. At the moment, no plans to go back to North America. All valid points, I fully agree with you, but there are so many opportunities in Europe, in LatAm that I would like to focus our efforts, our capital allocation on these priorities where we can see very high synergies, high ROIC and relatively attractive paybacks.

And the next question comes from the line from Martin Hüsler from ZKB.

So I have 2. First, maybe talk a bit about your free cash flow guidance for the full year. I know you don't give out numbers after 9 months, but maybe an indication where you stand here. Obviously, we can see that the EBITDA was up CHF 200 million. Yes, maybe your thoughts on why it should not be higher than last year? And maybe can you remind us on your CapEx guidance for this year? That's the first question.

CapEx is around CHF 1 billion, but I'll let Steffen.

Look, we always keep this guidance for the cash flow. Year-to-date, we're tracking well, basically pretty much in line with last year. But there are always timing topics at year-end, you could have tax payments in January, you could have them in December. And since free cash flow is both a KPI that covers a time frame, but a snapshot date, we keep the flexibility at year-end.

So we've done this in prior years, too. We kept the cash flow guidance where it is so that we have the flexibility at year-end to move the money and not put ourselves under pressure in working capital. And also, we are a cash-rich company. We don't need to squeeze. So we take this with a very cautious approach. But your math, of course, is right. EBIT is up, cash should not be under pressure and it is not.

Makes sense. The second question I have, obviously, very strong development also in Europe, I would say. But maybe some words on difficult markets such as France and U.K. Do you see there any green shoots maybe on pricing, maybe on new projects coming on stream? Or should we expect those markets to remain in a very difficult position?

Yes, Martin, you're right. U.K. was especially difficult this year. I do see a light at the end of the tunnel. And I don't expect a massive recovery in U.K. But what is good for us is that we did manage to secure some big large projects Sizewell C, London Crossing that will -- these projects have already started some of them. So this will help us reduce this softness in 2027.

On France -- pricing in France was excellent this year. This was one of the positive upside. So despite the relatively softer markets, especially residential, we did have a good pricing momentum. Team has done a good job on pushing sustainable offering. We did invest in decarbonization and circular construction. This is driving profitable growth. And we did some very value-accretive acquisition that will help us next year in 2027.

Perfect. Thank you, Martin. The next one in the line is Luis Prieto from Kepler Cheuvreux.

Super quick for you, I promise. My usual question is if you would be able to break down the organic growth building block of your recurring EBIT bridge between price over cost and volume. Rough idea would be super useful.

The second 1 is regarding the fact that we have seen diesel prices go up a lot so far this year in developed markets. This is being an issue, obviously, in North American aggregates, which is evidently no longer your concern today. But are we seeing anything remotely similar in your markets, in Europe, in particular? And my final question, just detail. Coming back to alternative fuels for a moment. What is the thermal substitution rate in Europe and at group level, not just Costa Rica or Latin America, Europe and group?

Luis, thank you for your question. So start with the simple 1, alternative fuel. Europe is at 70%. Obviously, I mentioned September was really a record month. We want to hit 90% by 2030, and group should be around 50% by 2030. This is -- and we communicated this already as a part of our KPIs for 2030.

On the diesel price, Steffen, you can tackle price over cost bridge. On the diesel, this is the -- I am spending now more time on logistics topic. I do believe, honestly, that the potential for optimization in logistics is significant. We have communicated this as a part of our AI initiatives -- and we do see the biggest impact coming from production and also from logistics.

I mean opportunities are really endless when it comes to the fleet utilization, backload hauling, when it comes to the cost reduction per ton per kilometer when it comes to waiting time. And this is something that will help us offset diesel volatility. Yes, we have seen in September, diesel price went up. We are managing to reduce the impact, thanks to the optimization of what we are doing and also passing this on to customers.

So for the EBIT growth bridge, you saw we have 6% in Swiss francs, 12% organic. Between that is M&A and foreign exchange. Now if you look at the organic piece, price over cost is significantly price driven. There's almost no volume impact in here. So we can say today that, that is predominantly pricing is pricing.

But what Miljan said before, it's not just pure price increases. It's the portfolio. It's the growth of ECOPact, ECOPlanet, it's the construction demolition materials. It's the whole shift to higher-value offering. All of this together. These products also drive a higher margin because we're producing them very cost efficiently. So it's not just price, it's the whole portfolio mix that is changing towards a higher value margin portfolio. But roughly, you can say that it's all driven by that and volume has a very, very minor impact.

The next caller is Ephrem Ravi from Citigroup.

Just 2 questions only left. Firstly, just looking at the organic growth in Building Solutions, it looks a lot weaker than the group and it hasn't really picked up in Q3 either. I mean, it's about 4%. Almost all the growth has been driven by inorganic. Do we see organic growth, kind of, overtaking inorganic, kind of, contribution to growth in the medium term?

Or is, kind of, mid- to low single-digit growth in Building Solutions, what we should expect as long as the overall construction market, kind of, remains weak. Obviously, Building Materials are growing much faster. So I guess that's cost plus pricing or cost, kind of, being passed on into pricing while there is less probably for Building Solutions.

Second question, just on LatAm, congratulations on the 90 bps year-on-year margin improvement, which was probably earlier than people anticipated after the acquisitions in there. So should we, kind of, expect everything else being equal, sort of 30%-plus margins in LatAm next year as historically has been the case?

Thank you for the questions, and thank you for joining. Regarding LatAm, so yes, it came earlier than expected with all the acquisitions and everything. I think we could see upside in Colombia next year that will help us go above 30%. But target for LatAm is to be around 30%. We want to invest heavily in Disensa. This could -- obviously, this is for us to grow overproportionally. So I am confident that success story of LatAm will continue in 2027. On OG in Building Solutions, Steffen?

Your numbers are, of course, right. And your suspicion or your outlook is right because by far, the biggest pieces of Building Solutions going forward are going to be Xella and Fermacell. And going forward, you will see a much stronger organic contribution from that, that you see today in scope.

So the composition of that segment and the mix of the businesses in there is fundamentally going to change once we have Xella and then also Fermacell under our belt for 1 year, and we'll report that in organic, then you'll probably see the growth. I don't want to speculate now, but you will see towards a high single-digit growth once these things are under our belt in organic.

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

I have 3, if I may. Hopefully, they're quite short. So firstly, for scope effects acquisitions, can you give us an indication of the, kind of, embedded 2027 contribution to sales and EBIT? That's my first question.

Secondly, maybe just a technical question on the full year guidance. You said the underlying trends are unchanged in October, November. Obviously, we'll have to see the weather in December. But also the corporate costs were quite high last year. So theoretically, you get a boost in Q4 year-on-year from normalized costs. So shouldn't you see some level of acceleration in like-for-like EBIT growth? And related to that, if you could give us a guidance for the full year corporate costs?

And lastly, sorry, just a follow-up on M&A. You've acquired the business in Peru. You sold Brazil, I think that was back in '21 or '22. We know some assets are coming back in Brazil for sale. Would you be interested to have a look at those?

Thank you for your question, and thank you for joining us this morning. Regarding Brazil, no interest. We have exited, you're right, already 5 years ago, no intention to go back in Brazil.

Pacasmayo, a great acquisition. You saw in H1, they reported EBITDA growth of 34%, net sales growth of 15%. They are also publishing in next week. So you will see more from that. We are now fully focusing on integration. I think probably we could even see upside in the synergies and Peru is a strategic market for us for the long term. Steffen, on the scope and the full year.

Yes. Thanks, Miljan. So scope for next year, roughly think about EUR 900 million to EUR 1 billion in sales. Think about EUR 120 million to EUR 150 million in EBIT. Again, depending on how fast we integrate these companies, there will be a bit of wiggle room there, but that gives you the picture. Xella is only going to come in for 3 months into -- it's going to come 3 months into scope and the rest into organic because that's when it was acquired, but the others have a bigger impact.

Now corporate cost, right? When we did the spin-off, our corporate cost in relation to sales was some 3.3%. And by the end of last year, we had brought this to 3%. And by the end of this year, you will probably see the percentage between 2.4% and 2.6%. So you see we're on this trajectory. And our aim by the end of next year is to be short above 2%, let's say, to 2.2%.

So if you make the math, that gives you roughly CHF 440 million corporate cost, CHF 430 million, CHF 440 million by the end of the year. And this is not just the overhead. This is also things like insurance and so there's also a bit of uncertainty in the last month, but CHF 430 million, CHF 440 million, should do it.

Perfect. Thank you so much. These were all the questions from the line. Now Jon Bell from Deutsche Bank sent us a question by e-mail. He's asking, is the Disensa platform currently present in all of your Latin American countries? Do you expect a further rollout? In which countries do you expect most expansion potential? And where will you be most aggressive?

Yes, Jon, we are present in all the countries we operate. In Peru, it's called Dino, but it's the same platform. The biggest expansion by far, Mexico has to be Mexico. This is our biggest market. This is where we have a well-established production footprint. And my expectations are that Mexico will go overproportionally when it comes to the Disensa expansion.

Perfect. Thank you so much, Miljan. So these were all the questions for today. Thank you so much for your active participation. Miljan, do you want to close with some closing remarks?

Thank you all for joining us this morning. As you can see, we are very proud of our Q3 of our year-to-date performance. Now we are entering also exciting phase. We are working to finish this year on a very strong end. We do have integration of Xella and Pacasmayo happening as we speak. We are closing Fermacell and acquisition in Colombia in H1 next year. So plenty to do.

Holcim is indeed stronger than ever. This is demonstrated by our industry-leading margins. And I would like to say one big thank you to all my colleagues, 50,000 of them making this company what it is today. Thank you.

Thank you, Miljan. And obviously, also a big thank you for participating in today's conference call. The Investor Relations team is more than happy to support you if you have any further questions. And obviously, we are also very happy to see many of you in the coming weeks. Thank you.

Good morning, and welcome to the analyst and investor conference call for Holcim's First Half 2026 Results. My name is Bernd Pomrehn, and I'm pleased to be joined by Miljan Gutovic, our CEO and our CFO, Steffen Kindler. After their presentation of our results, you will have the opportunity to ask your questions. Sandra, may I ask you to share the technical details with us. Thank you.

[Operator Instructions]

The conference is being recorded. [Operator Instructions]

The conference must not be recorded for publication or broadcast.

Thank you so much, Sandra. And with this, I directly hand it over to Miljan. Miljan, please?

Thank you, Bernd. Good morning to you all, and welcome to Holcim's 2026 Half Year Results and Analyst and Investor Conference. Steffen and I are pleased to be presenting our numbers to you today. And of course, we look forward to taking your questions afterwards. As you have seen, after a very strong start to the year, our momentum even accelerated in Q2.

In net sales, our organic growth was 5.2% for H1 and 6.4% in Q2. There was an even stronger momentum in recurring EBIT which grew 11.5% in H1 and by 13.1% in Q2. The drivers included increased customer demand for our sustainable offering, our strict cost discipline and of course, our operational excellence.

In the first 6 months, we closed the 2 value-accretive strategic acquisitions of Xella and Pacasmayo. This, we will discuss later on. And building on our strong first half performance, we are upgrading our 2026 full year guidance. Turning to the regional highlights now. In Europe, there were strong net sales accelerating in Q2, driven by Germany, Switzerland, Spain, Greece and East Europe.

Price-over-cost was positive, and our use of alternative fuels in the region went up again over 70% in H1, in future-proofing Holcim from energy price exposure and market volatility.

We completed the milestone acquisition of Xella on June 19 and with this Building Solutions now already at 50% of net sales in the region. For the outlook, we expect the strong activity in infrastructure to continue and this includes from roads, tunnels to the airports. Several projects have started such as a crossing river in London, the Axenstrasse Tunnel in Switzerland.

And we are seeing major investments in railway, in Eastern Europe, especially in Bulgaria.

In residential, the recent increase in building permits is continuing with recent notable growth in France, Germany and also in Poland. In LatAm, we delivered 6.2% organic growth in net sales in H1. This was driven by Mexico, Ecuador and Central America with our recurring EBIT margin consistently above 30%. The strong performance of Pacasmayo, the acquisition of which we completed in March, contributed to both net sales and also recurring EBIT.

For the outlook, we expect government support for new homes and also infrastructure projects to accelerate growth in Mexico, in Peru and also across the whole Central America. One large project that I would like to highlight, which I recently visited was the region's biggest social housing project in Ecuador.

This is a perfect example where customer demand for sustainable products is evident outside -- even in the emerging markets. They are building homes for 35 -- they're building 35,000 homes for more than 150,000 people. Our outstanding performance in Asia, Middle East and Africa continued with net sales up 8.5% and also overproportional increase in EBIT nearly 24%. The margin rose 80 basis points from a year ago to nearly 26%. The drivers in this case were continued favorable demand trends in North Africa and Australia, and we expect this to continue for the full year.

One of the infrastructure projects in Australia is Western Parkland City and the Western Sydney International Airport. During my recent visit to Australia, I was quite impressed with the amount of infrastructure projects we have happening. And we are investing heavily -- we are commissioning the new high-capacity concrete batching plant at Badgerys Creek that will be producing from September. Another example is the upcoming Olympic Games in Brisbane, where we are seeing a lot of construction activity already starting or in the tender stage.

With that, I would like to hand it over to Steffen to talk through the financials in more detail. Steffen?

Thank you, Miljan. And a warm welcome to all of you also from my side. It's always a pleasure to be here with you today. Turning first to the net sales bridge. You can see that we had a strong organic growth of 5.2%, representing almost CHF 390 million.

Total sales are also up as the strong OG offsets impacts from net M&A here, mainly the divestment of Nigeria and foreign exchange translation effects. The foreign exchange translation effect of 3.4% year-to-date is a mixture of mature and emerging markets currency devaluation versus the Swiss franc. It's notable that this softened in the second quarter to 1.5%, while it was still at 5.5% in Q1.

For recurring EBIT, we delivered double-digit organic growth of 11.5%. There were foreign exchange translation effects of CHF 40 million or 2.8% and CHF 112 million impact from divestments, as mentioned already in the sales chart. Here as well, net M&A is mainly driven by Nigeria and other divestments, partially offset by Pacasmayo. Also here, the foreign exchange translation effect softened to 1.4% in the second quarter. EBIT growth was driven by strong commercial execution, operational excellence and disciplined cost management in the countries and at corporate level.

And I want to underline that once again, we delivered positive price-over-cost in all our regions. This is now the 17th consecutive quarter with positive price-over-cost for Holcim. Next, let's look at the progression of our recurring EBIT and recurring EBIT margin on a rolling 12-month basis. This graph shows our continuing margin expansion again, driven by our strong commercial execution, operational excellence and disciplined cost management, also underlined with our AI initiatives.

The group margin for the second quarter was flat compared to the same period a year ago, mainly due to divestments. We are committed to further margin expansion for the full year 2026 and expect to be broadly flat for the first 9 months before seeing expansion for the full year. Next, let's look at the regional performance. Organic growth in net sales was strong in each of LatAm and AMEA.

And in Europe, there was a significant acceleration in the second quarter. In Asia, Middle East and Africa, there was excellent organic growth in recurring EBIT in H1 at almost 24% with an 80 basis points increase in margin, while we keep achieving a recurring EBIT margin of above 30% in Latin America.

Europe saw good margin development and as mentioned before, good cost development on the corporate level continued. Our performance culture and disciplined financial management ultimately drives the growth of our earnings per share, EPS, which is up 7.4% in Swiss francs from a year ago. This shows that we pay equal attention to operational performance and financial discipline in the lines below recurring EBIT and that we are producing superior profitable growth.

Next, you can see the development of our free cash flow in the first half of the year. The headline number incorporates some CapEx phasing, a seasonally strong June that impacted H1 working capital and the large divestment of Nigeria in the second half of 2025. Taking these things into account, we are fully on track to meet our full year guidance of around CHF 2 billion.

Looking now at our strong investment-grade balance sheet as well as accounting for dividend payments or M&A, principally the acquisition of Cementos Pacasmayo and Xella has increased our financial debt. Given the seasonality of our cash flow, we expect our leverage ratio to be back to around 1.6x by year-end, so close to a 1.5x target level even after closing our announced acquisition and expansion in Colombia and our usual run rate of around CHF 0.5 billion on bolt-on acquisitions.

And with that, I'm pleased to hand you back over, Miljan.

Thank you, Steffen. For Next Growth 2030, we are delivering superior performance and margin expansion focused on the 5 key drivers. Firstly, we are scaling up our sustainable offering, powered by our premium brands. We are accelerating initiatives for decarbonization and circular construction driving profitable growth. A key part of NextGen Growth is expanding high-value Building Solutions and with our impeccable track record of value-accretive M&A we are focusing on the most attractive markets and the most attractive businesses. And all of this is driven by our deeply embedded performance culture.

Now let's look more closely at some of these drivers. Our sustainable offering, driven by our premium brands, ECOPact, ECOPlanet and ECOCycle continues to be in demand. These premium brands are being used at scale in large-scale projects. One example here, which you can see on the slide is the library in Australia, which is built with ECOPact and Geostone, our modern decorative concrete inside. The libraries in Geelong and in Melbourne is a landmark and community hub that reflects aboriginal heritage, and it was also awarded a 5-star Green Star rating from the Green Building Council of Australia.

During the first half, we increased the volume of recycled construction and demolition materials by 36%, accelerating also our circular construction technology ECOCycle. Circular construction more broadly continues to be a driver of profitable growth. And as you can see on this slide, the contribution from our acquisition of Xella, for example, with its additional 22 circular construction hubs we are now close to 150 in total. We also closed 7 value-accretive transactions in the first half of the year, of which 6 were acquisition and 1 was divestment. To reinforce Building Materials, Holcim made acquisitions in Romania as well as Pacasmayo in Peru.

Building Solutions expanded with 4 strategic acquisitions in Belgium, Germany and New Zealand as well as the acquisition of Xella. We also made 1 divestment. The 2 strategic acquisitions we closed in H1 will definitely help us accelerate our NextGen Growth 2030 strategy. Xella, which is a leader in the attractive EUR 12 billion plus walling market brings around CHF 900 million in projected 2026 sales as well as more than 50 production facilities.

At the same time, Pacasmayo, a leading player in Peru of Building Materials and also Building Solutions brings additional CHF 500 million of projected 2026 net sales as well as 3 integrated cement plants and 28 ready-mix and precast plants.

On the next slide, you can see how addition of premium Xella brands enhances our integrated end-to-end Building Solutions, offering our customers from foundation and flooring to walling and roofing. For walling, our customer offering now includes Ytong as well as Silka and Multipor mineral insulation. For roofing, we now offer a large-format Hebel panels.

To conclude this section on Xella, I wanted to emphasize how delighted I am to welcome Xella's 4,000 employees to Holcim family. Last quarter, we explained to you how AI is unlocking incremental value and growth for Holcim, improving performance and also driving customer-centric services. And to reinforce, we expect benefits from AI of around CHF 200 million by 2028, reflecting both cost savings and also cost avoidance. We think this will entail growth investments of around CHF 20 million a year. And we have around 40 initiatives across these 4 areas of production, logistics, commercial and administration.

Let's look next at some of the initiatives we are scaling up. So on this slide, we have initiatives related to production. We have AI-powered Holcim Predict family of initiatives. M-Predict is for maintenance where we are using AI models correlating smart sensors to predict maintenance of critical machines. The other one is Q-Predict, which is for quality using models, it allows us to optimize cement formulations while reducing clinker factor and so far, we have tested more than 7,000 different cement formulations since its launch.

For M and Q-Predict, we have made excellent progress, the next big initiative is P-Predict, which uses AI for real-time kiln process control, allowing us to optimize our energy mix and this will include increased usage of alternative fuels. Now turning to the rest of the year, we are upgrading our 2026 full year guidance after this very strong first half. Net sales and recurring EBIT growth at high end of our next-gen growth 2030 targets, 5% organic net sales growth and 10% organic recurring EBIT growth. Further increase in our recurring EBIT margin, free cash flow around CHF 2 billion, and we want to continue to overproportionally grow in recycled construction and demolition materials. Bernd, you can now open it for questions.

Thank you, Miljan. Thank you, Steffen. With this, we open the line for questions. The first question came in from Benjamin Rada Martin from Goldman Sachs.

Excellent. My first question was on, I guess, the ETS changes we've seen in the last few weeks. I'd be interested in how that affects your European decarbonization strategy at all? Are there any business cases that you think are stronger under the proposed changes or any that you might look to revisit and then the second question is around Europe cement pricing. I wonder if you could provide an update on your ambitions as we get into the second half of this year?

And as we think about 2027 with the backdrop of more energy inflation, is it right to think that the contribution for pricing into next year could be a similar magnitude or even larger than what we saw in 2026.

Good morning, Ben. Thank you for your question. I'll start with ETS. So it's been almost 2 weeks, Ben, since we saw the EU ETS proposal for reforms. First reaction from my side was this actually once again confirms that ETS will remain the key pillar of European climate and industrial policy. After analyzing it, we found that it is positive for Holcim, and it will open additional opportunity for us. Starting with this industrial decarbonization bank, CHF 100 billion of investments. We've definitely want to participate in this. Free allowances phasing out. I see this as a positive sign because it will give us additional time, maybe a year or 2 to optimize our value chain.

I think I said this many times before, when it comes to carbon capture project, I strongly believe that we need to find onshore storage possibilities to make this project even more financially attractive. So moving from offshore to onshore, this can help us to delay this project by a year or 2. Then we talk about market, carbon market. This is also something very interesting, where we can participate. Then we talk about carbon capture utilization, which is something very interesting because they have changed accounting from the capture to the usage.

And this can open the possibilities for CO2 to become feedstock. And we do have some of the projects, including the one in France, where we are working with our partners. Of course, we want to use the captured CO2 to be -- to sell it, to be used to produce sustainable aviation fuel. So in my view, very positive and for Holcim being the leader in decarbonization, this will definitely open the new opportunities.

Now on the pricing, very happy so far. At the beginning of the year, we did aim for mid-single digits. This is where we are. There were some very pleasant upsides, for instance, Mexico. So for the second half of the year, I do believe there are pockets of opportunities, but nothing on this level. Steffen said it, 17 quarters of positive price-over-cost. So next time when we talk, Ben, I will report another 18th quarter of positive price-over-cost. So that's the goal for the rest of the year.

Excellent. And I guess, just to come back on pricing, conscious it's a little bit early 2027 but given the energy inflation backdrop in Europe, do you expect pricing to be a bigger contributor next year than what we've seen this year or similar magnitude? Or is it too early to say?

I would not like to comment on this at this stage. It's too early. Probably we should talk more about this in Q3 or towards the end of the year.

The next one on the line is Julian Radlinger from UBS. Good morning, Julian.

So a couple of questions. The first one is can we dig a little bit deeper into Europe? So you finally turned the corner there on volumes. And of course, you're not the only company, construction company to have done so. But so could you paint us a bit of a picture of which countries are growing, which ones aren't yet and I'm also really curious about is this more infrastructure driven? Or is residential coming back in a clear way somewhere? And by that, I mean not just permits that you're seeing, but actual activity.

Good morning, Julian. Thank you for the question. On Europe, very pleased with the momentum in H1, especially acceleration in Q2. As you have seen, we did very well in Europe. So all in all, infrastructure backlog is extremely healthy across the whole Europe. On the residential sector, I would like to say that Eastern Europe is doing well, but we are seeing soft recovery in Germany and also in France. At the same time, Spain and Greece are doing really, really well. So the only soft market in H1 was U.K., and we expect that these big projects such as River Crossing in London and Sizewell C, a few others where we are participating tendering. This will create a much better momentum in H2. But unlike Germany and France residential in U.K. is still soft.

Great. And then sort of the same question for Latin America. So here, your volumes were slightly negative, I think, in Q2. They looked a little bit better in the prior quarter. And if I look at all sorts of construction data and what some of your peers reported for Mexico, et cetera. I would have actually expected a bit of volume growth in Latin America. Can you help us understand what drove that sort of volume setback in Q2? And will that change in the second half of the quarter -- of the year?

On LatAm, Julian, it was a country mix, but countries that we are seeing a strong performance, Mexico, Ecuador, the whole Central America and especially Peru, you saw what Pacasmayo reported for Q2 net sales up more than 15% and EBITDA up 30-plus percent. So Argentina is softer than we expected and in Colombia, we had the election, so that probably had an impact on the whole volumes.

Regarding Mexico, we are pleased with the performance, we are still talking about even higher EBITDA margin than 45%. We maintained our market share. I know there was a shift in the volumes in Central region of the Mexico, but this was nothing to do with the Holcim. So for the H2, I believe that we will see a significantly better momentum. We did spend money on the integration of these companies. We invested heavily in Disensa. So all of this is already paying off. And maybe the highlight on the pricing, I would like to say for me at least was indeed Mexico.

Thank you, Julian. Then we take 3 questions from Paul Roger from BNP Paribas. He sent us the questions by e-mail. First question from Paul, are the margins in LatAm likely to be relatively stable sequentially around 30% in the future, which would actually imply a big expansion year-over-year in the third quarter.

I would hand it over to Steffen.

Yes, Paul, good question. Look, I would say what we've been saying all along that LatAm -- for us, we manage this like a portfolio. And LatAm has always been above 30%. We have some countries every year that are a bit stronger, that are going through other periods. So we manage this as a portfolio, and we always say between 30% and 35%, this margin will swing year-by-year, which is great for us because the region is growing in sales. And so the mix into our overall portfolio and into our results is positive from this high margin growth.

So every year, we expect this to be above 30% with some wiggle room depending on the country mix and the specific projects that we're doing. So yes, we confirm that it's above 30%.

Perfect. The second question from Paul is on our corporate costs. He is writing. Is there upside risk to your previous targets for reducing central costs, given the good performance in the second quarter?

Yes. Look, very good question. So please be mindful that at the half year, the corporate costs we show you cannot simply multiply that by 2 to get to the full year number because we have some backloaded impacts, like, for example, insurance payments, clearing out the insurance from our internal captive. So these are things that hit in the fourth quarter. This is why you cannot put a straight line from half year-to-date to full year. But we're fully on track, fully on track with the target that we set.

We said that after the spin, we had corporate cost of a bit more than 3% of sales, and our trajectory is to come down to 2% by the end of this year, at least to be in a structure that allows for 2% as of 2027. And we're fully in line with that trajectory. We will see then in the full year how we manage the late sequencing of those costs. But so far, there's certainly no risk that it could be worse.

And the third question from Paul. He's asking, are there any green shoots in the U.K. Any positive signs, first, leading indicators? Any...

Look, I did mention this previously that in H1, U.K. has been relatively soft. We are seeing that all these big infra major infrastructure projects have started. We are supplying River Crossing in London I mentioned, Sizewell C I mentioned. What's equally important that we are tendering for a lot of big infrastructure projects. So government is committed next year to spend more than CHF 700 billion. So it is moving. Probably the delay in H1 was due to the political uncertainty.

I would expect that a much better stronger momentum later in Q3 and hopefully, the residential will start coming back through some government incentives.

Thank you, Miljan. The next one on the line is Elodie Rall from JPMorgan. Good morning, Elodie.

I have 3, if I may. First of all, on your guidance, I think it implies in H2, some deceleration, right, in H2 EBIT like-for-like given you delivered 11.5% in H1 and your guidance is around 10% for the year. Why is that? We see some easy comps, I think, in Q4 from corporate cost? What's keeping you from being a bit more optimistic there?

Second, in terms of price cost spread, quite sorry to come back on that. But can you confirm that it was positive in Q2 and give us some color by region? I think you mentioned 17 quarters of positive price cost spread, but was it just for Europe? I didn't quite catch that. And lastly, just maybe a bit of out of the box question, but you're selling your emerging market exposure. You just sold Nigeria, but you sold that to Huaxin and you have a 41% stake as part your JV in Huaxin. So just trying to understand what the long-term rationale is here with regard to your strategy and your JV .

Good morning, Elodie. Thank you for your question. On the guidance, we decided to go to the upper end because it was it's H1. We usually revisit guidance in Q3, but we were feeling comfortable with the performance in H1. So we decided to go up to the upper level. It doesn't mean anything for H2 that there will be a slowdown. I can tell you that July is looking good, equally good as June across all our markets. Some markets are even better in July than in June. And then Q4, it will be better in December. But I would not expect any slowdown or deacceleration in H2. So whether -- we can revisit our guidance again at the end of Q3.

Regarding the Huaxin, yes, we did divest Nigeria because we believe in Huaxin. We believe that Huaxin is a better owner of this business. We did this even before some other positions. With us, we like our participation in Huaxin. It's a healthy, very healthy relationship and it does not contradict with our strategy in the long term. On the price-over-cost, I would like to hand it over to Steffen.

Elodie, good morning from my side as well. Correct, 17th quarter of positive price-over-cost in all regions. So to make you -- to give you a bit more insight that you can do your math, positive price-over-cost was to the tune of, let's say, CHF 90 million. And you can probably pass on this in equal 1/3 to the 3 regions with Europe in the sequence Europe, EMEA, LatAm, that gives you a good indication, but roughly 1/3 all of those.

Emerging market strategy, she asked?

Emerging market strategy. So, so far, Europe represents around 55% of our total net sales. and the rest is LatAm North Africa and other positions we are. I believe this is a good mix. There could be some additional potential divestments just on the smaller scale. And we are constantly reassessing our position, and we will continue to invest in the most attractive markets and most attractive businesses. For instance, LatAm is considered as a developing market. This is a market where we have the highest margins.

This is a market where we have made some significant investments. I mentioned Pacasmayo. The other, we signed the acquisition in Colombia. We expect this to close in the next few months. So emerging market or developing market will continue selective ones will continue to be the key focus for us in the years to come.

The next caller is Pujarini Ghosh from Bernstein.

So my first question is on the margin expectation for the year. And while we have been speaking over the last few months, the impression I had was that through pricing, you are trying to offset the absolute increase in costs because of the energy and raw material cost inflation. However, that could mechanically mean that the margin could be a bit weaker year-on-year. But then today's result comes as a slight positive surprise to that. So could you explain what has been better than expectations in terms of pricing?

I mean you did mention Mexico, but anything else you're seeing maybe better uptake or reception from your customers? And how should we think about this going into H2? Are you still continuing to pass pricing? And this guidance upgrade, how much of that comes from better pricing expectations versus volumes versus the outperformance that you've already shown in H1?

Thank you for your question, Pujarini. I just want to go back to history, and I'll take an example of Europe. From '21 to '25, markets were challenging in Europe. The construction activity was soft and residential dropped. During this time, Holcim Europe has increased sales, increased the EBIT, but also we have managed to have a margin expansion of more than 400 basis points. So why I'm telling you all of this. Pricing is definitely something that what we are focusing on, what we are driving. But margin expansion is driven also by other factors. We are scaling up our sustainable offering. You saw it at ECOPact, ECOPlanet now ECOCycle.

On these products, we do have a modest price premium, but we also have some cost upside. So it's a double dipping. You have a small premium, you have a reduced cost and you do end up with the margin expansion. And these products are now representing 1/3 of our sales. Secondly, decarbonization and circular construction. These initiatives we have on alternative fuels, on clinker factor reduction, on recycling of construction and demolition materials. All of this is driving profitable growth and all of this is actually helping us when it comes to margin expansion.

