Rockwool International Stock

Good day, everyone, and welcome to ROCKWOOL A/S's

Conference Call regarding the results for the first half of 2026. My name is Kim Junge Andersen. I'm the CFO of ROCKWOOL A/S. Today, I'm pleased to present CEO, Jes Munk Hansen. [Operator Instructions] As a reminder, this conference call is being recorded. First, Jes will go through our presentation and give you an update on the results for the first half and second quarter of 2026. Afterwards, we will be ready to answer all your questions. Before I hand over the word to Jes, I must ask you to notice Slide #2, which is the forward-looking statement. Please be aware that this presentation contains uncertainties.

Now we can go to the next slide, which is Slide #3. Jes, I will now hand over the word to you.

Also welcome and good morning from my side. My name is Jes Munk Hansen. I'm the CEO of ROCKWOOL A/S. I'll start on Page 3. And as you have seen, the group delivered revenue growth of 6% in the first half year. Importantly, this was driven by volume. The EBIT margin reached 13.1%, a good result despite inflation on energy and mainly transportation prices, persistent market challenges in a few countries as well as higher depreciation from investments. Free cash flow was impacted by the larger ongoing capacity and decarbonization projects.

Page 4. To the quarter, the group delivered a strong 10% revenue growth and reached a record high quarterly revenue of just north of EUR 1 billion in Q2 2026, driven by volume growth across regions. EBIT margin was 12.9%, a good result considering the circumstances. And cash flow from operations was good. Investments around EUR 200 million in the quarter led to a free cash flow of negative EUR 32 million.

I'll just jump directly to Slide 6, just jumping the half year detail. But on Q2, I think we should spend more time on that. The revenue from the very strong 10% growth. And the growth was mainly driven by significantly higher volumes, partially from market share gains where we benefited from favorable market dynamics with a narrowing price gap to competing combustible insulation materials. Somewhat more broadly and less directly related to the quarterly results, we do observe in the market that higher oil and gas prices are driving a greater interest in energy efficiency in the build environment. So while we are affected on the cost side, of course, we also expect to benefit from the greater focus on energy efficiency that results from the higher energy prices in the market.

At the same time, the tragic wildfires in South Europe and in North America over the summer are generating more awareness about the importance of noncombustible materials such as stone wool. This should too become visible in higher demands over the next period. Okay. Let's get back to the report. In the quarter, we saw prebuying activity ahead of the announced price increases, not surprisingly, which mostly took effect from the price increases from July 1. We estimate that this prebuying contributed to around 1 to 2 percentage points of the second quarter's growth. However, sales price increases were also realized, especially in the latter part of the quarter and accounted for 1 to 2 percentage points of the growth, partially offset by negative product and country mix.

I'll also skip Page 7, which is just a summary of the half year revenue and go to the second quarter revenue on the segment level. And the Insulation segment revenue grew 10% in the quarter with strong growth in the United States and across Europe. The revenue in Canada, United Kingdom and Switzerland continued to decline, though the rate of decline moderated in U.K. and Switzerland compared to the first quarter of the year. And in our Systems segment, revenue grew 9% with a good growth across the business.

Slide 9, where we take a look at the geographies. If we start from the left, from the west side of the map, United States continued to perform well with momentum accelerating into double-digit growth in the second quarter. And it's also worth noting that stone wool is growing as a category in the United States and that ROCKWOOL is gaining market share in the total insulation market. And this is, of course, in a soft overall market. Here, the growth is also driven by greater focus on noncombustible insulation solutions in a row of segments, including the Facade segments.

Revenue in Canada declined in a challenging market as the Canadian economy has contracted now for 2 consecutive quarters in a row. West Europe showed improvement compared to previous quarters and key markets for us like Germany and France gained momentum, which was partially offset by the challenges I mentioned in the United Kingdom and Switzerland. And Eastern Europe delivered a staggering 31% revenue growth, reflecting double-digit growth across the entire region. And in Asia, we grew 17% with double-digit growth in all major markets, except China, where revenue remained flat year-over-year.

To Slide 10 on our profit. The quarterly profit was impacted by rising oil and gas prices. However, this also creates opportunity for us as elevated and fluctuating energy costs drive a much greater focus on energy efficiency in building, strengthening the overall demand for our insulation solutions. The EBITDA in absolute figures was up 6%, which we considered a good result. Let me note that Q2 in 2026 benefited from a onetime EUR 7 million gain related to a settled claim against the former transport supplier in the U.K.

That said, margins in the quarter were impacted by several factors such as the weak construction market in Canada and the United Kingdom, as I mentioned. And then importantly, higher logistic cost and an expanded cost base, especially related to energy and oil-based raw material. And announced sales prices increased since first took effect late in the second quarter. We believe we are good at addressing challenges like these. Among other things, during the quarter, we also took the opportunity to refine our marketing and branding. And I hope you have noticed our emphasis is on core value drivers like energy efficiency and fire safety.

We also redirected the product flows and resources from softer markets into high-demand regions and adjusted our capacity expansion strategy based on long-term market condition expectations. The EBIT in absolute figures was up 3%, and the EBIT margin ended at 12.9% in the quarter. And EBIT was impacted by higher depreciation related to investments and a one-off EUR 9 million write-off on some reprioritization of our capacity investment base.

And last year, Q2 included donations to the Foundation for Ukrainian Reconstruction of EUR 7.4 million out of the total EUR 13 million donated. And this year, there was no donations recognized.

Let's look at the segment on Page 11, profitability by segment. On the left, you see our Insulation segment. And looking at profitability, the EBIT margin insulation was good and landed just short of 12%. The result mainly reflects timing lags between inflation and price increases, and costs from electric conversions shutdown in Netherlands and the EUR 9 million write-downs I just mentioned in reprioritization of capacity expansion. And this was, as mentioned, partially offset by EUR 6 million gain from the settled transport supplier claim. I deliberately said EUR 6 million because the other 1 million you can find in the Systems division.

The Systems segment EBIT margin was 12.6%, and this is a good result considering input cost inflation and lower performance in our Grodan business in North America. And here, as just alluded to, the 12.6% margin included a EUR 6 million out of the total EUR 7 million claim gained from the supplier settlement.

Page 12 shows our investment in new capacity and decarbonization. And our major investments in Q2 were related to the new factory constructed importantly in the United States and India. If I can just stop up a second and say, I just a few hours ago, saw pictures of the first commercial wool coming off our factory in India. And investments in the new technical insulation production line in the United States and production expansions in Romania and our logistic automation projects in Germany. I just said that the Indian factory has gone online, and this will, of course, support the growing demand for stone wool in that particular market where we see high growth rates.

The sustainability investments mainly consisted of electric conversions in the Netherlands and in France. As part of our electrification strategy and to strengthen our in-house technical capabilities, we acquired the remaining stakes in the Swedish company, ScanArc Plasma Technologies back in June 2026, a critical technology in our so-called Jeti conversion activities.

Page 13, where we look at our cash flow. And operating cash flow improved by EUR 31 million compared to Q2 last year, demonstrating underlying good cash generation. And the net working capital at end of the half year 2026 increased as per the usual seasonal compared to year-end 2025, and the increase related partially to higher trade receivables from the increased quarterly sales and partially offset by higher trade payables. Cash flow ended at minus EUR 32 million, reflecting the ongoing large capacity investments. And our net debt position increased to now EUR 461 million at the end of the quarter. And that brings our leverage ratio to 0.6, which is still within our policy of a leverage ratio below 1.

A few comments to our sustainability and safety. You can see on Page 14, just briefly a few comments. Safety remains our top priority in ROCKWOOL with the aim, of course, of a 0 fatality and 0 serious incidents. That's almost logical that it should be 0. And -- but we recorded 2 serious incidents in the first half of '26. But besides -- despite these incidents, the overall lost time incidents frequency rate improved significantly now at 1.6, and that is almost a 40% improvement compared to last half in 2025 -- sorry, first half in 2025, which to us demonstrates that our efforts are working.

The CO2 emission, just very briefly on that. You can see on the slide that our Scope 1 and 2 CO2 emission intensity shows a 25% reduction compared to the baseline of 2019. Nonetheless, the Scope 1 and 2 greenhouse gas emissions increased by 1%, reflecting the higher production volumes. But the intensity, as mentioned, is down significantly. In 2025, we adopted new targets for renewable energy. And now we aim to reach 40% renewable on our energy consumption by 2034. And in Q2 2026, we reached 22%, showing a solid progression on that target as well.

Also I won't comment on the other targets, you can see that we are pretty much on target in general. Then I jump all the way to Slide 16. Importantly, our outlook for the remaining of the year. As you noticed yesterday, we made upward adjustments to our outlook. And after a record high Q2 revenue driven by volume, we expect the broad-based momentum to continue through the second half of 2026, and the revenue growth will be driven by both volume and now also sales price increases, which we introduced to compensate for inflation on energy, raw materials and transport. However, we expect the growth to be partially constrained by sourcing limitations such as in the North American arena. We therefore forecast full year revenue growth of 5% to 7% in local currencies. And EBIT, we maintain our expectation for the full year EBIT margin in the range of 13% to 14%.

And while sales price increases will support this margin, the benefit will partially be offset by North American sourcing constraints and elevated maintenance costs and less favorable product and country mix. Last but not least, our investments, our projects are largely on track. And we do have some timing on our CapEx. So significant supplier contracts were being finalized and are being finalized in 2026. And this timing of down payments are expected to drive our investment outlook to around EUR 750 million for the year. These were the initial slides, and I hand over now to questions.

[Operator Instructions] First question is from Pujarini Ghosh, Bernstein.

So if we talk about your guidance, you have now raised the local currency growth guidance already twice this year. So could you explain the changes in your assumptions on pricing and volumes, which has led to this latest upgrade? And how much price and volumes are being baked into the full year guidance of 5% to 7% overall? On the other hand, you have not taken up your margin guidance, and you did mention it's possibly because costs are also rising in line with the pricing. But could you just explain a little bit more why the margin expectation is also not rising in line with the top line guidance? Or are you being a bit cautious as of now? So those are my questions.

Yes. The market has been developing in the last 6 months, and that's why we have made this progressive lift in our outlook. I think we have told a few in previous calls that we don't have like outlook and cannot see developments 6 or 12 months into the future. So we can only, of course, adjust as we see the market develop. It has been very favorable the last quarter, as I just reported, mainly on volume. But now for the next half year, we do see a little bit less volume and more price that we have of timing differences. It's at the half year that the price comes in. Will you comment on the specific numbers that you see, Kim?

Yes, I can do that. I mean what we see is previously, we had expected a 0% volume growth in the second half of the year. We now expect to reach 1% to 2% volume growth. And then on top of that comes then the impact from the pricing. We do see a slower Q3 in France and Germany, some of the bigger markets. So we're ending up at this 6% growth also for, you can say, for the first half and then hopefully, between the 5% and 7% in the second half.

Did we answer your question?

And on the margin guidance?

The margin guidance is just unchanged. The whole purpose with us doing the sales price increase on July 1 was to defend the full-year EBIT margin. And I think that is still the expectation that we are able to do this. So there is no change, particularly to the dynamics between the -- in the full-year guidance for the EBIT margin compared to what we did in May.

Next question is from Anders Christian Preetzmann, Danske Bank.

I would like to ask about the U.S. sourcing constraints that you mentioned. My first question is, how much of the U.S. demand do you expect to be met by European imports through H2 '26 and into '27, maybe expressed as a share of the expected U.S. volumes? And then my follow-up question to that is, should we maybe be viewing shipping volumes from Europe into the U.S. as maybe a permanent way to capture an additional U.S. demand? Or is this strictly a bridge until the new plant opens in 2028? Or in other words, should we expect it to keep importing into the U.S. for as long as demand exceeds the U.S. supply, which I suspect could go on for many years? Or would you rather read on the margin expansion potential for the group?

Yes, I can answer that. For the foreseeable future, there's still limited what we need to import from Europe to the U.S. market. But the aim is overall to keep growth and momentum developing in the U.S. to prepare for when our very large factory in the U.S. opens, our new factory that we're investing in and building right now in the U.S. So we get, you can say, a high utilization rate when it opens in approximately 2 years from now. So it is what you call a bridge and its financial beneficial, not only because it generates business in the short term. But as I said, then we can start the factory with a high utilization when it comes online.

It is also -- but this becomes very detailed, some product categories that are beneficial to import. It has to do with weight and volume and what is meaningful to import. And so some products are not affected at all and some are affected more because available capacity and/or simple practicalities around shipping logistics. But yes, you can consider that bridge. But here for the foreseeable future, it is limited. We just wanted to share with you that we can satisfy the growth and the demand in the U.S. market with capacities from Europe that is doable and also sustainable for the period we need to.

Obviously, Anders, these imports, of course, comes at a lower margin, but we always have this hurdle rate to say it has to be cash positive import. But it is -- in the short time, of course, the imported part will have a lower margin compared to the locally produced products.

Next question is from Zaim Beekawa, JPMorgan.

The first is just on CapEx. I think you've increased from EUR 700 million to EUR 750 million largely due to timing, but then we also increased from EUR 650 million at Q1 due to warehouse investment. So how should we be thinking about CapEx next year? Should this be more around the EUR 600 million mark? And then secondly, on price and costs, can you comment on your hedging position for the remainder of the year and if you see a risk of supply of natural gas or you have enough security there? And then on price, do you still think that the 6% to 8% from July 1 is enough to compensate some of the recent sort of price cost inflation? Or do recent developments need higher pricing?

Yes. Zaim, Kim here. The only sort of major -- not major, the only CapEx that is going out this year, of course, is the factory in India. The other 3 main factories of Insulation capacity and also the Technical Insulation project in U.S. will continue into next year. So I expect to have also an elevated CapEx next year. We have not yet detailed out again the timing of the contracts when payments are falling due. But in '27, as you know, we will have the Romanian factory opening up in the middle of the year. So in '28, hopefully, that CapEx will be gone as well. But next year will be elevated as well. We haven't yet made the exact number, but we expect it to remain about the same level.

Second question about the hedging. We have covered. We're now up to 75% of the Q4 electricity and gas. As you know, we cannot cover forward foundry coke, but there has not been a big price development in that particular energy source. And then for the first 2 quarters next year, we also started to cover of this. But we are still in a period where we have to determine the pricing drumbeat plan for '27 that has not yet and does not yet have to be decided, but we need to decide that here in the autumn before we start negotiating with our customers.

Next question is from Kristian Tornøe.

Two questions. First one is on guidance. So to the previous question on why you've been raising growth guidance, but not margin guidance, you primarily referred to the price increases you've done to safeguard EBIT margin. But in my view, that was more the explanation behind the change you did back in May. So my question is, has anything changed in your assumption on pricing and input cost since May? And therefore, why is this additional 1 to 2 percentage points, would you raise your growth guidance now just not yielding an increase to the margin guidance?

Yes, Kim, here. I mean the full-year guidance, as I said, we will maintain. And of course, it would have been nice to see an impact from that higher sales growth that we are having. There is a little bit of a negative product mix or less favorable product mix in the top line that means that it doesn't in itself lift the margin. And then as I said, we also have a continued sort of higher maintenance spend in some of the factories, mainly in Wyoming and also in the U.S. So it's just a fact of those things coming in that we are seeing. We have -- I think the inflationary impact, both on first half, but also on the second half is mainly on the logistic cost. And as I said, we are simply just transporting more goods around, and that has become more expensive to use this transport. So we also have just a slight sort of increased or assumed increased logistic cost for the second half compared to the first half.

Okay. Understood. And then my second question goes to the sourcing limitations in the U.S. Now you, in the previous question, spoke about imports, but just to clarify exactly what do you mean by these sourcing limitations?

We have -- there's a row of operational things, but one of them is maintenance. You have to do maintenance on our factories in certain periods, upgrade. By the way, also, we want to expand how much capacity we can drive out of each factory. It's Lean & Kaizen activities. And that means that you have to take the factory out of the loop for a while. And so there are some effects there. But it is also the growth, and that's, of course, also why we are building more factory capacity, both in technical insulation and in general insulation materials. So I think it's a very good solution we have found in selecting products that can be imported from Europe. By the way, we're not hit on tariffs on that. So we can actually import from Europe and satisfy that demand until our large jumbo lines go online in approximately 2 years from now.

Next question is from Daniel Khajenouri, Morgan Stanley.

Just a follow-up on the guidance, top line guidance. And if I missed it, apologies. But you delivered 6% local currency growth in H1, mainly volumes, while 6% to 8% price increases are rolling through from the beginning of Q2 and the new guidance is 5% to 7% local currency for the full year. So this begs the question on price realization and volume trends into H2. My understanding is you're seeing good price realization, but so far disappointing volumes. Is that the correct read into the earlier answer?

Yes, that is -- Daniel, that is correct. And we do see a good price realization. Right now, as we move into Q3, it stands around the 6%, which is within the framework that we have -- that we talked about. And we are pushing hopefully a little bit more in -- up to the autumn season. We had also anticipated that the volume will go down. We had quite a good run on both in France and Germany and also in Poland, other Eastern European countries. And we had already foreseen that, that will sort of taper down a bit in the second half. And that's why previously forecast was a 0% volume for the second half. Now we're adjusting that slightly upwards to 1% to 2% volume growth. But that is a distinct difference compared to the first half that was mainly volume driven and very limited price driven.

Okay. That's very useful. And just a follow-up on the CapEx, maybe I'll get back in the queue. You gave an idea for 2027, which is very useful. But given the schedule of FID-ed assets being built globally, from 2027 onwards, should we expect this to stay at elevated CapEx levels? Or should we expect that to start to slowly come down towards 2030?

Yes. Thanks, Daniel. I mean, we have right now sort of 4 large capacity investments ongoing. One of them in India, opening this year. One is in Romania opening in '27 and then one in France to be opened in '28 and one in the U.S. to be opened in '28. We have not yet announced any further capacity expansion plans. But that means once we sort of get those online, the best guess right now is that the CapEx amount will go down as we open up these factories. To what level then it will be in '29, once we have opened all the 4 factories, I think we will have to revert to that. That is so far out in the future that we are not yet even internally decided if there's room for further CapEx expansion. But there's nothing planned and announced at this time after 2028.

Next question is from Claus Almer, Nordea.

Also a few questions from my side. The first question goes to guidance. If you look at the CapEx guidance, the extra EUR 50 million you are increasing your guidance with, should we think about this as less EUR 50 million next year, given this timing of the milestones? That will be the first one.

Yes, Claus, you can think like that. It is a timing difference of down payments.

Okay. Very helpful. Then about the P&L guidance. As you said, you're going to raise your price so far by 6%, and you would get an additional maybe 1% in addition. When you look at Q2, limited ASP impact, as you said, so key driver was volume. When I look at your gross margin, it seems to be down by 2 or 3 percentage points year-over-year, given, I guess, energy cost. Is it fair to assume if you had introduced your price increases earlier and thereby being able to fully offset the energy cost, then your EBIT margin in the quarter would have been like 2 or 3 percentage higher than reported?

I mean, obviously, in -- as you know, in my perfect excel, I live in, I could easily have put prices up in the second quarter. But in real life, we could not -- we have contractual obligations with customers, and we didn't judge this exercise to be a force majeure. So we had to adhere to the notice periods that contractually we have with many of our key customers. And that is typically 8 to 12 weeks. i.e., it takes 2 or 3 months in order to effectively get pricing into the market.