And the third big topic is M&A. We have a great track record of value accretive M&As where we are divesting less attractive markets and at the same time, we are focusing, we are investing in the more attractive markets. Perfect example is the latest Pacasmayo where the EBITDA margin in this year has been well above 30%, but we have divested some less attractive position.

So it is the product mix. It's the sustainability-driven initiatives plus value-accretive M&A. And when you combine all of this, this will continue to lead to margin expansion this year and also in the years to come. Steffen, maybe on the guidance for margin for the rest of the year.

Yes, look, our guidance for margin for the rest of the year is that we will increase further. I said previously that we have a sequential improvement. We were still slightly down in the first quarter. Drivers for that were, of course, the weather in the first quarter. We are flat in the second quarter, very good performance on price-over-cost, very good performance on our pricing and on our cost performance.

But there's an impact from divestments. So there's just a mix impact, and that has kept us flat for the second quarter, predominantly in Nigeria that had a very high margin last year but that is fading out now.

So the Nigeria divestment happened in August. So we're going into a more like-for-like basis on that for the second half. And then all the other things will continue. And so we expect probably to be year-to-date, 9 months flat and then full year positive, which means 2 good margin quarters to come.

So going back to pricing Pujarini. So happy with what we have achieved so far for the rest of the year. Nothing extraordinary, but I do see some pockets of potential price increases in Europe, but more in Latin America.

Then we take a question from Luis Prieto from Kepler Cheuvreux.

Just 2 left for me. Would you be able to break down the organic growth building block of your Q2 2026 recurring EBIT bridge between price-over-cost and volume to get a better idea. And then the second one, following up on Elodie's question. If I recall correctly, you mentioned in Q1 that in order to achieve the top end of the guidance, there would need to be geopolitical stability. I understand that the strength -- there was strength in Q2, but wouldn't it have been more advisable to wait until 9 months that you mentioned earlier, to have more visibility on the geopolitical front?

Thank you for your question, Luis. I'll take the second one, and Steffen can go with the first one. Yes, geopolitical factor is always a risk. But as I said, we had such a great momentum in H1. We started well in Q1 despite the weather impact, then we really accelerated in Q2. I mean you saw it net sales above 6% over-proportional double-digit EBIT growth.

So we felt the need to up our guidance a little bit. So in Q3, we will revisit this again, but it seems that once again, we have demonstrated that the business model that Holcim has is resilient across all market conditions, economic cycles, and we can overcome geopolitical uncertainties as well.

As for pricing over cost -- Luis first, good morning. Good to have you. I answered to Elodie before the price-over-cost in the second quarter was to the tune of some CHF 90 million. I would say, let's say, CHF 15 million to CHF 20 million of that was volume, then there was some positive contribution of JVs to a tune of CHF 10 million to CHF 15 million and the rest is pricing.

Perfect. Thank you so much, Luis. The next caller is [ Martin Huesler ] from ZKB.

I hope you can hear me?

Loud and clear.

So I have a question regarding this margin guidance you just alluded to. I was wondering whether the margin improvement in the second half does also include Xella? Or is it only on recurring basis? That's the first question.

Martin, our margin is calculated on all sales and all EBIT. So it's not an organic margin. It's a full margin. Organic is just for everybody on the call to make this very clear. Sales growth is organic. EBIT growth is organic. The margin is a full margin. Cash flow is a full cash flow and EPS growth is a full EPS growth, okay? So the only 2 organic KPIs that we have in our reporting and guidance is sales growth and EBIT growth.

Okay. So that's a rather strong message, I guess, because I would expect Xella obviously, on recurring base to be a bit margin dilutive? And then obviously, you have some consolidation effects in the second half probably as well. Maybe can you share what maybe margin or, let's say, what EBIT contribution we could expect from Xella in the second half? Obviously, you mentioned the sales side, but maybe on the EBIT side as well.

I said it before that the impact of M&A on our margin in the first half was rather one of divestments, right? So we divested Nigeria, which had a margin impact in the first half because that was that was a business with a very high margin. The inclusion of new businesses, like our bolt-ons, we do bolt-ons to a tune of CHF 400 million to CHF 500 million each year is what we said, plus Pacasmayo plus Xella.

The net of all of these and will, of course, have a slight negative impact because all of these things come in new, they come in for the first year. They have integration costs. We don't break that out. But this is all included in our guidance.

So the positive price-over-cost, the positive performance we have elsewhere and the positive contribution from M&A we did in previous years that will help us to offset. So we give this guidance knowing that we offset the onboarding cost of the newly acquired businesses.

That's very helpful. But the second question I have, maybe a bit housekeeping. But the delta between adjusted operating profit and operating profit was rather a bit higher than what I was expecting. So maybe to the tune of CHF 150 million. What should we expect for the full year here?

That is a tune that is rather a bit elevated this time because of provisions taken in the first half of provisions released. So there are one-off items. There was also an impairment in the numbers in Argentina. We would expect that for the full year, the best guidance we can give you, go with run rates of the past. So we manage these below the EBIT, recurring EBIT lines. We always manage them with big care, and we try to always keep them within the framework of what we're used to.

Just so that I personally approve every item that's booked below recurring EBIT. So we're managing these lines very closely. And the best assumption you can take is previous years.

Thank you, Martin. The next question comes from the line of from Ephrem Ravi from Citi.

Just most of my questions have been answered. So just 2 follow-ups. Firstly, on the M&A front. I mean, your net cash or net debt position of CHF 7.3 billion obviously includes some big one-off items for Xella and Pacasmayo. But looking forward, if you make CHF 2 billion of free cash this year, your net debt will come back to about CHF 5 billion just about that, and that will leave you at around just over at times of EBITDA in terms of leverage. And given CHF 1 billion of dividends and CHF 0.5 billion of bolt-ons that still kind of leaves you close to CHF 2.5 billion, CHF 3 billion of balance sheet firepower for sizable acquisitions in the next 12 months?

Would that be a fair characterization of how we should think about your balance sheet strength in terms of inorganic, assuming there are obviously good opportunities out there to buy? And second question, I know you've mentioned the margin dilution at the group level was minimal. But just on the LatAm level, your margin was lower by just over 200 basis points, I suppose, because of Pacasmayo. Could you help us quantify that margin dilution percentage?

Ephrem, very good on the balance sheet. If you're looking for a job in treasury, we're happy to have you, that was spot on. We have about 1.6x leverage by year's end, after we paid for all the acquisitions. You remember, we still want to do mandatory tender offer for Pacasmayo. We still have the Colombian acquisition to close probably this year.

So all of these things together will lead us to a debt leverage of around 1.6x by the end of the year. And you said it absolutely right. If we want to stay with our, let's say, 1.5x guidance for next year, then I come back to that, we have more than CHF 1 billion -- on top of bolt-ons of CHF 400 million to CHF 500 million and we have another CHF 1 billion of firepower available.

If we were to increase the debt leverage any further, we would even have more money available which we could do for a short period of time. So your estimates there were not bad. But maybe the simplest way to go about it, if we keep on doing bolt-ons, if we want to go back to [indiscernible], we have more than CHF 1.1 billion, CHF 1.2 billion available still for next year to spend.

On the LatAm margins.

Oh, sorry, yes. The LatAm margins yes, is correct what you said there as well. It was Pacasmayo integration. Pacasmayo came with a bit of a lower margin for the very good results, very good growth, but a bit of a lower margin, as you can also see in their reporting. So that had a mix effect and the onboarding cost of Pacasmayo. Those were the main drivers, plus some other M&A we did, there are some other onboarding costs.

Those were the main drivers for margin in Latin America. But again, as I said before, we expect margin in Latin America to be above 30% and to always be above 30% because this is how we're managing the region, a bit like an investor manages a portfolio with different companies -- in different countries having different growth trajectories at different points in time.

Just to add on M&A, what Steffen said. Look, yes, we did close Pacasmayo, Xella. Teams are working to close Colombia at the end of the year, beginning of next year, but we are not stopping. Pipeline is very healthy. We are seeing some promising targets. We are working on some very good deals. So we do have -- thanks to our very healthy balance sheet, thanks to our financial discipline, our excellent cash conversion of free cash flow we will be able to do more of these value accretive deals in the future.

Perfect. The next question is from Arnaud Lehmann from Bank of America.

Just a couple of follow-ups, if I may. On cash flow, the cash flow guidance is unchanged despite the small upgrade in the EBIT guidance. I appreciate there's a lot of moving parts, and you've given us a net debt-to-EBITDA target as well. But can you help me even further? And do you have a view on working capital effects and CapEx the full year. Because I'm actually struggling to get to [indiscernible] naturally would go a little bit lower than that.

My second question is just on Xella, you reported CHF 458 million of sales for the first half. If I multiplied by 2, that's about CHF 920 million, which I believe was more or less what was delivered in 2025. So can you confirm that for now Xella sales have been broadly stable this year? And do you believe the business can start growing even without a meaningful recovery in German housing activity.

Thank you for the question, Arnaud. I'll start, and then I'll hand it over to Steffen. First of all, Xella, look, Q1 was tough for Xella, yes, mainly weather-related conditions, especially in Western Europe. What we saw in Q2 was very promising. I still believe they can grow. Momentum is there. We are seeing positive signs in residential, as I said. And thanks to combining our forces, Holcim and Xella, we will be able to accelerate these activities on cross-selling, on specification selling and also on system selling.

So I believe they can and they will grow. On the first question, I'll start with the CapEx, then I will hand -- I'll hand it over to Steffen. So we talk always that more -- we talk about M&As. But the fact is we are investing heavily in value-accretive CapEx projects. And yes, this year, we have invested heavily, there is a brand new flagship plant for us in Belgium that will be commissioned in H1 and most of the payments is due this year. We're also building the new grinding station hub in London, Tilbury.

We have made some heavy investments in alternative fuels in Europe but also in Latin America. I mentioned some of the investments we made in Australia. So we are investing also in organic growth. And all these CapEx projects that we have, they have very attractive ROIC, which is well above -- currently above our current company ROIC. I'll stop here and hand it over.

Thanks, Miljan. So to deconstruct the components a little bit good EBITDA growth. Also, you saw a slight softening of the FX headwind that, of course, helps, which is not even part of the calculation really a bit of higher working capital maybe to the tune of CHF 100 million because of good business development. Remember, our working capital is negative in most of our countries. So there is not so much room to improve further. But that will be totally compensated by the cash flow coming in with new acquisitions. Nothing to be said on taxes.

So when you put all these things together, we're quite confident around the CHF 2 billion. And why do we not narrow this down much more? I always say, cash flow is a KPI that represents a period, but there's also a significant snapshot effect in it. So if I'm asked to do -- close out a tax audit in some country, a several year tax audit and the administration wants the payment in December or in January, this could have a large swing factor on our free cash flow.

This is why we're guiding around CHF 2 billion but we're quite confident -- based also on the past on the trajectory where we're standing today, when we look at the past years, we're quite confident that this CHF 2 billion is a very realistic guidance.

Thank you, Arnaud. And the last question today comes from Harry Dow from Rothschild.

Just 2 questions from me. Firstly, just on the AI savings. I wonder if you could just tell us whether any of that was booked in the first half and maybe just some phasing around you might have given us before, but reminds us the phasing for this year and next, through to 2028 of those savings. And then secondly, just on the strategy on European roofing. I think you mentioned that there was a launch of a new roofing panel product. Just some more color on the strategy there. Should we expect more organic development or M&A led.

And also, I'm assuming that was a sort of an insulated panel. Does that mean potentially that could be a future of insulated panels for walling solutions as well?

Good morning, Harry, and thank you for your question. On AI, the total target we communicated CHF 200 million net benefit by 2028, that this includes approximately CHF 20 million investments per year. We did not say the target for 2026, but I would expect this to be CHF 30 million to CHF 50 million. And then I would expect that we significantly increase and double up on this. Very happy with the progress, especially what we showed you this morning on -- in production side with our Predict family. This is probably something that I personally am very connected to. It started 3.5, 4 years ago.

I was in my previous role and the whole momentum we -- once we set up the team, the scaling up today, we have more than 1,500 machines already on AI platform, it's quite impressive. So the speed, the scale, acceleration, what we saw in production, we want to replicate in commercial in logistics and to some extent, even in admin. On the roofing, well, roofing is a relatively small business, a few hundred million. We did make some acquisitions, if you recall Zinco, green roof, with Xella, we do have the opportunity to provide the system through our Hebel brand, but it could be more organic market, as I said, it's consolidated. There are not many opportunities for additional consolidation or M&A.

Perfect. Thank you so much, Miljan. This concludes today's conference call. Thank you so much for your interest in Holcim and your very active participation. Obviously, the Investor Relations team is more than happy to help you if there are any further questions. So please stay tuned. Have a wonderful summer. And with this, I hand over to Miljan for some closing remarks.

Once again, thank you all for joining us this morning. we were very proud to share with you our extraordinary performance in H1 and especially in Q2. We will continue to focus on our key strategic initiatives combined with impeccable execution. I think we are looking forward to equally good H2 and I also take this opportunity to thank now 50,000 of my colleagues around the world for outstanding contributions to Holcim's NextGen Growth 2030 strategy. Once again, thank you very much.

[Presentation]

Good morning, and welcome to the analyst and investor conference call for Holcim's First Half 2026 results. My name is Bernd Pomrehn, and I'm pleased to be joined by Miljan Gutovic, our CEO; and our CFO, Steffen Kindler. After their presentation of our results, you will have the opportunity to ask your questions.

Thank you, Bernd. Good morning to you all, and welcome to Holcim's 2026 Half Year Results and Analyst and Investors Conference. Steffen and I are pleased to be presenting our numbers to you today. And of course, we look forward to taking your questions afterwards.

As you have seen, after a very strong start to the year, our momentum even accelerated in Q2. In net sales, our organic growth was 5.2% for H1 and 6.4% in Q2. There was an even stronger momentum in recurring EBIT, which grew 11.5% in H1 and by 13.1% in Q2. The drivers included increased customer demand for our sustainable offering, our strict cost discipline and of course, our operational excellence.

In the first 6 months, we closed the 2 value-accretive strategic acquisitions of Xella and Pacasmayo. This, we will discuss later on. And building on our strong first half performance, we are upgrading our 2026 full year guidance.

Turning to the regional highlights now. In Europe, there were strong net sales accelerating in Q2, driven by Germany, Switzerland, Spain, Greece and East Europe. Price over cost was positive and our use of alternative fuels in the region went up again over 70% in H1, future-proofing Holcim from energy price exposure and market volatility. We completed the milestone acquisition of Xella on June 19 with this Building Solutions now already at 50% of net sales in the region. For the outlook, we expect the strong activity in infrastructure to continue, and this includes from roads, tunnels, to the airports. Several projects have started such as Crossing River in London, the Axenstrasse tunnel in Switzerland, and we are seeing major investments in railway in Eastern Europe, especially in Bulgaria.

In residential, the recent increase in building permits is continuing with recent notable growth in France, Germany, and also in Poland. In LatAm, we delivered 6.2% organic growth in net sales in H1. This was driven by Mexico, Ecuador, and Central America with our recurring EBIT margin consistently above 30%. The strong performance of Pacasmayo, the acquisition of which we completed in March contributed to both net sales and also recurring EBIT. For the outlook, we expect government support for new homes and also infrastructure projects to accelerate growth in Mexico, in Peru, and also in across the whole Central America.

One large project that I would like to highlight, which I recently visited was the region's biggest social housing project in Ecuador. This is a perfect example where customer demand for sustainable products is evident outside -- even in the emerging markets. They are building homes for 35,000 -- they are building 35,000 homes for more than 150,000 people. Our outstanding performance in Asia, Middle East, and Africa continued with net sales up 8.5% and also over proportional increase in EBIT, nearly 24%. The margin rose 80 basis points from a year ago to nearly 26%. The drivers in this case were continued favorable demand trends in North Africa and Australia, and we expect this to continue for the full year.

One of the infrastructure projects in Australia is Western Parkland City near the Western Sydney International Airport. During my recent visit to Australia, I was quite impressed, the amount of infrastructure projects we have happening. And we are investing heavily. We are commissioning the new high-capacity concrete batching plant at Badgerys Creek that will be producing from September. Another example is the upcoming Olympic Games in Brisbane, where we are seeing a lot of construction activity already starting or in the tender stage.

With that, I would like to hand it over to Steffen to talk through the financials in more detail. Steffen?

Thank you, Miljan, and a warm welcome to all of you also from my side. It's always a pleasure to be here with you today. Turning first to the net sales bridge. You can see that we had a strong organic growth of 5.2%, representing almost CHF 390 million. Total sales are also up as the strong OG offsets impacts from net M&A, here, mainly the divestment of Nigeria, and foreign exchange translation effects. The foreign exchange translation effect of 3.4% year-to-date is a mixture of mature and emerging markets currency devaluation versus the Swiss franc. It's notable that this softened in the second quarter to 1.5%, while it was still at 5.5% in Q1.

For recurring EBIT, we delivered double-digit organic growth of 11.5%. There were foreign exchange translation effects of CHF 40 million or 2.8% and a CHF 112 million impact from divestments, as mentioned already in the sales chart. Here as well, net M&A is mainly driven by Nigeria and other divestments, partially offset by Pacasmayo. Also here, the foreign exchange translation effect softened to 1.4% in the second quarter. EBIT growth was driven by strong commercial execution, operational excellence, and disciplined cost management in the countries and at corporate level. And I want to underline that once again, we delivered positive price over cost in all our regions. This is now the 17th consecutive quarter with positive price over cost for Holcim.

Next, let's look at the progression of our recurring EBIT and recurring EBIT margin on a rolling 12-month basis. This graph shows our continuing margin expansion, again, driven by our strong commercial execution, operational excellence, and disciplined cost management, also underlined with our AI initiatives. The group margin for the second quarter was flat compared to the same period a year ago, mainly due to divestments. We are committed to further margin expansion for the full year 2026 and expect to be broadly flat for the first 9 months before seeing expansion for the full year.

Next, let's look at the regional performance. Organic growth in net sales was strong in each of LatAm and EMEA. And in Europe, there was a significant acceleration in the second quarter. In Asia, Middle East, and Africa, there was excellent organic growth in recurring EBIT in H1 at almost 24% with an 80 basis points increase in margin, while we keep achieving a recurring EBIT margin of above 30% in Latin America. Europe saw good margin development. And as mentioned before, good cost development on the corporate level continued.

Our performance culture and disciplined financial management ultimately drives the growth of our earnings per share, EPS, which is up 7.4% in Swiss francs from a year ago. This shows that we pay equal attention to operational performance and financial discipline in the lines below recurring EBIT and that we are producing superior profitable growth.

Next, you can see the development of our free cash flow in the first half of the year. The headline number incorporates some CapEx phasing, a seasonally strong June that impacted H1 working capital and the large divestment of Nigeria in the second half of 2025. Taking these things in account, we are fully on track to meet our full year guidance of around CHF 2 billion.

Looking now at our strong investment-grade balance sheet as well as accounting for dividend payments, our M&A, principally the acquisition of Cementos Pacasmayo and Xella has increased our financial debt. Given the seasonality of our cash flow, we expect our leverage ratio to be back to around 1.6x by year-end, so close to our 1.5 target level even after closing our announced acquisition and expansion in Colombia and our usual run rate of around CHF 0.5 billion on bolt-on acquisitions. And with that, I'm pleased to hand you back over. Miljan?

Thank you, Steffen. For Next Growth 2030, we are delivering superior performance and margin expansion focused on the 5 key drivers. Firstly, we are scaling up our sustainable offering powered by our premium brands. We are accelerating initiatives for decarbonization and circular construction, driving profitable growth. A key part of NextGen growth is expanding high-value building solution. And with our impeccable track record of value-accretive M&A, we are focusing on the most attractive markets and the most attractive businesses. And all of this is driven by our deeply embedded performance culture.

Now let's look more closely at some of these drivers. Our sustainable offering driven by our premium brands, ECOPact, ECOPlanet, and ECOCycle continues to be in demand. These premium brands are being used at scale in large-scale projects. One example here, which you can see on the slide is the library in Australia, which is built with ECOPact and Geostone, our modern decorative concrete inside. The libraries in Geelong, in Melbourne, is a landmark and community hub that reflects aboriginal heritage, and it was also awarded a 5-star Green Star rating from the Green Building Council of Australia.

During the first half, we increased the volume of recycled construction and demolition materials by 36%, accelerating also our circular construction technology ECOCycle. Circular construction more broadly continues to be a driver of profitable growth. And as you can see on this slide, the contribution from our acquisition of Xella, for example, with its additional 22 circular construction hubs, we are now close to 150 in total. We also closed 7 value-accretive transactions in the first half of the year, of which 6 were acquisition and 1 was divestment. To reinforce Building Materials, Holcim made acquisition in Romania as well as Pacasmayo in Peru. Building Solutions expanded with 4 strategic acquisitions in Belgium, Germany, and New Zealand, as well as the acquisition of Xella. We also made one divestment.

The 2 strategic acquisitions we closed in H1 will definitely help us accelerate our NextGen Growth 2030 strategy. Xella, which is a leader in the attractive CHF 12 billion plus rolling market brings around CHF 900 million in projected 2026 sales as well as more than 50 production facilities. At the same time, Pacasmayo, a leading player in Peru of building materials and also building solution brings additional CHF 500 million of projected 2026 net sales as well as 3 integrated cement plants and 28 ready-mix and pre-cast plants.

On the next slide, you can see how addition of premium Xella brands enhances our integrated end-to-end building solutions, offering our customers from foundation and flooring to walling and roofing. For walling, our customer offering now includes Ytong as well as Silka and Multipor mineral insulation. For roofing, we now offer a large format Hebel panels. To conclude this section on Xella, I wanted to emphasize how delighted I am to welcome Xella's 4,000 employees to Holcim family.

Last quarter, we explained to you how AI is unlocking incremental value and growth for Holcim, improving performance and also driving customer-centric services. And to reinforce, we expect benefits from AI of around CHF 200 million by 2028, reflecting both cost savings and also cost avoidance. We think this will entail growth investments of around CHF 20 million a year. And we have around 40 initiatives across these 4 areas of production, logistics, commercial, and administration. Let's look next at some of the initiatives we are scaling up.

So on this side, we have initiatives related to production. We have AI-powered Holcim Predict family of initiatives. M-Predict is for maintenance where we are using AI models correlating smart sensors to predict maintenance of critical machines. The other one is Q-Predict, which is for quality. Using models, it allows us to optimize cement formulations while reducing clinker factor. And so far, we have tested more than 7,000 different cement formulations since its launch. For M- and Q-Predict, we have made excellent progress. The next big initiative is P-Predict, which uses AI for real-time kiln process control, allowing us to optimize our energy mix, and this will include increased usage of alternative fuels.

Now turning to the rest of the year. We are upgrading our 2026 full year guidance after this very strong first half. Net sales and recurring EBIT growth at high end of our NextGen Growth 2030 targets, 5% organic net sales growth and 10% organic recurring EBIT growth. Further increase in our recurring EBIT margin, free cash flow around CHF 2 billion, and we want to continue to overproportionately grow in recycled construction and demolition materials. Bernd, you can now open it for questions.

Thank you, Miljan. Thank you, Steffen. With this, we open the line for questions. The first question came in from Ben Rada Martin from Goldman Sachs.

My first question was on, I guess, the ETS changes we've seen in the last few weeks. I'd be interested in how that affects your European decarbonization strategy at all? Are there any business cases that you think are stronger under the proposed changes or any that you might look to revisit? And then the second question is around Europe cement pricing. I wonder if you could provide an update on your ambitions as we get into the second half of this year. And as we think about 2027 with the backdrop of more energy inflation, is it right to think that the contribution for pricing into next year could be a similar magnitude or even larger than what we saw in 2026?

Ben, thank you for your question. I'll start with TTS. So it's been almost 2 weeks, Ben, since we saw the EU ETS proposal for reforms. First reaction from my side was this actually, once again, confirms that ETS will remain the key pillar of European climate and industrial policy. After analyzing it, we found that it is positive for Holcim, and it will open additional opportunity for us. Starting with this industrial decarbonization bank, EUR 100 billion of investments, we definitely want to participate in this.

Fee allowances phasing out. I see this as a positive sign because it will give us additional time, maybe a year or 2 to optimize our value chain. I think I said this many times before, when it comes to carbon capture project, I strongly believe that we need to find onshore storage possibilities to make this project even more financially attractive. So moving from offshore to onshore, this can help us to delay this project by a year or 2.

Then we talk about market -- carbon market. This is also something very interesting where we can participate. Then we talk about Carbon Capture UItilization, which is something very interesting because they have changed accounting from the capture to the usage. And this here can open the possibilities for CO2 to become a feedstock. And we do have some of the projects, including the one in France, where we want to working with our partners. Of course, we want to use the captured CO2 to be -- to sell it, to be used to produce sustainable aviation fuel. So in my view, very positive and for Holcim being the leader in decarbonization, this will definitely open the new opportunities.

Now on the pricing, very happy so far. At the beginning of the year, we did aim for mid-single digits. This is where we are. There were some very pleasant upsides, for instance, Mexico. So for the second half of the year, I do believe there are pockets of opportunities, but nothing on this level. Steffen said it, 17 quarters of positive price over cost. So next time when we talk, Ben, I will report another 18th quarter of positive price over cost. So that's the goal for the rest of the year.

Excellent. And I guess just to come back on pricing, conscious they're a little bit early for 2027. But given the energy inflation backdrop in Europe, do you expect pricing to be a bigger contributor next year than what we've seen this year or similar magnitude? Or is it too early to say?

I would not like to comment on this at this stage. It's too early. Probably we should talk more about this in Q3 or towards the end of the year.

The next one on the line is Julian Radlinger from UBS.

So a couple of questions. The first one is, can we dig a little bit deeper into Europe? So you finally turned the corner there on volumes. And of course, you're not the only company, construction company, to have done so. But so could you paint us a bit of a picture of which countries are growing, which ones aren't yet? And I'm also really curious about, is this more infrastructure driven? Or is residential coming back in a clear way somewhere? And by that, I mean, not just permits that you're seeing, but actual activity.

Julian, thank you for the question. On Europe, very pleased with the momentum in H1, especially acceleration in Q2. As you have seen, we did very well in Europe. So all in all, infrastructure backlog is extremely healthy across the whole Europe. On the residential sector, I would like to say that Eastern Europe is doing well, but we are seeing soft recovery in Germany and also in France. At the same time, Spain and Greece are doing really, really well. So the only soft market in H1 was U.K. and we expect that these big projects such as River Crossing in London, Sizewell C, a few others where we are participating, tendering, this will create a much better momentum in H2. But unlike Germany and France, residential in U.K. is still soft.

Okay. Great. And then sort of the same question for Latin America. So here, your volumes were slightly negative, I think, in Q2. They looked a little bit better in the prior quarter. And if I look at all sorts of construction data and what some of your peers reported for Mexico, et cetera, I would have actually expected a bit of volume growth in Latin America. Can you help us understand what drove that sort of volume setback in Q2? And will that change in the second half of the quarter of the year?

On LatAm, Julian, it was a country mix, but countries that -- where we are seeing a strong performance Mexico, Ecuador, the whole Central America and especially Peru, you saw what Pacasmayo reported for Q2, net sales up more than 15% and EBITDA up 30-plus percent. So Argentina is softer than we expected. And in Colombia, we had the election. So that probably had an impact on the whole volumes. Regarding Mexico, we are pleased with the performance. We are still talking about even higher EBITDA margin than 45%. We maintained our market share. I know there was a shift in the volumes in Central region of the Mexico, but this was nothing to do with the Holcim.

So for the H2, significantly better momentum. We did spend money on the integration of these companies. We invested heavily in Disensa. So all of this is already paying off. And maybe the highlight -- on the highlight on the pricing, I would like to say for me at least, was indeed Mexico.

Thank you, Julian. Then we take 3 questions from Paul Roger from BNP Paribas. He sent us the questions by e-mail. First question from Paul, are the margins in LatAm likely to be relatively stable sequentially, around 30% in the future, which would actually imply a big expansion year-over-year in the third quarter?

I would turn it over to Steffen.

Paul, good question. Look, I would say what we've been saying all along, that LatAm, for us, we manage this like a portfolio. And LatAm has always been above 30%. We have some countries every year that are a bit stronger, that are going through other periods. So we manage this as a portfolio, and we always say between 30% and 35%, this margin will swing year-by-year, which is great for us because the region is growing in sales. And so the mix into our overall portfolio and into our results is positive from this high margin growth. So every year, we expect this to be above 30% with some wiggle room depending on the country mix and the specific projects that we're doing. So yes, we confirm that it is above 30%.

Perfect. The second question from Paul is on our corporate costs. His writing, is there upside risk to your previous targets for reducing central costs given the good performance in the second quarter?

Yes. Look, very good question. So please be mindful that at the half year, the corporate costs we show, you cannot simply multiply that by 2 to get to the full year number because we have some backloaded impacts like, for example, insurance payments, clearing out the insurance from our internal captive. So these are things that hit in the fourth quarter. This is why you cannot put a straight line from half year-to-date to full year.

But we're fully on track, fully on track with the target that we set. We said that after the spin, we had corporate cost of a bit more than 3% of sales, and our trajectory is to come down to 2% by the end of this year, at least to be in a structure that allows for 2% as of 2027, and we're fully in line with that trajectory. We will see then in the full year how we manage the late sequencing of those costs. But so far, there's certainly no risk that it could be worse.

And the third question from Paul. He's asking, are there any green shoots in the U.K? Any positive signs, first leading indicators, any...

Look, I did mention this previously that in H1, U.K. has been relatively soft. We are seeing that all these big, major infrastructure projects have started. We are supplying River Crossing in London, I mentioned, Sizewell C, I mentioned. What's equally important that we are tendering for a lot of big infrastructure projects. So government is committed in next year to spend more than EUR 700 billion. So it is moving. Probably the delay in H1 was due to the political uncertainty. I would expect much better and stronger momentum later in Q3. And hopefully, the residential will start coming back through some government incentives.

Thank you, Miljan. The next one in the line is Elodie Rall from JPMorgan.

I'll have 3, if I may. First of all, on your guidance, I think it implies in H2 some deceleration, right, in H2 EBIT like-for-like, given you delivered 11.5% in H1 and your guidance around 10% for the year. So why is that? We see some easy comps, I think, in Q4 from corporate cost. What's keeping you for being a bit more optimistic there? Second, in terms of price cost spread, sorry to come back on that. But can you confirm that it was positive in Q2 and give us some color by region? I think you mentioned 17 quarters of positive price cost spread, but was it just for Europe? I didn't quite catch that. And lastly, just maybe a bit of out-of-the-box question, but you're selling your emerging market exposure. You just sold Nigeria, but you sold that to Huaxin and you have a 41% stake as part of your JV in Huaxin. So I was trying to understand what the long-term rationale is here with regard to your strategy and your JV.

Elodie, Thank you for your question. On the guidance, we decided to go to the upper end because it was -- it's H1. We usually revisit guidance in Q3, but we were feeling comfortable with the performance in H1. So we decided to go up to the upper level. It doesn't mean anything for H2 that there will be a slowdown. I can tell you that July is looking good, equally good as June across all our markets. Some markets are even better in July than in June.

And then Q4, it will be better in December. But I would not expect any slowdown or deacceleration in H2. So whether -- we can revisit our guidance again at the end of Q3. Regarding the Huaxin, yes, we did divest Nigeria because we believe that -- to Huaxin, we believe that Huaxin is a better owner of this business. We did even before some other positions with us, we like our participation in Huaxin. It's a healthy -- very healthy relationship, and it does not contradict with our strategy in the long term. On the price over cost, I would like to hand it over to Steffen.

Elodie, good morning from my side as well. Correct, 17th quarter of positive price over cost in all regions. So to make you -- to give you a bit more insight so that you can do your math, positive price over cost was to the tune of let's say, EUR 90 million. And you can probably parcel this in equal 1/3 to the 3 regions with Europe in the sequence Europe, EMEA, LatAm, that gives you a good indication, but roughly 1/3 all of those.

Emerging market strategy, she asked?

Emerging market strategy. So, so far, Europe represents around 55% of our total net sales, and the rest is LatAm, North Africa, and other positions we are. I believe this is a good mix. There could be some additional potential divestments just on the smaller scale. And we are constantly reassessing our position, and we will continue to invest in the most attractive markets and most attractive businesses.

For instance, LatAm is considered as a developing market. This is a market where we have the highest margins. This is a market where we have made some significant investments. I mentioned Pacasmayo. The other -- we signed the acquisition in Colombia. We expect this to close in the next few months. So emerging market or developing market will continue, selective ones will continue to be the key focus for us in the years to come.

The next caller is Pujarini Ghosh from Bernstein.

So my first question is on the margin expectation for the year. And while we've been speaking over the last few months, the impression I had was that through pricing, you are trying to offset the absolute increase in costs because of the energy and raw material cost inflation. However, that could mechanically mean that the margin could be a bit weaker year-on-year. But then today's result comes as a slight positive surprise to that. So could you explain what has been better than expectations in terms of pricing?

I mean you did mention Mexico, but anything else you're seeing maybe better uptake or reception from your customers? And how should we think about this going into H2? Are you still continuing to pass pricing? And this guidance upgrade, how much of that comes from better pricing expectations versus volumes versus the outperformance that you've already shown in H1?

Thank you for your question, Pujarini. I just want to go back to history, and I'll take an example of Europe. From '21 to '25, markets were challenging in Europe. The construction activity was soft and residential dropped. During this time, Holcim Europe has increased the sales, increased the EBIT, but also we have managed to have a margin expansion of more than 400 basis points. So why I'm telling you all of this? Pricing is definitely something that what we are focusing on, what we are driving, but margin expansion is driven also by other factors. We are scaling up our sustainable offering. You saw it that ECOPact, ECOPlanet, now ECOCycle. On these products, we do have a modest price premium, but we also have some cost upsides.

So it's a double dipping. You have a small premium, you have a reduced cost, and you do end up with the margin expansion. And these products are now representing 1/3 of our sales.

Secondly, decarbonization and circular construction. These initiatives we have on alternative fuels, on clinker factor reduction, on recycling of construction and demolition materials, all of this is driving profitable growth, and all of this is actually helping us when it comes to margin expansion. And the third big topic is M&A. We have a great track record of value-accretive M&As where we are divesting less attractive markets. And at the same time, we are focusing, we are investing in the more attractive markets. Perfect example is the latest Pacasmayo, where the EBITDA margin in this year has been well above 30%, but we have divested some less attractive position.

So it is the product mix. It's the sustainability-driven initiatives plus value-accretive M&A. And when you combine all of this, this will continue to lead to margin expansion this year and also in the years to come. Steffen, maybe on the guidance for margin for the rest of the year.

Yes. Look, our guidance for margin for the rest of the year is that we will increase further. I said previously that we have a sequential improvement. We were still slightly down in the first quarter. Drivers for that were, of course, the weather in the first quarter. We are flat in the second quarter, very good performance on price over cost, very good performance on our pricing and on our cost performance. But there's an impact from divestments. So there's just a mix impact, and that has kept us flat for the second quarter, predominantly in Nigeria that had a very high margin last year.

And -- but that is fading out now. So the Nigeria divestment happened in August. So we're going into a more like-for-like basis on that, for the second half. And then all the other things will continue. And so we expect probably to be year-to-date 9 months flat and then full year positive, which means 2 good margin quarters to come.

So going back to pricing, Pujarini. So happy with what we have achieved so far for the rest of the year. Nothing extraordinary, but I do see some pockets of potential price increases in Europe, but more in Latin America.

Thank you. Then we take a question from Luis Prieto from Kepler Cheuvreux.

Just 2 left for me. Would you be able to break down the organic growth building block of your Q2 2026 recurring EBIT bridge between price over cost and volume to get a better idea? And then the second one, following up on Luis's question. If I recall correctly, you mentioned in Q1 that in order to achieve the top end of the guidance, there would need to be geopolitical stability. I understand that the strength -- there was strength in Q2, but wouldn't it have been more advisable to wait until 9 months that you mentioned earlier to have more visibility on the geopolitical front?

Thank you for your question, Luis. I'll take the second one, and Steffen can go with the first one. Yes, geopolitical factor is always a risk. But as I said, we had such a great momentum in H1. We started well in Q1 despite the weather impact, then we really accelerated in Q2. I mean you saw it, net sales above 6%, over proportional double-digit EBIT growth. So we felt the need to up our guidance a little bit. So in Q3, we will revisit this again, but it seems that once again, we have demonstrated that the business model that Holcim has is resilient across all market conditions, economical cycles, and we can overcome geopolitical uncertainty as well.

For price over cost, I -- Luis first, good morning. Good to have you. I answered to Elodie before the price over cost in the second quarter was to the tune of some EUR 90 million. I would say, let's say, EUR 20 million -- EUR 15 million to EUR 20 million of that was volume, then there was some positive contribution of JVs to the tune of 10% to 15%, and the rest is pricing.

The next caller is Martin Husler from ZKB.

I hope you can hear me. So I have a question regarding this margin guidance you just alluded to. I was wondering whether the margin improvement in the second half does also include Xella? Or is it only on recurring base? That's the first question.

Martin, our margin is calculated on all sales and all EBIT. So it's not an organic margin. It's a full margin. Organic is just -- for everybody on the call to make this very clear, sales growth is organic. EBIT growth is organic. The margin is a full margin. Cash flow is a full cash flow and EPS growth is a full EPS growth, okay? So the only 2 organic KPIs that we have in our reporting and guidance is sales growth and EBIT growth.

Okay. So that's rather strong message, I guess, because I would expect Xella, obviously, on recurring base to be a bit margin diluted. And then obviously, you have some consolidation effects in the second half probably as well. Maybe can you share what maybe margin or, let's say, what EBIT contribution we could expect from Xella in the second half? Obviously, you mentioned the sales side, but maybe on the EBIT side as well.

I said it before that the impact of M&A on our margin in the first half was rather one of divestments, right? So we divested Nigeria, which had a margin impact in the first half because that was a business with a very high margin. The inclusion of new businesses like our bolt-ons, we do bolt-ons to the tune of EUR 400 million to EUR 500 million each year is what we said, plus Pacasmayo plus Xella. The net of all of these will, of course, have a slight negative impact because all of these things come in new. They come in for the first year. They have integration costs. We don't break that out, but this is all included in our guidance.

So the positive price over cost, the positive performance we have elsewhere, and the positive contribution from M&A we did in previous years, that will help us to offset. So we give this guidance knowing that we offset the onboarding cost of the newly acquired businesses.

Okay. That's very helpful. Then the second question I have, maybe a bit housekeeping, but the delta between adjusted operating profit and the operating profit was rather a bit higher than what I was expecting, so maybe in the tune of CHF 150 million. What should we expect for the full year here?

That is a tune that is rather a bit elevated this time because of provisions taken in the first half or provisions released. So there are one-off items. There was also an impairment in the numbers in Argentina. We would expect that for the full year, the best guidance we can give you go with run rates of the past. So we manage these below the EBIT, recurring EBIT lines, we always manage them with big care, and we try to always keep them within the framework of what we're used to. Just so that you know, I personally approve every item that's booked below recurring EBIT. So we're managing these lines very closely. And the best assumption you can take is previous years.

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

Just most of my questions have been answered. So just 2 follow-ups. Firstly, on the M&A front. I mean, your net cash or net debt position of CHF 7.3 billion obviously includes some big one-off items for Xella and Pacasmayo. But looking forward, if you make CHF 2 billion of free cash this year, your net debt will come back to about CHF 5 billion, just about that, and that will leave you at around just over 1x of EBITDA in terms of leverage. And given CHF 1 billion of dividends and CHF 0.5 billion of bolt-ons, that still kind of leaves you close to CHF 2.5 billion, CHF 3 billion of balance sheet firepower for sizable acquisitions in the next 12 months. Would that be a fair characterization of how we should think about your balance sheet strength in terms of inorganic, assuming there are obviously good opportunities out there to buy?

And second question, I know you've mentioned the margin dilution at a group level was minimal. But just on the LatAm level, your margin was lower by just over 200 basis points, I suppose, because of Pacasmayo. Could you help us quantify that margin dilution percentage?

So Ephrem, very good on the balance sheet. If you're looking for a drop in treasury, we're happy to have you. That was spot on. We have about 1.6x leverage by year's end. After we paid for all the acquisitions, remember, we still want to do a mandatory tender offer for Pacasmayo. We still have the Colombian acquisition to close probably this year. So all of these things together will lead us to a debt leverage of around 1.6 by the end of the year. And you said it absolutely right. If we want to stay with our, let's say, 1.5 guidance for next year, then come back to that, we have more than CHF 1 billion -- on top of bolt-ons of CHF 400 million to CHF 500 million, we have another CHF 1 billion of firepower available. If we were to increase the debt leverage any further, we would even have more money available, which we could do for a short period of time.

So your estimates there were not bad. But maybe the simplest way to go about it, if we keep on doing bolt-ons, if we want to go back to CHF 1.5 billion, we have more than CHF 1.1 billion, CHF 1.2 billion available still for next year to spend.

On the LatAm margins?

Sorry, yes. The LatAm margins, yes, this is correct, what you said there as well. It was Pacasmayo integration. Pacasmayo came with a bit of a lower margin for the -- very good results, very good growth, but a bit of a lower margin, as you can also see in their reporting. So that had a mix effect and the onboarding cost of Pacasmayo. Those were the main drivers, plus some other M&A we did there, some other onboarding costs. Those were the main drivers for margin in Latin America.

But again, as I said before, we expect margin in Latin America to be above 30% and to always be above 30% because this is how we're managing the region, a bit like an investor manages a portfolio with different companies -- with different countries having different growth trajectories at different points in time.

Just to add on M&A, what Steffen said. Look, yes, we did close Pacasmayo, Xella. We have teams are working to close Colombia at the end of the year, beginning of next year, but we are not stopping. Pipeline is very healthy. We are seeing some promising targets. We are working on some very good deals. So we do have -- thanks to our very healthy balance sheet, thanks to our financial discipline, our excellent cash conversion of free cash flow, we will be able to do more of these value-accretive deals in the future.

Very clear. The next question is from Arnaud Lehmann from Bank of America.

Just a couple of follow-ups, if I may. On cash flow, the cash flow guidance is unchanged despite the small upgrade in the EBIT guidance. I appreciate there's a lot of moving parts, but -- and you've given us a net debt-to-EBITDA target as well. But can you help me even further? And do you have a view on working capital effects and CapEx for the full year? Because I'm actually struggling to get to 1.6, naturally would go a little bit lower than that.

My second question is just on Xella. You report CHF 458 million of sales for the first half. If I multiply that by 2, that's about CHF 920 million, which I believe was more or less what was delivered in 2025. So can you confirm that for now, Xella sales have been broadly stable this year? And do you believe the business can start growing even without a meaningful recovery in German housing activity?

Thank you for the question, Arnaud. I'll start, and then I'll hand it over to Steffen. First of all, on Xella, look, Q1 was tough for Xella. Yes, mainly weather-related conditions, especially in Western Europe. What we saw in Q2 was very promising. I still believe they can grow. Momentum is there. We are seeing positive signs in residential, as I said. And thanks to combining our forces, Holcim and Xella, we will be able to accelerate these activities on cross-selling, on specification selling, and also on system selling. So I believe they can and they will grow.

On the first question, I'll start with the CapEx, then I will hand it to -- I'll hand it over to Steffen. So we talk always more -- we talk about M&As. But the fact is we are investing heavily in value-accretive CapEx projects. And yes, this year, we have invested heavily. There is a brand-new flagship plant for us in Belgium that will be commissioned in H1, and most of this -- most of the payments is due this year. We're also building the new grinding station hub in London, Tilbury. We have made some heavy investments in alternative fuels. in Europe, but also in Latin America. I mentioned some of the investments we made in Australia.

So we are investing also in organic growth. And all these CapEx projects that we have, they have very attractive ROIC, which is well above -- currently above our current company ROIC. I'll stop here and hand it over.

Thanks, Miljan. So to do -- to deconstruct the components a little bit, good EBITDA growth. Also, you saw a slight softening of the FX headwind that, of course, helps, which is not even part of the calculation really. A bit of higher working capital, maybe to the tune of CHF 100 million because of good business development. Remember, our working capital is negative in most of our countries. So there's not so much room to improve further. But that will be totally compensated by the cash flow coming in with new acquisitions. Nothing to be said on taxes. So when you put all these things together, we're quite confident around the CHF 2 billion.

And why do we not narrow this down much more? I always say cash flow is a KPI that represents a period, but there's also a significant snapshot effect in it. So if I'm asked to do -- to close out a tax audit in some country, a several year tax audit and the administration wants the payment in December or in January, this could have a large swing factor on our free cash flow. This is why we're guiding around CHF 2 billion, but we're quite confident based also on the past, on the trajectory, where we're standing today when you look at the past years, we're quite confident that this CHF 2 billion is a very realistic guidance.

And the last question today comes from Harry Dow from Rothschild, obviously.

Just 2 questions from me. Firstly, just on the AI savings. I wonder if you could tell us whether any of that was booked in the first half? And maybe just some phasing around -- you might have given this before, but just remind us the phasing for this year and next through to 2028 of those savings?

And then secondly, just on the strategy on European roofing. I think you mentioned that there was a launch of a new roofing panel product. Just some more color on the strategy there. Should we expect more organic development or M&A-led? And also, I'm assuming that was sort of an insulated panel. Does that mean, potentially, there could be a future of insulated panels for walling solutions as well?

Harry, thank you for your question. On AI, the total target we communicated, CHF 200 million, net benefit by 2028 that this includes approximately CHF 20 million investments per year. We did not say the target for 2026, but I would expect this to be CHF 30 million to CHF 50 million. And then I would expect that we significantly increase and double up on this. Very happy with the progress, especially what we showed you this morning on -- in production side, with our Predict family. This is probably something that I, personally, are very connected to. It started 3.5, 4 years ago. I was in my previous role. And the whole momentum we -- once we set up the team, the scaling up, today, we have more than 1,500 machines already on AI platform, it's quite impressive.

So the speed, the scale, acceleration, what we saw in production, we want to replicate in commercial, in logistics, and to some extent, even in admin. On the roofing, well, roofing is relatively small business, a few hundred million. We did make some acquisitions, if you recall, ZinCo green roof. With Xella, we do have the opportunity to provide the system through our Hebel brand, but it could be more organically market, as I said, it's consolidated. There are not many opportunities for additional consolidation or M&A.

Perfect. Thank you so much, Miljan. This concludes today's conference call. Thank you so much for your interest in Holcim and your very active participation. Obviously, the Investor Relations team is more than happy to help you if there are any further questions. So please stay tuned. Have a wonderful summer. And with this, I hand over to Miljan for some closing remarks.

Once again, thank you all for joining us this morning. We were very proud to share with you our extraordinary performance in H1 and especially in Q2. We will continue to focus on our key strategic initiatives, combined with impeccable execution, I think we are looking forward to equally good H2. And I also take this opportunity to thank, now, 50,000 of my colleagues around the world for outstanding contributions to Holcim's NextGen Growth 2030 strategy. Once again, thank you very much.

Good morning, esteemed shareholders, dear guests, On behalf of the Board of Directors and the Executive Committee, I warmly welcome you to the Annual General Meeting at the OYM Hall here in Zug. I am delighted to welcome so many of you today. Thank you for coming. I would like to extend a warm welcome first to [ Mr. Andre Vicki ], Mayor of the City of Zug and [ Thomas Esi ], National Council. I'm also pleased to see that the members of the Board of Directors and the Executive Committee are present. In addition, I would like to welcome [ Martin Ebner] and our former Chairman of the Board of Directors, [ Beat Hess ]. I would also like to welcome Mrs. Sabine Burkhalter, who has once again been mandated by many shareholders to act as the independent proxy this year. I also welcome Mr. Jacques Pierres and Mr. Daniel Zaugg from Ernst & Young AG as representatives of our auditors.

Next, I will introduce my colleagues who are on the podium with me today. They will support me in reporting on the past year. They will also help me in answering your questions and in conducting the Annual General Meeting in proper fashion. I will start on the right side with our CFO, Steffen Kindler. Next to me on the right is our CEO, Miljan Gutovic. Then we have Lukas Studer, our Group General Counsel and Secretary of the Board of Directors; as well as Claudia Sender Ramirez, Chair of the Nomination, Compensation and Governance Committee of the Board of Directors.

Before we report in detail on the course of business, ladies and gentlemen, allow me to make some technical and organizational remarks. If you prefer to follow the Annual General Meeting in English, please select Channel 2 on your headphones. For German, please select Channel 1. In order to ensure an efficient process, we have, as usual, set up a speaker registration desk for all shareholders who wish to take the floor. The speaker registration desk is located to the left of the stage. Please register there and briefly state the agenda item you wish to speak about. We will then call on you during the corresponding agenda item and ask you to put your questions or give your comments. And finally, one last remark. Health and safety are our top priority and this also applies to today's Annual General Meeting. Please look around and take note of the nearest emergency exit. The emergency exits are marked with a green sign. In the unlikely event that we have to evacuate the building, we ask you to follow the instructions of the staff. And now I wish you a successful Annual General Meeting.

Now I'm pleased to give you an overview over the 2025 year for Holcim. Distinguished shareholders, dear guests, 2025 was a year of transformation for Holcim as we started to put our NextGen growth strategy in full execution, delivering on our vision to be the leading partner for sustainable construction. On behalf of the Board of Directors, I can share with you that we were all extremely committed and active in shaping our new strategy together, of course, with Miljan and his team. We were highly energized by this process, and the entire Board is excited about the growth and value that our strategy is already generating, thanks to its full speed execution. As a result, Holcim is stronger than ever today. NextGen Growth 2030 aims to unlock significant growth and value creation for people, customers and shareholders and indeed is already doing so as we generated strong profitable growth for the full year 2025.

To achieve such excellent results, you need a pool of talented people working with a deep sense of purpose to deliver across all market conditions and economic cycles. We have more than 45,000 dedicated employees, and they're all guided by experienced leaders. Here, our culture of empowered, decentralized leadership really comes into its own. I feel honored to be part of a winning team in my first year as Chairman of Holcim.

And I would like to take the opportunity today to express my gratitude to all employees for their dedication in delivering these fabulous results. I extend my thanks in particular to our CEO, Miljan, and his wonderful leadership team. They are doing a splendid job and so are our 428 empowered P&L leaders worldwide. They can all adapt swiftly to market opportunities and changing dynamics. Such dynamic and indeed visionary leadership is the driving force behind Holcim's year of transformation and the successful launch of our NextGen Growth 2030 strategy.

In 2025, Holcim once again confirmed its status as a benchmark for key topics such as sustainability and innovation as well as for financial performance and value creation. So congratulations to all my Holcim colleagues for delivering a great year. Thank you.

One thing that amazes me particularly about Holcim is this. Now we may have a 114-year history but we are always looking to the future. This is demonstrated by the NextGen Growth 2030 strategy, which anticipates and addresses the powerful megatrends shaping the future of construction to further unlock shareholder value. One such megatrend is population growth and urbanization with growing construction spend in cities and rising demand for housing and infrastructure. The world builds the equivalent of Madrid every week partnering with our customers, we make sure that cities can be built sustainably, whether it is for a new build project or energy-efficient repair and refurbishment.

Another mega trend we're seeing is the rising demand for modular construction with off-site production enhancing on-site productivity. At the same time, Holcim continues to embrace digitalization and artificial intelligence, AI both to drive innovation as well as to improve operational efficiency and enhance the customer experience. Likewise, Holcim has maintained its focus on building a nature positive future with our broad range of solutions that bring nature into cities thus improving biodiversity as well as the well-being of everyone. As the leading partner for sustainable construction, Holcim is best placed to capture the tailwinds from these global mega trends. We offer our customers a broad range of sustainable building solutions at scale to build next-gen cities. And if you look around this arena, you will see images of many building icons. These are special projects that display just those qualities and have been implemented with the latest state-of-the-art materials, both here in Switzerland and beyond.

Let me say a few words here about Switzerland, where Holcim has its headquarters and where we have such a rich heritage. Switzerland is a pioneering market for us in terms of sustainable building innovation. Switzerland is a place where we develop and scale breakthrough innovations with our partners before exporting them across the world. What sets Switzerland apart is its political stability, it's reliability, its exceptional public transport links as well as the high level of technical education. We are grateful for these benefits, which have helped us grow and innovate over the past 114 years to become the leading partner for sustainable construction.

It was here in Switzerland that Holcim developed the world's first circular cement. Susteno, which contains 20% recycled construction and demolition materials as well as many other breakthrough components ranging from 3D printing and lower clinker cement through to the Rippmann flooring system. Switzerland has also had the vision to advance landmark construction projects with Holcim, which will serve generations to come. You can see some examples on this slide. The new transport route through the Alps with the second Gotthard road tunnel, the Roche towers and the extension of the Kunz towers [ Zurich ]. All these projects materialized with Holcim's innovative and sustainable building solutions. These icons of construction you see here and around the arena are just a few of many and everyone at Holcim is proud of the key role we are playing in building the infrastructure, industry and buildings of the future. A future I should add that is happening right now already. So ladies and gentlemen, distinguished shareholders, let me briefly comment on the principles of our strong corporate governance.

A year ago, in May 2025, I took up my position as Chairman of the Board of Directors of Holcim with 6 years prior experience on the Holcim Board of Directors and 9 years as CEO of Danfoss, I'm channeling that commitment and know-how to give my best in my role as Chairman. In many years as CEO already, I have always been hands-on, spending time in the field and the same is the case at Holcim. The same applies to the Board of Directors. I have now moved to Switzerland. So I live here to be closer to the Holcim team and our headquarters. And I regularly spend time actively visiting Holcim's operations from Morocco to the United Arab Emirates and Mexico, where the Holcim spirit is a common thread.

One of my responsibilities, of course, is to ensure that our Board is made up of the most talented, diverse and experienced people possible. In 2025, we added depth welcoming Adolfo Orive and Sven Schneider, both highly accomplished business leaders, and we are delighted to have them as part of the Holcim team. And allow me, ladies and gentlemen, to make a comment regarding today's elections.

As I just pointed out, a strong Board of Directors is Holcim's top priority. I'm, therefore, pleased that all members of the Board of Directors are standing for reelection at this AGM. Subject to their election, Holcim's Board of Directors will continue to consist of 10 members, all of whom are independent.

In addition to ensuring sound and strong corporate governance, we ask the Board of Directors are also responsible for creating value for you, our esteemed shareholders. Over the past years, this is exactly what we have done and we have consistently delivered shareholder value through growth-focused capital allocation and attractive cash returns. 2025 was no exception. Thanks to Holcim's strong profitable growth, the Board of Directors is pleased to propose today an adjusted dividend of CHF 1.70 per share. The dividend is paid out of foreign capital contribution reserves, which means it is fully exempt from Swiss withholding tax.

Of course, alongside with our full year results, we also published our 2025 integrated annual report. And I would like to invite you to read for detailed information on our strategy, financial and sustainability performance governance compensation and more as well as Holcim's 2025 highlights.

To conclude, I would like to thank you all dear shareholders for your trust in us as well as your ongoing commitment to Holcim. Your investment creates the foundation for us to continue to deliver NextGen Growth 2030 and to drive further value creation in 2026 and beyond. Our CEO, Miljan Gutovic and our CFO, Steffen Kindler, will now provide you with a detailed overview of the results for the 2025 fiscal year. I wish you all a great Annual General Meeting and now pass the floor to our CEO, Miljan. Thank you.

Thank you, Kim. Good morning, everyone. It gives me a great pleasure to address you, the shareholders as we reflect on a successful 2025. With our NextGen Growth strategy in full execution, we are deeply grateful for your commitment to Holcim's growth and your faith in our strategy and management.

As Kim mentioned, the absolute highlight of 2025 was the launch of our NextGen growth strategy to be the leading partner for sustainable construction. Thereafter, we built momentum throughout the year, executing our strategy to achieve strong profitable growth. I will give you a brief overview of our 2025 results now and you will hear more details from Steffen later on.

In 2025, we delivered strong, profitable growth and achieved all our targets. As you can see on this slide, we accelerated our recurring EBIT growth in '25, at 10.3% in local currency we exceeded the top end of our guidance. Our industry-leading margin increased by a further 80 basis points to 18.3%. Margin expansion was driven by our high-value strategy, which includes scaling up our sustainable offering, continuously exercising strong cost discipline and enhancing operational efficiency. We generated CHF 2.2 billion in free cash flow with a record cash conversion rate of 54%. Due to our excellent results and the confidence in the outlook, our Board of Directors has proposed a dividend of CHF 1.7, which is not subject to Swiss withholding tax, representing a payout ratio of 53%. So as you can see, Holcim's NextGen Growth 2030 strategy is in full execution.

Since the launch in March '25, everyone at Holcim is committed to deliver a superior performance and value creation for our people, customers and of course, our shareholders. We are focusing our efforts on the 4 strategic drivers of NextGen Growth 2030, which I will cover briefly now. First, we are investing in the most attractive markets through organic investments and value accretive M&A. In 2025, we made acquisitions and continue to generate profitable growth benefiting from the strong fundamentals.

Second, sustainability drove profitable growth in '25 as we scaled sustainable offering powered by premium brands from ECOPact to ECOPlanet. We accelerated initiatives for decarbonization as well as circular construction using our ECOCycle technology while building a nature positive future and reducing freshwater withdrawals.

Third, we are expanding high-value building solutions from foundation and flooring to walling and roofing systems, offering integrated end-to-end solutions across the built environment.

Fourth, we achieved our success in '25, thanks to our deeply embedded performance culture and value creation with our engaged employees focusing on the impeccable execution of our strategy.

And of course, health and safety is our absolute top priority. In 2025, we made significant progress focusing our efforts on achieving 0 harm. With our NextGen Growth strategy, we are delivering superior performance and margin expansion enhancing our lead positions, scaling our sustainable operations [ for our ] premium brands [indiscernible] high-value. As you saw in '25, we have [indiscernible] accretive M&A, the focus on the most attractive markets. All of this is driven by our deeply embedded performance culture. Let's look at this area in more details.

Customer demand for our premium brands, ECOPact and ECOPlanet continues to grow, and they are being used at the scale to build city-shaping projects across the whole world. For example, CityWave in Italy is being built with ECOPact made from ECOPlanet that is even more sustainable due to its use of calcined clay in place of energy-intensive clinker. And the Mohammed VI tower in Morocco is built with ECOPlanet and our energy-efficient insulation foam, Airium.

We are also seeing a strong growth for ECOCycle, our circular technology which we are using to recycle construction demolition materials for using products ranging from cement and concrete to aggregates with no compromise on quality and performance. One landmark recent project built with ECOPact and ECOCycle is Recygenie, a 220-unit social housing project near Paris, France. As the world's first 100% recycled concrete building, all its components, cement, aggregates, even production water were recycled. Overall, using [ ECOPact, ECOCycle ] on these projects saved more than 6,000 tonnes of primary materials. This project demonstrates what we can achieve by working with forward-looking cities to evolve building standards and norms.

Circular construction is a driver of profitable growth, and we are advancing it to build cities from cities and drive profitable growth. In 2025, we made 3 acquisitions and invested organically to grow our circular construction hubs to a total of 109 as we continue to establish them in all the major metropolitan areas where we operate. Over the same period, we grew our net sales from circular construction to close to CHF 500 million, well on our way to our CHF 800 million target for 2030. Organic investments make up an important part of our broad focused capital allocation and in 2025, our capital expenditure amounted to around CHF 400 million. Here, you can see some recent examples that give you some ideas of our priorities.

State-of-the-art cement plants, alternative fuels, grinding investments, calcined clay production and expanding in building solutions in Australia. In Obourg, Belgium, we are in full execution of the first phase of our GO4ZERO carbon capture project, which involves the installation of the next-generation kiln to make this the most efficient state-of-the-art plant in the industry. We will continue to accelerate our long-term CCUS investments. All of these growth investments have very attractive returns and payback.

Next up is value-accretive M&A. We closed 21 value-accretive transactions in 2025 of which 18 were acquisitions and 3 divestments. We made 9 acquisitions to strengthen building materials and 9 to expand high-value building solutions. In Building Solutions, we are growing our addressable market, both organically and via M&A.

In October, we signed an agreement to acquire Xella, a European leader in sustainable and innovative walling systems. Xella is a home to premium sustainable brands, including Ytong, Silka, Hebel and Multipor and is a pioneer in digitally supported construction processes. This strategic acquisition, which we expect to close in H2 this year is a milestone in our vision to be the leading partner for sustainable construction, accelerating Holcim's high-value building solutions in line with our NextGen Growth strategy. Xella will give us a growth platform in a highly attractive walling market worth more than EUR 12 billion with cross-selling and system selling opportunities. I look forward to welcoming Xella's over 4,000 employees to the Holcim family.

In March, we completed the acquisition of majority stake in Cementos Pacasmayo, a leading Peruvian producer of building materials and building solutions and warmly welcome another 2,000 employees. This synergetic acquisition will expand Holcim's presence in Pari and accelerate our growth in Latin America, in line with our NextGen Growth strategy.

Artificial intelligence is transforming the industry, and Holcim is accelerating and scaling up initiatives to unlock incremental value and growth, improving performance and driving customer services. We are unlocking its benefits focusing on 4 core areas: production, logistics, commercial and administration. Holcim will deliver benefit from AI of around CHF 200 million by '28 reflecting both cost savings and cost avoidance. To achieve this, we will make growth investments of around CHF 20 million per year. We are deploying 38 large-scale AI initiatives across our business from our Holcim M-Predict intelligence for optimizing production processes and equipment performance to our Holcim Foresight tool that optimizes our transport fleet and network utilization.

Another example include Holcim+, our AI-powered platform that offers customers a 24/7 service with real-time tracking and demand forecasting. And our internal career hub tool matches Holcim's people with business opportunities to create value and to nurture talent.

Finally, a note or two on our deeply embedded performance culture. You can see some really impressive statistics on this slide. Ultimately thought our results don't come down to statistics. They come down to the people who work for Holcim. We want Holcim to be the best workplace where talent is nurtured, employees are engaged and innovation is encouraged. Our commitment to this vision is reflected in Holcim's recognition as a global top employer by Top Employers Institute in 2025 and again in '26. Through Holcim University, our in-house business school, we provided almost 3,000 of our people with best-in-class training in '25. With our focus on accountability and empowerment through the Holcim Spirit, our more than 45,000 employees are delivering value in all economic cycles and market conditions.