On the supplier side, we got hit immediately with the higher transport cost. So that just hits us immediately. And yes, that is just a timing difference. As I said, the plan has always been to maintain the full-year EBIT margin, 13% to 14%, knowing that we have a number of sort of one-off this year that disturbs the picture a bit, but that is included in the 13% to 14% EBIT margin guidance.

Sure. So what I'm trying to figure out what is the underlying everything has been introduced and implemented price increases. So as I understand your reply is that when you look at Q3, everything equal, then probably the gross margin, EBIT margin should be 2, 3 percentage points better than we saw in Q2. Is that a fair way...

Moving upwards, definitely. I'm not sure we can know everything because I also know of some of the things that we are looking at in terms of these maintenance costs. But everything equal, yes, it should move upwards by a few percentage points.

Next question is from Julian Radlinger, UBS.

So I have a couple. The first one is the easier one. Sorry to come back on the guidance. I still don't understand something here. So you did 6% -- 6.3% local currency growth in H1. You're guiding 6% at the midpoint for the full year, so basically 6% in H2 as well. And now you've got price, which is at least 6% you're saying in H2, but you're also saying 1% to 2% volume on top. That gets me to 7% to 8%. What am I missing here?

You're missing a little bit of negative product and country mix. That's it, Julian. There is -- some of these growth are coming in markets where the average selling price are just lower than the average. So that's really just the gist of it. There's nothing really strange to this. And this is just both the product and the country mix. On the product side, it's mainly because we're selling a lot more flat roof insulation also in the second half, and that has a lower average cost than our normal insulation.

Okay. Okay. Understood. My other question is a bit of a bigger picture one. So I want to get back to this CapEx increase. So look, you've been open about the capacity expansion in the coming years. You've made it clear CapEx is going up because of that and it's temporary. But now you've increased it twice this year, and you've not really indicated whether next year is going to be up or not. I know you just said it will be on a -- it might be on a similar level, but nonetheless. So you haven't really helped investors understand how to think about the returns on that CapEx, aside from, of course, saying the incremental ROIC will meet your own hurdle rates. The stock is now down 10% in 2 days or since yesterday, and I think that's actually largely because of that.

And so assuming you won't provide more help on those fronts in today's call, which is, of course, not the right forum necessarily. Is this a concern to you? Is there -- are there any plans that you have to provide some numbers and some visibility on this CapEx over the next few years? And more specifically, the returns over the next few years from when you open these plants in the form of an Analyst Day or just something to give investors a bit of a toolbox to get more comfortable around this and get more comfortable about buying into this. Big question. Sorry.

Kim and I are looking at each other and nodding and saying yes. Fair question, fair comment and definitely also something we have discussed here. And without promising too much, let me start somewhere else. Again, there are 4 factories announced, like Kim just alluded to. They will be completed over the next 2 years. So yes, CapEx will be elevated and then come down as these 4 major footprint projects are getting finalized. We have realized that it would be good for the investor community and in general to give some more granularity on not just on a macro level, but also opening up a little bit for the individual projects of what that means on return on invested capital as the capital flows out in establishing this capacity, but also when you can say the volumes and the capital starts flowing the other way.

So it's a little bit premature to promise you the exact date when we come back to it. But if I can just park it here and say that we want to give you some more insight to it, and we're right now discussing what should be the form and format to open up -- to give you that insight into the capital movements.

That's fantastic. I think people are really going to appreciate that. If I can actually just throw on half a question, just a little last one. I'm really, really sorry about this, but really easy question. You're importing from Europe because you're sold out in the U.S. Why aren't you importing from Canada if Canada is down?

We are. And we always have, by the way. The Canadian factories have been the backbone of our U.S. business also. It becomes very granular to explain this. It depends on the product type, whether or not -- our factories are not the same. So some factories are better at producing certain product types more efficient and more efficiently and have more capacity available. So it's always a mix.

But we want to ensure, and this is the most important thing. We want to make sure that our growth and momentum that we have in the U.S. market is satisfied and not limited by capacity. And we can do that as one of your colleagues called the bridge until our very large factory in Wallula goes online. So it's typically heavier products I mean it's typically heavier products that travel well, just to give you an idea, but not into logistic numbers.

Next question is from Alexander Craeymeersch, Kepler Cheuvreux.

So first question would be basically on the question I even asked last quarter's call. So I flagged that if the H2 top line growth would be price-driven rather than volume-driven, the EBIT margin would likely land at the bottom of the 13% to 14% guided margin range. I asked you whether that was the right assumption and your answer at the time was to wait for Q2. So here we are. Q2 is actually usually some of the stronger quarters. Normally, it's above year average margin, yet with volume growth solid this quarter, EBIT margins barely touched 13%.

So the question I have is twofold. First, what gives you the confidence to keep that 14% on the table? And what would specifically have to change from here on out to reach that top end? And the second, if conditions stay exactly where we were and exactly as budgeted, -- where do we land? Do we land on the upper end or the lower end of the range?

Then second question would be on the Dutch plant. It has been taken out. I thought it actually was only taken out recently. So could you elaborate on how long this Dutch plant has been taken offline? How much -- how long do we expect this conversion to take? And considering that this is the largest plant, how much volumes or capacity are lost because of this?

Yes, I can start with the plant question, and then Kim comes back to your marketing question. In Roermond, there are 3 large production lines. So it's only 1 of the 3 that was taken out for electrification, and it's back online. We will, at a later point also, actually in the near future, also electrify the next production line. But the first one has been electrified and is now running stable.

Yes. And I don't want to come into the detail on the margin. We have, of course, a spread on the margin there to allow us to have a little bit of uncertainties in the forecast, which they are and what will drive it towards the upper end, that will be more growth, obviously. It will be growth in markets where we have available capacity, i.e., France, Poland -- sorry, Germany, Poland and the Nordics. But that so far, we are just in the -- you can say, in that broader segment. So there's really just nothing more to comment on that particular range.

Next question is from Yassine Touahri, On Field Investment Research.

The first question would be coming back to Julian's question. After your factories in India, Romania, I think you have an expansion in Mississippi, a new U.S. factory, a new French factory. After all those factories are fully operational, which I understand should be by the end of the decade. Could you give us a very rough idea of the additional EBIT this investment could generate? I understand that you might not give a precise number and that you will do -- you might do a Capital Market Day, but even just a ballpark number would be extremely helpful. And my second question, could you give us -- sorry.

I mean, yes, indeed, we cannot give you that because that's exactly what we're working on trying to get an idea of, as we replied to Julian, if we have sort of a midterm outlook, we need to work on this still and find a timing to do that. So I cannot hear in this call give you an idea of this.

You don't even have a range of outcome.

No. Thank you.

And the second question would be on, could you just give us a bit more color on the volume and pricing development in July? Are the trends that you're seeing consistent with your H2 guidance of volume up 1% to 2%, and then price mix of 4%, 5%?

Yes, yes. I mean -- for sure, we alluded to that there was some prebuying in June. And that, of course, we can see on the July numbers where volume and growth is down, and then we expect this to pick up here in August, September again. So there's nothing dramatic about July. It sits there with a flat volume and a small -- small pick up...

You can see the price increase sticking.

Yes. Yes, yes. There is a price increase, but there's no -- you can say the volume was impacted by this prebuying. So there was a few percentage points of prebuying in Q2 that affected the July's volume for sure.

Next question is from Allison Sun, Bank of America.

Two questions from my side. So first, what's your expectation for Eastern Europe for the second half? Should we be expecting them to keep the good momentum we see in Q2? And the second question is, you mentioned about the market share gains in some flat roof markets. Which regions exactly are we talking about?

I couldn't hear you second. Just acoustically, I couldn't hear what you said.

So the second question is on the flat roof market share gain. Can you tell me exactly which regions we see the market share gain?

Yes. Let me start there. It is in our large markets that we see the flat -- that we gained flat roof share. And it is because we are more competitive against our foam products, but also this bigger awareness of fire, fire protection in France, Poland, Germany as people put PV solar panels on their roofs. In commercial buildings, they need to be fire safe. So that's in our main markets. East Europe, I mean, we grew 31%. That will not continue at that level going forward. We see more aggressive pricing from the foam and plastics. So it will come down a little bit from where we are right now.

Next question is from Chase Coughlan, Van Lanschot Kempen.

I just have 2. You mentioned in the report you are expecting a bit of margin pressure from what you said to be elevated maintenance costs. Could you explain a bit what that is and when you expect that to sort of fade out? Was that related to the U.S. sourcing issues you mentioned earlier? And then my second question, I think more of a clarification, you referenced the 1x net debt EBITDA. Sort of is that an internal policy? Or is that sort of a debt covenant, a harder debt covenant? And in the context of that, how are you looking at M&A at the moment given obviously the higher CapEx spend and such. Is that still something you're sizing up? Or maybe just sticking with the smaller strategic investments or smaller bolt-ons?

No, our -- that's internal policies that we keep our leverage under 1. And we can run our investment programs within our policies. The maintenance costs come from a row of areas, but now it becomes very operational, but we have had to upgrade some things in our electric melter in Norway that was planned and the large electrification in the Netherlands are part of those costs. When you shut down a big production line like that, then, of course, you also take the benefit of having the line stand still and then you upgrade a whole row of other things that make sense to do while you are offline, so to say.

Yes. But how long do you expect those to remain elevated then?

These maintenance runs don't normally take more than weeks and weeks, but then it's just a matter of how to forecast and foresee whether these are happening. And so far, we have had a few more incidents than we have normally had. But yes, we don't have any sort of specific forecast for this case in the outlook.

Next question is from Anna, BNP Paribas.

Most have been answered, but I just have a last one on North America. So the growth -- the local currency growth of 4% was much softer than the group. What was driving this? Like is it the sourcing issues? Is it end market weakness, price discipline, share loss? Anything would help.

We're struggling a little bit with hearing what you said, but I'm just double checking with my colleagues.

I think -- and I just repeat that again because the sound was not so clear here.

Sorry about the line. It was on North America softness, like what was driving this? Was it the sourcing issues? Is it end market? Any color here would be helpful.

Then we have to differentiate a little bit. Canada is, as you can read in the press, just now for the 2 quarters in a row in technically in a recession. And the building construction industry is just at a very low level. So that's Canada. We also don't see that improve dramatically, although it's stabilizing a little bit right now. So that's Canada. And we are then benefiting from that we can use that role in the U.S. So that doesn't hit us as hard as it would be if we were having overcapacity.

In the U.S., the construction market, then you really have to go down by region and see where there are some areas where there still is quite a lot of commercial and industrial growth and there are some areas where there's also residential. So it's more nuanced. But we grow because we are gaining market share, both the stone wool market is getting better, but we're bigger. And we, of course, gain market share both in stone wool and totality. So when you put it all together, then it's 4%.

Next question is from Daniel Khajenouri, Morgan Stanley.

Sorry, my follow-up question was indeed answered already. Thank you.

Last question is from Pujarini Ghosh, Bernstein.

So a couple of times today, you highlighted that stone wool is gaining market share in the U.S. and you are gaining market share probably within the stone wool space as well. As I remember, I think in a previous presentation, you had mentioned the share of stone wool in the U.S. was around 3%. Do you have an indication of how much that share could be today? And then how much your share is within that space?

Yes. And we have a nice slide we sometimes show you. So I think you can download it from some of the other presentations. But as it looks now, and this is not exact science, please bear with me a little bit, but the numbers we see is that the share of the total insulation market, stone wool is moving from 4% up towards 5% these days. But when we look at other markets, including Canada, which is a comparable market just simply from how you build houses in North America is comparable. Then you look at markets where stone wool are close to 20% of the total insulation market.

So I'm not suggesting that we will get the 20% market -- total market share in the U.S. in the very near future, but our growth is driven by what you could call a category shift away from flammable foam and plastics into noncombustible stone wool.

This concludes our Q&A session. I would like to turn the conference back over to the management for any closing remarks.

Yes. Jes and I thank you for joining today's earnings call, and we would like to thank you for all the questions and the audience for listening in today's call. We appreciate your interest in ROCKWOOL A/S. If you have further questions, please feel free to reach out to me. You may find the ROCKWOOL contact details in the Investors section on our corporate website. Have a very nice day. Thank you.

Hello, and welcome to ROCKWELL A/S' conference call regarding the results for the first quarter of 2026. My name is Kim Junge Andersen, I'm the CFO of ROCKWELL A/S. Today, I'm pleased to present CEO, Jes Munk Hansen. [Operator Instructions] As a reminder, this conference call is being recorded.

First, Jes will go through our presentation and give you an update of the results for the first quarter of 2026. Afterwards, we will be ready to answer all your questions. Before I hand over the word to Jes, I must ask you to notice Slide #2, which is the forward-looking statement. Please be aware that this presentation contains uncertainties.

Now we can go to the next slide, which is Slide #3. Jes, I will now hand over the word to you.

Thank you, Kim. Also welcome from my side. And as Kim said, I will start on Slide #3, where we have our key numbers. The ROCKWELL Group delivered resilient performance in Q1 despite a challenging operating environment with revenue growth of 2%, primarily driven by Eastern Europe, the United States and Southern Europe. The EBIT margin, as you can see, reached 13.2%. What we believe is a satisfactory result, though 2.2 percentage points below the record high level of last year. Weak construction market, particularly in Canada and United Kingdom pressured the margin as did higher logistic costs and an increased cost base.

I turn to Page #4. Let's focus on the revenue in Q1. And where, overall, the construction market continued to be affected by the geopolitical turbulence and macroeconomic uncertainty. Additionally, the first two months of the year were impacted by adverse weather across Europe and North America. However, volume demand recovered from March and onwards. We successfully restarted the Swiss factory in Flumroc, in Flums, the Flumroc factory during the quarter, but the production stop did have an impact on performance in the quarter. Additionally, the conversion to electric melting and upgrades to one of our production lines in our [indiscernible] factory temporarily reduced output. The growth was driven by higher volumes and a minor increase in overall sales prices.

Page #5, where you see the revenue by business segments. Insulation revenue grew 2% in local currency, with solid growth in the United States and key markets across Eastern and Southern Europe. That growth was partly offset by a decline in United Kingdom, Germany and Switzerland. In our Systems segment, revenue grew 4% in local currency. Rockfon Europe Asia delivered solid growth across key markets [indiscernible] achieved growth mainly in Europe, while our Rockpanel business had a stable quarter.

Page #6, where we look at the regional revenue in the quarter. In the United States, we sustained the growth momentum, while Canadian revenue declined in a very challenging market, characterized by weak residential demand and ongoing trade uncertainties. In Western Europe, revenue declined 1%, as solid growth in Southern Europe was offset by market-driven declines in the U.K. and the delay in construction activities due to the hard winter in January and February. Eastern Europe delivered strong 15% revenue growth, driven by solid growth in Romania and Hungary while Poland increased slightly in the quarter. In Asia, revenue grew more than 7% with decent growth in several of our markets there.

Page #7, where we look at the profitability in the quarter. Although the EBIT margin was down 2.2 percentage points, we consider this a good result given the challenging market conditions and in comparison to a record high profit level last year. Margins in the quarter were impacted by several factors. First, a very weak construction market in Canada and United Kingdom. Second, higher logistic costs and a higher cost base. Third, additional costs related to the production incidents in Switzerland and the planned production stop in the Netherlands related to the electric conversion and other upgrades of the production line there. Overall, these two challenges accounted for about 1/2 of the decline in margin. That is equivalent to approximately 1 percentage point.

While production is up and running in Switzerland, we do expect the run-in costs for the new melting technology and these other upgrades in Netherlands to affect the margin for the rest of the year. Last year, first quarter included donations to the foundation for Ukraine's reconstruction of EUR 6 million out of the total donation of $13 million, while no donation was recognized in '26.

On the next page, we look at the profitability by segments. First, Insulation segment. Looking at profitability by segment, the EBIT margin in Insulation, while satisfactory was down 1.7 percentage points compared to last year. The result was impacted by several factors, including the ones I just mentioned. In the Systems division segment -- sorry, the EBIT margin decreased 3.7 percentage points, driven by inflation on input costs that were not sufficiently offset by sales price increases. Additional factors include increases in bad debt provisions as well as increased scale-up costs in our new business area which is part of the system segment. These new businesses mainly consist of our water management system and our prefab construction business.

Let's look at our investments in Q1. Our biggest investment in Q1 related to the construction of new factories in the United States and India and a new technical insulation production line in the United States. And the production expansion in Romania as well as a large logistic automation project in Germany. The new factory in India is expected to come online during this summer. The sustainability investments are mainly related to electric conversions in the Netherlands and in France. On May 5, we signed an agreement to acquire Ravago's Stone wool factory in Northeastern Hungary with a capacity to 40 million -- sorry, 40-kilo tons. The acquisition will support our long-term priority to meet regional demand. The transaction is expected to close in Q4 '26, of course, subject to customary closing conditions and regulatory approvals. The acquisition is not expected to materially impact our 2026 financial outlook.

And then we have our cash flow for the quarter. As expected, financial positions turned into net debt of EUR 306 million. That brings our leverage ratio at the end of Q1 at 0.4x, which is well within our policy of maximum ratio of 1x. At the end of Q1, we had an unused credit facility of EUR 400 million. Cash usage for working capital during the quarter was unchanged compared to Q1 last year. The negative development in working capital ratio was mainly due to the planned stock build and a higher-than-usual seasonal increase in trade receivables due to the revenue uptake towards the end of the quarter. Free cash flow decreased EUR 68 million compared to the same quarter last year, mainly from higher investments and less cash from operations.

And last but not least, to our outlook on Page 12. The revenue, as previously already announced, we are now expecting revenue growth to land between 3% and 6% in local currencies. And the growth outlook is based on the increased activity we saw in March and thereafter as well as sales price increases in the range of 6% to 8% which will mainly take effect from the midyear. We continue to closely monitor, of course, the ongoing geopolitical turbulence and macroeconomic uncertainties around us. The EBIT group margin for 2026 is still expected to be between 13% and 14% as the announced sales price increases are expected to offset input costs and logistic inflation whereby maintaining profit margins. And investments, our major investments in 2026 include capacity expansions, as already mentioned in India, Romania, United States and France, along with the acquisition of land for further manufacturing sites in several countries. Overall, our total investments are expected to reach around EUR 700 million in 2026, excluding acquisitions.

That concludes my run-through of the key data points and I hand back over to Kim.

Yes. Thank you very much. And I know the operator will invite in for questions. I just have a small request for you when -- even if we limit to two questions at a time, please allow us to answer one question at a time. Thank you very much.

[Operator Instructions] The first question is from Ben Rada Martin, Goldman Sachs.

My first question was on cost inflation. Thank you for providing some of the color in terms of the pricing changes you're looking to put into the market. I'd be interested in what you're seeing in terms of energy cost inflation and transport inflation as we go into the back half of the year. I think energy cost was maybe towards EUR 0.5 billion and similar delivery costs. That would just be my first question.

Yes, allow me to answer that one, Ben. We have seen already an increase in cost inflation, including transportation. It is so that, as you know, our -- [ any ] consumption consists of 3 main energy usage. One of them is foundry coke, which is by far the largest energy source. And then, of course, we also have electricity and then gas that we also use in the manufacturing side. Foundry coke is where we have these fixed price agreements a quarter at the time. And that has not increased significantly between quarter 1 and quarter 2. So there's not so much inflationary pressure there. Of course, on the gas and electricity, they are more, say, correlated to the general sort of energy inflation in the market. And there, we have seen increases. We have, as mentioned before, we have a coverage in place for like half of the expected consumption for the second half of the year and -- that means we have, of course, cushioned this a bit. But with that there is inflation coming in the second half, also on transportation, mainly in the North America. But we still believe that the 6% to 8% price increases should be enough to cover the inflationary impact in the second half.