As we continue to go full speed on NextGen growth, there are many external factors influencing our markets that we cannot control, such as the evolving geopolitical landscape. What we can do is to control the controllables and eliminate complacency wherever we find it. We did this successfully in '25, achieving best-in-class performance an industry-leading margin of 18.3%. And we have consistently done so through the period that includes COVID, energy crisis, challenging market condition and carbon price volatility. We are confident that we can keep the same momentum on our NextGen Growth execution and performance in 2026. This is why our outlook remains positive, underpinned by the global megatrends that are central to our high-growth strategy.

So what is our outlook? Net sales and recurring EBIT growth, fully in line with our NextGen growth targets, 3% to 5% organic net sales growth, 8% to 10% organic recurring EBIT growth. Further increase of our recurring EBIT margin. Free cash flow before leases of around CHF 2 billion and more than 20% growth in recycled construction and demolition materials.

These shareholders, as Kim mentioned, 2025 was a transformative year. And as a result, Holcim is stronger than ever. We are grateful for your commitment and energized by our partnership as we continue our shared growth journey together. Now I will hand over to Steffen, who will cover Holcim's excellent performance in 2025 in greater depth. Thank you.

Thank you, Miljan. Good morning. ladies and gentlemen, from my side [Foreign language]. I would also like to extend a warm welcome to everyone who is attending at our AGM today, both online and those in person here in Zug. As Miljan said, Holcim achieved excellent performance in the 2025 fiscal year. Our results mean that we are well positioned for future success. Today, I'm delighted to share with you how we are creating shareholder value at Holcim consistently and reliably. Since Miljan has just covered many of these highlights, I will pick up on just a few.

Let's start with the over-proportional growth of our recurring EBIT, earnings before interest and tax which was up 10.3% for the year. This exceeded our 6% to 10% long-term guidance and led to a margin increase of 80 basis points to an industry-leading margin, as we call it, of 18.3%. Let me remind you this is the ratio between the EBIT and the sales. Such progress is a confirmation of the quality of our commercial execution, operational excellence and strict cost discipline. These qualities are also reflected in the free cash flow of CHF 2.2 billion and the EPS growth of 5%. EPS is earnings per share.

Let's now look at our profitability in more detail. This chart shows that we have consistently expanded our recurring EBIT or earnings before interest and tax, which is now well above CHF 2.8 billion along with our industry-leading recurring EBIT margin and now I'll just like to explain. Our margin expansion is driven by our high-value strategy as we scale up our sustainable offering, while keeping a strong focus on cost discipline as well as operational excellence. Other factors for this profitable growth include decarbonization and circular construction underpinned above all by our strong culture of performance and value creation. Our disciplined financial management extends beyond the operational performance, which is measured by the recurring EBIT and it applies to the entire profit and loss statement, including items like financing cost and nonoperational expenditure. This ultimately leads the growth of our earnings per share, or EPS, which is up 5% in Swiss francs from 2024. You can see that by all bottom line measures, we are generating superior profitable growth.

Next, you can see the development of our free cash flow in 2025, which is well aligned with our long-term target of around CHF 2 billion. In the last 4 years, Holcim reliably delivered superior free cash flow with a cash conversion rate consistently above 50%. Cash conversion means to term balance sheet profits into cash. That's the ratio of free cash flow to EBITDA. This is driven by a strong EBITDA, the profit before interest, taxes, depreciation, amortization, our focus on working capital, financing costs and other cash-relevant items.

Last but not least, we have a disciplined approach to capital expenditure. We prioritize those projects with high returns and ensure budget discipline.

Let me now talk about the balance sheet. Our net debt leverage ratio closed at 2025 had a comfortable 0.9x. This will provide Holcim with sufficient financial flexibility to execute the acquisitions that we have announced. It will also give us the ability to navigate all economic cycles while continuing to invest in profitable growth through CapEx and M&A and offer attractive shareholder returns. While debt leverage might increase in 2026 due to the acquisitions, we remain committed to a healthy balance sheet and a net debt leverage of below 1.5x over the long term with an investment-grade credit rating.

Holcim is investing for growth, together with our disciplined approach to CapEx, while delivering steadily increasing profits, which result in increasing ROIC, return on invested capital. Hence, our return on invested capital continues to tick up year-on-year, reaching 11.2% in 2025 [indiscernible] holding capital. This represents a payout ratio of [ 63% ] at the post-tax dividend yield of [ 24% ] after tax which places us in the upper third of the SMI companies. Our culture of performance and value creation is also reflected in our share price. Holcim was the best performer in the SMI 2025 and the next slide outlines our growth-focused capital allocation in 2030.

We would like to thank you for your sustained confidence in Holcim, and we look forward to extending these successes in the future. Thank you.

Thank you, Miljan and Steffen. Dear shareholders, on behalf of my 45,000 colleagues, I'd like to extend my thanks to -- for your trust in Holcim. You have a great share in the successful development of Holcim over the past years, your trust, your support and your commitment are the fundament on which we want to continue building.

Ladies and gentlemen, you now have the opportunity to ask questions and we're happy to answer all of them. Some persons have already stepped up to the speaker's desk, and I will call upon the speakers to step up. Please introduce yourself with your name and your place of residence. Please be brief. If we have too many speakers or if speakers speak for too long, I would have to limit the speaking time. We will call upon speakers on the respective agenda items. And I'd like to draw your attention to the fact that this assembly is being recorded on video and it's being broadcast in a web stream. With this, let's get started with the questions, please.

Our first question comes from Mr. Kaufmann from Ethos.

Dear Mr. Chairman, members of the Board, dear fellow shareholders. I'm speaking today on behalf of the Ethos Foundation representing more than 250 Swiss pension funds. Let me start by congratulating the management team and thanks to the 45,000 employees for the very good results achieved in 2025. I would also like to thank the Board and especially the sustainability team for the very good dialogue we have year after year.

I would like to address 3 topics this morning. The climate vote, our concerns about the pace of cement decarbonization and executive remuneration. Let me start with the climate vote.

We regret the Board decision to discontinue the separate vote on the climate report. Given the critical importance of climate change for Holcim's business and for the long-term value of our investment, we believe that distinct vote on climate strategy and sustainability reporting allow us to send differentiated signal on topic that, of course, are connected, but require a different response. We have noted the Board commitment to all the climate vote periodically or in the event of material change in strategy. We ask the Board to give this commitment greater clarity by pledging to hold such a vote at least every 3 years to ensure sufficient board accountability on this material topic.

Dear shareholders, let me now turn to what I believe is the most strategically important question for the long-term value of this company, the pace of cement reformulation. Ethos acknowledges the progress Holcim has made in reducing its greenhouse gas emission, and we recognize that the 2030 target appear both credible and primarily driven by product reformulation, but we have serious doubts about how the 2050 targets will be met. 44% of the plan Scope 1 and 2 reduction by 2050 rely on carbon capture, usage and storage. These technologies have not yet demonstrated their viability at industrial scale and betting nearly half of our long-term climate strategy on them is a risk that ultimately fall on us to shareholders. We believe the answer lies in a far more ambitious reduction on the clinker content in cement and the technology to do so already exist. Holcim's own annual report states its intention to reduce the clinker factor from 70% today to 65% by 2030. That is just 5 percentage points over 5 years. Independent analysis show that the pathway consistent with 1.5 degree would require reaching about 50% clinker ratio by 2035. Dear shareholders, the long-term interest of the room is with a quicker shift, a faster transition, protect asset values, reduce regulatory risk and positional Holcim ahead of competition.

This brings me to the definition of low-carbon cement. Holcim qualifies ECOPlanet as a cement reducing emissions by at least 30% compared to CEM1, so the most carbon-intensive cement on the market. This is a low bar. At the time when Holcim has aligned its nonfinancial reporting with the EU taxonomy, we asked, why not also align the ECOPlanet definition with the carbon intensity threshold set by the same taxonomy. This lead me to a broader structural concern, one that goes to the heart of whether Holcim's public commitment are matched by its actions behind closed door. Holcim is an active member of CEMBUREAU and GCCA, the two main European Cement Industry Association. This association exerts a decisive influence on the development of standards which governs what cement can legally be sold in Europe. Dear shareholders, independent analysis have shown that this association are slowing the transition towards performance-based standards. standards that would open the European market to clinker-free cement such as Alkali-activated cement. These alternatives already exist, are commercially available in Australia and U.S. and emit 75% to 90% less CO2 than the [ potent ] cement that Holcim selling. Europe will not have a harmonized standard for them before 2030 at the earliest due partially to the pressure of the association. We asked about directly how the position Holcim defense within CEMBUREAU and GCCA are consistent with its public climate commitment. And if performance based standards were adopted, enabling clinker-free cement to compete freely in Europe, at which pace, Holcim clinker [ cleans ] could become stranded assets. Dear shareholders, this is a material financial risk, and we are entitled to know how it is being managed.

Let me close with executive compensation. Last year, Ethos raised serious concern about the excessive leverage embedded in Holcim's performance option plan. Our analysis shows that former CEO, Mr. Jenisch, was able to realize close to CHF 40 million through the exercise of option received in 2020, a leverage effect of more than 30x the grand value. Those figures have since been confirmed in the 2025 annual report of not Holcim but Amrize. Amrize has disclosed full disclosure of realized remuneration option exercise. That information remains entirely absent from Holcim's own remuneration report. That is not acceptable. And the option granted in 2025 carries the same structural risk. On the reasonable market scenarios, the leverage effect could again generate realized remuneration that bears no meaningful relationship with long-term value creation. Our position is clear. The performance option plan must be discontinued. It does not reflect the long-term vision this industry demands. Dear shareholders, in a sector where the industrial transformation unfold over decades remuneration structure should reward patient sustainable value creation, not short-term share price movements. We, therefore, ask the remuneration committed directly, is the board prepared to commit to discontinuing the performance option plan for 2026 and to presenting full realized remuneration included the value at exercise a vested option in next year's remuneration report? The 3 topics I have raised this morning, climate ambition, lobbying strategy and remuneration design are connected by a single thread, the long-term interest of the company, the stakeholders and us, the shareholders. Thank you for your attention.

Thank you very much. And we were in contact prior to this AGM, Mr. Kaufmann, as you remember. You asked a long list of questions that were highly detailed and I'll take them on one by one. Let's begin with the climate vote, your first comment. In our climate report and our nonfinancial reports were integrated and united to our sustainability reports. This is voluntary and in agreement with EU guidelines. There's transparency and there's consistency in our sustainability report in our business report, 2025. We had a more detailed reporting even shareholders are further in a position to vote on the sustainability report, they will be able to approve of it. And I can add that there will also be further regular votes on climate issues. And I hope I have made clear that this is so.

And on your second question then. About our sustainability offer. What I can tell you is this. Our offer in matters of sustainability is by far the broadest, widest in the industry. And together with ECOPact and ECOPlanet, we are further expanding this offer. Sustainability is a driver of profitable growth. It is core of our strategy at Holcim. And we're fully committed Obviously, this is tailored to local markets, and we have a CO2 reduction of at least 30% with these brands. But they can do more, far more. Many of you are declaring their CO2 -- we're declaring our CO2 footprint in our reporting. We're reporting in line with EU taxonomy and dividing by their criteria. I would therefore say that sustainability is at the very heart of our strategy, and we're fully committed to achieving our goals there.

On your third question then. Obviously, you've asked a question at a very detailed level. And I would say we should keep the dialogue open, obviously, where we can address all these details. These details are a bit difficult to address at this AGM. But Holcim is committed, actively committed to develop political framework conditions to achieve the [ 1.5 ] target of Paris. We're fully committed to drive this goal, as you say, Holcim is a founding member of GCCA, and it is also a member in other associations also CEMBUREAU. Both associations have a time line to achieving net zero by 2050 in accordance with the Paris Agreement. Holcim are actively verifying the alignment of the positions in these associations that have an impact on the company. You can rely on the fact that we're actively cooperating there. And we are of the opinion that we are on a good path there.

Your fourth point on structural performance options. What can I say? That we have very strong performance culture at Holcim. And over the past years, we have generated value added for all our stakeholders with a focus on total shareholder return, the structure of performance options are geared to NextGen growth strategy and targeted to reaching [ shareholder ] value goals. The leverage is a necessary feature. It's not deficiency because it helps achieving long-term shareholder values. On all compensation matters, we follow strictest guidelines that are also confirmed by our auditors. I would conclude by saying that our compensation approach is fully in line with our NextGen Growth strategy 2030, attempts to achieve maximum long-term shareholder value as we have done in the past.

With that, thank you very much. And again, we are always open for continuation of our dialogue on these important issues.

Next question will be asked by Mr. Van Pernis from Actares.

Ladies and gentlemen. My name is Frank Van Pernis from Bassersdorf in Switzerland. I take the floor on behalf of Actares, Swiss Association for shareholders favoring stronger corporate responsibility. Our shareholders' association is pleased to note the good results of Holcim's business year 2025. Despite a decline in profits, the share price rose significantly in the second half of 2025. It fell back somewhat at the beginning of 2026, but appear to have recovered in recent weeks.

I'd like to speak about the legal situation. During recent years, Holcim has shifted away from low-margin cement production into building materials with better margins. The sale of cement plants, mainly in Asia, the spin-off of Amrize in the U.S.A. and the acquisition of new companies helped to improve the margins, except for the sale of the Nigerian business. This leads me to my first question. Has Holcim been able to get rid of all the skeletons in the closet acquired through its merger with Lafarge? Are there still any risks of getting involved in legal complaints for instance, like the Syrian problems of Lafarge?

The products of Holcim. Holcim is proud of those buildings constructed with its new products. My question is, what is the life expectancy of these products? And how does it influence the building industry? It would, of course, be a waste if these buildings had to be replaced at [ two shirts ] time intervals, considering the amount of gray energy invested in them.

As for social responsibility, it doesn't extend only to Holcim shareholders, its employees and its customers, but also to many other stakeholders. Actares approves the projects initiated to accelerate the process of CO2 use and storage that underline Holcim's efforts on behalf of the environment for the air, for the earth, for water, for local communities. The earth, firstly, due to biotope destruction, sand and gravel extraction, it becomes necessary to renature the sites as soon as they are abandoned. I just would like to mention the Haller Park in Mombasa in Kenya and the renaturing, accomplished around the village of Huntwangen in Switzerland as projects that show the way. Does Holcim have more projects like these in store in other parts of the world?

As for the year, Actares strongly encourages Holcim to control and reduce air pollution caused by dust and CO2 and to switch to alternative fuels like waste products. As for water, attention should also be paid through water consumption and ground water level as well as to waste, water treatment and recycling.

And last but not least, local communities. These have to include Lori traffic improvement of road safety, noise reduction, but also engagement on behalf of local communities affected by Holcim activities.

And then we have the -- still the problem of the compensations. It's a sociological problem that remains to be solved, the high compensations paid out to members of the Board and directors. You have surely heard of the Gini coefficient. If you compare the average salary of a manager to that of the CEO, it might take a manager his whole working life to earn as much as the CEO earns in one year, not to speak, of course, of workmen, drivers and for small shareholders, this is difficult to understand. Therefore, my question, the compensation committee is competent to avoid excessive salaries and bonuses. It wouldn't be a good policy for Holcim's reputation in the sense of worldwide corporate responsibility to act as a pioneer and moderate its compensation and bonus budget to a fair level. Thank you for your attention.

Thank you very much for your comments and for your questions, Mr. Van Pernis. First of all, I'd like to thank you for the praise, the appreciation for the team of Holcim which indeed has performed excellently in 2026. And I'm happy for your appreciation of this. Thank you.

On your first question then, as to Lafarge. I'd like to state that this case refers to the behavior of Lafarge 10 years ago prior to the merger with Holcim. At the time of the merger, such behavior had been kept silent by Lafarge purposely so. To address your question, Holcim really has a very strong corporate culture, and it acts according to highest moral standards without any compromise. Lafarge will further address -- have to address this. Holcim will be acting responsibly and the ongoing procedures will go on, and we will accompany them.

On quality then. You asked as to the quality for sustainable products. You asked about life expectancy. What will it look like in the future? Well, let me say the following on quality. We do not make any compromise with regard to the quality of our products. We keep up the quality throughout the entire range of our products. All our products have exactly the same resilient solidity as all other products. There is no compromise here whatsoever. And that is one of the reasons why we have seen such a strong growing demand by our customers for these products, we can fully trust in the life of these products, and therefore, in the future of these products. We take our responsibility very seriously. And we -- the results we achieved are indeed benchmarked.

Alternative fuel has been -- have been used to 39%. We have reduced water consumption by 25% and this is also industry-leading. And this is also true with regard to communities. We annually invest massively in our neighborhoods, EUR 18.4 million in 2025 for education, first of all, then also accommodation and health. These are investments that are not just a transformation we deliver also in terms of figures, that, Mr. Van Pernis, we're fully committed.

On compensation then, I repeat what I said before, when I replied the question raised first, but still we're happy to take your contact details to continue this discussion separately. I think you will understand why I do not repeat my answer from before.

With that, we move to the next question. Next speaker is from Mr. [ Nyar Ardenti ] from HEKS.

Chairman, Mr. Fausing, members of the Board of Directors, distinguished shareholders. My name is [ Ivan Nyar Ardenti ] from Fribourg in Switzerland. I work at HEKS, which is the charity of evangelical churches in Switzerland. On the 17th of December 2025, the Cantonal Court of Zug passed a historic ruling, it admitted the climate complaint of the people from the Pari, the Indonesian Island, Pari against Holcim. The claim is admitted on all accounts. Just to remind you, the claimants ask for compensation from Holcim for climate damage based on Holcim's contribution to global climate change, number two, a reduction of Holcim's CO2 emissions compatible with the objective to limit global warming to 1.5 degrees. And number three, financial contribution to flood protection measures on the Indonesian Island of Pari. The Cantonal Court of Zug confirmed with its ruling that climate change isn't exempt from legislation. These people have the right to claim their right at a court, the ruling of the Cantonal Court of Zug rejects Holcim's position that climate protection claims need to be dealt with on a political level only and cannot be dealt with on a jurisdictional level. That's a quote from the law and they are a complement to the political discussions. They do not replace this political discussion. This is a wake-up call, ladies and gentlemen, around the world, calls are increasingly willing to investigate the responsibility of international companies. Holcim is one of the biggest CO2 emitters worldwide. And therefore, for all shareholders, this is not just a legal issue, but also a moral and strategic challenge. Holcim advertises its net zero objective for 2050. But doesn't really have a path to reduce CO2 emission that is really in line with this 1.5-degree objective. And Holcim refuses to comment on the impact of CO2 emissions in the past since 1950. Holcim has emitted 7.5 billion tonnes of CO2 into the atmosphere, which is twice as much as Switzerland and since the industrialization began these massive CO2 emissions by Holcim contributed to the damages claimed by the 4 Indonesian claimants.

So my question to you, Mr. Chairman, are as follows. What is Holcim BOD's position on the ruling of the Cantonal Court of Zurich to admit the claim? You will probably say, you cannot comment on a pending case. I'm asking you a second question. Do you recognize that Holcim as a global cement manufacturer bears responsibility for the global climate crisis and damage to our climate and therefore, ought to contribute to compensating for these climate damages? Thank you very much for your answers.

Thank you very much, Mr. [ Nyar Ardenti ]. First of all, let me tell you that climate change is a global challenge. It's a superior challenge. And I think our position is also clear. It is the legislator's mandate to regulate things such as CO2 emissions. And it is not the mandate -- and as we see it, you just gave the answer yourself, it's not the mandate of an individual court. We live in a democracy, and we need to clarify this issue as part of this democratic process. This is the position that we stand by.

Unfortunately, this now is a pending case, which is why we cannot give you any detailed information. But I would still like to comment on it briefly, if I may. Holcim attributes top priority to sustainability in its business. And if you want to have an external view on our sustainability activities, you will see that we have a global leader position confirmed by independent sustainability ratings, CDP, for example, and other rating institutions. So I can assure you that sustainability is at the core of our strategy. It was yesterday. It is today, and it will be tomorrow. But I cannot comment on the specific case. I'm really sorry to say that we now have a pending case here, so I refuse to comment. Thank you very much.

The next question comes from Mrs. Kalman from Chinox AG.

Chairman, Distinguished shareholders, my name is Petra Kalman from Budapest, Hungary. I am a shareholder of the Swiss Chinox AG which in itself is a shareholder of Holcim, and I also represent HEJoCSABA, the Hungarian cement factory. For many, many years, we have been speaking at every Annual General Meeting and have reported about the outrageous behavior of Holcim at the Hungarian cement factories about the disappropriation of shares of the Hungarian stakeholders, about the exclusion of Hungarian stakeholders from their possession in the factory about preventing legally imposed reposition of the original state about the decade-long operation of the factory owned by a third party without paying any royalties. We have reported about realizing profits in the millions, about the exploitation and cutting of the factory, about preventing an extension of the factory by preventing the new operations in the factory, about evasion to pay damages, about preventing to pay damages for 3 decades.

Ladies and gentlemen, we have presented, disclosed these facts. And the history is well known. Two years ago at the Annual General Meeting, we very explicitly mentioned the wrongdoing and explained that Holcim has misused or abused it's leading position to set up a network of corruption, which extends to all areas of power and has as its objective, to undermine the operation of an independent Hungarian cement factory. Now this is a process which is going on for 32 years, outrageous behavior going on for 32 years. Holcim felt it was necessary to file a criminal lawsuit against our company, Chinox and against me personally. At the last Annual General Meeting, one year ago, I reminded everyone of my previous speak and the -- and then informed the Annual General Meeting about all the details. The result was the same. Holcim felt unhappy about the corruption case and again, placed a -- or filed a lawsuit at the Cantonal Court, a criminal lawsuit. These proceedings have been going on for two years. However, corruption, as we know, is not something done by individual perpetrators. The land slide, a position victory in Hungary will perhaps speed up the process that Holcim's partners will actually mention its core collaborators and uncover the wrongdoing and finally bring this case to a conclusion. Thank you very much for your attention.

Thank you, Mrs. Kalman. For more than 20 years, you use the AGM to make wrong claims in front of the shareholders. And in the last two years, you went as far as to criticize us for corruption. As you just did, again. On behalf of Holcim, I can tell you, clearly, we do not accept these claims. They are wrong, and they damage Holcim's good reputation. It's just not okay for you to say such things, and we will continue to fight against such claims. You can be sure about that. Thank you.

Thank you. We'll move on to the next question, which comes from Mr. Maloone.

Ladies and gentlemen, my name is Thomas [ Maloone ] from [indiscernible] and I speak as a private shareholder. I have no written speech prepared. Now we heard speeches about big issues. Compared to that, I just have some minor points. First of all -- for the last couple of years, what they have achieved in every sense. My next point is a comment, not a question. The voting material that was sent to us, my feeling is this, there is a lot about the statutory proceedings of the Annual General Meeting, but something is missing, actual figures for shareholders to prepare about the business operations as just presented by the CFO, but also specific figures on compensation, which is a separate item. The previous speakers have picked up on compensation, time and time again. And I have to say on Swiss average for an industrial company's compensation is very high at Holcim. And other companies, all the Swiss companies with international operations manage to actually put the figures into the voting documents and comment on them, which helps everyone, the shareholders present at the meeting to prepare properly for the votings. And it shouldn't be the shareholders' duty to go and look for this information. You have an annual report, which is 250 pages is strong. And on Pages 174 or 148, we have all the compensation. Wouldn't it be possible just to present this as a slide because you know in advance, this is going to be a controversial point. So why don't you communicate these figures openly and actively?

Thank you very much, Mr. [ Maloone ]. We take note of your comments. Thank you also for the words of appreciation you said at the very beginning. If it's okay with you, let me propose the following. Just give us your contact details at the registration desk, and one of our team members will contact you so that we can make sure we take note of all of your points. Thank you very much.

Are there any further contributions?

I think there is somebody approaching the [indiscernible]. Mr. [indiscernible], I think this is, a well-known face.

Chairman, ladies and gentlemen, shareholders, [indiscernible]. I was really annoyed to hear what the representative from HEKS had said that funds were misappropriated. Do you really believe in what you're saying? Do you believe in what you're saying to make claims against companies? HEKS is a charity of protestant churches, whether protestant or catholic, you also get money from companies and you accept [indiscernible]. You are heretical and this is what I don't like. HEKS, the charity of protestant churches or catholic churches, I don't mind, you have plenty of work to do to look into your own books to try and find skeletons in your own closet. What did we do well over the past few years and what mistakes did we make? I don't need to mention what news reports put forward on the churches, be it protestant churches or Catholic churches. And now you take the money you get from companies to misappropriate these funds to the benefit of your belief or your faith. As you just heard, Holcim does a great deal. And Holcim doesn't take any prisoners, it makes no compromises. As the Chairman just said, when dealing with sustainability and environmentally friendly products. But no, what does HEKS do? It takes the money it gets from donations and misappropriate them. And also takes the money from others and isn't respectful enough with regard to the funds from companies and then attacks those companies it takes money from. With time, I'm convinced that the catholic churches and protestant churches will no longer get any money from company. In certain continents, this is already the case. And I hope that such people will rethink what their actual job is and stop doing things that are inappropriate. Thank you very much.

[Foreign Language]

Any other speakers? This is not the case. No further requests to take the floor. With this, we move on to the individual businesses.

In accordance with our Articles of Association, I will chair the meeting. I've appointed Mr. Lukas Studer as Secretary. I will now formally make all necessary statements. Today's AGM was convened in accordance with the law and the Articles of Association observing the statutory 20-day notice period. The invitation was published on April 13, 2026 in the Swiss Official Gazette of Commerce and it was also available on our website. Shareholders registered as entitled to vote and the Holcim AG share registered were personally invited. The agenda contains all items required in the ordinary course of business. No requests to add items to the agenda within the meaning of Article 11, Paragraph 3 of the articles of association were submitted. On behalf of the independent proxy, I hereby inform you that in accordance with Article 689c of the Swiss Code of Obligations should provide the Board of Directors with a general overview of the instructions received on May 9, 2026. Electronic voting is also planned for this year. Upon entry, you received a voting device. Before we now move to the individual agenda items, I would briefly like to explain to you how to use the voting the advice.

Press the green button on top to vote, yes. Press the red button at the bottom to vote no, press the yellow button in the middle to abstain. When we move to electronic votes, all 3 buttons will light up a few seconds before the vote begins. This should be the case with your device right now. If this is not the case, please press the top button for 2 seconds. If the buttons still do not light up after 2 seconds, please stand up and raise your hand. Our staff will be happy to assist you. Also, if any problems were to arise during the meeting. As soon as the countdown begins on the screen, please cast your vote. The results will be displayed on the screen once they've been tallied. Counting Committee has recorded attendance and I ask that the results be displayed.

We have decided on vote counters also. You see their names projected. They would be acting in their function if the -- if any issues were to arise with the electronic voting and they also assist you should you have any problem with your voting device. I'd like to point out that all resolutions of today's AGM must be passed by a majority of the votes represented. Let's now begin with the individual businesses.

First on the agenda is the management report, the consolidated financial statements and the annual financial statements for 2025 of Holcim AG. The integrated annual report '25 was sent to you upon your request. It's also been available on our website since February 27. Miljan Gutovic and Steffen Kindler today provided additional comments on business performance and outlined the outlook. Our auditor, [indiscernible], have audited the consolidated financial statements. The report on the statements can be found starting on Page 82 of the financial reports, the report on the annual financial statement starting Page 97 of the financial reports. Representative of our auditors informed us prior to the start of this meeting that they have no further comments to make. The Board of Directors, therefore, proposes that the management report, the consolidated statement and the annual financial statements of Holcim AG 2025 be approved. Any comments on this?

This is not the case. We, therefore, will move to the vote. Time is running now. Thank you.

[Voting]

Thank you. Vote is closed. Time is up. We are waiting for the result. Take note of the fact that you've approved of the management report, consolidated statements and the annual financial statements for 2025 of Holcim AG. Thank you so much.

The shareholders will shortly proceed to the consultative vote on the compensation report. Let me first explain our compensation strategy and the compensation programs for the Board of Directors and the Executive Board of Holcim. To strengthen the independence of the members of the Board of Directors in fulfilling their supervisory duties vis-a-vis management, they receive only fixed compensation. They're not entitled to performance-based compensation. If they are covered by the pension plan, they must bear the full costs themselves. The Board compensation consists of an annual Board fee as Chairman or as member as well as fees for membership on the Board's committees. 50% of the annual fixed compensation is paid in cash and 50% in shares. The shares are subject to a 5-year lockup period. In addition, committee fees and an expense allowance are paid in cash. The compensation model for the Executive Board consists of 3 main elements: fixed compensation and annual bonus and a long-term incentive. The fixed compensation consists of the salary for the position as well as fringe benefits, as participation in pension plans. The annual bonus rewards the annual financial results of the group and the regions. Both absolute results and the company's performance relative to the market are taken into account. Furthermore, the annual bonus includes targets in the areas of health, safety and the environment and the group and regional levels to account for the important aspect of a safe workplace for our employees. The annual bonus is subject to a cap and is paid out half in cash and half in shares. The shares are subject to a 3-year vesting period. The long-term incentive plan rewards the company's long-term performance and strengthens the alignment with shareholder interests. It consists of shares and options. The shares are subject to a 3-year performance period and the options to a 5-year performance period. The final number of shares and options depends on the company's performance during the performance period and is also subject to a cap. Variable compensation is subject to for feature and callback provisions. Under certain conditions, variable compensation may be forfeited or even reclaimed Furthermore, members of the Executive Board are expected to build up and hold a minimum stake in Holcim shares over time in alignment with shareholder interests.

The Board of Directors is convinced the compensation model is balanced and well aligned with the interest of our shareholders. The compensation report describes the compensation system related programs for the Board of Directors and for the Executive Board. The report also provides information on the compensation awarded to the Executive Board and the Board of Directors for fiscal 2025. Remuneration to the Board of Directors for the period from AGM 2025 to the AGM 2026 amounted to CHF 4.2 million, which was within the approved maximum of total CHF 4.5 million. Remuneration to the Executive Board for the business year 2025, amounting to CHF 21.6 million is within the approved maximum total amount of CHF 32 million. Details can be found in the compensation report 2025. Ladies and gentlemen, I'd like to ask you to raise any questions or comments regarding the remuneration system for the Executive Board and the Board of Directors. Any questions or comments?

If there are no questions or comments, we will proceed with a vote under agenda item 1.2. The Board proposes that the 2025 compensation report be approved in a consultative vote. We will vote now. Time's running.

[Voting]

Time is up. Vote is closed. We'll wait for the result. I take note of the fact that you have approved the Holcim AG compensation report for fiscal 2025 in a consultative vote. Thank you.

Under agenda Item 1.3, we will vote on our sustainability report. In the sustainability report, we have now combined the report on nonfinancial matters and the climate report on which you voted separately last year. Unlike last year, you will be voting on the sustainability report in a binding manner.

The report discloses our strategy, our goals and our implementation regarding sustainability. It provides you with a sound basis for assessing whether we're managing environmental, social and governance risks responsibly. Selected information has been audited by Ernst and Young, the corresponding audit report can be found on Pages 134 to 136 of the sustainability report. Any comments on this? That does not appear to be the case. We therefore proceed to the vote. Please vote now.

[Voting]

Time's up. The vote is closed. Let's wait for the result. I take note of the fact that shareholders have approved of the sustainability report for fiscal '25 of Holcim. We now proceed with the next agenda item, discharge the members of the Board of Directors and the Executive Board.

The Board proposes that the members of the Board of Directors and the Executive Board be granted discharge for their activities in fiscal 2025. I expressly point out the persons who participated in the management of the company do not have voting rights for the resolution on the discharge of the Board of Directors and the Executive Board. The number of shares are presented has already been reduced accordingly in the system. Any requests to speak on this? This seems not to be the case. Please vote now. Time's running.

[Voting]

Time's up. Vote's closed. Let's wait for the result. I take note of the fact that you have granted discharge to members of the Board and the Executive Board for their activities in fiscal 2025. Thank you.

Let's now turn to the appropriation of profits. Board of Directors proposes a distribution from capital contribution reserves this year. This requires two steps. As a first step, the Board proposes to carry forward the retained earnings of CHF 13.571 million to the new fiscal year. Any comments on agenda Item 3.1? This seems not to be the case. Please vote now.

[Voting]

Vote's closed. Let's wait for the results. I take note of the fact that you have followed the proposal of the Board regarding the appropriation of retained earnings. We move on to step 2.

This year, the Board of Directors proposes to distribute a cash dividend of CHF 1.70 per registered share to shareholders from the capital contribution reserves. The total amount of the distribution not to exceed CHF 964 million is based on the total number of outstanding shares. The shares held by the company and its subsidiaries. No distribution will be made on the shares held by the company's subsidiaries the amount of the payout is reduced accordingly. Any comments on this? This is not the case. We move on to the vote. Time's running.

[Voting]

I close the vote. Let's wait for the results. I note that you have approved the Board of Directors' proposal to distribute a cash dividend of CHF 1.70 per registered share, up to a maximum of CHF 964 million. Cash dividend is expected to be paid on May 21, 2026. We move on to reelections. This is the reelection of the members of the Board of Directors to reelection as Chairman of the board, reelection of the members of the Nomination, Compensation and Governance Committee and the reelection of the auditors and the independent proxy. I ask you to raise any comments regarding all the elections listed under agenda item 4. Any requests to speak at this time? I take note of the fact that there are no requests to speak. Let us, therefore, begin with the reelections of the members of the Board of Directors as the term of office for all members and with today's AGM.

First reelection concerns me. For this reason, I ask Claudia Sender Ramirez to take over. Claudia, please.

Thank you. Kim Fausing has been a member of the Board of Directors since 2020 and has been elected the Chairman of the Board of Directors at last year's Annual General Meeting. The Board of Directors proposes Kim Fausing to be reelected as a Board member and as Chairman of the Board of Directors for a further term of office of one year, expiring upon completion of the Annual General Meeting 2027. We start the vote.

[Voting]

I close the vote. I confirm that you have approved the reelection of Kim Fausing as a member of the Board of Directors and his reelection as Chairman. Congratulations, Kim and back at you.

Thank you very much, Claudia. Thank you very much for your trust. We will now proceed with the remaining elections. The Board of Directors proposes that all other members of the Board of Directors standing for reelection be reelected for the next term of office until the conclusion of the next AGM '27. You were able to view the details of all candidates on the Holcim website. Therefore, I will not be introducing the candidates during the selection proceedings. We will conduct the elections individually, one after another in a single round. Again, pay attention to the count down during the election of each candidate as projected on the screen. I will announce the overall election results at the end of this voting process. I now open the reelection of the remaining candidates.

First, we will consider the reelection of Professor Dr. Philippe Block as member of the Board of Directors. Time is running now.

[Voting]

Next, the reelection of Leanne Geale, time's running now.

[Voting]

Next up, the reelection of Catrin Hinkel.

[Voting]

Next up, the reelection of Naina Lal Kidwai. Time's running now.

[Voting]

Next up, the reelection of Dr. Ilias Laber. Please now.

[Voting]

Next is the reelection of Michael McGarry. Time's running now.

[Voting]

Next, the reelection of Adolfo Orive.

[Voting]

Next, the reelection of Claudia Sender Ramirez. Please, now.

[Voting]

And the reelection of Dr. Sven Schneider. Please, now.

[Voting]

I hereby close the election round, and let's wait for the results.

Dear shareholders, I hereby declare that you have approved the election of all members of the Board of Directors standing for reelection. On behalf of the Board of Directors, I thank you for the trust you have placed on its members. Thank you.

All the reelected members of the Board of Directors have informed me prior to the election that they will accept their reelection. This brings us to the reelection of the members of the Nomination, Compensation and Governance Committee, whose terms of office expire at today's Annual General Meeting. The Board of Directors proposes that all members of the Nomination, Compensation and Governance Committee who are standing for reelection, be reelected for a further term of one year until the close of the Annual General Meeting in 2027. Hereto, we will conduct the elections individually, but in a single round. Please also note the countdown during the election of the respective candidate, the countdown will be projected on the screen. I will again announce the overall election results here at the end of the voting round.

I now open the election. First, we come to the reelection of Leanne Geale as a member of the Nomination, Compensation and Governance Committee. Countdown is on.

[Voting]

Next, is the reelection of Dr. Ilias Laber. Countdown starts now.

[Voting]

Next is the reelection of Michael McGarry. Countdown starts now.

[Voting]

Next is the reelection of Claudia Sender Ramirez. Countdown starts now.

[Voting]

I close the ballot, and we wait for the results. I note that you have approved the reelection of all members of the Nomination, Compensation and Governance Committee. Thank you very much. This brings us to the reelection of the auditors.

The Board of Directors once again proposes Ernst & Young AG Zurich as the auditors for the 2026 fiscal year. Ernst & Young AG has confirmed in writing that it accepts the mandate for the financial year 2026. We now proceed to the vote. Countdown starts now.

[Voting]

I close the ballot. We wait for the result. I note that you have appointed Ernst & Young AG as the auditors for the 2026 financial year. Finally, the independent proxy has to be elected as well.

The Board of Directors proposes Dr. Sabine Burkhalter of Voser [indiscernible] in Baden for the next term of office as well. Please cast your vote now.

[Voting]

I hereby close the ballot, and we wait for the result. I note that the shareholders have approved the reelection of Ms. Burkhalter. Mrs. Burkhalter informed me prior to the vote that she would accept her reelection. This brings us to Item 5 on our agenda which is the binding vote on the maximum aggregate amount of the remuneration of the Board of Directors and the Executive Committee.

I shall first provide an overview of the proposed maximum aggregate amount for the Board of Directors for the period from the 2026 Annual General Meeting to the 2027 Annual General Meeting as set out in agenda item 5.1. The Board proposes that a maximum aggregate amount of CHF 4.5 million be approved for 10 members of the Board of Directors for the period from the 2026 AGM to the 2027 AGM. This amount remains unchanged from the previous year's amount of CHF 4.5 million. Does anybody wish to speak on this agenda item? If not, I would like to proceed to the vote. Please cast your vote now. The countdown is running now.

[Voting]

I close the vote, and we now wait for the result. I note that you have approved the Board of Directors' proposal regarding the remuneration of the Board of Directors for the next term of office. Dear shareholders, we now turn to agenda Item 5.2, which is the binding vote on the maximum aggregate amount of remuneration for the executive committee for the year 2027.

In connection with the spin-off of the North American business last year, a comprehensive review of our remuneration system was carried out. The Board of Directors has concluded that the remuneration system is appropriate and should be kept. It is designed such that it supports the company's strategy by attracting, motivating and retaining talented executives while simultaneously aligning their interests with those of the shareholders. The Board of Directors, therefore, proposes that a maximum aggregate amount of CHF 35 million be approved for the remuneration of 13 members of the Executive Committee for the 2027 financial year. This amount represents an increase of 9% compared to the approved amount of the previous year of CHF 32 million. This is due to the expansion of the Executive Committee from 9 to 13 members. As you can see from the slide, the total remuneration actually awarded to members of the Executive Committee in previous years, remained within the respective approved maximum aggregate amount. Does anybody have any questions on this matter? If not, we will proceed to the vote on this agenda item. Please cast your vote now. The countdown is running now.

[Voting]

I close the vote, and we now wait for the result. I note that you have approved the Board of Directors' proposal regarding the remuneration of the Executive Committee for the 2027 financial year.

Right, we have now dealt with all the items on the agenda for this year's AGM. I would like to take this opportunity on behalf of the entire Board of Directors to extend my warmest thanks to all shareholders and to everyone who has contributed to this Annual General Meeting. The next Annual General Meeting of Holcim will take place on the 20th of May 2027.

We now cordially invite you to lunch. You can look forward to meat balls and mash potatoes. Our buffets are located at the back of the hall and on the first floor in the gallery. I wish you a lovely day, ladies and gentlemen, enjoy the meal, Bon appetit, and I look forward to seeing you here again on the 20th of May 2027. Bon appetit.

Good morning. Welcome to the analyst and investor conference call of Holcim's First Quarter 2026 Trading Update. My name is Bernd Pomrehn, and I'm joined today by our CEO, Miljan Gutovic; and our CFO, Steffen Kindler, to present our financial results. Following the presentation, you'll -- we'll open the floor for questions. [Operator Instructions]

And now, I'm happy to hand it over to you, Miljan.

Thank you, Bernd. Good morning to you all, and a warm welcome to Holcim's 2026 First Quarter Trading Update Conference. Steffen and I are pleased to be presenting our numbers to you today, and we look forward to taking your questions afterwards.

As you have seen, we have delivered a strong start to the year. There was a robust organic growth in net sales of nearly 4%, driven by leading positions in the highly attractive markets where we operate. The 8.3% organic growth in our recurring EBIT was even stronger, and this was driven by our premium and sustainable offering, our strict cost discipline and operational excellence.

With our resilient and proven business model across all economic cycles and market conditions after this strong start to the year, we are confirming our 2026 guidance, which includes a further increase of our industry-leading margins versus 2025.

Turning to the regional highlights now. As you can see, in Europe, there was a sales acceleration in March, and price over cost was positive, partially offsetting the impact of weather on the margin. Our use of alternative fuels increased to 70% in the region during the quarter, future-proofing Holcim from energy price exposure and market volatility. You will hear more on this topic from Steffen later.

In terms of the outlook, we expect strong activity in infrastructure across the whole region. And in residential, a recent increase in building permits is expected to continue in several countries. In LatAm, we delivered 7.6% organic growth in net sales, driven by Mexico, Central America and Ecuador with a recurring EBIT margin above 30%. We completed one large acquisition and also signed another, and we will talk more on this later on. For the outlook, we expect that the Mexican government's plans for 1.8 million new homes and infrastructure projects to accelerate the growth in this key market for us. And in Central America, there will be ongoing high demand for housing and infrastructure.

Our performance in Asia, Middle East and Africa clearly demonstrates that our strategy is able to achieve strong profitable growth across all market conditions and economic cycles. The region delivered organic growth in recurring EBIT of 26%, while the margin rose 100 basis points to 22%. We saw strong demand trends in North Africa and Australia and expect this to continue for the full year, driven mainly by the residential and infrastructure sectors in North Africa and infrastructure projects in Australia.

With that, I would like to hand it over to Steffen to talk through the financials in more detail. Steffen?

Thank you, Miljan, and a warm welcome to all of you from my side as well. Always a pleasure to be here with you and now for our Q1 trading update.

Turning first to the net sales bridge. You can see that we had robust organic growth of 3.9%, representing CHF 136 million. Total sales was affected by a negative CHF 104 million impact, mainly coming from scope following the divestment of our Nigeria business, Karbala Cement Manufacturing in Iraq and other divestments completed in 2025. Also, the FX effect created a translation effect of 5.6% as a mixture of mature and emerging markets currency devaluation versus the Swiss franc.

On recurring EBIT, we delivered 8.3% organic growth. There were FX translation effects of CHF 26 million or 5.5% and CHF 63 million from divestments, as mentioned already in the sales chart. EBIT growth was driven by strong commercial execution, operational excellence and disciplined cost management, both in the countries and at corporate level. Once again, we delivered positive price over cost.

As you know, increasing our usage of alternative fuels is one of ways that sustainability drives profitable growth at Holcim, increasing our margin and reducing CO2. What may be less appreciated at that point is that it also future-proofs Holcim from energy price volatility. We are reducing fuel and costs through operational excellence in manufacturing while decarbonizing our electricity consumption. As you can see, in the last 3 years, increasing our alternative fuel usage by 11 percentage points came with a 3 percentage point decrease in our energy cost. That's fuel and electricity costs as a percentage of net sales. By the year 2030, we will have scaled up the use of alternative fuels to 50% globally and 90% in Europe. Already today, almost half of our cement plants in Europe operate between 80% and 100% alternative fuels.

Next, let's look at the progression of our Q1 recurring EBIT and recurring EBIT margin on a rolling 12-month basis. At this time of the year, we usually show this number as a 12-month rolling because the first quarter is by far the smallest in terms of business size, so we put it into a better context. This graph shows our continuing margin expansion. The group margin for the first quarter was down year-over-year slightly, mainly due to the divestments that I explained before. As Miljan has said, we are committed to further margin expansion to the full year 2026.

Now, let's quickly look at the regional performance. Organic growth in net sales was strong in each of LatAm and AMEA. And in Europe, there was a significant acceleration in March. Asia, Middle East and Africa, there was double-digit organic growth in recurring EBIT at 26% with a 100 basis point increase in margin, where we maintained a recurring EBIT margin of above 30% in Latin America. In Europe, the margin was impacted by weather. And as mentioned before, good cost development on the corporate level continued.

With that, I am pleased to hand it back over to Miljan.

Thank you, Steffen. For the NextGen Growth 2030, we are indeed delivering a superior performance and margin expansion focused on the 5 key drivers. As you can see from this slide, we are scaling up our sustainable offering powered by our premium brands. We are accelerating initiatives for decarbonization and circular construction, which is driving profitable growth. A key part of our NextGen Growth 2030 is expanding our high-value building solutions. With our impeccable track record of value-accretive M&A, we are focusing on the most attractive markets and also the most attractive segments. And all of this is driven by our deeply embedded performance culture.

Let's look now more closely at some of these drivers. Firstly, customer demand for our premium brands, ECOPact and ECOPlanet continues to grow. These are being used on the large scale in large projects like the one you see on this slide in Argentina, which was built with ECOPact to help address the estimated 1.5 million housing gap in the country. This is a really exciting project with over a few hundred apartments and office space designed for sustainable urban living. Another example is this bridge in Bordeaux in France, which was built using ECOPlanet. It's a long bridge of 550 meters, and it was built with 4,000 tons of ECOPlanet with 50% lower carbon footprint relative to traditional cement.

We are also seeing a strong growth in our ECOCycle, our circular technology that is being used to recycle construction demolition materials and put it back into our products. A recent project completed using ECOCycle was this housing project in France, where ECOCycle was used to rebuild 90 social housing units. Again, Holcim is looking to address this housing gap here as France aims to build additional 2 million homes by 2030.

Very pleased to report that last month, we completed the acquisition of Pacasmayo in Peru, which is a milestone in Holcim's Latin America expansion, bringing a very complementary portfolio of building materials and solutions in Peru. The company is a leading player in Peru that -- and with this acquisition, we are also reinforcing our ready-mix, precast and roofing offering in Latin America. I was in Peru myself, and I can tell you it's a highly attractive market for construction materials. It has excellent long-term economic growth prospects and increasing demand for higher quality housing, both new and renovated as well as for infrastructure and industry.

Peru nation has an infrastructure gap, which is estimated to be around USD 100 billion. And as a result of that, government has approved, what they call, a national infrastructure plan to prioritize more than 70 strategic projects to be completed by 2031. As you can see on this first slide of this presentation, Holcim Peru played a key role in the construction of the new international airport in Lima, and we continue to support ongoing work associated with this expansion. We are also involved in some of the biggest projects in Peru, especially in Lima, the metro expansion and highways, which is connecting the capital from East to West.

Now, more on M&A. Well, pleased to say that we closed 5 transactions in Q1, of which 4 were acquisition and 1 was divestment. We strengthened building materials by making acquisition in Romania as well as, as I mentioned, Pacasmayo in Peru. We also completed 2 acquisitions in Building Solutions, one in Belgium and one in New Zealand. We have divested our operation in Lebanon at the same time.

Also, we announced that in March, we signed an agreement to acquire a building materials and solutions operations in Colombia from CEMEX that represents projected 2026 net sales of around USD 360 million. This transaction is subject to customary conditions, and we expect closing around the end of the year.

One slide on artificial intelligence. Well, it's known that artificial intelligence is unlocking incremental value and growth for Holcim, improving performance and driving customer-centric services. Holcim will deliver benefits from AI of around CHF 200 million by 2028, reflecting both cost savings and cost avoidance. To achieve this, we will make growth investments of around CHF 20 million per year, where we will be focusing on the 4 key areas: production, logistics, commercial and administration. By investing in our large network of integrated sensor and data lakes, we are future-proofing Holcim today to unlock great value tomorrow.

Currently, there are 38 large-scale AI initiatives, which we are deploying across business, from our M-Predict Intelligence for optimizing production processes and equipment performance to our Foresight tool that optimizes our transport fleet and network utilization. With Holcim+, which is our AI-powered always-on platform, we can offer customers a 24/7 service with real-time tracking and demand forecasting that will only become more attractive as we added to it over the time. Meanwhile, our AI-powered internal career hub tool matches Holcim's people with business opportunities to create the value and also to nurture talent.

With this, happy to say that we are confirming our 2026 full year guidance after a strong start to the year. Net sales and recurring EBIT growth fully in line with our NextGen Growth 2030 targets. As you can see from the slides, organic net sales growth 3% to 5% and organic recurring EBIT growth 8% to 10%. We are also committing to increase of our recurring EBIT margin and free cash flow before leases of around CHF 2 billion. And we will continue to invest in recycling of construction and demolition materials with another 20% growth in 2026.

And just to wrap it up, Holcim remains a highly compelling investment. It is important to remind you why, today, Holcim is a leader in the most attractive markets with a leading sustainable offering for our customers. This enables us to capture the tailwinds from a powerful megatrend shaping the future of construction such as population growth and urbanization to energy-efficient refurbishment and digitalization.

We are unlocking significant growth opportunities across geographies and also in our Building Solutions segment, which will enable us to achieve above-market growth. Our talented people and our performance culture will continue to deliver a superior financial performance and value creation. All of this will allow Holcim to continue driving shareholders' value through growth-focused capital allocation and, of course, attractive cash returns.

Bernd, you can now open it up to questions.

Perfect. Thank you, Miljan and Steffen. With this, we can open up the line for questions. And we will take now the first question from Julian Radlinger from UBS.

So a couple of questions. Firstly, regarding pricing, so in Europe, pricing increased, I think, something around 3% in Q1, but that didn't include price increases in all countries yet, and it didn't include much of the surcharges yet that you've implemented. And I also think the base for pricing is actually going to get easier in Q2. So what does that mean for the kind of price growth that we should expect in Europe in Q2 and H2? And then, the Middle East conflict aside, would you expect to see any kind of demand impact in any regions or end markets on the back of that kind of pricing? Any pushback or stomachache from any of your customers in light of such strong price increases? That's my first question.

And then secondly, in Latin America, you had flat organic EBIT growth despite very strong pricing in Mexico, I think, and not terrible volume trends across countries. So could you please dissect for us what drove organic EBIT growth down to flat in the quarter? I assume integration costs may have played a role and maybe some price cost issues due to fuel costs and so on. How should we think about that in the next few quarters? Can we think about year-on-year growing EBIT margins again in due course in LatAm?

Julian, thank you for your question. I'll start, and then, I'll ask Steffen to add as we go. I'll start with the pricing. Yes, Julian, you're correct, pricing has still been -- has not been completed in Germany and another 1 or 2 markets. We expect this to be finalized in April. Overall, I can confirm that we are seeing a very healthy pricing dynamic in Europe across all our regions. And at the moment, we are within our expectations, which we communicated earlier around mid-single digit.

Outside Europe, situation is pretty much similar. We have some markets where we are slightly above expectations like in Mexico. But all in all, across all our key markets, pricing dynamic, I can confirm is very healthy. Regarding the Middle East conflict and how it is impacting the market momentum, exception is GCC countries where we have relatively small operations, represents less than 1.5% of the net sales. We put priority on the safety and well-being of our employees and their families. So we did stop operations for a couple of weeks. Last few weeks, we have resumed. Other than that, I'm not expecting any change in the momentum on -- in the construction market momentum as a result of the Middle East conflict. So far, we are seeing a healthy pipeline of projects in Europe. Same applies in North Africa, and I did give the outlook for Mexico, Central America and Ecuador.

On the LatAm, I'll start, and then, Steffen can add. First of all, just to address Mexico, H1 last year was slow. We saw momentum gaining in Q3. We reported some infrastructure projects that we have secured, and we have seen similar trend this year in Q1. We have secured a few of the big projects in Q1, end of the last year Q1, which is Guadalajara Airport and Salina Cruz refinery, where we are already supplying our ECOPact, ECOPlanet solutions.

Our focus in Q1 in Mexico was on the pricing, and I'm very happy to report that pricing dynamic, what we achieved actually, outcome was slightly above expectation. So for us, maintain the pricing, maintain the market share, continue with expanding Disensa, our retail outlook. And just one fact that we have not communicated before, Holcim Mexico's EBITDA margin currently in Q1 was around 44%. So this is a very healthy level, and we want to maintain this.

On the margin impact, I'll just mention scope and some maintenance -- extended maintenance shutdown in Argentina.

Steffen, why don't you say?

Yes. Thanks, Miljan. Julian, also from my side. Miljan basically gave the complete answer. The margin or the EBIT growth impact in Latin America was scope, predominantly through Guatemala and Peru, so the onboarding of our acquisitions and the entry into new countries. Argentina, we had some extended maintenance shutdowns. That was an operational issue that hit us in Q1, will have a bit of a lingering effect into Q2. What is important for us, the story for LatAm remains super positive, right? The strong price increase that Miljan just described, the good momentum across markets. We just talked about Mexico with a very high EBIT and EBITDA margin.

Organic growth will be mid- to high single digits for the full year, margin above 30%. And remember, there is a massive amount of scope coming in the second half of almost CHF 400 million with the acquisitions that we're doing. So there is a very positive outlook for Latin America going forward, especially into the second half.

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

My first question was another one on pricing. Interested particularly in the pricing actions you've had to make post the conflict and the inflation that you're seeing. What kind of magnitude, I guess, do you expect to be additional to, I guess, your original February expectations for pricing for 2026?

And then the second one would just be on 2026 guidance. We're a few months into the year now. Obviously, some moving parts in terms of cost and pricing. But I'd be interested from your side, what do you think are the key swing variables that get you to the top end or the bottom end of the range? Is it more related to volumes? Or are there also things in price cost that you think are still up for debate?

Ben, thank you for your question. So I'll start with the pricing. Look, nothing to add actually. We are -- we have achieved what we aimed at. What the impact of Middle East conflict could have some -- we could see some movements on logistics cost as a result of the diesel prices, but we are confident we can cover that through surcharges and pass it to the customers. So I'm not expecting any significant impact as a result of this Middle East conflict.

What I would like to reinforce is that we do get many questions on energy. This is what Steffen already addressed in the presentation. Really all the hard work that we did in the last couple of years where we have invested to phase out traditional fossil fuels from our business and replace it with alternative fuels is now paying off. You see that we are close to 40% usage of alternative fuels globally. And in Europe, which is where we were seeing the biggest impact on energy prices, we are up to 70%. So all these investments are now paying off, and we will continue to invest in these initiatives with the aim to reach 90% of alternative fuel usage in 2030 in Europe and 50% globally.

On the guidance, I think you hinted that, I mean, if geopolitical situation stabilizes, we will see -- we could see a significant upside on the guidance that we provided because the whole construction momentum will accelerate.

The next question comes from the line of Luis Prieto from Kepler Cheuvreux.

I had a couple of questions. The first one is if you would be able to break down the organic growth building block of your Q1 recurring EBIT bridge between price over cost and volume, at least a rough idea.

And the second one is with regards to you having committed significant resources to acquisitions over the last months, Xella and Pacasmayo. Does this imply that we should expect you to take some time to digest these businesses? Or you believe you have ample integration capabilities to do something sizable on the M&A front in the remainder of '26?

Luis, thank you for the questions. I will start with M&A, and then, I'll hand it over to Steffen to break down organic growth. On M&A front, yes, Luis, you're right, we have -- we just closed Pacasmayo. We are planning to close subject to conditions to close Xella end of Q2 and Q3, and the plan is to close Colombia acquisition end of the year. All of this will -- it will take time and energy to integrate these businesses. But keep in mind, we are fully decentralized business. This is the power of our model where we -- local people take the ownership of the whole integration and achieving synergies. So I'm not excluding that you will not see some additional big deals that signed from us this year. But this year, I would like to focus more on integration of these companies and continue with strong momentum on bolt-on side. We have closed few -- 3 bolt-on acquisitions already in Q1, and I can confirm that we have a very healthy pipeline for the rest of the year.

Steffen?

Yes. So for your question, how to break down the Q1 EBIT, look, as I said, price over cost is positive. That is composed of a positive price of, let's say, mid-single digit. Then, we have a bit lower energy still in Q1. So Q1 still has energy tailwinds. And we have a slight nonenergy inflation of, let's say, round about 3%, which is distribution, raw material, structural cost and fixed cost. So here's your breakdown. And volume, of course, had a negative impact on price over cost in the -- on the EBIT development in the first quarter, price over cost positive, volume negative. I think that puts it together.

The next question comes from Jon Bell from Deutsche Bank. He sent us through his e-mail. Do you think any of the strength seen in Europe in March was due to prebuying by those keen to avoid price rises? Did you see the positive demand trend continue in the first 3 weeks of April?

Thank you for the question, Jon. I would not say much was about prebuying. Yes, we've had some upside because January and February in Europe, as you know, have been greatly impacted by weather conditions. So that lifted the momentum in March. I would like to confirm that April is looking solid so far.

The next question comes from Pujarini Ghosh from Bernstein.

So on the EBIT margin guidance, you have mentioned that you are expecting to see a continued margin expansion. Could you provide some more color about how we should think about the different regions in terms of the EBIT margin expansion given what you've already seen in Q1?

And my second question is on M&A again. So you've already announced some very big acquisitions as well as completed 4 bolt-ons this quarter with a couple of quite sizable bolt-ons in LatAm. So how is the pipeline looking? How are transaction multiples developing? Is there any impact of the war making it either easier or more difficult to do the acquisitions? How are you seeing the synergies develop? And finally, for the Latin American business, how does this impact the growth and the excellent margins going forward?

Thank you for your questions, Pujarini. I'll start, and then, maybe Steffen can add. On the M&A -- I'll start with M&A, look, I think so far so good, momentum is strong. Europe, we have very exciting projects in the pipeline, companies that specialize in recycling of construction and demolition materials. We do have a few interesting targets in aggregates where we have over-proportional EBIT in Europe. So I'm not seeing any negative impact. It's not getting more difficult to do acquisition as a result of conflict in the Middle East.

On the EBIT guidance, I think Steffen can add a few things.

Pujarini, so for your regional understanding, let's start with EMEA. You saw a very nice margin growth in Q1. We explained the reasons for that. But that story is going to continue throughout the year. So we see a good margin progression here. Europe will turn positive in margin development. You know that we talked about the impact of the weather in January, February, good recovery in March. Miljan just hinted to a solid outlook into April. So that will also help us to come back with margin growth here. Also, I said before that the margin overall was impacted due to the effect of incoming acquisitions that will also wear out throughout the year.

And then lastly, Latin America, here, we always say we want to be above 30%. Latin America margin can -- is so high, so it can vary between 1 year to the other. What is important here is that we drive growth in Latin America, sales growth and that we get more of this very high margin into our numbers in terms of the mix effect. I think this is the way to think about it. And then something we've also said repeatedly that the contribution from the rightsizing of our corporate structure, we'll probably also add on a full-year basis, right around 0.5 percentage point. So that gives you the algorithm.

So the next one on the line is Elodie Rall from JPMorgan.

So I had one on AI. It sounds a bit like probably not a new initiative, but it's the first time you spent the most time giving us more color there. So it seems like the focus is increasing. Is it fair to say that this AI initiative was not embedded in your Capital Markets Day guidance last year, and this could be a source of upside to your midterm targets?

And then, I had a clarification question or point, if you want, so on those fuel surcharges that you're passing through, particularly on transportation costs, these are like passed through. Should we expect that you give this back, i.e., pricing down should transportation costs come down with the oil price move at some point?

Elodie, thank you for the questions. I'll start on AI. Yes, this was not embedded in our Capital Markets Day. This is upside. Yes, you are right, Elodie, this is not new. We have been deploying these initiatives for the past few years. And this morning, we are committing to a number that could be exceeded. If everything goes according to plan, CHF 200 million in cost savings and cost avoidance by 2028. And if you can see here from this chart, most of it will come from production, where we have already deployed our key initiatives, and it's all about scaling. And I am counting also that on logistics commercial side, we can see significant upside in the years to come. To do all of this, obviously, we need to spend some money. So yes, as you can see, we are committing to investments of approximately CHF 20 million per year in order to accelerate AI adoption.

Regarding the logistics COGS surcharges, this is -- this could go up and down depending on the fuel prices. And what I said earlier, we do have our ability to pass this on to the customers, and this is the protection we had in place for a number of years now.

If I can just follow up on these cost savings from AI, can you give us a bit of a color on the phasing of the realization of those cost savings?

Look, CHF 200 million is '28. I would like to see next year CHF 100-plus million, possible, yes. We will something, CHF 100-plus million next year and CHF 200 million by 2028.

The next one on the line is Cedar Ekblom from Morgan Stanley.

Can you talk a little bit more about your purchasing structures in place for energy that which is not alternative fuels, just to get a bit of understanding of when we should think about higher spot prices actually flowing through your costs? And then following or linked to that, I just like to push you a little bit on your point that the sort of top end of the guidance requires geopolitical stability. If I think about your moving parts versus where you were when you provided that guidance, I would argue that the pricing backdrop is better. Obviously, there is some cost risk, but you do stress the points around alternative fuels and recycling and hedging, et cetera. So I do wonder how long it takes for these costs and how meaningful these costs are actually when they come through.

And then, it doesn't sound like you're really talking down the volume backdrop. So when I put those moving parts together, it feels like actually the backdrop is better than it was when you provided the guidance, strangely enough, but you're not sort of lifting your ambition. So I'd just like to hear what incremental risk factors have come into the business that -- I mean, you're not talking down volumes, right? You sound pretty good on volumes. So I'd just like to understand why the guidance upgrade is not there.