Excellent. And maybe just a second one on capacity expansion outside of the ones that you're investing in now. I'm thinking some of the European facilities, U.K., Sweden, Italy, could you maybe share an update on some of the time lines for these projects? I'm interested just given, I guess, the uncertain economic backdrop in Europe, what we've seen in terms of interest rates moving higher, and I guess, some excess capacity in the market. Could some of these later facility openings be flexible in, I guess, their opening times? Or how are you seeing the time lines for some of those additional factories, particularly in Europe?

I can give you a couple of data points there. Now you spoke specifically into Europe. So let's take those. Next year, we open up Romania factory, where we are adding capacity to our existing facility in Romania. There, of course, you should also notice that the capacity we have bought in Hungary adds 40 million-kiloton that is relevant also for Romania and why we bought it.

Just a small little detail, Romania could -- is better served from Hungary due to the mountain range going through Romania, but that's a small little detail. So Romania will come online next year. And then the acquisition will add another 40-kilo tons there.

Then the next one coming online in Europe will be our Soissonnais factory in France in '29 is that expected to open up. And yes, that was Soissonnais. And then I don't want to give too many details on the other ones that we have announced, but where we haven't set a date yet, but after '30, it will be Italy, the one in Birmingham and in -- outside of Stockholm are the main European capacity expansions.

I think it is important when we talk capacity also to talk about productivity. We are very focused on, of course, also optimizing existing footprint. We are a manufacturer that pays a great attention to productivity, the usual approaches with Lean and Kaizen and there's quite a lot more than we can pull out of our existing footprint to maximize capacity utilization, not just in Europe, but throughout the group.

Excellent. And maybe just a follow-up on that. It seems like maybe the France factory is slightly a little bit delayed versus your original plans there. Is that a conscious effort on your side or some of the progress is taking a little bit longer to move on that plant?

It's not significantly delayed. I mean you know the delay that originally was caused by getting building permits. That's what's pushed it originally, but else, the project is fairly much on time. The timing of all these factories, of course, what we're trying to hit here is this expected uptick in Europe in what we call the renovation wave. As you know, in Europe, in Brussels, the new EPBD regulations that now are falling in place. We are following very, very closely country by country and are modeling what volume uptick will take place the next few years. It is, of course, a modeling, but it is very much driven. Our logic is driven by the expected uptick due to the EPBD regulations.

The next question is from Anna Schumacher, BNP Paribas.

So the first one, could you provide a bit more detail on your volume expectations for this year and possibly by region and cadence? It's just that if I take the midpoint of your pricing this year, say, 2% for H1 and [ 7% ] for H2, that gives full year price increases of about 4.5%, which is the new midpoint of your local currency guide. So I would assume no growth. Yes, any [indiscernible] would be helpful.

Anna, we had a little bit of trouble with the sound apparently. Could you maybe just repeat the question [ short ]?

Sorry, about the sound. So could you just provide a bit more detail on your volume expectations for this year, possibly by region and cadence?

Yes. Thank you very much. I mean, we have seen, as Jes said, a volume pickup here at the beginning of the year, driven by some positive moves in some of our key markets. And we can also see that in the second quarter, we also see a higher volume growth, most likely that there are competing materials that are increasing prices faster and higher than we are. But our price increase are mainly coming around July 1. So in our forecasting assumptions, we have assumed that we will have a little bit of stagnation on volume in the second half. Still to be seen whether that will be realized, but that is at least the assumption that we have put in, in the 3% to 6% growth for the full year is that, that volume will start to be a bit stagnated compared to last year in the second half of this year. Anna, was there a second question?

So you called out quite solid growth in the U.S., both in Europe and Eastern Europe. From your comments, it sounds like it's mostly volumes. What is driving this? Is it new build, renovation, new channels? Any details would help.

Okay. We had a little bit hard time hearing you acoustically. So we just repeated it to each other here. I understood your question was targeted towards Southern and Eastern Europe, the volume pickup we've seen lately.

Yes. As you know, it is very important to understand. We compete against glass and we compete against foam plastic products. And when we look at the developments in cost. We do believe that the foam plastic products are harder hit than we are on price, input cost. And we can also see out in the market or at least observed that their price points and availability are under strain. So we are winning, I believe, market shares across and that drives quite a bit of the volume growth in East Europe, where there's a lot [ per pool ] products. And in Southern Europe, it's been a growth trajectory we've been on for quite a while. I do think we should highlight again that the fire regulations in Europe, particularly also again in Eastern Europe, Romania, Poland are getting more and more attention. And when we become more competitive as a stone wool product price point-wise against the flammable products, then there's a tendency to shift over to stone wool. So that is definitely driving some of the growth.

Next question is from Zaim Beekawa, JPMorgan.

The first one is just on pricing. As you've announced 6% to 8% but given your hedging levels and also the comments that you've made on foundry coke being flat between Q1 and Q2. How much of that announcement do you actually need to be realized to protect your margins this year?

First of all, it is important to understand that input costs, of course, vary across regions. It's a different profile on input cost in North America than it is in Europe. Just as an example, we are hard to hit on transport cost in the U.S. because we have longer further transport patterns in the U.S. and the diesel price that has gone up in the U.S. hits us there. So input cost depends a lot on the regional profile, so to say. And our pricing is, of course, also adjusted to local market condition and product groups and applications. So it's not like one for all that all products, all regions, all customers get exactly the same number. But in totality, in order to balance out the inflation, it is going to be around the 7% that we need to harvest in order to balance out inflation.

Okay. And then my next question is just on some of the one-offs. I think you called out specific factors kind of the U.K., but also [ Netherlands ] how much of this would you expect to be sort of continue for the remainder of the year? And on the topic of one-offs, I think you mentioned India starting online this summer. Will there be any one-off start-up costs related to that? And is this already in guidance?

To take your last sub-question first because it's the quickest to answer. India, it is minimal what you will see affecting the numbers so it is single digit in India, but it is already in the guidance for that start-up that is well planned. The bigger issues, you could say, the bigger challenge is that also will take longer time to get resolved is the market in Canada and the market in the U.K. both are down a lot. You can just read the public market reports about construction industry in Canada. Canada is hugely affected by the trade uncertainties with the U.S. investments in commercial industrial and in residential has stalled. They're actually down quite significantly. So that I don't think will resolve quickly. I do want to note that we believe we are winning share in this suppressed market. But because the overall market is down so significant, even market share gains from our side, it does not result in growth in Canada.

The U.K. is a different story, but it has been somewhat quick in decline the last 6 months now. and is caused by a couple of things. Our read on it is that the macroeconomics in the U.K. is generating a lot of uncertainty and hence, subdued willingness to invest in construction. That is one thing. The other one is that the U.K. has instilled a new process for building permitting, which we believe in the long term will benefit us a great deal because it is very much focused around fire and fire regulations but they're struggling with getting the bureaucracy of this new permitting process to get up and running. So that backlog of permitting is dramatic in the U.K. right now. So we do that results, we do see an improvement in the situation in the U.K., but else the U.K. market will also simply depend on the macros in that market.

And sorry, can I just follow up on sort of the other issues with Netherlands and Switzerland. So would that be a drag again in Q2 and beyond?

Yes, it won't change much in those 2 markets, but they're small for us. So you won't really see the material impact in the overall numbers.

The next question is from Claus Almer, Nordea.

Also a few questions from my side. As you wish, I will do them one by one. So the first question goes about this price hikes. As I understand, there is a 3 to 5 months of delay between the energy cost inflation to new and higher prices. Is there a reason for this long delay, not least as this is -- this appears to be later than your main competitors? That will be the first one.

[indiscernible], Claus, it is quite different in the various markets. There are different traditions and different laws that govern and also commercial contract that govern how you can increase prices. So some places, we can increase prices faster and some it simply takes a 3 months warning period. So yes, I don't think that's unusual.

I know it's not all -- it's not all fair question, but it's also more compared to your key peers who seems to be a little bit more aggressive or faster in implementing these price increases. Maybe they have a bigger problem than you have. That might be the reason.

There can be many reasons. That's not what we have registered in the market on our direct peers, but -- and we have also not used force majeure or instruments like that. But you could be very right that some of the foam and plastic products are in a very different situation because their input costs have gone up dramatically more as they are based on petrochemical products almost completely.

That makes sense. And then the second question, is there any of your more meaningful markets where you have decided not to raise prices?

No, there's none of those.

Next question is from Anders Christian Preetzmann.

My first one is on the recent acquisitions you've made in Hungary. I was wondering if this signals now a preference for doing acquisitions in capacity-constrained markets and whether you could maybe give us some examples of other markets where you could do similar transactions to gain volumes?

Yes, I think your observation of that it is a somewhat consolidating market is correct. But we don't have a bay strict, you can say, M&A search process. We are a little bit more opportunistic in our approach, and we'll only do it where it makes sense, obviously, which means where we need the capacity, but also where the acquisition target has a high technological level that fits into our quality levels. And that simply limits the opportunities that arise.

I thought so, too. My second question is on the data center opportunity in the U.S. I mean, yes, you've mentioned in a recent interview that the U.S. pipeline alone, that includes around 1,500 potential data center projects, which does underline a sizable medium-term opportunity for you guys. But I was wondering if you were able to quantify this a bit for us, maybe what the average ticket size is for a data center project and considering your situation in the U.S. right now, which do you even have available capacity to meet this increased demand?

At first, I have to start and say that we have not been a big player in that arena in the last few years. But the way data center is now constructed is turning in our favor and let me explain briefly why. A few years ago, the main focus was building what you call data centers, mainly data repositories. It was cloud solutions. So there was a lot of focus on bits and bytes and building that. And that had a certain building envelope that was not demanding what we can offer with our products, not to the same degree. As these investments now move over to a slightly different type of data centers, namely AI data processing, the equipment in these facilities are becoming significantly more expensive. It's basically high-end processes, as you know. And they require both more cooling and more stringent fire protection. And that is moving into our strength, the cooling insulation from our technical installation team and the fire protection. And the numbers are big. Yes, it is around 1,500 projects. They are in very different stages. Some of them are early, early planning and some of them are being implemented. But it's a big pipeline. And of course, we have organized around ourselves [indiscernible] that increasingly. Just to give you an idea, it is mainly the big 4 that we work with in this arena but we won two big projects. I don't want to mention the customer name, but that alone generated around USD 1 million in fire protection and in cooling insulation. But please don't multiply that with [ 1,500 ].

Next question is from Alexander Craeymeersch, Kepler Cheuvreux.

My first question would be on the net working capital. It was somewhat higher, I think stands at 14.2% of 12-month sales, so it's almost a percentage point higher than usual or at least than last year. So -- and in your report, you mentioned next to the seasonal development that there was planned higher inventories. I'm just wondering what you're planning for considering you mentioned that H2 sales volumes should stabilize?

Yes. Thank you, Alex. The -- when we build inventory, it is not to keep that inventory for several quarters, it's strictly to keep inventory for a few months. So the buildup of inventory at the end of quarter 1 was to cater for some maintenance shutdowns in some of the factories, amongst others in Norway. We also had a you can say the -- all the growth that we had in Q1, in fact, came in March. So there was a higher sales in March compared to March last year, and that simply [indiscernible] accounts receivable. We're typically collecting within 20 days after the month. So there was a buildup in accounts receivable. And then there was a higher inventory due to this inventory buildup to be used in the second quarter.

Okay. Now the second question I would have would be on the margin. A colleague of mine already alluded to it, but the -- basically, with the 7% price increases that are taking effect as of Q2, is it -- I guess it's reasonable in relative terms that there's going to be some dilution effect on the margin. So I'm wondering if the prices remain where they are and if volumes don't change dramatically that basically, we would end up at a 13% to 14% guidance more towards the bottom end of that range and less towards the upper end. Is that correct?

We are guiding in the range of 13% to 14%. But I think it's fair to say that what we see the volume growth we have seen here in quarter 1 and also in quarter 2, mainly within our [indiscernible] segments. And that's where we have an average selling price that is slightly lower than the -- price selling price is slightly lower than the average. So that's one element of it. I would say to quantify whether it's going to be closer to the bottom of the range or in the upper end of the range, I think I'll just wait until I see the Q2 results, and then I can guide you a slightly bit on this one here. Because it is mainly in Q2, we're going to see the bulk impact before our prices started to pick up.

The next question is from Yassine Touahri, On Field Investment Research.

Yes. So my first question would be on your CapEx program. So I understand that this year, you're probably targeting nearly EUR 0.5 billion of investment in capacity and sustainability. It's probably the largest investment that you're doing in the group history. And I understand that this is going to continue for the foreseeable future, like this EUR 0.5 billion investment there. Well, what kind of economics do you target on those investments? What kind of return? And if you can explain a little bit how does it work, the timing and the potential impact on earnings in the coming half?

I mean for sure, yes, it is clear that to build these 4 capacity expansion at the same time in parallel is a step up. Having said that, there are, of course, built in different geographies, and we see growth in all 3 geographies, Asia, Europe and North America so that we need to build capacity. I would have wished that we could have built the factory in France 2 or 3 years earlier that would have sort of smooth now the bit of CapEx impact because we haven't opened a new factory since 2021. So it would have been fantastic to have that factory in France a bit earlier.

Having said that, we need the capacity and they are now coming sort of in subsequent years being -- going live into the market. Whenever you open a factory, you typically have the first 12 months of running in cost. And that is typically for the larger factories. Not the one in India, but for the 3 other ones are typically in the range of EUR 10 million to EUR 50 million as a one-off cost in the first 12 months of operating. After that, it sort of becomes normal operations. And these factories, of course, are all with the latest technologies. That means they will -- hopefully, when they are fully utilized, will be the most profitable and most effective factories we'll have in the group. How to put a number to that? We have not really done that exercise. But as I said, it is, of course, a part of the plan that they will contribute to a very good return once they're up and running. But we are in an industry where it takes 3 to 5 years to build these factories. And that means we have to be patient, shareholders have to be a bit patient because we do need that capacity to continue to grow the company and also a profitable growth.

What I'm trying to understand that when we look at, for example, the -- historically, when you -- when you were investing EUR 100 million, you were able to generate approximately EUR 100 million of sales or a bit more a bit less depending on the investments with mid-teens margin. Is it what we should expect [indiscernible] we could expect that [indiscernible] additional sales over time with the return of the margin a bit [indiscernible]?

There is no one rule of thumb. We are building in North America. It's the most expensive place in the world to build, but it's also the place where we have the highest both sales and the contribution profit per produced tonnes. So it all sort of links in. France also have a relatively high CapEx number. But again, it is also price-wise and contribution profit-wise in Europe, one of the most attractive places. Romania is a place where you can say the sales prices are lower, but the CapEx is also lower. So it all sort of ties in. And as I said, all of the factories will be more productive than any of existing ones. But I don't have sort of a one number to give you that if we spend.

[indiscernible] which is. Yes. But I understand that when we look at this number, which is quite high with EUR 500 million of addition of CapEx on top of the maintenance. And I think a lot of [indiscernible] try to understand what returns do you target on those investments. Do you have a minimum number that you're targeting?

All of them are living up to sort of our internal sort of threshold, which we have said before that we have sort of a treasury around 15% return on invested capital. And that they are sort of all of them living up to that. But as I said, it's very different market to market.

And the 15% is before tax?

Yes, that's before tax.

The next question is from Allison Sun, Bank of America.

The first question, I just want to confirm, Kim, you mentioned that the Swiss bond and the Netherlands electrical conversion as 1 percentage point on EBIT margin in Q1. Is that correct? And should we expect some margin recovery in Q2 if the operations normalize it?

Yes, the Swiss one is not the conversion. That was the factory breakdown in the autumn, that's stretched into the beginning of Q1. That factory is up and running now. So that impact is not going to continue into Q2, whereas the one in [ Romania ] is sort of a bigger conversion we are doing on a major line down there, and that will impact also the result in Q2.

Okay. And my second question is maybe more specific on the return on CapEx in this Norway front where you have EUR 15 million added. What kind of [indiscernible] and what is time line should we be expecting? Is this going to still be at 15% as you just mentioned?

No. The investment we are doing in Norway, I think I alluded to some way, it's just a warehousing that we have decided to acquire a land and construct a warehouse instead of renting several warehouses in the area. So that is not a factory per se. It's just a warehousing project.

Next question is from Pujarini Ghosh, Bernstein.

I have just one. So on your recent acquisition, could you give us some color into the transaction value, how much sales you expect from the plant once it's fully consolidated. So we have some numbers around it?

Yes. I mean, as I said, the plant has this capacity of 40,000 tonnes and the acquisition prices will be revealed in the annual report anyway is sort of in the mid-EUR 40 million. It will not have a substantial impact in the financial results for this year either on sales or on earnings. As I said, there is a regulatory sort of period down until we can start to consolidate this into the group.

Yes. So you mentioned that this year, it's not going to have so much of an impact. But once it's fully consolidated, do you have any expectation of how much sales it could generate?

Well we will not reveal that. So we do have an expectation, yes. But -- so it will be blended into the entire group once we release the 2027 numbers.

It is a running business.

Next question is from Julian Radlinger, UBS.

Two questions from me. They're both on [ Q2 ]. So the first question is, do you -- and I think this has been asked a few times in one way or another, but can you talk more specifically about the margin impact you expect for Q2 just from the fact that you're not increasing prices yet and you may have some of that input cost inflation? And is there any way for us to just understand if you isolate that price versus cost headwind, is that meaningful at all? How should we think about that?

Julian, we will not do an outlook quarter-by-quarter. So you just have to be a bit patient with us. But as I said, my -- take it at least in the forecast assumption is that we will have, you can say, an impact from the higher input cost in Q2, and then we will recover margins gradually in Q3 and Q4. So the full year that we have you can say, the same expectation for margins on EBIT for the full year. That means we will most likely do a bit better in the second half compared to the previous outlook.

Understood. And then switching to the top line. So the market challenges in the U.K. and Canada are very clear. But Canada specifically, declined quite meaningfully last year in Q2. I remember this well, I think it was one of the reasons for your profit warning of the slide. So my question is, with Eastern Europe accelerating so meaningfully like we've already seen and the base effect in North America becoming meaningfully easier for Canada and the U.S. still doing well anyway, is it fair to think that volume growth in Q2 could be well ahead of Q1?

No, as Kim said before, we don't think Q2 will be way ahead of Q1 on the volume side. We don't see that. So no to that.

Do you follow my reasoning though, with the base effect being significantly easier in North America? Is there something I'm missing?

Yes, but that's also based on easier comparables in the latter half of last year than I agree.

The next question is from Chase Coughlan, Van Lanschot Kempen.

I also just have two. Firstly, on the systems margin, it's obviously still under quite some pressure and you explained that there was some inability to pass through prices in time to offset rising costs, bad debt provisions and so on and so forth. Could you explain a little bit about your expectations for the rest of the year? Are a lot of those problems, primarily pricing, going to be recovered throughout the year? Or how should I think about the phasing of that divisional margin for the remaining quarters?

Yes, I can give you some insights to that. First of all, the bad debt, of course, we're still working on getting secured. And then we see do expect an improvement in the profitability in the Systems division as our measures take effect in those markets. Some of them are in systems, as you know, more project-based businesses, and it takes a little bit longer to flush it through depending on how the projects are set up. But we do expect an improvement in that area.