Cedar, thank you for the question. I'll start with the guidance, and then, I'll hand it over to Steffen to talk more about purchasing spend when it comes to energy. So, Cedar, so okay, geopolitical risk can create tension in the system that could slow down investments in the residential investments in infrastructure and so on. Early Q1, it's just the first quarter. It's the smallest quarter in the year. So we are a little bit cautious. March, what we saw in Europe, for instance, was excellent momentum. April is solid. So on the volume side, on the whole marketing activity, I would say that I'm not expecting any significant changes since Capital Market Day. Hard to predict what can happen in the H2 if the conflict in Middle East prolongs.

So on the LatAm side, yes, you're right, probably there is a slight upside. What I personally witnessed during my last trip is that momentum is better than -- slightly better than we initially thought. And then the whole EMEA should be okay with some potential risk as a result of the Middle East conflict. So I still maintain that the biggest concern today we have is this whole geopolitical situation, depending how it translates if it continues for a longer period of time.

For energy, Cedar, we said previously that close to 80% of our energy requirements are secured for the rest of the year. How to understand that in regulated markets, which are about 35%? We have contracts in place, so this is done. And then, we -- from the hedgeable portion, which is about 60% of our requirement, 70% is hedged. So there you go. This gives you altogether a secured piece of almost 80%. What I would also say is for the remaining piece, we have plans in place. We have cost actions in place. We have commercial actions in place. It's always important also that our management stays sharp on this topic so that we can stay nimble. But for the balance of this year, we feel quite confident that we can deal with further pressures on the markets quite well.

Next one in the line is Arnaud Lehmann from Bank of America.

Two on my side, please. Firstly, coming back on the RMEA region, could you give us an indication of the contribution from Russia and China? And within that, was there a meaningful impact from Nigeria? That's my first question.

The second question, I mean, I appreciate AI is more fashionable than carbon capture at the moment. But I think there are discussions around launching a large-scale carbon capture project in Europe, possibly in Belgium. Is it something that you're still working towards? And could you make an announcement this year?

Arnaud, thank you for your question. I'm equally excited about carbon capture, as we are about AI. So you are referring to our GO4ZERO project in Belgium, Obourg. You saw probably recently, we did sign the agreement with Air Liquide for Phase 2. Currently, priority is to finish Phase 1, which includes brand new industrial -- brand-new cement plant, which will indeed be state-of-the-art with very high usage of alternative fuels, alternative raw materials and the most efficient production processes. Nothing has changed.

We are committing to commissioning in Q1. Recently, I have also visited the project. It is going according to plan. Once we have completed commissioning of Phase 1, then we will start working on Phase 2, working with our partners, as I mentioned, Air Liquide on capturing, but we also have a partnership with another company when it comes to logistics, transporting CO2 and also storing CO2. So commissioning Q1 2027, and that means completing Phase 1 of the project.

Steffen, why don't you comment on EMEA and Russian contribution?

Arnaud, look, it's a bit difficult to comment on Huaxin because it's a listed company. So I have to be very careful what I say. I cannot really comment on their results so much. What I can tell you is the JV contribution was positive. We had a positive OG contribution this year so far in our EBIT, mainly due to good developments in Australia and Huaxin. The good demand in Australia, we talked about before. We saw a good resurgence here with good volume growth. And the strong development in Huaxin is driven by their overseas business. It's not driven by their domestic business, driven by their overseas business. I'm not telling you something that the company wouldn't say itself. This is public. And when I tell you that, then you can probably deduct that their investment in Nigeria was potentially not detrimental. So maybe we'll leave it there.

The outlook for our joint venture business is quite positive for this year. So we expect a strong contribution from all our 3 large JVs.

The next one on the line is Martin Hüsler from ZKB.

I have a short question. First, on the AI investments. I was just making sure that this is all OpEx, CHF 20 million? Or is part of it CapEx?

Martin, thank you for your question. It includes both OpEx and CapEx.

And maybe 50-50 split or what is the best adoption for you?

Approximately 50-50.

Okay. And then, I have a second question. With the annual results, Steffen gave us a certain outlook what he expects in terms of FX for the full year and cons and deconsolidations. I was just wondering whether those numbers are still valid or if something has changed there.

Yes. Look, so currently, we see -- in the first quarter, we see an FX headwind of 5%, 5.5%. We don't usually guide for FX. But if you need a guidance, I would go with current spot rates. Current spot rates, I think on sales, is a bit above 3% and on EBIT a bit above 4%. That's your best guess, I would say, at the moment.

Okay. And in terms of scope, you were mentioning to something like scope in [ 120 ] to [ 150 ] and divestments roughly minus [ 40 ]. Is this still ballpark?

Yes. I would think you should stay with that, yes.

Maybe let's stay at the AI topic. So we received 2 questions from Paul Roger from BNP Paribas. His first question is, how unique are your AI initiatives? And are they only being deployed internally? Would they be monetized with third parties?

Look, the way we do AI is really the ideas and the concepts are driven by our people in the operations in production, logistics, commercial and also admin. That's where the ideas come from. Then, this is paired with technical and data know-how from our IT team. And a third pair is external expertise. So what I would say is these initiatives are highly unique because they're based on our data platform.

Super important for the deployment of AI is that you have harmonious data that's consistent over time and over regions so that you can scale it. So this is why it's very proprietary, and it's also based on the knowledge of our people. The underlying models that we use with external head, they may be standard. But then again, the algorithms are custom trained on Holcim-specific materials. So for the time being, I would think this is highly specific to us and our situation, and it's based on, a, our data; and b, the know-how of our people paired with external expertise. And therefore, we would think this is very Holcim-specific.

Perfect. And then, Paul had another question on AI. He's asking, are the AI skills to develop these initiatives available internally or it was in using consultants or attracting new talent? And what makes the group an employee of choice for digitally minded experts?

So in short, the answer is we are building AI capabilities, mainly internally. However, we do complement this by selective hiring and selective partnerships with third parties. So what's making a difference is the way we approach this. We have -- this is a part of our Holcim University, where we are preparing our people for the future. We are upscaling them. We are training them, and AI is part of these initiatives.

When it comes to AI, I would -- maybe just to mention that we have 2 key initiatives: one is AI Academy, where we have our dedicated programs for our managers to really master AI leadership and also strategy. And then, we have functioning AI modules, where we are targeting training built into every department, procurement, finance, logistics and so on and so on.

Perfect. Thank you so much, Miljan. We received another written question from Anthony Codling from RBC. He's asking, can you please comment on CBAM, your thoughts about possible changes to ETS and your expectations for the new benchmark, timing, benchmark price, et cetera? Do you see these as headwinds, tailwinds or no wind?

So, Anthony, I can just comment on the rumors. What we heard is that the benchmark is around 657 kilograms. This is 5.5% below Phase 4, below the previous benchmark. I'll just say this is in line with our expectations, and we are okay with this outcome. Hopefully, by September, European Commission will confirm and make it official. So in our view, this does not change anything regarding CBAM. We welcome CBAM. We are happy that it's been finally implemented. And now, it's all about verification and auditing when it comes to CBAM.

Thank you, Miljan. The next one on the line is Ephrem Ravi from Citi.

So 2 -- most of it has been answered, frankly, but like 2 clarifications really. Firstly, disaggregating the Latin American business into Mexico and rest of LatAm. The context of the question is, I think CEMEX reported Mexico up double-digit percentage revenue in local currency. And if you had similar growth in Mexico, and LatAm is up 7% organic, Mexico is roughly half of LatAm. It indicates a slightly soft rest of LatAm. You did mention the Argentina issues, but would it be kind of fair to say that rest of the LatAm was significantly softer on a topline basis compared to Mexico?

Secondly, again, on the fashionable topic of AI, you're going to spend CHF 20 million per year on AI and expect CHF 200 million of recurring EBIT that implies an ROI of close to 200% if you take the 3 years cumulatively and phase it. If you are -- if you can stand by these numbers, then what is the limiting factor in accelerating these investments even more as it could be possibly the best ROI you could gain in this business?

Ephrem, thank you for your question. I'll start on LatAm. I think I answered it pretty much earlier, and Steffen also had a few points. Just to summarize it, Mexico, we are expecting strong, strong momentum in 2026. We are positive about the whole market, and this is based on the project pipeline currently we see.

On the Mexico and our financial performance, I would maybe mention one more time, our EBITDA margin in Mexico is 44%. And this is where we want to maintain. We want to keep investing in Disensa. We want to keep expanding and growing our business over proportionally. So for the whole LatAm, the -- this year, we have a strong price increase. We will maintain EBIT margins above 30%, and we will have a positive scope effect of nearly CHF 400 million from Pacasmayo.

Steffen, would you like to add?

For ROI, look, what we gave you here, the CHF 200 million, is based on our current 38 initiatives. 38 is a large number already, and we're putting a lot of power behind that. But there's no limitation to doing more. If we come back in a year from now, and Miljan and I work on 50 initiatives, then of course, the benefit will be higher. So it's the number of ideas we can generate internally and the number of projects we can generate internally. 38 is what we're working on right now. It doesn't have to be like that forever. It can -- there's potentially upside on that as well. But this is where we are today. So no limitation.

The next one on the line is Yassine Touahri from On Field.

Two questions. Last week, I think President von der Leyen in Europe commented on boosting the market stability reserve as part of the ETS review in July. Do you have any updated view from discussion with the European Cement Association of Brussels on where the EU ETS price could go medium term? And I think the question is what CO2 price do you currently assume for decarbonization investment? And what level will either accelerate or delay your carbon capture project?

And second question on Latin America. I think you have a couple of press reports that have been confirmed by Chinese cement companies that suggest that large Chinese players are considering acquiring 1 or 2 cement companies that are currently for sale in Brazil. And this could mark the first meaningful entry of Chinese player into Latin American cement. And the question is, would this have any implication for your long-term regional strategy? Or do you see this potential move as Brazil specific, and therefore, it's not directly relevant for your portfolio because you exited the country?

Yassine, thank you for the questions. I'll start with ETS and CO2 price. So we are still using EUR 120 and EUR 150 per tonne as an indicative price when we do these business cases for carbon capture projects. Yassine, please remember that we are working on derisking these projects. One option is what we saw in Germany is this CCfD, Carbon Contract for Difference. We need to have a backup option in order to derisk the projects and to ensure that being a first mover, we will not be punished in the long term.

Regarding LatAm and Chinese, yes, there is a reason why we exited Brazil. For someone to enter some of the countries where we have a dominating position, extremely hard, extremely hard. I would not say impossible, but very, very hard because markets are consolidated, reserves have been secured. So for the -- someone to enter to build a -- start from scratch and build a cement plant, I do not see it.

The next one in the line is Harry Goad from Berenberg.

Can you talk a little bit around what you're seeing in Germany, please, and whether we're beginning to see any of the benefits come through from the stimulus program? And then, I guess, more generally, I know you don't like giving sort of individual country numbers, but can you give us a feel for what you're seeing in cement volumes across big markets in Europe, like U.K., France, Germany?

Harry, thank you for the question. Regarding the German infrastructure spend, we are not budgeting anything for H1. We might see something in H2. But in H1, I would not put any numbers for H1. Regarding the whole market momentum, we do not comment basically per country. But just to give you a few regions, we see a strong -- Eastern Europe seems to be -- will continue to be strong.

Probably Germany and France, we have started seeing some positive momentum in residential. Southern countries in Europe, Spain is strong. Greece is strong. And our home market, I think, in my view, Switzerland, this year will be very, very strong with -- we have already secured some of the big projects last year, and we have secured 2 more this year. So I expect Switzerland also to have a strong year. U.K., hard to say at the moment. I would like to see Q2, but U.K. is probably the only market today in Europe which is softer.

And the next one is Harry Dow from Rothschild.

Just 2 from me. Firstly, on the alternative fuels in Europe at that high level, I was wondering if you could give us some more color on the volatility of the prices in those alternative fuels. Are they effectively hedged the kind of fixed prices? Or do they move with time with kind of spot fossil fuel prices? And then just also coming back to sort of demand and volume implications and sort of elasticity of demand to higher prices, I think when we started the year, cement being up mid-single digit was probably at the high end in view of the overall build cost kind of environment.

And now, when I look at a broader range of building materials and products, actually mid- to high single digits is probably where a lot of things are landing. And if it's a lot of energy input, it could well be into double digits, certainly in the summer. So for the end users, they're now facing a homebuilder is facing more a mid-single-digit cost inflation this year now. Where is the elasticity in your view of that to demand? Can margins at the sort of the end of the chain compress further do you think? Or are you still confident that volumes can grow in an environment where you see mid-single-digit inflation across the board?

Harry, thank you for the question. I'll start on the demand and the pricing. Look, so far, we have achieved what we hoped for. We -- and could be potential additional price increases that will go through the surcharges. But I don't think any of this will have impact on the demand in 2026.

Steffen, you can...

I think the question was -- I didn't fully understand it, but I think the question was volatility in pricing of alternative fuels. And if that was the question, the answer would be, it depends a bit on the market, but the volatility in alternative fuels is, of course, much, much less because it's -- well, it's trash, right, oftentimes. And so they are sitting supply chains, they are local supply chains, and the price is relatively stable compared to classic fuels in the open market.

Something to keep in mind is as the prices of traditional fuels go up in some places, the use of alternative fuels also becomes even more attractive and more interesting and the business cases become even better to pay back. So -- but as we said before, one of the main reasons why alternative fuels are attractive is definitely the lower volatility.

Thank you so much, Harry. So this was actually the last question for the day. So I would like to thank you very much for joining us again. If there are any further questions, please reach out to the IR team. We are more than happy to help.

And with this, I hand it back to Miljan for some concluding remarks.

Thank you all for joining us this morning. Very happy with the strong start of the year. We will continue to execute on our strategic initiatives, and with our impeccable execution of 45,000 of my colleagues, I am confident that 2026 will be another great year for Holcim.

Stay healthy, stay safe, and thank you very much.

Good morning, everyone, and welcome to Holcim's Full Year 2025 Results Presentation. My name is Bernd Pomrehn, Head of Investor Relations, and I'm pleased to be joined by our CEO, Miljan Gutovic; and our CFO, Steffen Kindler. After their presentations, as usually, you will have the opportunity to ask questions. If you join us on this sunny day, Friday in Zurich, then just raise your hand, and we will hand you a microphone when it's your turn. And our colleague from Chorus Call will now instruct you how to ask your questions via the webcast. Sandra, please.

[Operator Instructions] The conference is being recorded. [Operator Instructions].

And with this short intro, I directly hand it over to Miljan. Miljan, please.

Thank you, Bernd. Good morning to all of you, and a warm welcome to Holcim's 2025 Full Year Results Analyst and Investors Conference. Steffen and I are pleased to be presenting our earnings to you today. And of course, there will be a time afterwards for your questions. We delivered strong profitable growth in 2025 with an acceleration in the fourth quarter as we achieved all our targets. As you can see, we accelerated the growth of our recurring EBIT in Q4. It was up 12.2%, taking us to a 10.3% for the year, exceeding our guidance. Our industry-leading margin increased by further 80 basis points to 18.3%. Margin expansion was driven by our high-value strategy, which includes scaling up our sustainable offering as well as continuously exercising strong cost discipline while enhancing operational efficiency.

We generated CHF 2.2 billion in free cash flow with a cash conversion of 54%. Due to our excellent results and the confidence in the outlook, our Board of Directors has proposed a dividend of CHF 1.7. That represents a payout ratio of 53%. With these excellent results, we are setting guidance for '26 that is fully aligned with our midterm targets, and I'll take you through the guidance in details at the end of this presentation. Now let's turn to the region highlights. Very proud to report excellent results in Europe. Europe for Holcim continues to deliver strong margin expansion, which is driven by our high-value strategy as we are scaling our sustainable offering and accelerating initiatives in decarbonization and circular construction.

In terms of the outlook, very positive on Europe. We expect strong activity in infrastructure. For instance, take, for example, Switzerland, we already communicated that we are supplying our products and solutions to Gotthard Tunnel. Now we have landed another big tunnel Axenstrasse, and we will start delivering soon. Also in residential building permits have increased across the whole Europe in recent months, even in the big markets like Germany and France. Let's look now in more detail on how we have made sustainability a driver of profitable growth in Europe. By scaling our sustainable offering, accelerating, decarbonization and circular construction as well as investments in value-accretive M&A, we have achieved a consistent multiyear margin expansion of 430 basis points between 2020 and 2025. That is a period that includes COVID crisis, high energy crisis, challenging economical cycles, market condition and also significant volatility in carbon price.

Leading in decarbonization, we are using innovative formulations and alternative fuels to continue to expand our margins, so too with recycling of construction and demolition materials into the new building solutions. During this period, we have also created excellent value through our disciplined M&A approach, closing 66 acquisitions at very good prices, which were on average just around 5.3x EV EBITDA at signing, including synergies. These acquisitions are increasingly focused on expanding less carbon-intensive high-value building solutions from foundation and flooring to walling and roofing. All of this demonstrates our agility, our resilience based on our proven business model. I'm sure that we will get on to discussions on the EU ETS in our Q&A. So let me say a few words on this topic.

The European Commission already announced its work program in 2025. So this is not new. This included a review of ETS to provide clarity for the post-2030 period with a proposal expected in Q3 this year. I would like to emphasize that we do not expect any major changes in short term before 2030. Holcim, of course, welcomes the work that EU Commission is doing to provide clarity for the post 2030 period, including for topics important -- that are important to decarbonization of our industry. If there are any changes to EU ETS allowances in the mid- to long term, this will simply provide more time to build effective business cases and partnerships to evolve the carbon management value chain, including transportation and storage as well as decreasing our costs.

Once again, this slide shows that Holcim has made sustainability a driver of profitable growth regardless of the CO2 price. And more importantly, we have the strategic agility to adapt to different scenarios in our decarbonization road map with levers that expand our margins independent of the carbon price. Strong cost discipline and operational excellence are part of Holcim's DNA. Next, in LatAm, we delivered double-digit net sales growth for the full year with recurring EBIT margin above 30%, even after absorbing the integration costs of our newly acquired businesses. Disensa, the largest construction materials retail franchise in the region continues to grow strongly. We opened 460 new stores to take us to total 2,360.

We expect the strong performance in LatAm to continue with 1.8 million new homes and the start of the next wave of infrastructure projects to accelerate growth in Mexico as well as significant demand in residential, but also in infrastructure to boost Argentina and Central America. Asia, Middle East and Africa delivered outstanding double-digit increase in recurring EBIT in '25 and really outstanding margin expansion of 220 basis points. We saw strong growth in North Africa, driven by public spending and also very, very good momentum in residential market. For this year, as a whole, we expect the strong demand in North Africa to continue with public and infrastructure projects in Egypt, Morocco and Algeria. We also see Australia as another bright spot where our team has secured important precast contracts for roads and tunnels. With that, I would like to hand it over to Steffen to talk through the financials in more detail. Steffen?

Thank you, Miljan, and a warm welcome to you all also from my side. It's a pleasure to be with you today for the full year results. Turning first to the net sales bridge. You can see that organic growth was the main contributor to a 3% rise in local currency as we achieved our 2025 guidance. While there was a contribution from acquisitions, we also divested Nigeria in the fourth quarter, which is categorized as a large transaction. The foreign exchange effect on sales was negative CHF 810 million or 5%.

Just a note on our guidance that you may have picked up from the presentation and press release as a technical simplification and a move to the more common terminology of organic growth, we will be guiding on organic growth for 2026. OG for 2026 is expected to be very similar to the LC definition used so far. For the full year, on the next chart, EBIT, on the full year, we delivered 10.3% growth in recurring EBIT in local currency, excluding large M&A. Now you know why we go back to OG, and even 12.2% organic growth, significantly exceeding our 6% to 10% targeted range for the year.

Despite foreign exchange headwinds of CHF 200 million or 7%, we managed to grow our absolute EBIT in Swiss francs by 1.4%. Next, let's look at the progression of our recurring EBIT and recurring EBIT margin over the last 4 years. This graph here shows that we have been consistently expanded both our recurring EBIT margin and our recurring EBIT, now well above CHF 2.8 billion. As Michael said earlier, our margin expansion is driven by our high-value strategy as we scale up our sustainable offering while keeping a strong focus on cost discipline and operational excellence. We saw strong recurring EBIT contributions from all the regions, around CHF 1.5 billion in Europe and more than CHF 900 million in each of LatAm and EMEA. Europe delivered strong EBIT growth with margin expansion of 140 basis points. Net sales growth was double digit in Latin America, and we maintained a recurring EBIT margin of above 30%.

In Asia, Middle East and Africa, there was double-digit growth in recurring EBIT at 14.1%. The strong performance overall shows the benefits of our regional diversification playing out well. Our deeply embedded performance culture and disciplined financial management ultimately drives the growth of our earnings per share or EPS, which is up 5% in Swiss francs from 2024. This shows that we pay equal attention to operational performance and financial discipline. And as you see here also on the lines below EBIT, obviously. You can see that by all measures of the bottom line, we are producing superior profitable growth. Next, you can see the development of our free cash flow in 2025, which exceeded our target of around CHF 2 billion -- in the last 5 to 6 years, Holcim reliably delivered superior free cash flow with cash conversion rates consistently above 50%.

This is driven by strong EBITDA, our focus on working capital, financing costs, other cash relevant items and last but not least, a very disciplined approach to CapEx, prioritizing those projects with the highest returns. On this chart, you see our net debt leverage ratio, which closed 2025 at a comfortable 0.9x. This will provide Holcim with sufficient financial flexibility and the ability to navigate all economic cycles while continuing to invest in profitable growth through CapEx and M&A and to offer attractive shareholder returns. We remain committed to a healthy balance sheet and net leverage below 1.5x over the long term, a reiteration to what we said at the Capital Markets Day. Holcim is investing for growth while delivering steadily increasing ROIC. Our return on invested capital continues to tick up year-on-year, reaching 11.2% in 2025.

And following our strong value creation for shareholders in 2025, the Board of Directors has proposed a dividend per share of CHF 1.7 to be proposed to our AGM. This will be paid out of foreign capital contribution reserves of more than CHF 7 billion, which amount to 17% of our market capitalization, and these are not subject to Swiss withholding tax. This represents a payout ratio of 53% and very important, a post-tax dividend yield of 2.4% after tax. This next slide is a bit of a reminder of our growth-focused capital allocation out to the year 2030, which we frequently discuss in smaller group meetings with our investors. The execution of our NextGen Growth 2030 strategy will provide Holcim with a total capital deployment capacity of up to CHF 22 billion until 2030.

In order to ignite further growth, we will deploy this capital strategically, focusing on growth as well as shareholder returns. We remain committed to a progressive dividend and returning substantial value to our shareholders. We will return a total of CHF 7 billion until 2030, corresponding to a payout ratio of approximately 50% or higher per year. An additional CHF 4 billion to CHF 6 billion from proceeds of larger divestments or available debt capacity can be used for large strategic M&A or to opportunistically execute share buybacks. We believe that our growth-focused capital allocation will further accelerate profitable growth while delivering attractive returns to shareholders. And with that, I'll close, and I'd like to hand it back over to Miljan.

Thank you, Steffen. So for NextGen Growth 2030, as you have seen, we are delivering superior performance and margin expansion focused on 5 pillars. We are scaling up our sustainable offering powered by our premium brands. We are accelerating initiatives for decarbonization and circular construction, driving profitable growth. A key part of NextGen Growth 2030 is expanding our high-value building solutions. With our impeccable track record of value-accretive M&A, we are focusing on the most attractive markets. And all of this, this is all driven by our deeply embedded performance culture, which we are proud to have at Holcim. Let's look more closely at some of these priorities. Customer demand for our premium brands, ECOPact and ECOPlanet continues to grow. These are being used at scale in large projects like the CityWave in Italy, which was built with ECOPact made from ECOPlanet that is even more sustainable because we use calcine clay and Mohammed Tower in Morocco, which was built with our ECOPlanet low-carbon cement and our insulation form Airium.

We're also seeing a strong growth in ECOCycle, our circular technology that is being used to recycle construction and demolition materials and put it back into our products. A recent project completed using ECOPact and ECOCycle was this housing project on the outskirts of Paris in France, which consists of 220 social housing units. This is the first and first in the world, 100% recycled concrete building in which all the components used, cement, concrete, even water are 100% recycled. Overall, this concrete with ECOCycle saved more than 6,000 tons of primary materials. It is a demonstration of what we can achieve by partnering with forward-looking cities to evolve building standards and building norms.

We are advancing circular construction to build cities from cities and also to drive profitable growth. In 2025, we made 3 acquisitions, and we also invested organically to grow our circular construction hubs. We are establishing them in all the major metropolitan areas in which we operate to a total of 109. Over the same period, we grew our net sales from circular construction to close to CHF 500 million. And as you can see, we are well on the way to hit CHF 800 million by 2030. Organic investments make up an important part of our growth-focused capital allocation, and Steffen also mentioned this. And in 2025, our capital expenditure amounted to around CHF 400 million. You can see some recent examples on this slide across different geographies. They give you some idea of our priorities, grinding investment, calcined-clay production or expanding our building solutions in Australia.

You will see in our press release that we have signed an agreement with Air Liquide to deepen our collaboration on one of our flagship projects, GO4ZERO for carbon capture and storage in Obourg, Belgium. We are in full execution of the first phase of this upgrade, which will make Obourg a really state-of-the-art plant, not only in Holcim World, but globally. And all these growth investments have a very attractive returns and a very attractive paybacks. Next, M&A. We closed 21 value-accretive transactions in 2025, of which 18 were acquisitions and 3 were divestments. We made 9 acquisitions in Building Materials and also 9 acquisitions in Building Solutions. We also have closed divestments of Jordan, Nigeria, and we sold our Karbala plant in Iraq. Just a reminder that we signed in October an agreement to buy Xella, a growth platform in a highly attractive European walling market.

It brings us sustainable and energy-efficient solutions powered by the premium brands that are really great fit to Holcim's existing product portfolio. It will also help us to accelerate the expansion of Holcim's high-value building solutions, which is in line with our next-gen growth strategy. This transaction is subject to customary conditions and approvals and is expected to close in H2 this year. In December, we also signed the agreement to acquire a majority stake in Pacasmayo. The company is a leading producer of building materials in Peru, and this transaction will probably close, of course, subject to all the regulatory approvals in H1 this year.

Finally, a note on our deeply embedded performance culture. You can see on this slide, statistics, but our results are not down to statistics. Our results are thanks to our people that work at Holcim. We want Holcim to be the best workplace where talent is nurtured, where performance is awarded and where innovation is encouraged. Our commitment to this vision has been reflected in Holcim being recognized as a global top employer by the Top Employers Institute. And through Holcim University, which is our in-house business school, we are providing our people with really best-in-class trainings. With our focus on accountability and also empowerment through Holcim spirit, our more than 45,000 of employees are delivering value across all economical cycles and across all market conditions.

And now to the outlook. Well, net sales and recurring EBIT growth fully in line with our NextGen Growth 2030 targets. Net sales, 3% to 5%. And as mentioned by Steffen, we are moving to organic growth. Also EBIT, 8% to 10% organic EBIT growth. We are committing to further increase of recurring EBIT margin. We estimate cash flow to be around CHF 2 billion. And of course, we will continue to invest in circular construction with 20-plus percent volume growth in 2026. Bernd, you can now open it for questions.

Thank you so much, Miljan. Thank you so much, Steffen. With this, we're starting our Q&A session. The first question is coming in from Martin Husler, who is joining us here in Zurich. Please wait until you get the microphone, please.

I have 2 questions. Maybe first, coming back to the ETS rumor scheme, and thanks for your elaboration so far. But maybe how much have you already invested, let's say, for example, in CCUS projects, which might stand at risk if CO2 prices came down below EUR 50 over the next couple of years. So just an indication on what's here at stake? And what would it mean if you start to delay CCUS projects for your CapEx for the next couple of years? That's the first question.

Okay. Thank you, Martin, and thank you for your question. So on ETS, the answer is negligible investment so far. I mean, we are -- for instance, in Obourg, we are building a brand-new plant, but we would do that without CCS. This will be the state-of-the-art plant best-in-class when it comes to cost efficiency and also when it comes to the sustainability KPIs. We talk here about a few million across the projects. So investments so far, negligible. If the projects are delayed, and I did discuss on what happens after 2030, I think if there is a delay, we will have more time to find more cost competitive solutions for these projects.

I'll give you a perfect example. 3 years ago, most of these carbon capture projects were based on offshore storage, means we take -- capture CO2, we take it somewhere in the sea. Now the momentum, especially in the last year, 1.5 years, has accelerated to move from offshore to onshore. So the cost advantage is enormous. So even if nothing happens on EU ETS, CO2 prices continue to go up, I might delay a project 6 to 12 months in order to move from offshore to onshore storage because cost advantage, as I said, is enormous. So when it comes to the CCUS projects, what we do at Holcim, and this is DNA, it's the discipline regardless, cost discipline on pricing, on cost and cost discipline on M&A and also CapEx projects.

And then a second question because you faced some integration costs you mentioned for Latin America, for example. Now thinking about the acquisitions that you announced, Pacasmayo, Xella, et cetera, which roughly add 10% to group sales on an annual base. How much as a ballpark number, how much EBIT contribution could that be? I mean, could EBIT also be impacted by integration costs, just 10% on sales? How much is this roughly on EBIT?

I'll start and then maybe Steffen can continue. So these 2 acquisitions in LatAm, they were different than Pacasmayo, let's say. Pacasmayo will run as a stand-alone company. So integration costs, they will -- there are always integration costs. Are we synchronizing ERP system? We will definitely invest in safety -- health and safety because this is the core of what we do, but I would expect negligible impact. And the same applies for Xella. On Xella, I think I would even like to spend more to accelerate this cross-selling between us to invest, for instance, in additional sales force so we can move faster on specification selling. So I would not expect significant impact on these 2 deals and the integration costs.

You're completely right, Miljan. Just to give you a feeling the scope in for these large acquisitions, Xella, Pacasmayo and Alkern for this year is going to be in the range of CHF 120 million to CHF 150 million on EBIT level. But the difference to a smaller acquisition -- in a small acquisition, you often need to go in and change a lot of things to bring it up to Holcim standard from safety to IT to accounting. Here, we're acquiring very mature companies. And so the initial cost to bring them to our standards is much, much lower. We can basically use almost everything they have. And then we change the accounting standards to completely communicate with ours. But the cost and the effort we have to do is much lower.

Next question comes from Lothar Lubinetzki from Octavian.

Let me follow up on the CO2 issue. What is more important for your margin progression, price or mix? And with regard to price, what is the current premium you're getting for ECOPact ECOPlanet in Europe and LatAm?

So everything is important. Don't get me wrong. But on the -- what is the -- what's driving our margin expansion is our whole high-value strategy, where pricing is important to offset the cost inflation, but margin expansion is coming from sustainable offering. I'll come to that later. It's coming from our incentives -- initiatives in decarbonization and circular construction. And you saw the slide on Europe, 66 acquisitions in the last 5 years at multiples of 5.3 after synergies. And so all of this is driving margin expansion. Now on sustainable offering. This is something that I'm really proud of the way we handle the whole launch of these products and where we are today. We do have a modest price premium on ECOPact, ECOPlanet, and this could be between low to mid-single digits. Probably in some countries, we are closer to 5%.

In some countries, we are between 1% and 2%. But as I said this before, these products, we have a cost upside. Thanks to Holcim's innovation, our production know-how, our formulation know-how on these products, we are reducing cost. We are replacing expensive raw materials with less expensive. For instance, you saw that we are now scaling up calcined clay production even in LatAm. This is exactly the point. By doing this, we will be replacing clinker with calcined clay. Calcined clay has lower CO2, but also has a lower cost.

So the story was about Europe. But a few weeks ago, I had a privilege to visit Egypt. I mean, country -- emerging market where the team took me to a project, National Grand Museum of Cairo, quite impressive, the whole development. And what was specified -- architects specified ECOPlanet. They demanded low-carbon cement and concrete solutions on these products. And this is a project in Egypt, not in Zurich or Hamburg or London. So potential for these products is increasing. And we are seeing more and more demand even in the developing markets. Another great example that you find might -- we published this actually 2 quarters, Ecuador. By far, I think it's the biggest residential development complex in the whole Latin America, houses for 180,000 people, all done with ECOPlanet and ECOPact.

And in terms of recycling CDM, I think you reached 8 million tons this year. Is there anybody else in the industry who is even getting close to that number?

So just to clarify, this market is big. What we're currently seeing that this market is fragmented. So there are many players. For us, where our advantage is, we are focusing on metropolitan cities, big cities from Zurich to London to Paris, Lyon, where we have a strong Holcim footprint. Buying these companies or building recycling hubs from scratch, we have excellent synergies. That's why we are faster than the others. I'm being modest.

Thank you, Lothar. One more question from the room. It's Remo Rosenau from Helvetische Bank.

What kind of price increases did you already announce in Europe ahead of all these certificate discussions? And when should they take effect?

It varies by region, so probably the most important regions.

So we talk about Europe -- Remo, thank you for the question. I know the pricing question always comes at some stage. First of all, very pleased with the pricing dynamic in Europe this year. We had an excellent exit price in December. And I think from what I have seen, and I have spent a lot of time with my dear colleagues at the back on pricing topic, we do have a very healthy momentum. I maybe too early to say, but it depends from market to market. Maybe we are talking about mid-single digits.

In percentage points.

Yes. We will stick before or after all of this.

Well, that's the question, how much of that will stick because the announcement is one thing and then the reality is the other one. And this is the slow season. So it only comes really -- I mean, the proof of the pudding will be in March, April, right?

Once again, depending from market to market, we are already seeing something -- some contracts have been secured. I am optimistic and positive that we will get there.

We stay tuned.

Thank you, Remo. We are now switching to questions from the webcast. The first one is Julian Radlinger from UBS.

So a couple for me. So first of all, the -- so you're guiding to 8% to 10% organic EBIT growth, which is higher than what you guided to last year. And last year, you delivered, I think, 12%. So I'm not going to ask whether or not you think you could do even better than 10%. But if that were to happen, what would the drivers for that be? What's likely to be different in 2026 versus 2025 in your mind in terms of demand, volumes, price or costs?

And then secondly, and I'm really sorry to ask this, but I think a lot of investors right now are really nervous about this topic, obviously. In a scenario in which something really draconian were to happen to this whole ETS mechanism. Let's just hypothetically say it actually -- they actually push the whole thing to the [right] or they cap CO2 prices on a very low level. What do you think happens to cement pricing dynamics in Europe or the level of competition? How would you -- what would you -- how would you think about that?

Julian, thank you for your question. I'll go to the second, and maybe you can answer the first one. We already addressed it on the guidance. So first of all, Europe slide is there, Julian, you can see what we have done in the last 5 years. And this is across some really challenging market conditions. We had COVID. We had -- remember in 2022, we had high energy prices going 300%, 500% overnight and so on. Pricing was disciplined in Europe, and that helped us offset all these costs.

So I do not perceive any significant impact, on the pricing dynamic will remain positive and healthy. There is more discipline. And Holcim, this is where we differentiate. We will continue with our pillars of our high-value strategy, sustainable offering, decarbonization, circular construction, M&A and so on to continue with margin expansion. So regarding just one on these big projects that I would like -- there are derisking mechanisms already in place in some countries that can help us mitigate the CO2 price volatility. So these projects on carbon capture can go ahead.

Look, we simply narrowed the guidance, right, from 6% to 10% to 8% to 10%, which is a sign of our confidence that we're really going to sit again at the upper end of that frame that we gave at the Capital Markets Day. So you should interpret that as a sign of confidence. Last year, we had above 12%. And again, we're aiming for the upper end of this guidance. Now what drives it? Leverage through a bit volume, as Miljan described before, operating leverage. And we're still on the journey to reduce our corporate costs, as you know, and to readapt to the regional footprint also after the spin-off. We have positive price over cost. We have good contribution from our JVs, a bit offset through the Nigeria divestment. So -- and I would also say the margin progress and the EBIT growth progress is probably a bit back-end loaded given the volume recovery pattern. But it's a sign of confidence, I would say, that we narrowed this guidance to the upper end.

Maybe one I mentioned in the presentation, Switzerland. So we are a Swiss company, proud to be a Swiss company. The amount of infrastructure projects we have in Switzerland today is significantly higher than versus 3 years ago. I mentioned Gotthard, okay, but this new one, Axenstrasse connecting Schwyz and Uri. This is a new project that will go on for years and where Holcim has secured the contract to supply. Also, once again, I would like to reiterate, residential sector was hardest hit in the last few years. For the first time, we are seeing bottoming down. Maybe it will not go skyrocketing, but we are seeing positive signs in this market segment where we took the hardest hit.

The next one on the line is Ben Rada Martin from Goldman Sachs.

My first is on the 2026 free cash flow guidance. Your comments around, I guess, expecting CHF 2 billion in '26 versus the CHF 2.15 billion you did in 2025 despite some really strong earnings growth in terms of EBIT. Can you talk through, I guess, what would bring you down towards the CHF 2 billion mark? Is it CapEx, tax, any working capital impacts, just so we can understand some of the key buckets? And then the second would just be on carbon capture. It's worth noting some headlines around potentially a Belgium project moving beyond 2030. Would you be able to touch on how you see the other project time lines within the next few years? And how much you expect to be online before the end of the decade?

Thank you for your question, and thank you for joining us. I'll go with the second question, and then Steffen can address the first on cash flow. So this morning, Air Liquide has made the announcement that we entered into partnership for the second phase of this project, Obourg, carbon capture. So as you can imagine, we have been dealing with the media recently a lot. Nothing to do with us. Phase 1 is progressing well. I had the opportunity to bring our Board members to see how the state-of-the-art project will look like when it's commissioned in H1 next year. Very happy with the development on that front. Once we complete commissioning in H1 next year, we will start working on Phase 2, which is with carbon capture with Air Liquide.

Ben, good to talk to you. On the cash flow guidance, look, over the last couple of years, also before the spin-off, Holcim has always delivered an above 50% cash conversion. And we've always had a very conservative cash flow guidance. Now why is that? Because cash flow is a time frame number, but it's also a snapshot number at the end of the year, depending on the fall of certain payments at the end of December or the beginning of January. This is why we give ourselves some flexibility here with this number. But you shouldn't read a message that we're reducing cash flow or that the strength of our cash conversion is weakening at any degree. It's just we give ourselves some flexibility in order not to be pushed into unsustainable measures at the year-end. That's it.

And the next one on the line is Luis Prieto from Kepler Cheuvreux.

A couple of them for me. The first one is I would like to come back again for a moment to the European Commission's overhaul of the EU ETS. The significant amount of noise around the subject has taken the CO2 price down, if I'm not mistaken, by almost 25% over the last 6 weeks. Could you provide us with a rough idea of what is the minimum price for the average project in your CCUS pipeline to be economically viable just to understand a bit better. And second one is from a conceptual perspective only, what could be a reasonable assumption for medium-term volume growth in Europe if the German infrastructure, defense investments, residential recovery and data center themes pan out as expected? In other words, if all these things fire on all cylinders?

Thank you for your question. On the volume -- I'll start with the volumes just to shake it up a little bit. On the volumes, we do not comment on the volumes, but I would say that construction activity can increase mid-single digit if all of this happens. On the ETS, well, the price can be even EUR 50, EUR 60 if you have derisking mechanisms in place. For instance, Germany has CFD, which is a carbon contract for difference, where they are helping the companies to offset the CO2 price volatility. So if we have that in place, then these projects can go ahead regardless of the CO2 cost. However, for us to be comfortable has to be EUR 100-plus per tonne.

The next one on the line is Elodie Rall from JPMorgan.

So first of all, on LatAm to change a bit from Europe. We've seen margin down 320 bps. I think you mentioned impact from integration of recent acquisitions. What kind of margin direction should we expect there for '26? Do you think we can get that back as soon as this year? Second question is on FX. Sorry, but could you give us your expectations for FX on top line and EBIT? And last question is on your view on capacity consolidation in Europe, if there is any update on this? I mean you were talking previously about further consolidation likely to happen by 2030. So has anything changed in particular with the potential for ETS reform?

Thank you for the question. On the capacity consolidation, we are not seeing any significant changes. I still believe that we might -- even this year, we might see some opportunities. As I said last time, we are interested. However, there are markets where we will not be able to participate. But overall, if there is a possibility, definitely, we would be interested in capacity consolidation.

For us, I said this also in the past, there could be a possibility that in the next few years, some of our existing clinker producing plants will be converted to produce something else, for instance, calcined clay. And the teams are working on this, and we already have a few of these projects underway. On LatAm, I think I am expecting margin expansion this year. I will not put the number, but all the signs -- positive signs are in place all the way from Mexico to Argentina. We are seeing a positive strong momentum in some of the countries in Central America. So I am expecting margin expansion in LatAm.

FX? Elodie, first of all, we expect headwinds to normalize from FX at around -- number one, first, I have to say, I don't have the crystal ball, okay? This is a disclaimer. And then after that, we expect headwinds to normalize as of the second quarter. The first quarter will still be a bit challenging. But if you have to put my best guess for this year, you have an FX headwind on sales of around 3% and an FX headwind on profit of around 4% to 5% with big disclaimer marks all around this information, okay?

The next one in the line is Arnaud Lehmann from Bank of America.

I have 3 questions, if I may. Just a follow-up on Latin America and Mexico, in particular, there's been a bit of unrest. Can you confirm that there wasn't any major disruption to your operations so far? And if you don't mind commenting a bit more on the volume outlook and pricing outlook for Mexico for 2026? That's my first question. My second is on North Africa. I believe the momentum was pretty good in Morocco, Egypt, et cetera. Can you -- do you see a continuation of the positive volumes momentum in '26? And lastly, you end 2025 with a very strong balance sheet. The share price has been a bit more volatile and obviously has come back down a little bit recently. Do you see opportunities for buyback?

I'll go on LatAm, Mexico and North Africa, and you address share buyback. Mexico, we are monitoring situation. There have been unrest in 20 out of 32 states in Mexico. Today, we still have some tension in 4 states, but Holcim operations have not been affected. And in -- other than these 4 states, most of the states are back to normal. On the whole Mexico volumes and trends, so as I said, last year, probably we were expecting these big infrastructure projects to start earlier, they started late in Q3 and they continued in Q4.

So I expect good momentum on infrastructure projects this year. And I already mentioned, it's on the slide that the first wave of social housing projects, 180,000 homes out of 1.8 million has started. So I'm optimistic about Mexico. On the North Africa, really, really strong momentum in '25. I am very happy what I'm seeing this year, what we have in the pipeline. You mentioned Morocco and Egypt. I would like to add Algeria. These countries -- these 3 countries' margins are now even higher than what we have in Latin America. Momentum is strong. Probably, we are expecting even better year than '25 in these markets.

Share buyback. Maybe I'll take a little step back to answer your question. So we announced the deals of Xella and Pacasmayo, which we will close in 2026. So the cash out will be in this year. We announced the dividend. And then there are some smaller portions that we do. We do bolt-ons again and so on and so on. So we will end up with a debt leverage of below 1.5 again, as we announced at our Capital Markets Day, we're going to move a bit closer to that number in 2026. Now also, as we've shown on our chart before, capital allocation until the year 2030, we have a clear priority of the dividend, the M&A, the CapEx, and we always said that share buyback is something we do with -- in exceptional opportunistic cases with excess cash.

But if you look at what I said before, we still have so many opportunities to do M&A on top also of Xella and Pacasmayo. There are still a lot of interesting opportunities out there for us in 2026 that you might hear as we go through the year. So that we -- for this year, we don't announce a share buyback. But as we also said in our capital allocation in a year where we don't have so many opportunities to drive very good returns with M&A, then we might also revert to a share buyback as a means to deploy our cash.

The next one on the line is Ephrem Ravi from Citi.

Again, only 2 questions left. Firstly, the Asia, Middle East and Africa, obviously seeing some of the strongest EBIT growth in local currency of all your regions. But it feels to me from the commentary that's almost entirely North Africa and maybe a little bit of Australia. So is it possible to unpack that region a little bit more in terms of what proportion of the growth in EBIT is coming from Morocco, Algeria and Egypt and maybe even Australia compared to Bangladesh, Philippines, et cetera, which is probably breakeven and obviously, Huaxin, we can look from public figures.

Second question on the -- back to carbon, I'm sorry for that. Is there any opportunity for you with lower carbon prices, i.e., can you sort of sell some credits before prices come down in the future if the rate of allowances given is going to be higher than expected in the future? And secondly, are you looking at hedging mechanisms on carbon? Because obviously, you could hedge currency and energy, but I haven't heard much about hedging carbon cost in the future because I suppose it was all seen as a one-way trade-off. But now that it's more volatile and range bound, is that something that you would be considering?

I'll tackle EMEA and you tackle the second one. Ephrem, thank you for your question. Yes, EMEA outstanding margin expansion, very good growth and most of it is coming from North Africa, Australia and GCC. We didn't mention it's a small position, but UAE is booming. Our position in Philippines, Bangladesh, it's relatively small. Philippines, if I can say one market where there are really challenging market conditions, that's Philippines and -- but relatively small position in the grand scheme, so it's not impacting. As I said, most of the margin, most of the contribution comes from North Africa, GCC and Australia. Having said that, Australia in H1 last year was a little bit softer, but we have seen a very good momentum in starting Q3 and continuing in Q4.

Carbon, Ephrem, we do not usually comment on that of what positions we take or don't take. It's highly sensitive. But we can be opportunistic in certain cases. We can look out into the future. We can make estimations that in certain years, the allowances we have will not cover our needs and then we might take positions at low markets. But be aware, what is very important to understand, we always view this as an industrial company. We never view this from a point of view of a trader who is trying to make a benefit on the carbon trades. We deal with the CO2 market like a raw material, okay, and not as a tool to make an additional gain with hedge positions. I think this is very important to understand.

So my view is even simpler. If I have CHF 1 million to invest, would I go and buy CO2 credits or would I invest in the circular hub or decarbonization initiative? Definitely. I would invest in a project where I can reduce the CO2. So we are -- as you said, we are not in the trading business.

Doing something good for shareholders and the planet. We've got a couple of written questions. The first one is from Pujarini Ghosh from Bernstein. She's asking, have you seen any change to the demand or willingness to pay a slight premium for your decarbonized products because of the ETS noise?

The answer is no and not only in Europe, but outside Europe as well.

Very simple. And the second question from Puja is, could you split the LatAm margin decline between what is driven by acquisition integration costs and how much could be operating leverage and underlying business impact?

Look, a couple of drivers here. Number one, we said that there were some onboarding costs for acquisitions. There was a big mix effect also, some countries that are very high profitability were a bit softer. Then we went through a bit of a slump in volumes also in 2025 in the second quarter, especially. And naturally, it takes a few months until you adapt your fixed cost structures.

And then lastly, we did a lot of maintenance, as I said, in the third quarter. So all of these things, as Miljan said before, we were quite positive that this is behind us. And for the full year 2026, we plan a very nice margin progression back to the levels of where we've been before. We're not guiding margin on one region specifically, but you can expect that the margin will come back up because there's nothing fundamentally -- there's nothing fundamentally that drove this where we are today. It was a couple of instances.

Then we've got 3 questions from Paul Rogers from Exane BNP Paribas. The first one, are you now happy with your portfolio in Latin America? Or are there still either new countries to enter or bigger gaps to fill?

I would simply -- last one was Peru. Peru now with Pacasmayo, we are gaining market leadership, and that would be it. LatAm story will be on bolt-ons, especially on Building Solutions side and the full, full acceleration in increasing number of sales points, number of Disensa stores.

Second question from Paul is how much debt capacity is left for larger M&A this year after Xella and Pacasmayo?

Yes. Paul, same question I gave to Arnaud before. We're going to close the deals on Xella. We're going to close the deal on Pacasmayo. We're going to pay a dividend. That leaves us at the end of the year roughly below 1.5. This is a long-term commitment. Now what we can do in order to maintain our credit rating, we can go up to -- up to 2 for a certain period of time. So there is a lot of debt capacity still left for us if we find it opportunistic to do other M&A. So financing will not hold us back.

And let me ask a third question. I think more or less we tackled this one. It's again update on Obourg modernization and CCS. Are there other big capital projects proceeding to plan?

All in all, I mentioned already Phase 1 commissioned in H1, really state-of-the-art plant. And I hope that once we are up and running, I will be able to send invitation for you to come and see the plant with the latest technology advances in cement industry.

Perfect. The next set of questions came also in by e-mail from Ebrahim Homani from CIC. Latin America, we already also tackled that one, I think, more or less. Is it possible again to reach the 2024 level in Latin America in the future?

Yes. Very simple.

Then the second question, weather conditions are currently bad in Europe since the beginning of the year. Not today in Zurich, but what's the impact on the expected organic growth for this year?

Look, Q1 is the smallest quarter in the year. January and February are the smallest months in the year. I say I cannot control the weather. But for me, what's important in January and February, Remo, this is what we discuss pricing momentum. So in the meetings these days, when it comes to activity, we only talk about pricing momentum. So even January was cold, February was wet, but this is only start of the year.

Perfect. The next question came in from Harry Goad from Berenberg. Do you expect to see positive organic volume growth in France and Germany this year?

To be highly conservative, I would say flattish. I would not commit to growth.

I think we demonstrated last year that we can achieve growing EBIT even in weak volume environments.

Well, the slide on Europe is suggesting activity was going down and the margin expansion was going up.

Somewhat related question from Stefano Donati from BlackRock. In your guidance, what volume assumptions are you using for Europe? And how much of the German infrastructure stimulus is in them?

[indiscernible] flat probably on 2 very large countries. And then up in Eastern Europe, I would say we have a low to mid-single-digit volume guidance in Europe positively.

I would -- on infrastructure in Germany, I would not expect anything in H1. We might see some positive signs in Q3, but I would not bet on anything big from German infrastructure spend.

Perfect. Then we are switching again to live questions from the webcast. The next one in the line is Harry Dow from Rothschild. Harry?

Just I think 2 questions left for me. I think, firstly, on the cost picture for 2026. I maybe you could take us through some of the assumptions around the raw materials, energy, employee sort of wage inflation sort of thinking about maybe in Europe? And then also just back on Northern Africa, I just wondering how much sort of spare capacity there is left in some of those markets for further volume growth? Or is it more sort of around pricing gains beyond sort of this year?

What was the second question? Can you please repeat the second question? I didn't hear it well.

Yes. It was just on North Africa, again, coming back on that. I just wondered how much spare capacity there was in that market for more sort of volume growth from here in terms of...

I'll go to North Africa, you tackled the cost topic. So North Africa, there is an excess capacity in all of these countries, especially in Algeria, but these countries are also export hubs. I mean, Algeria, currently, we are producing products to export to Europe, West Africa and also North America. Similar situation is with Egypt. There is a capacity if local demand is increasing, then exports will start reducing.

On cost, look, I would say energy, low single-digit impact, but we're always guiding carefully on energy. And then what nonvolume-related costs we're definitely going to go down this year. I said this before. We are still working on the fine-tuning of organization, which we do all the time. It's an ongoing topic at Holcim. We never have a big restructuring program or give it any name, but we're always working down on our structure.

So this will continue here. We see positive impacts. Distribution, hard to say, maybe a bit up by also low to mid-single digit. And then most importantly, I think what we said before and for you to take into account, there will be positive price over cost. So this is for us, it's the main topic. There will be positive price over cost, and there will be margin progress.

Perfect. The next one on the line is Isaac Ocio from On Field Investment Research.

So first one, I have 2. The first one would be, so in Asia, what additional EBITDA could you expect from Huaxin in China after they acquired Nigeria? And second question, so in Europe and Mexico, we're seeing mid- to high single-digit price increases successfully sticking. CEMEX announced 10% hoping to get mid-single digit in Mexico, and it looks like we could see some better volumes on top of that. So given the relatively limited cost inflation on the energy side, how much potential do you see for organic EBIT growth to really exceed the high end of your guide as the price costs expand?

Thank you for the question. Look, we probably go a little granular if we want to now break the Nigeria impact into Huaxin. I don't know, maybe 10% more conservatively -- 10% more contribution from Huaxin. And then Mexico, how much potential for organic growth? Well, double digit.

And the last question today in the line is an add-on question from Julian Radlinger from UBS.

I just wanted to ask, so judging from the slides, it looks like the ECOPlant mix has kept growing about 1% per half year through '25, but ECOPact has stayed at 31% of ready-mix sales since last summer. And obviously, as you explained, the increasing mix of these products has been a consistent price and margin driver for you guys. So how -- I know you have targets for that for 2030, but how should we think about that going forward? Is that -- are both of those products going to keep increasing?

Julian, very simply, it's not a linear relationship. For instance, I believe ECOPlanet will accelerate now because we are seeing a huge momentum in countries like Egypt, Morocco, all the way to Mexico and Argentina. So probably the ECOPlanet will start increasing over proportionally versus ECOPact. And ECOPact, this is more in mature market. We are seeing a growing demand across all markets, but at a slower rate. Anyhow, we do have a commitment by 2030. We are sticking to this commitment. I would say that probably ECOPlanet will be above that.

Perfect. Thank you, Julian. So with this, we are finished. Thank you so much for joining us today. If there are any further questions, obviously, the Investor Relations team is more than happy to support you. Everyone who is joining us in Zurich today, we are happy to invite you for a small lunch and the analysts which were not able to join us today and investors, we hope to see you soon in the coming weeks when we are going on roadshow. And with this, I hand it back to Miljan for some closing remarks.

Thank you. Thank you all for joining us. Really a pleasure this morning to present these outstanding results. I can assure you that we are at the full speed. Our performance culture delivered and will continue to deliver outstanding results. This performance culture, if I can use one word, that word is discipline. We will continue to exercise strong cost discipline, pricing discipline, discipline when it comes to M&A, discipline when it comes to CapEx projects. And I'm looking for another successful year in 2026. One big thank you to all Holcim employees, 45,000 of them for your outstanding efforts.

Ladies and gentlemen, welcome to the Holcim Q3 2025 Trading Update, Analyst and Investor Conference Call and Live Webcast. I am Sandra, the Chorus Call operator. I would like to remind you that all participants will be in listen-only mode and the conference is being recorded. [Operator Instructions] The conference must not be recorded for publication or broadcast.

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

Thank you, Sandra, and good morning, everyone. I'm pleased to be here with our CEO, Miljan Gutovic; and our CFO, Steffen Kindler . They will provide an update on our strong 9 months '25 results. Afterwards, they will provide an update on our strategy. And finally, obviously, they will give an outlook for the current year.

And with this very short introduction, I directly hand it over to Miljan. Miljan, please?

Thank you, Bernd. Good morning to all of you, and a warm welcome to Holcim's third quarter results. Steffen and I are pleased to be presenting our earnings to you today. Of course, there will be a time afterwards for your questions.

We delivered strong profitable growth in the first nine months of 2025. Highlights, as you can see, include the accelerating net sales growth in Q3 of almost 5%. Also, strong overproportional recurring EBIT growth across all our regions, and the industry-leading margin above 19%. Our margin expansion was driven by our high-value strategy. This includes scaling up our sustainable offering and accelerating decarbonization and circular construction to drive profitable growth. Earlier this week, we announced that Holcim signed a binding agreement to acquire Xella, a European leader in sustainable and innovative walling systems.

The acquisition is a milestone in our vision to be the leading partner for sustainable construction, and it will also accelerate the expansion of our high-value building solution segment in line with our strategy. With Xella, we have a growth platform in the highly attractive EUR 12 billion walling market, and I will talk more about this later on.

Elsewhere, we have continued our disciplined execution of value accretive M&A. Since the start of the year, we have closed a further 14 transactions focused on the most attractive markets. With these strong results, we are confirming our full-year guidance for 2025. I'll talk about the guidance in full at the end of this presentation.

Turning to the regional highlights now, Europe continues to deliver strong margin expansion driven by our high-value strategy, our sustainable offering, as well as decarbonization and circular construction. The demand for our sustainable offering is expected to drive continued earnings momentum. Here in Switzerland, our lighthouse market for innovation, where we have introduced the world's first circular cement, we have just launched ECOPlanet with ECOCycle cement with at least 10% to 100% of recycled construction and demolition materials inside. In Europe, more broadly, the residential market is showing signs of recovery, and we also have a robust project pipeline.

In Latin America, we delivered double-digit net sales growth for the first nine months with a recurring EBIT margin above 30%. We have also completed three value accretive acquisitions in Mexico, Peru, and Argentina since the start of the year. These acquisitions will help us further accelerate the expansion of Disensa, the largest construction material retail franchise in the region. Disensa is growing strongly, and we have opened around 290 additional Disensa stores in the first nine months.

We expect the strong performance in Latin America to continue with Central America and recently acquired businesses driving growth. In Mexico, there is a very strong pipeline of infrastructure projects to accelerate growth from 2026.

Asia, Middle East, and Africa delivered a double-digit increase in recurring EBIT and outstanding margin expansion of 200 basis points. We saw a strong demand in North Africa and in Australia, where our joint venture business, Cement Australia, also recently closed the acquisition of a division of BGC. Further out, there is a positive outlook in Australia, and we do expect the strong demand in North Africa to continue this year and also in the years to come.

With that, I would like to hand it over to Steffen to talk through the financials in more detail. Steffen?

Thank you, Miljan, and a warm welcome to all of you also from my side. It's a pleasure to be with you today for a nine-month trading update.

Looking first at the net sales bridge, you can see that organic growth was the main contributor. The contribution from acquisitions exceeded the impact of the investments for a total 2.9% rise in local currency, excluding large M&A. This keeps us nicely within the reach of our full-year guidance. The foreign exchange effect on sales was negative CHF 600 million, or 5%.

In the first nine months, we delivered 9.8% growth in recurring EBIT in local currency, again excluding large M&A. With this performance, we are still at the upper end of our full-year guidance. Despite FX headwinds of CHF 160 million or above 7%, we managed to grow our absolute EBIT in Swiss francs by almost 2%.

Now let's look at the progression of our recurring EBIT and recurring EBIT margin on a rolling 12-month basis. This graph shows that we have consistently expanded both our 12-month rolling recurring EBIT margin and our rolling recurring EBIT, now well above CHF 2.8 billion. As Miljan said earlier, this is driven by our high-value strategy from scaling up our advanced sustainable offering, accelerating decarbonization, and circularity initiatives to our value accretive M&A with focus on the most attractive markets and our empowered leadership with a strong performance culture.

We saw strong recurring EBIT contributions from all the regions, more than CHF 1 billion in Europe and more than CHF 700 million in each of Latin America and EMEA. Net sales growth was double-digit in Latin America, and we maintained a recurring EBIT margin of above 30%.

One quick comment on our Q3 margin in Latin. On the efficiency side, we had some phasing of maintenance shutdown in Mexico by three plants, so almost half of our plants in the country, which created comparatively higher maintenance costs and an impact on inventory movement. The timing has been good, as we believe, as we can now transition into the next phase of infrastructure projects with two large rail projects just starting. There were also some scope effects connected with the integration of our most recent acquisitions in Peru and Guatemala that impacted the Q3 margins.

We expect the margin in Latin to be above 30% again in Q4 and for the full year. In Asia, Middle East, and Africa, there was a double-digit recurring growth in EBIT at 14.7%. We had an especially strong Q3 in North African markets, and Australia was also strong, showing the benefits of a regional diversification playing out.

With that short update, I'm pleased to hand it to you back over, Miljan.

Thank you. Thank you, Steffen. To return to our big news from the start of this week, the acquisition of Xella.

Let's walk through the rationale, first of all. As I said, this is a growth platform in the highly attractive European walling market and a business that both has a scale in terms of top line and that is also high-performing with margin of around 20%.

It brings us sustainable and energy-efficient solutions powered by premium brands that are actually a great fit with Holcim's portfolio, with more than 900 salespeople dedicated to provide commercial support to the customers and also high-value specification selling. It also accelerates the expansion of Holcim's high-value building solution, which is in line with NextGen Growth 2030.

The financials are very attractive. The transaction is priced at 6.9x EV/EBITDA multiple after synergies of approximately EUR 60 million in year three. It is also EPS and free cash flow accretive in year one and ROIC accretive in year three.

Here you can see that Xella gives us new capabilities in markets where we are largely already present, which is beneficial in terms of vertical integration. There has been a significant investment in Xella's production facility in the recent years, making them truly state-of-the-art. Its sustainable offering is powered by the premium brands you see listed here.

As noted, this is absolutely in line with our strategy. I've talked about points one to three in the previous slides, but for four, performance culture and value creation, it is also worth noting that Xella is a pioneer in digitally supported construction and smart design tools and processes with its platforms, blue.sprint and Building Companion.

Aside from Xella for NextGen Growth 2030 as a whole, we are delivering superior performance and margin expansion focused on five drivers. Firstly, we are scaling up our sustainable offering powered by premium brands from ECOPlanet and ECOPact to ECOCycle. We are accelerating initiatives for decarbonization and circular construction, which is driving profitable growth. A key part of NextGen Growth 2030 is expanding high-value building solutions with our impeccable track record of value accretive M&A to focus on the most attractive markets. All of this is driven by our deeply embedded performance culture.

Let's look more closely at some of these drivers. Customer demand for our premium brands, ECOPact and ECOPlanet continues to grow. These products are being used at scale in large-scale projects like Metro line in Colombia, which is actually built with EcoPact inside, and the nautical bays in France built with ECOPlanet that is even more sustainable due to its use of calcined clay instead of more energy-intensive clinker.

We are also seeing a strong growth in ECOCycle, our circular technology that is being used to recycle construction demolition material and put it back into our products. A recent large-scale project using EcoPact and ECOCycle was this secondary school in Germany, which you can see on this slide.

Next, M&A, we have closed 14 value accretive transactions since the start of the year, with five to strengthen in building materials and seven in high-value building solution. We also closed the divestment of our Nigerian business, and we sold Karbala Cement Manufacturing in Iraq.

Now about our outlook. With these strong results, we are confirming our full year 2025 guidance with the following: net sales and recurring EBIT growth in line with NextGen Growth 2030 targets, 3% to 5% net sales growth in local currency, 6% to 10% recurring EBIT growth in local currency, recurring EBIT margin of above 18%, free cash flow before leases of around CHF 2 billion, and we will continue to grow in recycled construction and demolition materials more than 20%.

We'll now turn to the questions. Bernd, please open up the line.

Thank you so much, Miljan. Sandra, can you please repeat the instructions for the Q&A? Thank you.