Okay. Perfect. And my second question then, I recognize you just mentioned that you don't necessarily expect volumes in the second quarter to be much above the first quarter. But something that's been, I guess, spoken a lot about sort of across the entire building material sector, this idea of pre-buying in the second quarter ahead of price increases. Is that not something you think could potentially impact volumes going into the second half, I guess?

Yes. Chase. I mean the -- we didn't comment on the second quarter. I did comment on this. I think the volume in the second quarter, for sure, will be positive. It's the volume in the second half that in our assumption that we have given you [indiscernible] there, we have assumed that volume will be [indiscernible] compared to last year where this is going to be the case, we don't have an order pipeline, as you know, more than 2 months out. So we are still sort of a bit uncertain how the autumn season is going to pan out in this uncertain times. And the -- as you know, there might be a little bit of prebuying here in quarter 2. But our distributors similar to us we cannot prebuy a lot of physical products because it simply take up so much space. Do you typically see if they buy forward a single day, it's like a 5% growth in a month, but that small is it. But I don't think a lot of prebuying will be -- will take place simply because the physical constraints that our customers will have on their own storage space.

The final question is from Zaim Beekawa, JPMorgan.

I just had a quick follow-up with regards to Germany. I think you called out that in the decline in Q1. Was that solely due to weather and so were the trends in April also good?

It was a significant impact not only in Germany, that the weather was so bad. So all outdoor work, whether or not roofing or you can say, facades were at a very, very low level in Northern Europe. And yes, the improvement has continued.

This concludes our Q&A session. I would like to turn the conference back over to the management for any closing remarks.

Thank you very much. Yes, and I thank you for today's earnings call and for all your very good questions. We appreciate your interest in ROCKWOOL. If you have further questions, please feel free to reach out to me. You may find the ROCKWOOL contact details in the Investor section in our corporate website. Have a very nice day. Thank you.

[Interpreted] Good afternoon, everyone. A warm welcome to the ordinary General Meeting of Rockwool. In accordance with the Articles of Association, the Board of Directors has decided to appoint Anders Ørjan Jensen, attorney at law firm Gorrissen Federspiel, Chairman of the meeting, and I hand over to him.

[Interpreted] Thank you very much, Thomas. And I have a few formalities as usual.

First of all, I need to conclude whether the AGM has been lawfully convened and is [ quorate ]. I have been through the convening notice and the material that has been uploaded to the website, and I can say that all the documents and all the requirements are complied with in the Articles of Association as well as the Danish Companies Act. And that means that I can conclude that the AGM has been lawfully convened.

Looking at the agenda for today, we have all of the usual items at an Annual General Meeting in Rockwool as well as 2 proposals from the Board of Directors. These are an authorization to acquire own shares and also our proposal to reduce the company's share capital.

All the items on the agenda can be adopted by a simple majority apart from Item 9b about the capital reduction, which requires a qualified majority of 2/3 of the votes and the represented capital. We also have a requirement that at least 40% of the votes are represented at the AGM, and that is also the case today. And that means that the AGM is competent to transact the business on the agenda for today.

Before we get to the agenda itself, I can tell you that the 166 [ asked for access ] cards and almost 100 are present here today of these 70 are shareholders. Apart from the physical attendees, a number of shareholders have given out voting instructions ahead of the AGM, of course, primarily shareholders from abroad. And if you look at all of the votes, we can say that 74% of the votes are represented as well as 69% of the capital of these votes, voting instructions constitute 96% of the votes and 97% of the represented capital.

And based on these voting instructions, we can already include that all of the items have sufficient support to be adopted. But of course, we can still have a good and constructive debate at today's GM.

Now let's look at the agenda and as per tradition here in Rockwool, we will take Item 1 to 3 on block. So we will hear from the Chair of the Board with a report on the company's activities and the presentation of the annual report.

Go ahead, Thomas.

[Interpreted] Thank you. Once again, good afternoon, everyone. We are gathered here again. And on the screen behind me you see the headings of the various sections of my report.

First of all, safety. Manufacturing companies with large and heavy machinery such as ours can be a very dangerous place to work. And we therefore have the highest focus on creating safe working conditions for our many colleagues and factories all over the world. The general development of safety in the past year has shown a positive development in the number of injuries that have given rise to absence the so-called LTI frequency, which improved 11%. But unfortunately, there was also an increase in the number of serious accidents at our factories around the world. So there's more work to be done for us in this field, and we will continue to work in the coming year to strengthen safety of our colleagues in the workplace.

Last year, there were 2 deaths among employees in production at our Russian factories. As many will know, for the past 4 years we have not been involved with the day-to-day operations of the Russian plants because they have been kept out of passive ownership. And that's why we don't know what happened in connection with the 2 deaths, what circumstances prevailed or what lessons can be learnt from it. But it is tragic as that they happened at all, and it is unsatisfactory and highly frustrating that we cannot get clarity about the processes, learn from them, and take the necessary measures to make sure that it doesn't happen again. But those are circumstances we've had to work on for the last 4 years in our Russian business.

And let's remain in Russia. Because on the 13th of January this year, our 4 Russian factories by a decree of Vladimir Putin were placed under the external administration of the Russian authorities. I want to be absolutely clear about this.

Rockwool and I see it as a blatant breach of all international rules and agreements, and it is indisputably illegal by any standard. We are working with the legal options available to enforce our legitimate ownership of our factories. But I will not hide the fact that it looks very difficult. And we have also written down the full value of the factories in our 2025 annual accounts, although we still own them. We can hope that once the war stops, Russia will want to get its assets back in Europe, and Europe will want to get it's assets back in Russia.

So have we now requested holding on to the factories, one might ask. And the answer is, no. On the contrary, I remain firmly convinced that what we did was the right thing for us to do. When Russia began its cruel war of aggression in Ukraine, Rockwool was in a different situation than most other Western companies with operations in Russia. Since the Russian factories only produce products for the Russian market, had only Russian employees and could buy all raw materials in Russia, we took it for granted that the factories and the Russian business would continue with or without us, as owners.

We had no possibility of shutting down the company's activities. If we had given up our Russian business, it was our clear assessment that it would immediately be taken over by the Russian regime or an oligarch. From here, the company would be able to continue to employ the same employees, supply the same products and pay the same taxes.

On the other hand, dividend payments to the Danish parent company would naturally cease. So our choice was between giving the Russian factories to Russians who wanted to continue the business for free or maintaining ownership. And as I'm sure you already know now, we chose the latter solution but transition to passive ownership, treating the Russian subsidiary as if we no longer owned it. This means that we did not in any way support the company from the head office or from sister companies in the form of expertise, spare parts, management or anything else. Just as if the company were owned by others.

We also separated the IT systems to make sure that the Russian company could not use the group's platform and tools. From here, we only had contact with the company's management as shareholders, with a focus on getting as much dividend paid as possible to the parent company in Denmark.

Also with regard to the dividend, we chose to position ourselves in the same way as if we had given up ownership. We didn't want the dividend to be received from Russia, while the country was in a war of aggression in Ukraine to benefit the parent company or its shareholders. We, therefore, 4 times, we asked the shareholders in General Meeting to donate the significant millions we had received in dividends from the Russian company to the foundation for Ukrainian reconstruction.

In the period from August 2022 to April 2025, Rockwool thus together with its shareholders donated DKK 500 million to the fund, which exceeded the dividend payments by approximately DKK 100 million. In other words, the General Meeting has donated more to the reconstruction of Ukraine than the company has received in dividends from Russia. And I would like to thank you most warmly for that.

But you may then ask what have we achieved by holding on to the factories in passive ownership? Well, for almost 4 years, we have prevented that an oligarch or the Russian state won't get all the turnover and all the profits from our Russian activities, and that was exactly the point of sticking to it. I'm pleased about the DKK 500 million that Rockwool's AGMs have decided to donate to the foundation for Ukrainian reconstruction since 2022. These are funds that Ukraine has already had and can continue to benefit greatly from. Work in the foundation is underway on several major reconstruction projects, the foundation for Ukrainian reconstruction only supports civilian projects in the country, and since it was established in 2022, it has spent approximately DKK 100 million on, among other things, emergency aid, heaters, school buses and houses.

The foundation is currently in the process of constructing 9 multistory buildings in Chernihiv and Mykolaiv with more than 450 apartments. Completion of these projects will absorb nearly all of the foundation's remaining funds. Over the past few years, Rockwool has been the subject of a massive criticism of our decision to maintain the business in Russia. I understand full well that it may arouse strong emotions. It has also done so for me and the rest of the management, we had to deal with a very difficult situation.

Some of the criticism has largely been about the fact that we pay taxes in Russia and may have given some people the understanding that Rockwool transferred large amounts of cash from headquarters in Denmark to the Russian treasury during the period. But that was certainly not the case. It is the Russian subsidiary that has paid tax on its profits in Russia. And the company would have had to do that regardless of whether it was owned by Rockwool or by a Russian oligarch.

Another part of the criticism was that we just stayed in Russia to make money. As I said before, it's clear now to everyone that we have donated more to the foundation for Ukrainian reconstruction than we have received in dividends from Russia and activities. So we haven't made any money in Russia in those years. Of course, we are all great affected by the terrible war, such as the one in -- well, as the one in Ukraine. And if you don't pay much attention to the details, it can be difficult to tell the difference between companies that could effectively shut down their Russian operations and companies like ours, which if we gave up ownership, would, in any case, continue to pay taxes and provide income to their new Russian owners.

Fortunately, it's also my impression that there's now a general understanding of our dispositions and a realization that the few other options we had were worse than the one we chose. I'm, of course, pleased about that. And as I also said last year, we would rather be criticized for doing what we thought was right, than be praised for doing something we thought was wrong. So by retaining ownership, we have succeeded in stopping investments in our Russian factories for 4 years and in withdrawing more than DKK 400 million from the Russian economy as well as giving DKK 500 million to the reconstruction of Ukraine. That was a lot about Russia, but I felt that it would be a good thing to -- in view of the many resources we have spent also in terms of time on Russia to sort of tell how the story ended.

Let's have a look at the rest of the world. Let's go to the U.S. and the EU. Throughout 2025, there has also been significant economic and political turmoil in the international markets in which we operate. We've seen good growth in the U.S. market where we are in the process of building a new factory in Washington state in order to meet the strong demand on the West Coast, not least in California and also on expanding the capacity of our existing factory in Mississippi.

But the geopolitical and economic uncertainty also creates challenges not least in Canada where the market is heavily influenced by the U.S. tariff policy. In general, there is still some uncertainty in the North American construction market.

In Europe, we've also felt that uncertainty and geopolitical and economic conditions have affected activities in important markets such as the U.K., Germany and France. In other markets, especially in Southern Europe, the impact has been smaller. On our large factory in Switzerland, on the 9th of October 2025, we had a mechanical accident that caused hot lava to flow on to the factory floor. Fortunately, no one was injured and our local factory workers followed safety procedures to the letter.

However, the accident meant that production was at a standstill for a few months and the reestablishment of production entailed additional costs. Production resumed in January 2026 after have been at a standstill for about 4 months. Fortunately, the accident was not due to a fundamental design flaw in our electric melter, but rather a mechanical fault on a hatch that couldn't be closed. We've now made the necessary changes in order to ensure it doesn't happen again, neither in Flums nor at any other of our factories.

The green transition. The discussion on sustainability has broadened over the past year. While previously, it was predominantly about climate change and CO2 reduction. These important considerations have now been supplemented with other considerations that are also central. Energy efficiency is not just about the climate, it's about also security of supply that Europe can become more self-sufficient in energy and at the same time, make itself independent of Russian gas. Many studies show that renovating the European building stock is the fastest and cheapest way out of our dependence on Russian gas. And lastly, there's a renewed focus on the fact that energy efficient buildings are simply better buildings. They last longer, and they are better to live in and stay in. And here, Rockwool has an important role to play.

Our products reduced by almost 100 times more energy over their lifetime than what is consumed when they are produced. All this means that the climate agenda has more legs to stand on and is, therefore, even stronger. We hope and we expect that the EU member states will now take serious action and focus on reducing energy consumption.

A good place to start would be the EU buildings, which account for up to 40% of the total amount of energy consumed. This has been decided with the EU's Energy Performance of Buildings Directive also known as the EPBD, which will now be translated into concrete initiatives and objectives in the member states. It's gratifying that there are countries that are well on their way here but also disappointing that other countries are especially concerned with energy production instead of energy efficiency. The ongoing energy crisis with rising prices will hopefully inspire to intensify efforts to reduce energy consumption.

It offers good market opportunities for us at Rockwool just as well for other Danish companies working globally with energy-reducing solutions. At Rockwool, we have had continued success in 2025 with our own green transition, which is an area that remains a high priority for us. We have maintained the positive development in our work to reduce our own CO2 emissions, and we are actually ahead of our plans. At the same time, we continue our ambitious program to transition production across our global factories to nonfossil energy sources.

In November last year, we committed to new and stricter ambitions for our reduction of emissions by joining the science-based target initiative which builds upon a maximum temperature increase of 1.5 degrees. Our previous target was based on a scenario of well below 2 degrees temperature increase. With the new commitment, we reaffirm our long-term ambition to be Net Zero emitting by 2050 at the latest. We will be working in coming months to get this new objective validated.

We have experienced challenges in the electrification process. We have the technology, the money and the desire to electrify. But in several places, there is a very long waiting time to get the necessary amount of stable power supply. In total, we have invested EUR 473 million in new factories in India, the United States and Europe in 2025. And we have improved both the efficiency and sustainability of existing factories. Unfortunately, we have been forced to close 2 smaller factories, one in China and one in Norway, which in the long term, would neither be profitable nor appropriate to convert to a more sustainable production.

Now let's take a look at the financial performance in 2025. Overall, we are quite satisfied with the financial results for 2025 excluding the Russian write-down, it is, in fact, the second best result in the history of our company. However, it comes right after our 2024 result, which was exceptionally good. And which we have not been able to match completely in 2025. 2025 has presented numerous challenges, and I would like to commend our employees for staying focused and working hard to achieve the goals we set ourselves at the beginning of the year.

Revenue for 2025 ended at just under EUR 3.9 billion which is close to the same as the previous year. EBIT ended at EUR 570 million before the impairment of the Russian business, corresponding to an EBIT margin of 14.7%, which is 2.7 percentage points lower than the previous year. This decrease is partly due to the factory accident in Switzerland, the slowdown in some markets and the closure of the 2 factories I mentioned before.

When we include the impairment of our 4 Russian factories of EUR 392 million, the profit after tax for the year ended with a small profit of EUR 28 million. Overall, revenue increased by 1%, which is, in fact, slightly better than the expectations we had previously announced due to a good end to the year. All in all, we consider this to be a satisfactory result considering the circumstances.

If we then look at the results for our regions, let me start with Western Europe. Here, revenue increased by 1.5%, and this increase is mainly due to the acquisition of Wetherby in the U.K. in October 2024. In Southern Europe, we experienced a positive sales trend. On the other hand, the important market in Germany was characterized by low activity, both in residential and commercial construction. Sales declined in the first 3 quarters, but the development was better in the fourth quarter.

In France, sales were at a low level in the first half of the year but showed progress in the second half. In North America, sales growth was good, especially in the United States, where we also gained market share. That is, of course, satisfactory, not least in a market marked by political turmoil.

In Canada, sales also increased but less than expected due to tariff and other trade-related uncertainties.

In Eastern Europe, turnover increased by 5%, excluding Russia. Romania, Poland and Hungary, in particular, did well.

Finally, sales development in Asia was flat despite the acquisition in Vietnam in October 2024. Although we saw positive developments in India, Malaysia and Japan, this was offset by a contraction in China. Our results for last year show significant differences across regions within the Insulation business. In 2025, the Insulation segment grew by 1.5% and generated sales of EUR 3.2 billion. This corresponds to 83% of the group's total turnover.

The EBIT margin for the Insulation segment was 14%, which is a decrease of 2.6 percentage points. As I mentioned before, this decline can be explained in particular by the production halt in Switzerland and in the closure of factories in Norway and China as well as a decline in sales in Russia.

Now turning to the Systems segment. Revenue here ended at EUR 671 million, corresponding to 17% of the group's revenue. Rockpanel delivered solid growth, while Rockfon in Europe and Asia maintained stable revenue. Grodan experienced declines primarily driven by lower activity in the U.S. cannabis market.

Overall, this meant that revenue in the Systems segment decreased by 0.5%. The operating margin fell by 2.7 percentage points and ended at 12.2%.

Now looking ahead at 2026, I must say that despite what is happening in the Middle East, Rockwool has a moderately positive outlook on 2026. We expect rising inflation and higher energy prices to prompt some restraint in Europe with squeezed markets, particularly in parts of Eastern Europe and Canada.

On the other hand, we see a long-term growth potential in the United States. As I have already mentioned, the expectation is that European initiatives on building renovation not least the so-called EPBD Directive can contribute positively to the development of our business. The same applies to an increased focus on fire safety. We, therefore, expect to continue to invest in capacity, sustainability, and market growth in the coming years.

Across the business, we expect generally stable markets, but with selected areas of growth, it is expected that over the course of the year, we will be able to balance inflation and higher energy prices with price increases.

In summary, we expect sales growth of between 2% and 4% and an EBIT margin of 13% to 14%. Of course, these expectations are calculated without the Russian business, of which Rockwool as previously mentioned, no longer has control.

In 2026, we have also planned a number of investments. We're expanding our factory capacity in India, Romania and the United States. At the same time, we also plan to acquire additional land for future factories. And we continue to invest in the electrification of existing factories. I'm particularly pleased that our French factory project in Soissons is now pressing. With the building permit in place, we are ready take the next step towards this important expansion of our production capacity in Europe.

Our share price fell in the last financial year. The A share fell by 11% over the year, while the B share decreased by 12%. This must be compared to an overall 17% increase in the STOXX 600 Europe Benchmark Index.

There are a number of factors that may affect the development of our share price. As you know, Rockwool is dependent on the global construction and renovation markets. And during 2025, these were affected in many countries by geopolitical and trade uncertainty. And we saw that many major construction and renovation projects were postponed or stopped in certain parts of Central Europe, the U.K. and Canada.

At the same time, we could see a significant decline in the reported figures from Russia, which worsened during the year. Unfortunately, this and the postponement of major construction and renovation projects were not foreseen at the beginning of 2025. And as a result, we had to make 2 downward adjustments during the year.

Along with our annual report for 2025, we also published our remuneration report for the year. It contains an overview of the remuneration to Rockwool's Board of Directors and Executive Board for 2025. And as always, we will present this report at the AGM for an advisory vote later today. In 2025, the remuneration to the Board of Directors amounted to EUR 844,000 and to the Executive Board just over EUR 4.3 million. This is about half of last year's payments, which included a combination of severance paid to the outgoing CEO and an allocation of stock options to the new one.

These amounts are in line with Rockwool's remuneration policy, which was approved by the Annual General Meeting in 2024. The figures are shown on the screen behind me and you can see more details in the remuneration report on our website.

Also in 2025, the Board of Directors conducted its annual self-assessment. Based on the evaluation in 2025, the Board of Directors has concluded that the composition is appropriate and sufficient for the Board of Directors to perform its tasks and support the long-term value creation for the company and its shareholders. You can read more about the evaluation in the annual report.

I would like to take this opportunity to thank my colleagues on the Board for a well-functioning collaboration, great dedication and a value-creating effort. On behalf of the entire Board, let me thank all of our managers and employees for their great efforts and the very good results they have achieved in a challenging year.

And finally, thank you to all of you, our loyal shareholders, for your continued support and for your investment in the Rockwool Group. We really appreciate it. Thank you.

[Interpreted] Thank you to the Chairman of the Board. It's now possible to put questions or submit comments to the report and the annual report. We already had one speaker on the list, Klaus Jørgen Sørensen from the Danish Association of Shareholders, and Bjørn Hansen is second on my list. First, let's hear from the Danish Association of Shareholders.

[Interpreted] Thank you to the Chair for the comprehensive report and a good presentation of the Annual Report. My name is Klaus Jørgen Sørensen. I represent the Danish Association of Shareholders. We safeguard the interests of small shareholders, and we work to develop a healthy share culture in Denmark. We have about 17,000 members.

Rockwool delivers a comprehensive and transparent Annual Report and Sustainability Report. It's a solid business. And over the years, it's delivered fine results and it has focused on the climate-related challenges and the green transition and how Rockwool will contribute to resolving these challenges. So the company is well positioned in relation to future new requirements from the EU to energy efficiency in new build projects.

As opposed to 2024, 2025 was a year of challenges for Rockwool. The underlying operations were solid but the total picture was dominated by the massive write-down in relation to the Russian business. It amounted to EUR 392 million. EBIT less Russia declined by just over 15% and EBIT, including the write-down of Russia show the decline of 73%. The capital structure has been changed. So that Rockwool now has a net debt of EUR 168 million against previously a situation where the cash situation was positive.

My first question is the Russian authorities takeover of the Russian business. How does the Board see the risk of the Russian factory starting to export Rockwool's products to countries where Rockwool is already engaged in sales? And what possibilities do you have for putting an end to such sales?

My second question, the EBIT margin less Russia declined in 2025 from 17.5% to 14.7%. And the outlook for 2026 is in the range of 13% to 14%. Do you see this decline as a temporary effect of one-off items in connection with factory closures, et cetera? Or is this a new structural reality that we simply just have to accept our shareholders?

Question 3. In 2025, Rockwool closed down factories in Norway and China sustaining a loss of EUR 21 million, while at the same time investing massively in new production plants in the U.S., India, Romania. Is this a sign that your global network of factories was not correctly I mentioned? And what is the risk of additional closures?

Question 4. The U.S. is the company's great most powerful growth engine with double-digit revenue growth. At the same time, the local production is complemented with imports from Europe. How do you think the current and possibly future customs tariff will affect the company's earnings level and may it also affect the planned capacity expansion in Washington State?

We already heard that the B share price declined by approximately 11% in 2025 against 17% increase in the STOXX Europe 600 Construction & Materials Index. So in terms of return and earnings, it's been a very challenging year for the shareholders of Rockwool.

Thank you to management and employees for your efforts in the past year.

[Interpreted] Thank you, Klaus, for your comments and questions. I will try to answer. Your first question was about the risk that the Russian companies will all of a sudden become our competitors in a number of markets. As you will all know, over the past 4 years our Russian business has been held by us in passive ownership. And we know nothing about the daily operations. And that is even more clear after the situation that happened after the 13th of January this year and the Putin decree. There are EU sanctions that prevent the businesses from operating in the EU. The degree to which the Russian administrator has plans of starting exports to other parts of the world is something we don't know anything about.

But if the Russian products meet our products in a market outside the EU, you may, in theory see them as competitors. But that it's premature to say anything about the legal consequences or other consequences of this. It is expensive to transport insulation products over relatively long distances. We will have to navigate as the situation evolves.

You also asked about the decline in earnings whether this was a temporary effect of one-off items in connection with factory closures or whether it's a new structural reality. Our EBIT margin without Russia and without donations to the foundation for the reconstruction of Ukraine was 14% last year. We expect this year in '26, that is, to see new challenges because of geopolitical and trade policy turmoil and also the effect they will have on operating costs.

But we have electrification, and we have capacity increases. We have sales and marketing activities that will lead to an increased cost level, which will affect the 14% level in the short term. But we are trying to make efficiencies. And many of the new technologies we introduced on our production plants increase efficiency and in the long term. This means that our profitability will grow.

You also asked about the 2 factory closures that we talked about previously and whether more are likely to follow suit. Our network of factories is good and solid, both in Europe and North America and the risk of additional closures is limited as we see it. The 2 factories that we had to close down last year were faced with a lot of investments because of sustainability, and they were located in markets where these investments would not give a satisfactory return in the medium and long term.

And your last question had to do with the U.S. and problems with customs tariffs. And it's true what you say that we had solid growth in the North American market and this is -- we do have imports from Europe and we also work with efficiency improvements in the production plans in North America, and they are very close to reaching the -- well, the limit of their capacity. So we don't think that there's likely to be any considerable effect, not in relation to our earnings nor in relation to our planned capacity increase in Washington state.

[Interpreted] Thank you very much. And Mr. Bjørn Hansen has asked for the floor. And again, should anyone else wish to take the floor, please make yourselves known.

[Interpreted] Thank you for the floor. My name is Bjørn Hansen, and I represent private shareholders. Congratulations on the good results. Thank you for that good and detailed report. I think there's a lot of transparency in the company's report and it's getting better year after year. So congratulations.

And now let me get to the serious part. During the course of the year, Rockwool has lost a lot of money in Russia, as you have mentioned. But what is the amount in Danish krona. Can you tell us that? And I would also like to ask what have you done? I mean if you have a loss of DKK 3 billion, then how about approaching the Belgian bank that has to do with the frozen assets, the frozen Russian assets instead of using the Carlsberg method. And how far have you gone down that road? Because at some point, the Putin regime will be replaced and then Rockwool would be able to recover its funds.

We have a recent example in Denmark. There was a cable before the Russian -- before Russia became the Soviet Union. We put down cables in the Baltic Sea from Leningrad to Vladivostok. And during the period of Boris Yeltsin, an amount was paid to the Danish company -- cable company after 90 years.

Apart from that, I'm happy that you have this foundation and I would also like to ask, I hope that this foundation can have some of its losses covered. It's great that Rockwool pays something out of its own pocket. This really gives rise to confidence and goodwill . So congratulations. I've had some contact with the EU Commission. And unfortunately, someone from the commission DG 04, which is the Directorate General for Competition. And unfortunately, he stopped working there, but he gave me some good advice along the way. And he said, we should move as fast as possible and really make your losses known year by year. Make use of the directive also when it comes to delayed payments.

You might not get anything out of it. But on the other hand, you might get some raw materials in return. So really think you should try to reach a settlement, if at all possible. Because Russia only becomes poorer during the course of the war.

You also touched upon the foundation and how much have you accrued over the course of the year? I'm glad to hear that you reached the DKK 500 million, and it seems like it is already benefiting Ukraine. But what are you going to do in the future? Can we increase this amount? And what can you tell us about this? Because we would like to contribute to the reconstruction of Ukraine.

And then the share price. You showed us the share price just before, and we could see a decrease and it's understandable, of course. But I mean, your order backlog and your factories have done well around the different regions. And Danske Bank have said that for the past 52 weeks, the share price has declined by more than 31%.

And I can see that just a few days ago, someone called me and said that they bought the share. And I have some Norwegian contact who called me to ask, if I could get some accounts in Danish or Norwegian. And I said, well, in Norwegian, I don't think so. But when you buy an American share, you just click a button and you can get the accounts in Danish.

And here, we have some way to go still and that a company, the size of Rockwool, I mean, you could present accounts in Danish. I was glad to see some material in Danish out here. I will take it home, and I have taken a few copies for some of my acquaintances.

Finally, [ Nordnet ] has calculated your market value, EUR 7.370 billion, for '25 it was EUR 6.369 billion. So around EUR 7 billion, that's EUR 1 billion. So where are the last EUR 5 million? Perhaps you can tell me about that? Maybe you can clear that all up for me because the loss that you've had via the foundation isn't that tax deductible already? I mean your dividend policy is good, but I mean you could use a tax deduction, that would increase the return to the shareholders.

[Interpreted] Right. I think it will be Thomas, who will take the floor for a response.

[Interpreted] Thank you very much, Bjorn. I will try to ask -- to answer the first few questions. I have a few doubts about the last one, but we'll get back to that. And thank you for your praise when it comes to transparency, we really do strive to be transparent.

First of all, you asked about Russia and what the loss has been in Danish kroner. Well, in our accounts, the loss was DKK 2.930 billion, but the market value of our lost activities is a lot bigger than that in our opinion. So far, we still have ownership of the Russian company which has been put under administration. We, of course, maintain that the Russian business is our property and we'll see whether in the future we can regain control or whether we can achieve compensation via legal channels. It's probably too soon to say, but we have a number of efforts that we have launched. But to which I cannot speak any further today.

Then you ask about the foundation for the reconstruction of Ukraine. And as I mentioned in my report, it has used about DKK 100 million out of the DKK 500 million that we have put into the foundation that it has gone to heating, school buses, et cetera. Currently, we are building about 100 family homes around [ Mykolaiv ]. We also entered into agreements and started the construction of 9 large multi-story buildings also in and around [ Mykolaiv ] with a total of 450 apartments. We expect to complete these projects by 2028. And by then, we expect to have used all of the funds in the foundation.

And that leads me to the market value. Well, Bjorn, I think your question about market value is something we should take bilaterally afterwards. But there are information about the company's market value on the day of the balance. It's included in the annual report. And there's a comment without a microphone.

Well, it is included in the account.

[Interpreted] Right. Great I'm sure we can find the right figure for you afterwards. Thank you very much, Bjorn. Any other questions or comments? Mr. [indiscernible].

[Interpreted] I am [indiscernible]. I just want to correct the former speaker the possibility with Belgium has been well used. And I think that the money is not available any longer just for your information. Others have been there before you. And Russia and your business in Russia, the EU have decided that the Ukrainian war will continue until after the mid-term elections in the U.S. That's a very strange decision because it's been a long war, and we could have achieved peace already in 2022 in relation to Russia and Ukraine.

But Joe Biden at the time -- tell Johnson to Zelenskyy and said, don't stop your war. We have too much money at stake and it's a U.K. and the Biden family that is squeezed in terms of money, and that caused a lot of us also the Danish state DKK 80 million, and a lot of people have lost their lives. And you will never be able to topple the U.S. President in any case, a waste of money, your accounts, I'm just an ordinary shareholder, and I don't want to read 240 pages of your accounts. I want to have 5-year overviews, and I think we have a problem here because the Danish government apparently doesn't want to take the requirements of Danish shareholders seriously.

As a minimum, we should hear what is the share capital when we read the 5-year review. It should also state how much do we have by way of treasury shares and at what values -- at what prices were treasury shares acquired. When you buy treasury shares, you deduct the amount in the share capital and then they are booked at 0, but there is the intrinsic value. So there's a hidden reserve to be found.

And I think it would be nice if shareholders knew what hidden reserves can be found in a set of accounts for this. It would enable us when we invest in Rockwool and I checked Rockwool out because I felt that the share price was now affordable. At one point, it was [ DKK 204 ]. So you get a small discount right now, it's been higher. And I think you will have to wait a couple of years or more before the prices go back up. But the company is doing fine.

So just some things that I miss in the accounts. And also the intrinsic value, I think, should be available because that would enable us ordinary shareholders to check a lot of things. It requires far too much energy to have to read 5 sets of accounts in English in order to find out what the level of intrinsic value is. It's important, and there are so many things, tricks that can be used. So I think it would be nice if the company could furnish us with this observation.

The intrinsic value, please, and the dividend that has been paid out over a number of years, that should be an absolute minimum. The same applies to a translation into Danish of the accounts. All you have to do is to press the button that says and now in Danish, of course, there will be errors, but it would be such an advantage because we're really not experts at reading about this technical stuff in English.

Well, I think I've exhausted my list of comments. Congratulations with good accounts. And I hope that you managed to find a solution to your Russian business. I'm sure that Putin will be approachable once we are on the other side of the mid-term elections in the U.S. We hope to get rid of this horrific war because -- well, it really has to stop now.

[Interpreted] Thank you very much, Mr. [indiscernible] Thomas, will you reply to the questions?

[Interpreted] Thank you, [indiscernible]. The first bit of your comment was more by a comment, not actually a question. And as I said to Bjørn Hansen, we are currently looking into what we can do in relation to a loss of control over the production in Russia and what we will do in the event of different paths of development.

And your 5-year review content, well, I've taken note of what you said, and I take it that you find what you -- you've got the information you want in the account, but you want it also in the 5-year result. And then the Danish version is just by pressing a button, yes, I agree that you can press a button. But if we press a button, then we are responsible for the Google translation version of the text. And that's why it's a bit more expensive than that.

And the question is also how many languages should we translate into? But as a shareholder, you are more than welcome to try to press the button and then we can only hope that the text you get is the right one. So I can just tell you that we have no plans here and now of changing the language that we use for financial reporting.

[Interpreted] Thank you very much. Any other questions or comments? [indiscernible] you're back.

[Interpreted] Yes. I haven't seen any figures at all on the slides behind the speakers. At the AGM, I guess, you meet up as shareholders in order to get an explanation of the financial performance. We see nothing by way of financial results. I would like a proper presentation of the accounts and an explanation of developments in share capital. That's where the interesting things are going on.

And when there's a note in the accounts, I think in view of today's technological level, it would be a good idea for us just to be able to click so that we are taken to the note and then click again and get back to the body text. So that would be something that you could do. And it would be to the benefit of the Danish shareholders.

[Interpreted] Thank you for that suggestion. We'll include. We will take it home with us. And I hope that in future we will have more time at AGMs to talk about the accounts. Hopefully, we will not have the same kind of issues that we need to talk a lot about at the AGM in the future. But thank you for your contribution.

[Interpreted] Thank you. Any other comments or questions from shareholders? We are dealing with items 1 to 3 of the agenda. It doesn't appear to be the case. Which means that I find that the meeting has taken note of the annual report and the Board's report. The report has -- annual report has been available on the committees website for a number of time. But any additional questions? This is Item 3 on the agenda. It's been approved. And then we also have, in this connection, the question of giving this charge of liability to members of Board and management. Can we do that as well? Thank you very much.

That leads me to item 4, which is the presentation and the advisory vote on the remuneration report. We've heard about this report in the Chairman's report and the remuneration report has been published on the company's website. Are there any comments or questions under this item? If not, then the -- then I can conclude that the remuneration report has been adopted. Thank you very much.

Under Item 5, we have the proposal for the Board's fee for the period until the next AGM. You can see the proposal here, an adjustment of 3.2% and that means a basic fee of DKK 470,000. The Deputy Chair will receive twice that, and the Chairman will receive 3x that. Then there's an additional fee for the members of the Remuneration and Nomination Committee of DKK 118,000. Members of the Audit Committee, DKK 235,000. And the Chairman of the Audit Committee, DKK 388,000. Are there any comments or questions? The total amount, someone asks, I can't really sum it up in my head right here, but you can read it in the remuneration report for 2025 and also for 2026, you can see here. So if nothing else, I can conclude that these figures have been approved.

Under item 6. I was jumping ahead to Item 7, but we still need to go through item 6 here. The proposal is to pay out a dividend of EUR 4.15 per share which is the total of EUR 118 million . Are there are any comments under this item? If not, that has also been approved. Thank you very much.

And that leads me to Item 7, the election of members to the Board. And here, the proposal is to reelect the current members which are, and I might tell you that information about other managerial posts et cetera, can be seen in the meeting notice. So the Board proposes reelection of Thomas Kahler, Jorgen Tang-Jensen, Rebekka Glasser Herlofsen, Carsten Kahler, Ilse Irene Henne and Claes Westerlind.

And as mentioned, you can see more information about the candidates and their background in the convening notice. In the Board, we also have 3 employee-elected members. These are Connie Enghus Theisen, Christian Westerberg and Janni Munkholm Nielsen. Are there any questions or comments? Here, we have the complete Board of Directors. Are there any questions about the AGM elective members? If not, I hope you will agree with me that we can conclude that the Board has been reelected. Thank you very much.

That leads me to Item 8, which is the election of auditor. Here the proposal is to reelect PwC in relation to the financial accounting as well as the Sustainability Reporting. Are there any comments or questions? If not, I think we can also congratulate the auditor.

Item 9, 2 proposals from the Board, as I said, in my introduction, and this is something that is recurring. Authorization to acquire treasury shares. The proposal is for the AGM to authorize the Board of Directors to allow the company to acquire own shares of a total nominal value of up to 10% of the company's share capital provided the price of the shares of the [indiscernible] purchase does not deviate by more than 10% from the most recent listed price. Any questions or comments? That doesn't seem to be the case. I find that this proposal has been adopted.

9b, proposal concerning a cancellation of own shares. This is a capital reduction that results in a reduction of the amount in -- nominal amount in the Class B shares. And you can see the figures that also appear in the convening notice. What is the size of the reduction and how much has been paid for the shares? So any questions or comments that doesn't seem to the case. There will be an amendment to the Articles of Association once this has all materialized.

Item 10, any other business. It is not possible to adopt anything here, but you may put questions or may give comments. Bjørn Hansen appears to wish to speak.

[Interpreted] It was either Thomas or [indiscernible] Well, I have a couple of questions for this item on the agenda. Options, share options. Do you operate with this in Rockwool? Anyone that holds a portfolio of shares of a certain size that has to be sort of exercised at some point? And how about taxation and so on and so forth? Do we know anything about this? I'll remain here until I hear what you want to say.

Well, it should probably have been addressed under another item which was previous only. But I know you cannot have any sort of votes under this item on the agenda. I know says Bjørn Hansen.

[Interpreted] Let's hear from the Board Chairman.

[Interpreted] I hope I have understood the question correctly. You ask if we use share options? We don't. Our remuneration policy that was adopted most recently in 2024 allows the use of share schemes and share options. But in recent years, we have not used options. The allotments that have been made appear in the remuneration report, which appears together with the annual report. So there, you will find the numbers with regard to the number of shares held by members of management, members of the Board have no portfolios of this.

[Interpreted] I'm glad I didn't go all the way back to my seat. We have AI. So if we take the total number of shares, and the number of shares in Nordnet in Danske Bank. And are they the same? AI reflects a difference between the 2. So is this because of a certain date is my question. Is there something that has been updated that is not available in the accounts? AI, I'm quite sure you have a budget item worth several millions every year.

Well, it sounds as if it was a warning from Bjørn Hansen, concerning whether or not you can trust AI produced numbers. I don't think there's anything further under Item 10 on the agenda. So we have now exhausted the agenda of this Annual General Meeting.

And now over to the Chairman of the Board.

[Interpreted] Thank you. We have now dealt with all the business on the agenda. Thank you to the Chair of the meeting for helping us navigate successfully through the agenda and helping us getting questions answered. There's a tradition that after the formal part of the meeting, we have a presentation from a guest speaker. And today, it is Rafael Rodriguez, who is Executive Vice President, responsible for Southwest Europe. He will talk about the development that we are experiencing in the French market. He will speak in English, but it is possible to have his speech translated to Danish, if you so wish. You need a headset, of course.

Before I give the floor to Rafael, I'd like to thank you very much for coming. The formal part of the meeting is over. Thank you for your support and help me say welcome to Rafael here on stage.

[Foreign Language] I will speak in -- I will be speaking in English. Good afternoon, everyone. Thank you very much to the Chair for this invitation. I'm pleased to present -- sorry, I'm missing the -- I think it's over there on the table. I'm very pleased to present to all of you our strategic position, but also the market outlook for France.