[Operator Instructions].

Sandra, the fastest one this morning was Tom Zhang from Barclays.

Maybe two for me, please. Just the first one, look, it's a little early, but I think the big question from everyone is going to be into 2026. Can you maybe give us any early color around pricing strategy, how kind of expectations around ETS changes fit into that, especially in Europe?

The second one just on Latin America, you mentioned, I guess, Steffen, that you already expect Latin margins back above 30% from Q4. There was a bit of weakness in Peru and Guatemala. Could you maybe just give us a little bit more color into what drove a little bit of the margin compression this quarter? What gives you confidence that that already picks up next quarter? I mean, is that more a sort of market recovery? Is that cost control?

Is that kind of integration of M&A? Any color there would be very interesting.

Good morning, Tom. Thank you for joining. And of course, thank you for your questions. So I think I will start with the pricing and then Steffen will add a few points on LatAm.

Regarding pricing, Tom, you said it yourself, it's a bit too early. But where we stand today, I would expect strong pricing momentum in 2026. We are seeing significant changes on EU ETS front kicking in, in January next year. And automatically, this will open opportunities for healthy momentum on the pricing front. Outside Europe, I think, so far, the indications are good. Obviously, in the markets where we will have high inflation. We will be aiming for double-digit price increases. But so far, so good. I'm not expecting any major setbacks when it comes to pricing momentum in 2026.

On the LatAm front, I might start, obviously, and Steffen already mentioned it. Yes, we have seen a slightly lower EBIT in Q3, but I'm very optimistic about the full year and also next year. Maybe just from my side comment, we have seen some delays on these projects in Mexico.

However, just this week and last week, we have managed to secure the first tranche of these big projects. There is Mexico City to Querétaro. It's a train, a rail project, approximately 200 kilometers. And the other one that goes from Mexico City Airport to Pachuca, approximately 100 kilometers. So just the message from my side here, it's coming. It probably has been delayed for a couple of months, but we are seeing at least the first wave of these projects coming through. Steffen?

Yes. Exactly, Miljan. So to your question, look, as Miljan just said, we had a great run of infrastructure projects in Mexico, and we're now preparing for the next wave of infrastructure projects. This was a good time to take some of our factories into maintenance. So actually, we took 3 of our 7 factories in Mexico into maintenance, which had impacts on the cost and had impacts on the stock level variations. This was one driver for Q3 and then a driver also that we had with the 2 larger acquisitions with Guatemala and Peru. This is very common in our company.

When we acquire new companies, we bring them up to wholesome standards in terms of health and safety, in terms of accounting, in terms of compliance. So this has some start-up cost, which is, of course, part of our business plan. This business perform according to the plan. We're absolutely satisfied with that, but these startup costs are always part of our expectations, and this is what hit Q3. This is why -- and again, together with Miljan just described, we're quite confident that Q4 will be above 30%, I'm absolutely confident that the full year will also be above 30%. So high level of confidence that this was a Q3 limited short draft.

Okay, thank you. I guess maybe just very briefly to follow up, the sort of startup costs, maybe that sort of integration happens every several quarters, but the big delta, I guess, is factories coming back online after maintenance and projects restarting in Mexico for Q4, and you wouldn't sort of rule out further margin progression into '26 as the acquisition integration completes.

Absolutely. You nailed it. I could not add anything to that.

And plus the synergies.

Plus the synergies. Yes.

The next one on the line is Julian Radlinger from UBS.

So two questions for me, please. The first one is on the EMEA segment. So it seems like pro forma, excluding Nigeria, EMEA accelerate on a like-for-like basis in terms of EBITDA growth in Q3 versus the first half, if my math is right. We know, of course, North Africa has been quite strong for some time, but would you agree with that characterization? Am I reading that right that earnings accelerated in Q3? And if so, what or which countries are driving that?

And then secondly, on the German pricing or the European pricing point, I think a big debate amongst investors right now is, of course, the timing of all these regulatory steps and specifically the publication of the benchmark.

And I'm just wondering, is there any risk you see? Or could you help us in thinking about the relationship of the timing of the benchmark, if that happens rather in Q1 some point rather than before the end of the year. Would that have any impact on kind of annual price discussions, you think, like a delay or something like that? How should we think about that?

Good morning, Julian, and thank you for joining, and thank you for your question. Yes, I'll start on the pricing EMEA, and then maybe if you would like to add, Steffen, a few points on EMEA. On the pricing, yes, we need to know what's the benchmark. It will be published probably, I was hoping, end of this year, but it looks like it's going to be in Q1 next year.

For us, it won't make any difference. We will make our assumptions accordingly. Julian, if you recall, our pricing for full year takes effect from January to April. Depending on the contract obligations we have with the customers, it will happen in a few steps. We also have room for dynamic pricing, which we have executed for years successfully, especially in Europe. I would not expect any delays. It will take its natural course. Of course, we would prefer to have this benchmark published earlier than later, but we will deal with it.

On the EMEA side, I'll start, and then Steffen can add. North Africa momentum is really strong. I had the opportunity to visit Algeria just recently, and I had exposure to this country for years. I have never seen such activity on the construction side. We are seeing similar trends in all our big markets, Egypt and Morocco. Also, Australia, if you recall, I did say in the last call, Australia was softer in Q1. It started recovering slightly in Q2, but the momentum now is on a very good level.

I think EMEA momentum will continue, and it will be driven by North Africa, with all these huge investments on the infrastructure side, but also on residential. Plus countries like Australia and so, they will contribute to overproportional growth. Steffen?

Miljan, thanks. There's really not much to add to what you said. Maybe just one small comment that Australia developed positive momentum again. Also, in the Philippines, we've reached a bit of a new plateau in terms of performance. This is not a straight line, but we had a good reset in the third quarter there as well.

The whole region seems to be doing very well, and I want to echo what Miljan said. We also expect a strong fourth quarter. Just keep in mind, Nigeria also performed well in the third quarter, which is now divested. The region will continue to perform very, very well.

Perfect. Thank you, Julian. The next one on the line is Ben Rada Martin from Goldman Sachs.

I just had three, please. My first was on the European clinker asset base. I wonder, you know, we've seen some of the peers close assets in the last few years and talk to kind of an outlook of closures as well. Is this likely to be a theme for your business in 2026? The second one was just on carbon capture. I noticed that it wasn't too much of a focus in the presentation today. Could you give us an update on the timelines of the seven plants in Europe that you've received innovation funding for? Are they likely to still become operational in 2027 and 2028?

Finally, it would just be on price costs. Steffen, would you be able to talk to the price cost dynamics by region for this last quarter?

Good morning, Ben. Thank you for joining. Thank you for the question. I'll start, and then I'll hand it over to Steffen. Basically, the first question was on the footprint. We did optimize our footprint already in 2021, '22 with some modifications. If you are asking me what do I expect in the next two to three years, I do see some of our existing plants that are currently producing clinker. They will be converted to produce something else. These are usually small to mid-sized plants in selective locations, and what they will be producing is probably calcined clay. We see this shift will happen in the next few years.

On CCUS, Ben, you know that we do have seven projects in Europe. These projects were partially funded by the EU Innovation Fund. We talk approximately close to EUR 1 billion funding. They are progressing. Our commitment is actually 2030.

I just came back last night from Belgium, where I was there with the board. We visited the GO4ZERO, one of our lighthouse plants in Belgium that will be also carbon capture. The first phase of the project has already started. We are building a new state-of-the-art plant that will be even without carbon capture, the best in class, the most efficient on the cost side, but also on the CO2 footprint. We expect commissioning early in H1 2027.

Once the plant is commissioned, we will move to the next phase, which is CCS. On this particular plant, we got around EUR 230 million to support the second phase of the carbon capture. I expect that there could be some delays, but I'm not talking about years. I'm talking about months because we know what has to be done in our plants. You need to think about the whole value chain.

We need to have transport in place. We need to have ports in place. Of course, you need to have a sink storage in place. This is work in progress. At the same time, our execution of these projects includes collaboration with different parties. We are dealing with all the relevant stakeholders in the whole value chain to make this happen by 2030.

Price over cost?

Good morning, Ben. Welcome to the group. Look, price over cost has been positive across all regions. I would say the leading regions are Europe and Middle East, Africa. It's driven by pricing still. We have positive price across the board, but it's also very much driven by all the initiatives we do on our structure and on our cost side, from supply chain, distribution cost, where we now work with AI tools to optimize our forecasting, to maintenance, where we again use AI tools to predict our maintenance. This shows very, very nice progress on the cost.

We told you before that after the spin-off, we slowly look to reduce our headquarter structures, which we're making very good progress on. All of these things on the cost side, all the actions we do there also contribute very much to a positive price over cost.

As you know, at Holcim, we don't announce large cost-saving programs and don't give it names. We do this every day. For us, this is a continuous activity to increase the prices and to watch the cost space. Positive price over cost in every region. This is a key for us also in every review we do with our businesses.

The next one on the line is Pujarini Ghosh from Bernstein.

Going back to the topic of Latin American margins, thinking about it slightly on the medium to long term, we are seeing you move slightly away from just selling cement in bags to a more integrated approach with a higher proportion of building solutions in the mix. In that context, how do you expect the margins and also the returns to evolve in LatAm?

My second question is on pricing again, but specifically on some of the regions where you've struggled with pricing, for example, Germany. We've heard from you as well as some of your smaller peers that you've already started talking to your customers in terms of raising prices next year. What are you seeing on the ground? Basically, what are the expectations for pricing in difficult markets like Germany, but also if there are other such markets in 2026?

Good morning, Pujarini. Thank you for the question, and thank you for joining us. On the LatAm, yes, we will be moving more into the building solution. At the end, you have to think about the whole margin with the full vertical integration. We want to scale up building solutions? Yes, margins in building solutions are slightly lower than in the building materials. Looking at the whole picture, we are still seeing potential for, of course, margin expansion.

Our commitment for LatAm remains the same. Our margins have to be above 30%. We will continue at the same time to invest in building solutions, M&A, organic, and our key driver of expansion in LatAm will be Disensa, which is the largest franchise construction retail network. That will help us maintain our market share, increase our penetration into the markets, and also maintain very, very healthy EBIT margins across the LatAm.

If you recall at our NextGen Growth strategy in March, we said we have 200 of these shops around the whole Latin America. Our goal is to reach 5,000. This year so far, we have added approximately 300, and we believe this trend will continue to accelerate.

On the pricing, maybe if you want to add anything?

On the pricing, yes, Germany this year, the market, the pricing momentum wasn't great. For us, once again, pricing is one aspect. Our initiatives, our value over volume strategy, this is what's driving significantly margin expansion in Europe. Pujarini, if you saw that margin expansion in Europe this year, year-to-date was 130 basis points.

This is our focus on our sustainable offering, our premium brand, our investments in decarbonization and circular construction, and, of course, M&A, value accretive M&A strategy, where we are investing in the most attractive markets and most attractive business segments. I believe, as I said previously, pricing momentum in Europe so far is looking promising. It will kick off in January.

Probably by April, we will have the full picture. I just spent the last two weeks conducting comprehensive strategy reviews with the countries. It's part of our midterm planning cycle, and what I have seen is positive.

Thank you, Pujarini. Yes, just again, Latin America, the expansion of the Disensa stores from 2,000 beginning of the year to above 5,000. Obviously, this is a very strong driver of our business in Latin America. The next question comes from Luis Prieto from Kepler Cheuvreux.

A couple of them. Should we consider Xella as a platform to which you will synergistically add new small businesses? Or should we expect other sizable M&A to achieve critical mass in the walling solutions space. And my second question goes back to your example of the use of sustainable products in Colombia. In the absence of meaningful environmental motivations, what explains the client choosing them over your regular offering, again, in a particular case of Colombia.

Thank you for joining, and thank you for the question on Xella. Yes, Luis, this is exactly -- and I think the slide is on. You can see the slide. For us, this is a new growth platform, a platform that is highly attractive and also very profitable. And you would expect expansion in this sector, expansion either through M&As or even organically. We see a great potential where Holcim has a very strong position to actually expand in the -- and Xella is not producing. So there could be -- expansion will be a mix of organic growth and also value-accretive M&A deals.

On Colombia, so LatAm has embarked on the journey for sustainable offering early in the piece. We are not getting significant premiums on these products in Colombia, for instance, Luis, don't get me wrong. We talk about modest pricing premium. But these products, they are also -- with these products, we are able to reduce the cost because we are replacing very expensive raw materials with a cheaper, more environmentally friendly options. And this is what is driving margin increase. In LatAm, we are also talking to all the different stakeholders highlighting the advantages of our solutions from the mechanical and physical properties, but also on the sustainability footprint. And we are managing to achieve the great penetration.

Perfect. Thank you so much, Luis. The next question is from the line of Cedar Ekblom from Morgan Stanley.

Two questions. On Xella, the margins of the business have been under pressure and the business is exposed to residential as an end market in Europe. So I think we can understand why that might be but I think there has been some debate in the market since the acquisition around the quality of the asset and whether your ambition for the 2026 EBITDA of that business is credible and plausible.

So I'd just like to hear your sort of rebuttal to some of the more skeptical views out there that, that is not a good asset. Maybe you could tell us why you think it is. And then secondly, on consolidation in Europe, in the last quarter, you spoke about there maybe being a potential for some heavy side assets to be consolidated in Europe. I don't know if you could give us an update on your position there.

Thank you for joining, and thank you for your question regarding Xella's assets. So we did conducted a very comprehensive due diligence, which was not only desk due diligence. In fact, we spent a lot of time in the field, visiting plants, including myself, I had the opportunity to see some plants. Our technical people, they had a chance to do a comprehensive on-site due diligence on all the key Xella assets.

From what we have seen and what we have concluded, they really have a very strong production efficiencies already in place. They did some sort of footprint optimization in the last 2, 3 years. And at the same time, they invested heavily in the production facilities where they want to stay and expand. And we have seen high level of automation. We have seen a very efficient production cycles. We have seen even very good logistics efficiency, how they are servicing their clients. So all-in-all, I believe one of the greatest assets of this company are actually the production assets. So we were very, very pleased with that.

So on the Xella side, so I did say -- so basically, we talk about this huge walling market. We talked about EUR 12 billion. And this market is growing, and this market is profitable, and it is expected to reach EUR 16-plus billion by 2030. So what is driving this? First of all, there is a significant shortage in housing across the Europe. We talk about deficit of around 10 million homes. We are already seeing recovery in some of our main markets because, as you know, Cedar, Holcim is present also in residential sector.

This will drive growth. In addition to this, we are seeing a strong -- a very strong momentum in repair and refurbishment. For instance, 80% of the buildings where we live and operate today will exist in the next 20, 30 years. So we need to ensure they are suitable for use. So repair and refurbishment momentum will continue to grow. And what's very important that the EU regulations will mandate energy-efficient repair and refurbishment.

And Xella's product range, product offering is best positioned to capture this in long term. So when it comes to the financial performance of the company, I am not worried. I am very excited that we closed this transaction that we can start accelerating our synergies. As you saw, we talk about EUR 60 million in year 3. I believe that the potential is even higher after that from the cost synergies all the way to the commercial synergies.

In the presentation, we have given example of one of the projects. This project has been completed. They do have -- we have supplied ECOPact. We have supplied ZinCo’ roof, our green roofing system and Xella has supplied a sustainable walling system. And this is what I'm talking about. This potential for the cross synergies for specification selling and also vertical integration.

In addition to their, I believe, really very good assets, Xella has 900 commercial people. Out of these 900, 200 are purely dedicated to specification selling. So these people, their every day job is to go and talk to architects, engineers, project managers, builders, key owners to specify Xella's products. Once we close these very exciting acquisitions, they will be specifying Holcim's products. This will accelerate our synergies on the commercial side.

Consolidation, I think, it started. I mean I mentioned this several times. We did buy some assets already, grinding stations, terminals, ports. And I honestly believe we will see some consolidation already starting in '26. And this will be simply driven by the whole EU ETS Phase 4, CBAM and so on. So if you are asking me, yes, depending on the market, depending on the financials, Holcim will be happy to participate in this.

Perfect. Thank you so much, Cedar. Now we've got two questions from Jon Bell from Deutsche Bank. He sent us two questions. First one, can you tell us how long have you been looking at Xella, how competitive was the process? What was the genesis of the deal? That's the first question.

And the second question regarding currency movements, that's one question for you, Steffen. Currency movements, such as the weakness of the euro, will they have a positive impact on your year-end net debt figure '25.

Why don't you start with FX and then I'll...

Okay. Jon, thanks for your question. So we guided net financial debt of [ CHF ] 4.1 billion at the year-end with a debt leverage of 1.1 or below. The currency headwinds currently with about 7% -- above 7% on EBIT are not a detriment to achieving any of our financial KPIs that include FX, free cash flow, EPS. We maintain guidance, and we're well able to deal with that. On the net financial debt basis, we now completed the deal for Nigeria. We received the cash. So I would say the last guidance on net financial debt is probably conservative at this point of time. We're probably going to be right around [ CHF ] 4 billion depending on how free cash flow pans out, maybe even a little bit below.

On the Xella, thank you, Jon, for the question. Look, we've known Xella forever. When we are supplying big projects, I personally like to visit construction sites. When I go on the construction sites, I do see Xella's products. It's a very powerful brand name in most of our key markets, from Romania, Poland to Germany, Belgium, even here in Switzerland, we do have Xella's construction sites, in fact, around the head office.

For us, we knew the company. In some markets, actually, we have been supplying our products to Xella for years now. It was bilateral process. Due diligence lasted for a few months. I think we did spend time, appropriate time, energy and resources to conduct comprehensive due diligence. If you had a chance to hear Cedar's question, for us, it was very important that we understand the asset base, that we understand the commercial approach to the market, and this has taken a few months, but it was one-on-one discussion for the past several months. And yes, very happy that after due diligence, we have managed to sign this deal this week.

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

So my remaining questions would be, first of all, on Nigeria. I was wondering if you could give us how much did Nigeria contribute to organic growth in Q3 in terms of revenue and EBIT? Or if you want to give us what would have been the like-for-like growth in Q3, excluding Nigeria. So that's my first question.

Second on Xella. It seems like the D&A is quite high, which is bringing EBIT margin down closer to the 12% mark. So is that the correct starting point? And what is driving this high D&A? And how should we think about EBIT margin going forward? And then a bit of a housekeeping about corporate line. My last question is broadly [ CHF ] 100 million a quarter, it seems. So is that the right number going forward now?

I think most of these questions are for you, Mr. CFO. Elodie, tonight -- today, you are not asking me anything. So why don't you start? Maybe on Nigeria, just -- sorry, Elodie. So on Nigeria, so just for the -- it was the consolidated end of August. So September was completely out. On Xella D&A, just -- I just -- I'm very happy what I saw when it comes to the investments into maintenance, into the operational efficiency and obviously, that was the main driver behind D&A. I expect significant margin improvement that will come from a recovery of the market. But also that will come from our highly attractive synergies that we committed in the plan. I'll stop here and hand it over to Steffen.

Yes. Look, Nigeria was about 1/3 of the growth in EMEA. But also remember, please, that negative FX is also driven by Nigeria. The naira depreciated by 20%. What's very important is looking forward, EMEA, the region will continue to perform strongly because the performance was so broad-based. We said this before, Northern Africa, the Middle East, new dynamics in Australia and a bit of a level reset in Philippines, this all came together.

So we will still see very, very strong results from EMEA into the fourth quarter and into next year even after the divestment of Nigeria. I think this is the key message, although Nigeria contributed positively. And then there was a last question on corporate. Could you repeat that? I didn't fully understand that, please?

Sure. It seems like it's now [ CHF ] 100 million in terms of impact per quarter. I mean it used to be a lot higher. So I was wondering if this is the right number to have going forward.

Yes. Yes, [ CHF ] 100 million, corporate to the corporate line, [ CHF ] 100 million corporate cost per quarter about...

Yes, that seems about right. Yes. We are -- remind you, Elodie, we said that as part of the spinoff, we said that we here at Holcim, we had a bit of a larger structure after that, but also we have divestments ongoing. So we're in a permanent process to always look at our structures. We are in permanent process to optimize. I said before, what we're doing in distribution, what we're doing in maintenance with the use of AI, with the leverage of our shared service centers. So there's always a glide path of how we optimize our structure, always -- not with one big program or with one shot that has disruptive FX. We always do this over time. and always in line with our employees' interest. So -- but yes, this is a good way to look at...

I always like to look at that as a percentage of net sales. So maybe if you...

Yes, yes, we -- look, we have been -- our overhead cost has been 2% over the -- 2.2% over the long time in terms of net sales. After the spin, we shot to above 3% for a moment, and we will be back to around 2% at the end of 2026. So this is the glide path I was talking about that we slowly work our structure back down to there. Again, we give us enough time while the company keeps performing.

And regarding your last question, regarding depreciation because obviously, it's not just depreciation. It's also amortization. And obviously, Xella has one incredibly strong brand, which is Ytong. And obviously, they already had some other intangible assets before we acquire them, which we continue to amortize. But we can discuss this bilaterally with the Investor Relations team and will obviously help you to model that.

Now we are going to Switzerland. The next question comes from Martin Hüsler from ZKB.

Yes, I have actually just two questions last, maybe just stick to Xella. Again, can you talk about the current utilization rate and what maintenance and growth CapEx do you foresee to do the growth of more than 5% you expect annually. And also, am I right that it's mainly a new construction product, can you maybe share a bit your thoughts on what percentage of sales you see for refurbishment on Xella?

Martin, thank you for the question, and thank you for joining us. Xella is active in both new construction and also refurbishment, maybe the ratio is now 80%, 70% to 20% to 30%, but we expect this to continue to grow. And this is driven because Xella solutions -- they are nice combined with Holcim's. For instance, walling -- the whole walling is a perfect fit for a highly growing repair and refurbishment market.

On Xella capacity utilization, so what they did, as I said in the last few years, they optimized their production foot heavily, they actually invested in the facilities and upgrade them where they have been -- where they want to stay in the long term. The small inefficient facilities they shut down. Now we are talking about 50-plus production sites across 21 countries.

And when it comes to capacity utilization, we talk about 50%, 60%. It depends really from market-to-market. So we see our potential, we see this white space where we can grow from this map, if you look at the map that is on the slide on the screen, you can see that we can expand in some very attractive markets where Holcim has a leading position.

If you look at the Spain, if you look at the Greece, Switzerland, for instance, Martin, currently, Xella is not producing in Switzerland. Products are coming from Southern Germany. The question will be what -- how do we tackle Switzerland in the future? Then the huge market is U.K., where Xella is currently servicing, they have a commercial logistics setup. So I see opportunities, huge opportunities of inorganic growth. At the same time, we have already identified a few potential M&As. I think I answered...

Okay. Yes, in CapEx -- do you think CapEx -- or what is it in the range of 2% to 3%. Or is it higher?

I would say it's slightly higher. This CapEx is between light and heavy side. So it could stabilize around 3%, 4% in long term.

Okay. And maybe an add-on because you referred before on a question on conversion of plants into calcined clay, obviously, early stage. But I mean, this must come with a cost tag right? I mean to convert, to depreciate clinker factory. Can you give us some probably high-level numbers, what we should expect there?

Well, obviously, Martin, we are producing already calcined clay in some of our plants. In some plants, we have phases where at one, for a certain period of time, we would produce clinker, then we would produce the calcined clay and so on and so on. From the cost point of view, we don't need massive, massive upgrades in our existing plants. It's pretty much straightforward.

And then on the D&A side, I mean, we will still continue to produce the product. So probably too early to say, but I do not expect any significant impact when we are converting existing clinker line to calcined clay line.

Perfect, Martin. The next one is Arnaud Lehmann, Bank of America. Welcome back Arnaud and congratulations what you have achieved.

It was hard work, but it's a fantastic result. A couple of questions on my side, if I may. Just on Xella, could we have an indication of the share of Germany in the sales relative to Eastern Europe? Is it 50-50? Or is it very different from that?

And the second question on M&A. Post Xella acquisition, which I guess will take about a year to complete, Holcim will be pretty close to the 1.5x net debt-to-EBITDA ratio. And I think at the Capital Markets Day, you kept yourself at 1.5. Does that limit your ability to do other larger acquisitions in the next year? And related to that, are you still interested in the Insulation segment or -- now that you've done Xella as a platform deal, you've moved down from insulation?

Thank you for the question, and thank you for joining. It's interesting. I did get a lot of that question about Xella's net sales split, Germany versus the rest of the world. In fact, I would expect that this year and next year, German represents probably 25% to 28% of the total net sales.

The other big markets for Xella, it's Poland, it's Romania, it's Belgium, it's Italy. And this is where Holcim is in a very, very strong position. And as I said earlier, to Martin, I do expect potential to expand Greece. I mean we are a market leader in cement, in aggregates, and ready-mix in Greece. Greece is a great market for these products. Another great market, Spain, and of course, U.K. So Germany is no longer a dominant in Xella's world. And with momentum happening around Germany, I think other countries will grow the portion of the pie.

What was the second question?

Financial debt.

Financial -- why don't you have...

Yes. Okay. On the net financial debt, I alluded before that our balance sheet remains in excellent condition. We look at net financial debt of about [ CHF ] 4 billion towards the year-end with a leverage ratio of about 1. With the Xella acquisition to complete next year, remember, we're not only spending the money, we're also acquiring EBITDA. So it's the denominator and the numerator. I expect purely from the Xella deal to stay at or below 1.5x. And then also what I would like to add at the Capital Markets Day, we said this is our long-term objective in order to be comfortably in BBB+. But we also said if opportunity arises, if there's another deal on the table, we still have enough firepower to go up to below 2x for a limited period of time and still remain in our credit rating. So the 1.5 is a long-term ambition. We could go above that for a period of 12 to 18 months. So we still have ample firepower to do more M&A if we find equally attractive opportunities as Xella's.

Going back to your last question, Arnaud, on insulation. I mean interest is high. I mean this is part of our whole offering. If you recall, I mean, we are already producing PIR products in Germany. This is part of our roofing system. We have production facilities for insulation in Poland, in France. And recently, we did acquire a stone wool company in Poland. So for us, this is a complementary product range. And it is needed. Our goal is to be a leader in sustainable construction with full high end-to-end approach from the basement and the foundation to the walling and of course, roofing solution.

So we did -- in the deck, we did one of these projects, which I already mentioned. When it comes to the construction projects, we don't want to sell one product, we want to sell a system. Selling system means we want to sell 5, 6, 10 products. And with Xella, with our roofing systems, with our walling systems, plus with Holcim's existing sustainable portfolio, we are really now able to offer this high end-to-end solutions to our customers and at the same time, ensure maximum penetration on the construction side.

Perfect. Thank you, Miljan. The next question comes from Paul Roger from BNP Paribas. If I understand it correctly, he's currently on the road, doing some field research. So hopefully, the line works. Paul, are you there?

It's Anna Schumacher on for Paul Roger. I have one left. We are wondering what is the latest on CBAM free allowances and the benchmark in Europe from next year?

Thank you for your question. In regards to Paul. Look, it is happening 1st of January, it's a new EU ETS Phase 4 scheme, which includes implementation of CBAM. When it comes to CBAM, I would not expect anything major next year. It's all going to be about auditing, monitoring and so on and financial impact will come in 2027.

Thank you, Anna. Unfortunately, it's already the last question we can take. The last question comes from Harry Dow from Rothschild.

I think I've got maybe two questions for the Part A and B to first. Firstly, just on Europe, it continues to grow EBIT like-for-like at a fairly robust rate despite the top line, obviously organic still being negative and prices themselves are also relatively subdued. It feels as though cost is maybe the main driver. And I wondered whether you'd be able to put down how much of that is to do with the penetration of these lower clinker cement, lower carbon cement. So how much of that 5% to 6% like-for-like EBIT growth that we've seen is from the penetration of these lower clinker cement.

I wonder whether you could give some color on the economics of that kind of substitution in Europe. What is the average cost of some of these supplementary materials, the SCMs versus traditional clinker in the mix. And then related to that, I just wonder how you feel about the supply of those supplementary materials going forward. I don't know if it's something you've got sort of a number of years of stock of?

And then just finally, related to Xella again, future M&A. I think in the mix, there's some more sort of adhesives, I suppose products that you would traditionally kind of put in over the construction chemicals bucket. Is that an area of expansion more significantly into that market? Or is it still more focus on the more traditional building materials.

Harry, thank you for joining us, and thank you for the question. On the -- I start with the second question. So the focus is on the mortars, the focus is on the roofing, waterproofing. This is what we believe for Holcim is the best fit. And the rest are probably not high on the agenda. Regarding your question on EU. So if you -- we can share it with you, but these are the facts from 2021 to 2024 our net sales in Europe have increased 30%.

Our EBIT has increased 60%. And our EBIT margin expansion was around 300 basis points. You see in 2025, we continue to grow the EBIT. We continue with the EBIT margin expansion despite softer construction activities mainly in Western Europe. So very simple, Harry. This is driven by our value over volume strategy. And there are 3 key factors here. And I really would like to say they're contributing equally. There are no -- first one, yes, we are scaling our sustainable building solutions from ECOPact to ECOPlanet and now ECOCycle. On these products, we do get a small premium, but we also have the cost advantage.

Second pillar is that our investments in decarbonization and circular constructions are actually driving margin expansion, are actually driving profitable growth. And whenever we invest in our business, on decarbonization side and on circular construction, we do have high paybacks and very attractive returns. It's either a formulation with, as you mentioned, with [ mix ] development or it's investment in alternative fuels or something else.

And the third pillar is actually M&A. In Europe, we have completed 60 in the last 4 years, 60 highly value-accretive acquisitions, where we are have -- attractive business plans, where we have attractive synergies, and that's helping boost in our EBIT margins. So on the mix strategy -- so Harry, traditionally, I mean, it was slag and fly ash. And we still have these products, we have reserves, we have long contracts. But idea and where the future is that we move into the in-house produced mix. And when I say in-house produced mix, I talk about calcined clay, I talk about construction and demolition fines and these kind of products. And this is all part of our investments in decarbonization and circular construction.

In Switzerland, we are producing cements that contain 20% of construction and demolition materials inside. In France, we even showed the project. It was one of the nautical base in Marseille, I think, in France, anyway, where we are already producing cements that contain calcined clay. All of this is produced in-house, and we want to accelerate this.

So what the future holds for Holcim, we will be less dependent on slag and fly ash, and we will be able to produce these products in-house. Martin from ZKB asked the question, we will see this transition from clinker production and calcined clay. This will happen in the next few years. And we are already producing clays in several places around Europe but also in Latin America and also in North Africa.

Perfect. Thank you, Miljan. Thank you, Harry. Thank you so much for participating in our conference call today. If there are further questions which come up, please don't hesitate to contact the Investor Relations team of Holcim. We are more than happy to help. And with this, I hand over to our captain, Miljan, for some closing remarks.

Thank you all for joining. Thank you for your question as you have seen once again we deliver the exceptional financial performance, and we will continue to deliver. We are very excited about our latest addition to Holcim signing of Xella. Now, it's all about closing this acquisition and then delivering and overdelivering on our business plan and also on our strategy. And once again, all of this is possible, thanks to our deeply embedded performance culture. And one big thank you to all my colleagues, 45,000 of them around the world. All the best, and thank you.