France is one of the most dynamic markets in Europe. And I think we are in a good position to lead this transformation. During the coming minutes, I will share with you, I mean, first, I mean, our presence in France. I will present you as well the market structure and also the competitive landscape. I will go through the main growth levers -- growth drivers, I would say, shaping our industry. And then 2 important projects. I mean, how are we going to take advantage of these good opportunities in the market? I mean, first, with the decarbonization of our facility in Saint-Eloy-les-Mines. And the second is the new capacity project in Soissons.

Well, I will start with our foundation in France. Over the last 45 years, we have built, I would say, a relevant manufacturing activities in Saint-Eloy-les-Mines. This is the central part of France. And I would say that Saint-Eloy is more than a production unit. For me it's the cornerstone of local economic development and employment. We are more than 800 people today in France. It's quite impressive. We are serving more than 3,000 customers across the country, but also in neighboring markets.

In Saint-Eloy, we are producing more than 200,000 tons per year, making this factory one of the biggest production centers we have in the world. And I think during the last year, I think our revenue has been growing significantly, and now France represent -- I mean, the third largest market in -- for Rockwool, representing I think both, I mean, the size of the market, but also the value of our operations there. I think this strong territorial anchoring in France has provided us, I think, unparalleled knowledge about market dynamics, customer relations but also a main regulatory environment. And I think this is a very good platform to implement growth strategies with good confidence.

Market, France is today the second biggest market in Europe, speaking about insulation, of course, and is -- and we think with all the figures, we have all the plans that the government put in place that this market will experience a significant growth in the coming years. When paying a look to the market, I would say that it's quite balanced between, I mean, renovation projects and new build activity, 50-50. I think having this relevant presence in renovation has help us and has protected us especially during the crisis time.

When paying a look to the competitive landscape, we would say it is quite stable. We have a strong presence of mineral wool. Stone wool represent roughly 20% of this insulation market.

Rockwool, we are significantly strong in 2, I would say, relevant segments is the flat roof and in renovation. I want to highlight this because -- I mean, with the future plans, these 2 segments will be very relevant in terms of volume, but also in terms of value. And I think when I pay a look to our position in the market, I think we are well placed to take advantage of this growth.

While speaking about growth, there are like -- there are 3 main, I would say, structural policy-driven factors that are converging at the same time in France. And these are creating compelling growth opportunities for us. I mean the first one is energy efficiency. I think Thomas has been speaking about the EPBD, this is European mandates in terms of energy efficiency. I think that France is, I would say, is a good student. And the government has imposed, I would say, very demanding regulations, I mean, to save energy. And this is in both, I mean, residential and nonresidential buildings.

But on top, I think France is pioneer on mandating or obligating I would say, developers, building owners to install photovoltaic panels on existing roofs. And this is a big opportunity for our noncombustible insulation.

Second is the recently approved new housing plan. I mean, we have 2 main pillars. I mean the first one is to address there's significant housing shortage that we have in France, especially in the big cities. And with the aim to build 2 million new dwellings by 2030. Today, we are roughly up 250,000. So it means that it's a minimum 400,000 per year. And then the second big aspect is the deep renovation focus of this plan addressing also a big challenge that we have in France of what we call fully insulated houses.

And third is sustainability and circularity. Since 2022, we have in France, what we call the environmental law that is setting a big ambition on carbon emissions in buildings, but also in building materials. What we see these days is an acceleration of this shift towards low carbon materials. And it's going to be especially demanding after 2028 because, I mean, we have the thresholds are, I mean, more difficult -- I mean, more challenging.

And then on top, I mean, France is pioneering in one thing is the implementation of a mandatory waste recycling systems for building materials. So what we see in the market is that, I mean, when if I look to purchasing criteria, they are moving towards, I mean low carbon unrecyclable products. And I think here, I mean, when I pay a look to -- I mean, the decarbonation strategy we have and our commitment to circular economy, I think we have a clear competitive advantage.

So what are we going to do? Are we to capitalize on these opportunities and strengthen our competitive advantage in the market? I mean, the first -- I mean, we are undertaking, I would say, comprehensive decarbonation plan and is just decarbonation -- sorry, decarbonizing our activities in Saint-Eloy-les-Mines. The idea is based on previous experience in [ Roermond ] in [indiscernible] is just to implement, I mean, some innovative technology moving from fossil fuel systems to electrical or electric heating systems. I think this is a very good advantage, especially in France, where we have access to competitive and decarbonized energy. But the impact is -- I mean, it's substantial because we will be able to reduce by 60% emissions of our site.

And for me, it's not merely an environmental approach, is also I mean at the time, the regulations are imposing more and more low carbon solutions, having the opportunity with this technology to produce low [ embodied ] product position us I would say, as the market leader. Well, this is the first activity, but it's not the only one.

I would say the second is that we think, as I have shown before that the market is going to grow. So if today, I mean, we have, I would say, a structural deficit of stone wool in France. So we need more capacity, and we need more green capacity. So that's the reason behind our project in Soissons. Soissons is in the Northeast part of France. I would say, is 1 hour drive from Paris. So is optimally located there. So what we'll do there is to install proprietary e-melting technology leveraging from internal successes, but also from our own experience, I mean, in Saint-Eloy, we have been running for now 30 years electrical melters. So we have in-house knowledge that we will apply when building -- when we build this factory in Soissons.

When its full speed, we will produce more than 100,000 tons and I would like to highlight also the sustainability profile of this factory. I mean, it's access to low embodied products, but also is the possibility to recycle up to 50% of stone wool in the melting process.

So beside or beyond, this -- I mean, the factory itself, I want to also highlight, as I said before, I mean, the position of Soissons. We will optimally deliver I mean, our biggest markets in France. But I think it's very well placed in the European network capacity. And this gives us the flexibility to deliver, I would say, optimally and profitably also neighboring countries. But then when I speak about Soissons, for me, there is one word that comes to my mind. And this is a word that reflects what we are as an organization. But also that reflects what we are really producing, I mean, the performance of our products. And I think this word is resilience.

I think like many other industrial or big industrial projects in France, we have been navigating a complex, I would say, community management and environment and regulatory environment. We initially faced, I mean, legal difficulties. I mean, our permits were refused. We had also a significant opposition from local stakeholders but rather than giving up, rather than abandoning the projects, I think we have doubled our efforts. And we have doubled our efforts in terms of community engagement on improving the environmental footprint of our factory and of course, on having a more in-depth, I mean, legal knowledge. And I think as a result of this perseverance, I mean, this attractive approach, I mean, by the end of 2025, we have received a green light. So I think now we can go ahead and that's what we are doing.

So we are now actively constructing this factory. I mean you have some pictures there. I have more nice pictures of the progress. And if everything goes according to the time schedule, by 2028, we will have this factory up and running.

I think when I pay a look to the time line, I think there are 3 things that comes to my mind, and that reflects, I mean, the strength of Rockwool as an organization. For me is that we are committed to long-term value creation, even if we are facing -- I mean, this challenging environment. I think the second is that we engage constructively with the local community, with local authorities because we strongly believe that this is the way to build sustainable relationships in the future.

And third, I want to praise my organization is that we have the capability to deliver complex projects to completion.

So just to summarize, Rockwool possess today a strong presence in France, spanning 45 years. We operate in a market characterized by, I would say a strong structural opportunities. We are investing in -- we are going to invest in this decarbonization of Saint-Eloy, that position us as the, I would say, the low carbon industry leader. And we have this project, I mean, adding more green capacity to the network. So I think this is a perfect recipe to continue, I mean, the sustained and profitable growth that we are experiencing today in France. Thank you.

[Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]

Hello to everyone. And with a little bit of suspense, I welcome you to ROCKWOOL A/S' conference call regarding the results for the full year and fourth quarter of 2025. My name is Kim Junge Andersen. I'm the CFO of ROCKWOOL A/S. Today, I'm pleased to present CEO, Jes Munk Hansen. [Operator Instructions]

As a reminder, this conference call is being recorded. First, Jes will go through the presentation and give you an update on the results for the full year and fourth quarter of 2025. Afterwards, we'll be ready to answer all your questions.

Before I hand over the word to Jes, I must ask you to notice Slide #2, which is a forward-looking statement. Please be aware that this presentation contains uncertainties. Now we can go to the next slide, which is Slide #3. Yes, I now hand over the word to you.

Thank you, Kim, and good morning to everyone. I start on Slide #3. Overall, we consider the full year result to be positive, and the full year revenue increased by 1.1% in local currencies, slightly above expectations due to a good finish to the year. Acquisitions made back in October '24 accounted for 1.2% of growth. The group revenue grew around 3%, 2.7% to be exact, excluding the Russian business.

As you all are very aware of, on January 13 this year, Russian authorities installed external administration on our 4 factories in the country, thereby taking control of the business there. Consequently, the value of the net assets and liabilities related to the Russian subsidiaries of EUR 392 million was written down to 0 in 2025. For more information about the financial performance of the Russian subsidiaries, please refer to Note 1.5 in the annual report.

Moreover, at the end of this presentation, we have prepared an extra slide with the numbers to help you establish full transparency on this event, and we will walk through that at the end of the presentation.

The EBIT margin before the Russian value adjustment ended at 14.7%, down 2.8 percentage points. Of that amount, the Russian performance accounted for around 1 percentage point. And additionally, one-offs, including 2 factory closures and the Flumroc incident also contributed to the margin decline with about 0.6 percentage points. We maintained good pricing discipline and benefited from stable input costs. On the other side, we invested heavily in several areas, including capacity expansion, decarbonization and digitalization. Overall, we find a good -- this is a good result given the very challenging market conditions in 2025.

Further, on Slide 4, group revenue, excluding Russia, increased 2%, mainly driven by North America, South Europe and our OEM business and Rockfon. We're pleased to inform that production is again up and running at the Flumroc factory in Switzerland. And I can confirm that the incident was not related to fundamental e-melter design or proprietary technologies. The production incident did, however, affect overall revenue growth in Switzerland.

The Q4 EBIT margin ended at 11.8%, excluding the Russian value adjustment. The Q4 EBIT margin was negatively affected by the Flumroc incident with around EUR 4 million and the decision to close the oldest of our 2 factories in China with around EUR 15 million in impact.

Slide 5 that talks to the full year revenue. Total revenue in 2025, excluding acquisitions, was broadly in line with 2024 in local currencies. As noted on the previous slide, excluding Russia, revenue grew 3% in local currencies. Price increases accounted for about half of the growth.

And then to a change in our segment split. Before we move on and talk about the segment performance, it's important to note that we have changed our segment reporting. RO North America is now managed under the North American insulation business, and Lapinus has been allocated to another insulation business, namely our OEM. The changes reflect market structures as insulation and Rockfon North America share overlapping customers and channels. And in practice, Lapinus operated as an OEM business and, therefore, now is consolidated into our OEM business within insulation, also called Core Solutions.

As a result, around EUR 140 million of revenue has been reclassified from Systems segment to Insulation segment. All quarterly figures have been restated accordingly and can be found in our annual report. Insulation segment grew 3.4% in local currencies, excluding Russia. There was solid revenue growth in North America as well as in Eastern and Southern Europe. This was offset by low single-digit decline in our main markets, namely France and Germany.

The Systems division delivered a fairly stable top line in 2025 despite a challenging market. And Rockpanel delivered a solid growth, where Rockfon in Europe and Asia remained stable, while our Grodan business declined mainly due to a weaker cannabis market in North America.

And I'm just looking at the technicians to make sure that everything is good. Yes. Thank you. Slide #6. Group revenue increased 2 percentage in the quarter, excluding Russia. Insulation revenue grew 2.1% in local currencies, excluding Russia, and growth was driven by the Insulation business in North America, our OEM business, in particular. Revenue decrease in the U.K. and Switzerland due to the Flumroc incident pulled the numbers down.

In the Systems segment, the year ended on a positive note with revenue growth of 1% and a good commercial momentum going into 2026. Rockfon Europe, Asia and Rockpanel performed well, while revenue in the Grodan declined.

Let's take a look at our regions for the quarter. In Western Europe, revenue declined with 0.5 percentage points. The good growth in Southern Europe was offset by market-driven decline in the U.K. and the production stoppage, as mentioned, in Switzerland. In the United States, we continue with good growth in Q4, while the Canadian sales improved after having some difficult quarters. In Eastern Europe, revenue grew 4%, excluding Russia, with solid growth in Poland, in Hungary and in Romania. In Asia, revenue declined 5%. Sales in China, Thailand and Malaysia decreased, while Japan and our important India market continued to grow despite the Indian factories being in a sold-out situation.

A few comments on our profitability in Q4 on Slide 8. The margins in the quarter were impacted by several large developments. First of all, the China factory closure and the Flumroc incident had 2 percentage points negative impact, while the lower performance in Russia had a negative impact of around 1 percentage point on our EBIT margin in the quarter. Regarding China, due to the dramatic industry overcapacity and a systematic -- or systemic unattractive construction market, we decided in December to close the oldest of our 2 factories in China as part of optimizing our footprint.

In addition, the factory was coke-fueled and facing sustainability investments that were not economically viable in the current Chinese market. The closure resulted in a restructuring provision and impairment of the assets of EUR 15 million. The Flumroc incident caused a lengthy production stop. While stopped products in the Swiss markets were sourced from other ROCKWOOL factories, although with reduced profitability. The incident has in total caused a loss of around EUR 19 million, of which EUR 15 million has already been covered by insurance in 2025.

The continued slowdown in Russia also had a significant impact, which was partly offset by continued deflation on raw materials and moderate tactical sales price increases.

Let's look at the profitability by business segment for the quarter. Looking at profitability by segment, EBIT margins in Insulation was down 5 percentage points compared to last year, impacted by the closures, as just mentioned, in China, the Flumroc production incident and a slowdown in Russia. In addition, it should be noted that the comparison numbers from last year include the EUR 8 million gain from the sale of the Baltimore warehouse back in Q4 2024.

In the Systems segment, EBIT margin decreased 2 percentage points, mainly due to lower sales to the cannabis market in North America, higher depreciation following recent capacity investments and limited ability to pass on prices in an increasingly competitive environment.

A quick look at our investments for the quarter, where our biggest investments in Q4 related to the construction of new factories in the United States and India as well as the second production line in Romania. And of course, our expansion of our technical insulation production line in Marshall in the U.S.

The sustainability investments mainly related to the conversion to electric melting technology for 2 production lines, one in the Netherlands and one in France.

Moving to cash flow on Page 11. For the quarter, the net debt position landed at EUR 168 million, mainly due to loss of cash in Russia of EUR 243 million. Free cash flow decreased EUR 13 million compared to the same quarter last year, mainly due to lower earnings, a less favorable working capital development and higher investments.

The negative development in working capital was mainly due to planned stock building as well as timing differences in other receivable related to VAT and prepayments. And this time, we have added a few more talking points to our sustainability in connection with of course wrapping up the 2025 achievements.

So Slide #12, starting with our most important, which is safety, which remains our top priority at ROCKWOOL with, of course, having an aim of 0 fatalities and 0 serious accidents. However, during 2025, 2 fatalities were reported from our Russian business, a place where we, of course, have no insights on exactly what has happened and have had no chance to follow up on these incidences.

In addition, in the group, we have had 5 serious incidences. Nevertheless, we still have improved the overall lost time incident rate, though we clearly still have more work to be done on our safety performance.

On other sustainability measures, we are progressing very well, both on the SDG-related goals with baseline year 2015, and you see that here in the left column and the science-based target related Scope 1 and 2 with 2019 as a baseline year, and you see that here in column on the right. The most important thing today is to highlight on the SDG side is our Scope 1 and 2 CO2 emission intensity goals. That is emission per tonne produced.

You see then on the top of the left of the slide. We set our original goals back in 2016 with a target year of 2030. And we have actually, in fact, met the original goal way ahead of schedule in 2024, and that's why we now have raised our ambition levels. What you see on the slide is, hence, the new goal to reduce our CO2 emission per tonne of stone wool, also called intensity produced by 50% in 2034. We'll come back to that on the next slide.

We are on track with the remaining SDG-related goals, though we did not -- we did actually, in fact, use more water in 2025 due to using less recycled and less reused water as well as increased cleaning and maintenance activities.

And now to the SBTi side, science-based targets. To the right, you see on the slide, we also updated in 2025 our scope and methodology of how to measure Scope 3 emissions. As a result of this more refined approach, we now report an increase in Scope 3 emissions, though the 2034 targets remain the same. And importantly, we are confident that we will meet that target.

Then we have an extra slide on decarbonization and our commitments and ratings on Slide 13. Just to elaborate a little further on our sustainability performance last year, let me highlight a few special specific developments and then also talk about why this is important to us. On the decarbonization front, I spoke on the previous slide about having achieved the original emission intensity reduction goal ahead of schedule and thus having set an even higher goal.

On other development, group management's short-term incentive are now also linked directly to the decarbonization progress. And there's more on the strong commitment front. We also increased our ambition level on the absolute emission reduction target. And we're now committing to aligning with the stricter 1.5-degree emission reduction pathway from the previous well below 2-degree pathway. We'll submit -- we have submitted the updated plan for the science-based target validation during this year. And just to remind, the well below 2 degrees reduction plan was also validated by SBTi. Further, we will also submit a net zero by 2050 commitment for SBTi validation for the first time, and this will also happen this year.

A little bit about ratings. And we come to our improved ratings, and we're very pleased to have achieved A- rating from CDP on both areas where we report, and this is climate change and water security. This rating improvement reflects both stronger operational performance as well as transparency and better transparency in our reporting. So all in all, we're very pleased to get this additional recognition for our efforts.

And just to sum it up, we continue to making substantial sustainability investments, both because it's good for the climate and, importantly, because it is being very good for our business. Investing in electrification in new binders and other efficiencies makes us stronger and more competitive in the market. And very critically, there's a direct correlation between our decarbonization efforts and better environmental performance declarations on our products, the so-called EPDs. So yes, it's very much about competitiveness and about business value as it is about doing the right thing for the climate. And this is why our sustainability investments remain a very high priority for us.

That was for 2025 and a little bit already on '26 on sustainability, but let's look at the outlook for '26 on Page #15. And just to state the obvious, this outlook is excluding the Russian business. In 2026, we see a slight positive outlook, but with regional differences. Construction activity in Europe is still expected to be relatively low, and we expect to see continued pressures in parts of Eastern Europe and Canada.

On the other hand, the United States continue to offer solid long-term growth potentials, and we see selective opportunities driven by EU renovation and demand for noncombustible insulation. Across the business, markets are generally stable to flat with pockets of growth, and we expect prices increases in line with inflation to support ongoing investments in capacity, sustainability and market expansion.

With this in mind and recognizing that it's still early in the construction season, we look out for 2026 revenue to be between 2% to 4% growth in local currencies compared to 2025 revenue of EUR 3.66 billion, excluding Russia. Excluding Russia-related matters, the group EBIT margin for 2025 was 14%, with most businesses performing well despite the challenging conditions.

In 2026, we expect sales prices to balance input cost and inflation while increasing spending on capacity expansion, electrification and sales and marketing, and that will raise the cost base, resulting in an expected EBIT margin between 13% and 14%.

Lastly, our investment levels, major 2026 investments will include capacity expansion in India, Romania and the United States. These are ongoing projects, then also acquisition of land for further manufacturing sites and, importantly, the restart of the French factory project following clarification of the building license. We're also pursuing large factory conversions to electric melting and expect sustainability investments to remain relatively high. In total, investments are expected to be around EUR 650 million in 2026, excluding acquisitions.

This concludes the normal set of slides. And then we have prepared one extra slide -- 2 actually that Kim will make a few comments on in order to help you with transparency on the Russian situation.

Yes. Thank you very much, Jes. And if I go to Slide #16, which is sort of the traditional slide with quarterly results and full year results, you can see that we have, for your benefit, added in a line with EBIT before value adjustments of the Russian business.

And if you go to Slide 17, we have prepared what we will consider as a fair comparison for '26, the 2025 numbers, excluding Russian-related matters. What does that mean? That means we have taken the 2025 result and excluded the financial performance of our subsidiaries in Russia and the donations for the Ukraine reconstruction fund and the reversal of that liability we had in the parent company.

So I hope you will find this useful in your analysis of both '25 and 2026. Thank you very much.

[Operator Instructions]

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

I just had 2, please. My first is on the 2026 margins. You highlighted, I guess, some of the investments you're making on the cost side this year, speaking about new capacity, electrification, sales and marketing. What kind of investment would that drive in terms of basis points in your margin this year? I'm just interested in, I guess, bridging the gap between the 14% margin you did ex Russia and donations in 2025 and the 13% to 14% you're guiding this year with a reasonable backdrop in terms of organic growth.

And then the second one would just be on the CapEx envelope for this year as well. You mentioned that a portion of it will be tied to new land acquisitions. Can you maybe talk about the regions that you're interested in looking at? And any geographies in particular that you have kind of earmarked for future factories?

To the first, it's a plethora of activities that drive extra cost. But mainly, it is additional engineers for our many factory builds and conversions and that drives cost in the start. But in addition to that, we're also spending significant resource on digitalization of the company, which is very much around our productivity measures. We have a whole program called Factory of the Future that requires more digitalization. And then last but not least, very important efforts in sales and marketing, also very much driven about modern sales tools. So those are the big categories. I can't give you the -- I won't give you the exact numbers.

When it comes to additional capacity expansion, as you know, we already have announced 7 factories right now, 5 in Europe, 1 in India and 1 in North America. The next areas we are looking at is additional capacity in India, where I mentioned before, we are in a sold-out situation. And we are looking also for the next factory in the U.S. simply from the perspective that there's so much market to convert from competing insulation products to stone wool.

We take the next question from the line of Anders Christian Preetzmann from Danske Bank.

Just going back to the CapEx here. I mean you previously communicated that CapEx going forward would be in the range of around 13% to 14% of sales. But with your new guidance on EUR 650 million for '26, that's quite above that range, even including the Russian business. So is this level of CapEx representative for the rate going forward into '27 as well? Or should we expect then a lower or even more elevated CapEx for 2027? That's my first question.

And my second question is, in addition to the elevated CapEx level, can you please share some thoughts on your capital distribution policy? Would you perhaps consider adjusting your capital structure to allow for, say, a new share buyback program? Or are you contempt right now with the current payout levels?

Yes. Thank you very much, Anders. On the CapEx, it's true that the original guidance was a higher CapEx rate to net sales. That, of course, was at the time when we also had the Russian business inside. I think it's fair to say that with the programs that we have started up now, this is -- this will also, you can say, carry forward into the years beyond.

As you know, we are opening up the first of the 7 factories that we have lined up here in '26. That's the one in India that has the least CapEx cost. The next one is in Romania in 2027 and followed by both the TI installation and the U.S. factory in 2028. And the ones we are talking about is coming after that. So there will be sort of a continued long-term plan of investments. We have not yet guided on CapEx levels after 2026, but it will be at a higher level than in the past.

On the capital distribution structure, there is no plans. We will continue to adhere to our dividend policies of paying at least 1/3 of net profit. And we will -- I know the Board will use the share buyback as an ad hoc tool to channel excess cash back to shareholders when you can say they feel the time is right for this.

The next question comes from the line of Anna Schumacher from BNP Paribas.

I have a couple on the CapEx. So could you provide a bit more of a specific breakdown of the EUR 630 million investment? For example, how is it split between growth, maintenance and decarbonization and which one is driving the large [indiscernible]?

Secondly, as a link, there's been news this week suggesting that the EU could loosen some regulation surrounding ETS [ and possibly slow ] reduction in free allowances. How could this change regulation impact you? And would it make you reconsider the cadence or size of your decarbonization investments in the coming years?

Anna, we had a little bit of hard time hearing you acoustically. I think we got the first question. Do you mind repeating the second one?

Yes, sorry. So the second question was that there's been some news this week suggesting that EU could loosen some regulations surrounding ETS and possibly slow the reduction in free allowances. How would this change in regulation impact you? And would it make you reconsider the cadence or of your decarbonization investment in the coming years?

Yes. Let me try to give you an answer on this one here. On the breakup of the CapEx amount of EUR 650 million, most of the increase will be in what we call capacity investments, given the many newbuild days. We have continued investment in sustainability, and we will invest at least EUR 100 million in that annually for quite a number of years. And then we have our normal maintenance level. So -- but most of the increase will be capacity related.

On the ETS scheme, as you know, we have allowances on our balance sheet that can cover us for some years. And we are following this closely, and I think it makes good sense for EU to try to extend some of these periods because there are so many constraints in converting. I think our conversion is not so much driven by this ETS scheme, rather than it's driven by other good business reasons and our sustainability commitments.

We take the next question from the line of Chase Coughlan from Van Lanschot Kempen.

Just a question regarding the electric furnaces. You mentioned that, of course, there's a business element here, and I think you can make your products more competitive. But just from an economic standpoint and a margin standpoint, could you give any more details around the comparison and OpEx costs between the natural gas furnace and electric furnace in terms of energy? Or is there a difference in labor standpoint just for sort of my understanding?

Yes. But there's several elements to it. But the installations we have done so far are in themselves good business cases and competitive from a manufacturing perspective from that. I missed your question about the labor. There's not a big labor difference between the different technologies to be noted if you thought there was a different structure on that. So I would say they are very competitive. And we also, of course, select conversions where we see that it makes sense from a financial perspective. It does influence our decision which factory we convert first if we have access to the grid, what the infrastructure costs are to get access to the grid and of course, also keep an eye on the electricity prices in the area.

So -- and then there is the other one, which is the most important is that the demand for products with low footprints are definitely accelerating. So this is a competitiveness issue from a product stand -- point of view, the so-called EPDs, environmental performance declarations. And this is what is important to us that we are competitive with the most premier product, not only in the usual qualities, but also on the environmental footprint side.

Okay. No, that's very helpful. And then my second question, regarding, obviously, the big step-up in CapEx and now you sort of lost control of the relatively high cash-generating Russian business. How do you view sort of your debt profile at the moment? How much can you draw down, let's say, -- do you still feel comfortable within the 1x covenant, especially given you have this large expected cash out associated with CapEx this year?

Yes. Chase, it's Kim here. We are still quite confident that we can -- and there is no plan to do that to keep within that leverage of 1x EBITDA. And that's still the plan. We -- as you know, we are even -- outside of the Russian business, we are quite rich in cash generation and the plans that we have allows us to keep within that coverage.

The next question comes from the line of Alexander Craeymeersch from Kepler Cheuvreux.

So on 2026 outlook, I just want to come back on that comment on increasing sales and marketing as a percentage of sales in 2026. I'm just wondering like why in a year where we expect volume growth, why don't you expect some operating leverage?

Second question would be on -- you mentioned in the annual report that you see increased competition for Rockpanel. I'm just wondering whether this is increased competition coming from peer-based cores or stone wool cores. If you could just highlight that?

And then the third question is just to double check something. The Russian activity was 100% insulation activity, correct? So those are the 3 questions.

I think there was 3 questions. I just starting of writing down while you were talking, sorry. So I might return to your third question. So operating leverage, yes, I mean, the growth is still moderate out there. And a lot of our investments, as you know, are longer term. It takes us 4 to 5 years to build a factory. So you do encounter not only CapEx but also cost before you have a factory not just up and running but at a capacity that contributes positively. So it takes more than that to create operating leverage in the short run. But we are, as you know, both investing in capacity and in sales capabilities and digitalization, as I mentioned before. So -- but it is all about being more -- having higher productivity and competitiveness.

The Rockpanel question, sorry, you were a little bit hard to hear. Did you ask about which specific competitors we encounter or -- not totally sure.

Yes, where are you seeing the increased competition from? Is it from peer-based? Is it stone wool cores or something else?

The increased competition we're seeing is not so much on the panel side actually, even though there are new entrants, for instance, in Europe. It is more on the Rockfon side of the systems business where there's been increased competitiveness. Not so many offices being renovated as we would like to see. And that, of course, just increases the pressure in the market. Notable also Knauf has opened a factory, and they are, of course, also trying to gain some share in this market.

Okay. And then the last one was just to confirm something that the Russian activity was 100% insulation segment, correct?

Yes. That was only insulation, yes.

The next question comes from the line of Zaim Beekawa from JPMorgan.

The first one is just on the margin guide of 13% to 14%. Can you just sort of depict what gets us to the top end versus the bottom? And then secondly, in the U.S., where demand is going to exceed capacity, what do you think that means for pricing in the region? Could this be above the drumbeat 1% to 3% and actually more high single digit?

And actually, if I can sneak one more in, is just on the hedging actions you've taken for 2026 on the energy front.

It's super early in the year to become more precise on the margin, so I won't do that. U.S. pricing, we have plans for how to handle the situations where we could be in a sold-out situation. We have capacity available in other places that we can supply into the market and that we will do tactically also just to keep momentum and serve our customers. How the pricing exactly looks going forward, I don't know yet. But of course, you can just study the price points in the U.S., building materials industry in general are very robust and has also been a market that has been, let me call it, more rational about price increases than, for instance, the Europe market that is more fragmented and sporadic in its pricing. That's as close as I can get to.

And on the energy hedging for 2026, I can inform you that we have covered about 75% of the gas and electricity for the first 2 quarters and 50% for the third quarter. And then as you know, we have this quarterly price setting for foundry coke. That means we have fixed the prices for quarter 1.

Sorry, can I confirm that was 75% for Q1, Q2?

Yes.

We take the next question from the line of Pujarini Ghosh from Bernstein.

So my first question is a little bit looking into the P&L of Russia. So previously, you had announced it was around EUR 78 million for 2025. And in today's presentation, thanks for the details, we see that your group net income was EUR 437 million for 2025 and, excluding Russia, it's EUR 357 million. So on the net income line, the delta seems to be around [ EUR 81 million ]. So please could you explain a little bit on why the impact on the net income line could be more than the EBIT? I mean maybe we're getting -- we're missing something here. So that's the first question.

And the second question is on your pricing increase. So you just announced or highlighted that for 2026, you expect pricing to be in line with inflation. So how does that compare to the 1% to 3% drumbeat pricing increase that you normally would adhere to?

Yes, I'll take the first one. The [ EUR 78 million ] is the result for the EBIT for the full year. And as you know, in Russia, we had quite a large amount of cash sitting there on the banks, and there's quite a high interest rate that you earn on that cash. So that's the reason for that the delta on the net income is higher.

And on the pricing side, I think it fits quite well with our usual drumbeat to cover inflation with price increases in the range of 1% to 3%. Price increases, however, are very different from market to market. What we're talking about here is an average for the world. It varies greatly. And we are sophisticated enough to handle pricing, of course, also by market and competitive situation.

Could you explain a bit more like which markets could potentially see higher pricing?

No, we don't give that kind of data point.

We take the next question from the line of Kristian Tornoe from SEB.

Two questions from my side. First one on the CapEx. I appreciate the split into the 3 buckets, sustainability, maintenance and capacity. Could you talk a bit about your return requirements for these 3 kinds of investments? I mean, what return on invested capital are you assuming for the 3 various kinds of investments?

And then my second question is on the guidance, you can say, on this deliberate choice to increase your cost base to capture the potential of renovation activity in Europe. So I'm just curious on your visibility on this pickup in demand. Has anything changed? Do you think you have better visibility now than you had 12 months ago? If you could just expand a bit on that one as well.

Yes. Thank you, Kristian. For the categories of the CapEx amount, we have sort of a general rule of thumb on the capacity-related investments, we have sort of a threshold of 15% return on invested capital pretax. On the sustainability investments, we allow up to 8 years of payback. And then maintenance is typically a shorter payback period, much shorter payback period than that. So that's sort of our general rule.

And I will comment on the investments and the renovation wave that is mainly in Europe. I think it's super important to say that by far, most of our investments and our activities are not driven only by the logic of the renovation wave. We're fairly conservative in our expectations of when what will come. So the factories that we have decided, for instance, in Europe are underlying increase in capacity demand and not yet by the renovation wave. The same, of course, for Asia and for the U.S.

When it comes to the renovation wave, we have, of course, also noted, not surprisingly that the political system in Brussels and also particularly in the local countries is taking the time. It takes, so to say. However, we are following them closely. And it is in May that the EPBD, the transposition of the rule sets has to be effectuated in the countries. And we see the first countries being in place and ready. But we must say we're also conservative and don't expect much out of those, you can say, regulatory-driven growth pockets in 2026. So we have -- our plans are not based on that, that will materialize in a great deal.

The next question comes from the line of Daniel Khajenouri from Morgan Stanley.

One question from me. North America presents a great opportunity. Could you walk us through how the economics will stack on the assets? And what sort of margins and return on capital you expect? And how your go-to-market strategy across distributors and large contractors? I assume the latter is direct.

We had a little bit of hard time hearing you acoustically, but I understood you would like to know a little bit more about the opportunities in the U.S. and how we go to market. I think I also heard you asking for specific numbers. The specific numbers, we don't disclose on the U.S. level other than the ones we showed on the slide. But the opportunity in the U.S. is converting the categories from glass and foam into stone. So we are not depending on, you could say, the activity level in construction industry in the U.S. very much because we come from a very low level of market share, a couple of percentage points, where we, in most other markets, including Canada, have significantly higher market share with stone wool.

So it is a true conversion of categories from those 2 I mentioned into stone wool and appreciation by customers that the qualities of stone wool, and I'm not going to list them all here today, but particularly the fire capabilities and noncombustibility of stone wool is increasingly appreciated in the U.S. So it is really a strategy of conversion. It's a strategy of expansion, and that includes some of the elements you mentioned. It's about setting up the right distribution in wholesale and in retail, I should note where we are absolutely present in the big box, namely Lowe's and Home Depot. You will find us in most of their addresses, but setting up the wholesale distribution channels also in States where we are not present today. And that's why we have quite a lot of capacity opportunity and growth opportunity ahead of us.

The next question comes from the line of Allison Sun from Bank of America.

I have 2 questions. So first is on the market outlook. I think you mentioned that Canada is probably still expected to be weak throughout '26. And Eastern Europe, you're expecting sales to decline by single-digit number. I mean if you could tell us it's high or low single-digit number would be great. But is it fair to say you are mostly expecting the Western Europe to recover and plus a solid market growth in the U.S. to drive up the sales. Is that a fair comment? That's the first question. I will ask the second question after this one.

Yes. Now you almost took me around the world. That was -- maybe I need to comment on, but let me try to take it from the West. We do see that Canada is somewhat stabilizing right now, but it's an industry -- sorry, construction industry area that is really hard hit and heavily influenced by the ongoing tariff and just in general political environment with the U.S. Canada is like a huge geography. So we have territories in Canada that are up. So you can see activity going up in Quebec.

But the very important Ontario area that has driven growth and investment, namely in automotive and data centers, is down. So it's a nuanced picture. It has stabilized, but we don't see a lot of upside in the year.

If I go to Europe, again, also, I think I said it also in the last call, the picture of having a Southern Europe in good shape with growth and development, namely countries like Spain, Italy, all the way over to Romania with strong growth rates, strong activity levels, developing nicely. And then the 2 big markets, France and Germany, where we had declined last year, also being somewhat lethargic, still struggling with getting some of the programs that they have announced, getting them activated. France just announced a role of initiatives that should play favorable into this year. And Germany, you have heard about the funds that they have at least announced now more than a year ago, but we're still waiting to see them in the market. So it is also a very nuanced picture in Europe.

Okay. My second question is a bit nuanced. I think the bar fire that happened in New Year, I saw there are some news with the photos that saying the ROCKWOOL products are potentially involved. I mean I don't know if you have any comment or color you can add because we should think ROCKWOOL's products is noncombustible.

We know very little of what has happened. We have, of course, also registered that there are some pictures that I believe are all the way back from 2015 circulating on the Internet where our brand is on the pictures. Those are from 2015. We have not been contacted by the authorities yet. And I don't know more than what you just said about this terrible tragedy at this point in time.

We take the next question from the line of Julian Radlinger from UBS.

So first of all, getting back to the French tax incentives that you just mentioned. I'd love your thoughts on what you think the effect of that could be on new build and/or on renovation. I think a lot of people are trying to figure out whether this could be something that really gets demand going, and I'm sure you guys have looked at that more closely.

And then my second question is talking about the U.K. market specifically. So within Europe, it seems like that's the market that will see some of the most capacity additions in '26 and '27, specifically from your competitors and then you're adding more capacity yourself, I think, in '28 or '29. Is there a risk at all of maybe some temporary overcapacity at all in that market just because of how much capacity is coming in there in the next few years?

Yes. Two a little bit speculative questions and also answered. But France, of course, we are also trying to understand exactly what this will mean to the market and to us, similar to other political statements. There can be a difference between what is stated and the effect it takes out in the market. However, France has been quite effective and good at historically we have seen working with the so-called white certificates, fairly executable programs, not too bureaucratic. And I must say we see some positives in these new programs, but we don't have enough detail yet to actually trying to convert that into, you can say, real growth expectations. But of course, it's positive that they're leaning into it and that they are setting up these programs that they have had successful in the past.

Regarding capacity, we are not -- of course, we monitor that. I would say many of the things that has -- that you mentioned have been announced, but where we don't have -- we haven't seen actually a buildup of capacity yet. And as you also know, our products don't travel very far. So it is very, very local whether or not there is a surplus or lack of capacity. So you really have to dissect it by country and most often also by product category. But we're sticking to our plans. We don't see anything that will dramatically change the trajectory that we are on right now.

We take the next question from the line of Isaac Ocio from On Field Investment Research.

First of all, regarding your 2026 EBIT margin guidance, are there any material one-off items we should be thinking about? And then second question. So in Q3, you had flagged the incident in Switzerland and reduced efficiencies across some factories. Have you identified the underlying root causes? Could you maybe describe them? And what concrete measures are you putting in place to prevent similar disruptions from going forward?

Let me comment on the incident in the factory. We know very, very well what went wrong. And I can narrow it down to a particular valve that failed, a mechanical installation that regulates the flow of the lava, the melt, if you've seen pictures of our production. It was a mechanical error, and the redundant measures were not strong enough to take over. So it's been a fairly, you can say, very specific issue and an issue that has been easy to correct from an engineering perspective. And we have, of course, gone back in our own footprint to ensure that the proper dimensions have been upgraded and that redundancy measures are in place.

There was no big need to, for instance, change standard operating procedures or this like. But that was the driver of it.

Yes. And just to come back on the margin outlook, we do not -- have not included any one-off, i.e., that we have not, for instance, included or forecasted any donation for the Ukraine reconstruction fund.

We take the next question from the line of Pierre Rousseau from Barclays.

Maybe just a quick follow-up on planned capacity additions for the other European factories, so there's 4 remaining, excluding Romania. Are you able to provide a slightly more precise timeline at this stage and in particular, for the French plant, which was permitted end of last year?

And then second quick question would be on labor inflation into 2026. What are your expectations there, please?

Yes. Like Kim said before, what we can share with you is that the next factory opening will be next summer in India -- sorry, this summer in India, in Chennai. And then 12 months later, it will be the Romanian factory where we have -- adding a line to our existing facilities. Those are the ones we can give you specific dates on.

Will you take the labor inflation? I can also do it. Labor inflation on a group level, we see around 3%.

Ladies and gentlemen, this concludes our question-and-answer session. I would like to turn the conference back over to the management for their closing comments.

From Jes Hansen and I, Kim Andersen, thank you for joining today's earnings call. We would like to thank you for all your questions and the audience for listening in on today's call. We appreciate your interest in ROCKWOOL A/S. If you have further questions, please feel free to reach out to me. You may find ROCKWOOL contact details in our Investors section on our corporate website. Thank you very much. Have a very nice day.

Good day to everyone. Welcome to ROCKWOOL A/S Conference Call regarding the results for the first 9 months of 2025. My name is Kim Junge Andersen. I'm the CFO of ROCKWOOL A/S. Today, I'm pleased to present CEO, Jes Munk Hansen. [Operator Instructions] As a reminder, this conference call is being recorded.

First, Jes will go through our presentation and give you an update of the results for the first 9 months and third quarter of 2025. Afterwards, we'll be ready to answer all your questions.

Before I hand over to the word to Jes, I must ask you to notice Slide #2, which is a forward-looking statement. Please be aware that this presentation contains uncertainties.

Now we can go to the next slide, which is Slide #3. Jes, I now hand over the word to you.

Good morning, everyone. And I'll start on Slide #3. As you all know, the construction industry is still challenged in the macro context, owing to uncertainty, geopolitical turmoil and continued hesitations in the market. We don't expect this to change in the near term.

Revenue in the first 9 months increased 1% in local currencies. And acquisitions we made in October '24 contributed with a 2% increase in local currencies. So excluding acquisitions, group revenue decreased slightly.

Pricing had a 1% impact in the first 9 months, an impact from inflation was thus offset by the sales price increases. The EBIT margin declined 2.1 percentage points. Overall, we think the result is acceptable given the very difficult market circumstances.

Next slide is our Q3 highlights. Revenue in Q3 increased 2% in local currencies. Excluding acquisitions, group revenue growth was flat. In Q3, sales and earnings were negatively affected by a short-term sales decrease in the U.K., where large flat roof projects were canceled or postponed. In addition, a longer-than-planned production stopped, reduced available capacity in the U.K. market. At the beginning of Q4, U.K. sales were back to normal levels.

In Canada, which has been hard hit by the tariff situation, the construction market is in a challenging period. Here, we don't foresee any quick recovery. On the EBIT margin, the Q3 result was affected by three main factors: the lower performance in the important and profitable U.K. market, reduced efficiency in several factories as well as a decline in operating cost leverage, and last but not least, a continued decline in the Russian business. All-in-all and in short, it was a challenging environment in Q3, but I believe we navigated it well.

I will jump Slide 5 and go directly to Q3 revenue. So, Slide 6. The continued decrease in Russia had a negative impact of 2 percentage points in Q3. Excluding Russia and acquisitions, the group revenue increased 2 percentage points in the quarter, hence, 2% organic growth ex Russia.

On the Insulation segment, revenue increased 3% in local currency, with strong sales performance, notably in Poland, in Romania, in Spain, in Italy and importantly, also in France. Excluding Russia, the Insulation segment revenue increased 5%. Just to repeat, acquisitions contributed with a 2% revenue growth.

In the Systems segment, the 1% revenue decrease in the quarter was driven primarily by challenges in the Grodan business.

Slide 7, where we'll talk about our regional revenue for the quarter. In Western Europe, there was a double-digit growth in Italy, a double-digit growth in Spain in the quarter. On the negative side, Germany declined as did U.K., as I just previously noted on the previous slide.

In France, importantly, the revenue is back to a growth -- a slight growth, but a growth after several quarters with declines. And in Eastern Europe, many countries are back to real growth, including Poland and Romania.

Russia continues with double-digit revenue decrease. Year-to-date, Q3, Russia accounted for around 7% of the total group revenue in reported figures.

In the United States, we are also back to good growth. While, as I said before, the Canadian market is facing headwinds from the trade tensions ongoing. In Asia, revenue excluding the '24 acquisition increased slightly. However, sales in China decreased double digit.

Slide #8, a few comments to our Q3 profitability. In short, EBITDA is down 11% from EUR 241 million to EUR 215 million. This results in a 2.9 percentage point lower EBITDA margin due to unfavorable country and product mix. Reduced efficiency in several factories as well as a decline in operating cost leverage also contributed to the lower EBITDA margin.

The lower -- sorry, the longer-than-planned shutdown of our factory in Wales and the slowdown in the market had a EUR 5 million impact in the quarter compared to the previous forecast. And the lower sales in Canada, obviously also reduced earnings. The continued decrease in Russia had around a 1 percentage point impact on the group EBIT margin. So EBIT margins are at 15.5%, down 2.6 percentage points. Considering the global situation, again, we believe these results are acceptable, although from a very mixed performance in very different market situations.

Slide #9, a little bit about the profitability by business segments. We'll talk about Insulation segment first. Looking at profitability here, EBIT margin in Insulation segment was down 2.2 percentage points compared to last year. In the Systems segment, EBIT margin decreased 1 percentage point from lower earnings in Grodan. And the Grodan business is challenged by lower volumes in the medical cannabis market and an unfavorable product mix coming from the lower-margin vegetable business.

Slide #10 on our investment activities. And just in short, our biggest investments in Q3 related to the electrification of production lines in the Netherlands and in France, and what we previously have talked about the capacity expansion in Romania, as well as the large factory project in the United States.

A few comments to our cash flow on Slide 11. Our net cash position we landed at EUR 100 million, of which EUR 230 million was restricted cash in Russia. Net book value of the investment in the Russian business as per the third quarter was EUR 425 million. Free cash flow decreased EUR 92 million compared to the same quarter last year, mainly from the lower earnings, a less favorable working capital development and higher investments. The negative development in working capital was mainly due to softer demand and therefore, higher inventory, including in U.K. and Russia as well as in Germany and Canada.

Now let's turn our attention to the outlook for the remaining of the year. Slide #13. Q4 started as expected with a small sales growth in October. And so based on that, an underperformance in the first 9 months of '25, we maintain our full year revenue outlook that will be at level with last year in local currencies.

The production-related incident in the factory in Flums, Switzerland in October will have a reported impact on EBIT of around EUR 15 million in quarter 4. And as we see it now, we expect production to be up and running again in the beginning of the first quarter, which is important to us because we need to be ready for the important Spring season.

In the U.K. pipeline and quoting activities now suggest that we'll be back on track from the start of 2026. In Canada, however, we anticipate that both the Insulation and Grodan businesses will continue to be challenged. As previously announced, we forecast an EBIT margin between 14% and 15%, due to the incidents in Flumroc and the softness, especially in Canada and Russia.

Our large investment projects are on track and the investment level around EUR 450 million, excluding acquisitions, for the year is maintained.

We believe in the long-term demand for our products, and we remain optimistic about the future. In Europe, we continue to work at the member state level on implementation of the energy performance of buildings directive. As I must also note that so far, we have only seen limited impact on sales from the renovation wave and also don't expect much from it in the near term.

We will continue investing in capacity buildup, marketing, public affairs and digitalization, supporting the anticipated growth driven by the energy efficiency agenda in Europe and our expansion in the United States.

These were my introduction comments and we will now go into the Q&A session.

[Operator Instructions] Our first question comes from Kristian Tornøe with SEB.

Two questions from my side. So first of all, on your North American business, if we, sort of, go back to before the summer, you were talking about good demand, capacity constraints, potential imports from Europe. And now you made it fairly clear that demand in Canada is down, but you also state that demand in U.S. is actually up and running and good. So, I assume but you now have, sort of, available capacity, I guess, on your Toronto factory. How easy is it to use that capacity in the U.S. market? And how fast can you, sort of, compensate for that? So should we really think about your North American business or the slowdown in your North American business as temporary?

I'm not even sure if that was one or two questions, but I'll answer the North American question. Correct, U.S. is back to the growth levels that we saw before the summer, and Canada being down. So we have capacity available in our large Canadian factories that we can use in the U.S. market. And that's a model we have had for years and used for years. So the products have the certificates and everything they need to be used in the U.S. market. So that is our biggest capacity, you can say, potential. In the midterm, we do see that we need to import certain products from Europe until our new factory in Wallula is up and running. And also there, we are ready both with capacity and what it takes to import these products.

Okay. So -- but maybe just to be more specific on my question. So, obviously, we see revenue down 7%, I think it was in Q3 in North America. So, I guess what I'm after is, can the U.S. compensate for the lack of revenue in Canada and hence, North America as a region return to growth again on the short term?

In Q4 already, we see that effect, that the U.S. because of its size now can compensate at least to a certain degree for them down in Canada. So, if it continues this way, yes, then we will see a growth in totality in North America again.

Okay. That's very clear. And then my second question is just your comment on reduced efficiency in several factories. Can you elaborate what has driven this and whether this is temporary or something we should be worried about?

It is temporary. We have a lot of projects going on and also some maintenance projects, we've decided to pull forward and they have affected our factory efficiencies. Then of course, there are some factories where we have lower capacity utilization. So the absorption degree is lower, but it's mainly from the first factor.

Okay. But when is efficiency back to normal then?

That's too specific. Then I have to go down on factory level because they are really projects by projects. Also some of our conversion projects are affecting efficiencies because we have to take the factories off-line when we install equipment. So it becomes very detailed. I was just -- my colleague was just calculating the North American or trying to come with an estimate, and we do see some -- a single-digit growth in North America in quarter 4 already.

[Operator Instructions] Our next question comes from the line of Anna Schumacher with BNP Paribas.

I have two. So firstly, on margins. If I take the midpoint of the new guide, an add back of EUR 15 million expense expected in Q4 for the Switzerland incident. If my math is correct, it suggests the Q4 EBIT margin decline of over 4 percentage points, which is quite a step down versus what we've seen in Q3 and Q2. Does this mean that your new full year guide is on the conservative side? Or are you expecting a worsening of conditions in Q4?

And secondly, on Eastern and Southern Europe, where you mentioned pockets of good growth, what's driving this? Like is it new builds, renovation, new channels? And how repeatable business is this in 2020?

Just to the fourth quarter. The fourth quarter is always particularly December, our absolute slowest quarter and month. So that is more a year-to-year effect we see again and again. East Europe, it's right. We have some very strong market developments in Poland, in Romania. And what drives that? Poland is really the flat roof business has come back for us. We did small tactical price adjustments in the Polish market, and now see a very positive volume effect from that. And in Romania, it's the story that we've talked about for a long time now that Romania has adapted a new -- and it is a new fire regulation on buildings, but also this new EPBD programs, Romania is one of the first countries really to put that into action.

So, on the third question, I understand the margin is typically lower in Q4. But if I math is correct, it suggests that the year-on-year change in Q4 is bigger, like the step down is bigger in Q4 versus step down that we've seen in Q2 and Q3. In that because end markets are worsening or just slightly conservative guidance?

Yes. Anna, it's a very realistic guidance. We have most of the Flumroc, one-off expenses will be in Q4 and also continued, as I said, slowdown in Canada and Russia will impact the Q4 earnings. So there's nothing really unusual in our understanding of the market dynamics itself. They are unchanged compared to Q3.

Your next question comes from Claus Almer with Nordea.

Also a few questions from my side. So more to this Q4 implicit guidance. So I'll try to make an implicit Q4 EBIT guidance. And if you try to adjust for Russia and Canada, as you mentioned in the report, and obviously, also the issues in Flums. I'm still getting to an EBIT decline year-over-year around 10%, if you are at the midpoint of the guidance. This maybe looks a bit strange given that U.S. is growing and you have Eastern Europe and so on. So maybe a little bit more color to why you see a lower, this quarter, underlying EBIT? That would be the first one.

Thank you, Claus. As mentioned here, besides the -- you can say, the one-off that we've already mentioned in the report, I see this as a normal Q4. There is nothing dramatic changes in neither our pricing points or inflation. We do have a few -- as always, at the year-end, a few reviews of what else is happening around the group. And I guess we have just taken precautions that we don't end up with outside the range that we have specified.

Okay. So meaning that we should -- everything equal, you will be in the upper end of the range. Is that the normal way, I think, we should understand?

So far, we have not specified or qualified the range.

Okay. All good. Then my second question is about the CapEx. We have been talking about CapEx for a long time with these ongoing new factories being built. Given, yes, your comments about an uncertain end market, especially in some parts of the world, are you considering planning to delaying some of this CapEx or maybe even reducing the CapEx spend? That will be my second question.

We monitor it all the time. And when we talk capacity, it has to be a discussion country-by-country or region-by-region because, as you know, we are sold out in South Europe. So, we need capacity in South Europe. We're sold out more or less in North America. We sold out more or less in India. So all these places, it's fairly easy and very robust to make CapEx decisions. And of course, we then look at other places, both on capacity, but also on our energy transition, how fast we want to do it, and if the timing should be changed significantly -- sorry, slightly. But overall, we keep the very high CapEx level and investment programs, because when we model these things, we are convinced, as I said before, about the long-term demand for our products, both in Europe and North America. So already now, I can foreshadow that next year's CapEx will be higher than this year.

The next question comes from Chase Coughlan with Kempen.

Maybe on the topic of CapEx. So of course, you maintained the EUR 450 million guidance for this year. I heard you just say that next year should be even higher than that. Can you provide maybe how much higher exactly? Or could you provide maybe a normalized percentage of sales CapEx figure just for the midterm? Just almost from a modeling standpoint, that would be very useful.

We'll come back with that in February, more guidance on those numbers.

All right. And then a second question. I know it's quite difficult to talk about the Russian business. And you mentioned in the press release, it's down double digit from a revenue perspective, and you don't feel there's much, let's say, improvement in the near term there. Can you share any of the insights that you're hearing from the local management? Is that expected to even worsen maybe in Q4? Or any kind of color would be extremely helpful.

No, unfortunately not because I don't talk to the Russian management. I have in my tenure as CEO, never had a conversation with them. So, I have no further insights than you have into what's happening in Russia.

Your next question comes from Yassine Touahri with On Field Investment Research.

So, two questions. The first is on the margin guidance that you're suggesting for Q4. So, I think you -- in order to achieve the margin of 14% to 15% for the year, it suggests that you're expecting a margin in Q4 of between 9% and 13%. And I understand that there is an impact -- there could be a negative impact of margin of maybe 1.5% from a one-off. So it suggests that the margin excluding one-offs that you're guiding for in Q4 is 11% to 15% approximately.

And my question is like, this 11% to 15% that you're expecting in Q4, is it the new normal for Rockwool? Is it -- should we start -- should we think about this range when we're trying to forecast 2026?

And my second question is like, when we look at Russia, I think, you're giving a number for Russia on the margin, excluding Russia and Russia as a percentage of sales. And when I do the math, it suggests that Russia was approximately 14% of your EBIT with a bit more than EUR 60 million of contribution in the 9 months and with a margin of 30%. Is it correct?

Yes. We don't want to right now put more color to the Q4 than we have already done. As I said, the market development or trends are more or less the same as in Q3. And we serve sort of a little bit of the margin outlook, we reserve that for other things we're looking at right now and have to make a decision on before year-end. So there's nothing really dramatic, and I don't want to say it, because a new normal because as I said, these -- some of them are one-off, some of them are market -- adverse market developments and they can happen all the time. But there's nothing dramatic in Q4. But we are looking at a few things that might impact as a one-off in Q4. On the Russian, I think your calculations are correct.

A question on -- and I think just on the margin, it's like you're guiding on margin of 11% to 15% excluding one-off in the Q4. But I think the market is expecting margin closer to 16% in 2026. So that's a big, big difference. So, it seems dramatic, when you look at it.

As I said, Yassine, yes, we have other things that we are looking at that we have not yet completed the analysis and decision points on. So -- and that means there's a little bit of space reserved for eventualities that is coming in Q4, also kind of a non-recurrent one-off things.

That would be great if at some point, we could get more detail.

In February.

Next question comes from Anders Christian Preetzmann with Danske Bank.

I also have two. So the first one, is on the Canadian business where you mentioned the expected impact of EUR 15 million to EUR 20 million on EBIT from the continued slowdown in the Canadian business for Q4. And I mean, that's a quite significant number considering the size of the Canadian business. So, is it fair to assume that you expect a mid- to low single-digit EBIT margin in Canada for Q4? Or how should we read this? That's my first question.

My second one is regarding the incident in Switzerland. How much revenue here are you able to recuperate from shipping product into Germany? I know we've before talked about your Swiss customers appreciating the maiden Switzerland label. So, I suppose you might miss some of that revenue. Those are my two questions.

Let me take the last one. As it looks now, we can cater for approximately half of the volume into the Swiss market. We did believe it was more when it just happened. But as you maybe know, the Swiss operations has our own brand and our own product portfolio. So, a very unfortunate situation, lucky and glad that nobody got hurt. And I do want to put some flavor to it. I think it's important for everyone to know that it was -- even though somewhat dramatic, it was a fairly banal mechanical error. It has nothing to do with our novel melting technologies or any of our other proprietary technologies. So unfortunate and of course, an impact on the Swiss market and approximately 50% of the volumes that we can cater for through other factories.

On the margin in Canada, they are still double digit, but we had an expectation of a fantastic Q4. So, there was -- the impact was more compared to our original estimate, but it's still a double-digit margin business, Anders.

Next question comes from Julian Radlinger with UBS Group.

Yes. I wanted to ask about the Q4 as well, but I'm going to leave that since it's been asked so many times. Instead, I want to ask about North America. So can you just quickly remind us of the revenue split there between Canada and the U.S. Obviously, the U.S. is a lot bigger. But more importantly, what are your key end markets in Canada and the U.S. in terms of verticals? Because I remember at the H1 results, you mentioned it was predominantly non-residential warehouses, industrial, that kind of thing. Is your split of verticals in the U.S., excuse me, the same as in Canada? And is demand there just better? Or is it something different that's driving better demand in the U.S. versus what's going on in Canada?

Let me try to add some flavor to it. The U.S. is now slightly larger than the Canadian business, but only slightly. As you maybe know, for historic reasons, we started in Canada and grew our business there and only first really have gotten growth momentum in the last few years in the U.S. So a slightly bigger U.S. business than Canadian business.

From a structural perspective, it is similar. Canada and the U.S., slightly bigger commercial industrial than residential business. What drives growth in the U.S. is a combination of both investments into commercial and industrial, mainly warehouses, distribution and industry. And those were the ones we saw put on hold during the summer. I don't know if you were in the call we had in August. But we saw a sudden delay of large projects in the U.S. They were not canceled, they were just delayed. We heard from many of our distributors and end customers that one we're waiting for both consumer sentiment, but also where the interest rates would be heading. And we've seen many of these projects, although not all of them being released.

On the residential side, we are increasingly and accelerating our efforts on what we call the box business. It's the Home Depot and Lowe's channel, where we have also, together with both of those two players set up increasingly point of sales.

So, we -- I know we don't report on that yet, but maybe one day we should open up that a little bit about how many points of sales we have with the two large players into that market. If you follow that market, then you will see that a lot of Home Depot and also Lowe's but Home Depot is a leader, their sales go to commercial business also.

So, when we call the big box and residential, it is actually also to smaller contractors that the channel caters for. And there we are right now accelerating. We are setting up more points of sales, but we're also growing in comparable same-store numbers. So both of these channels, commercial, industrial and residential are driving growth.

The last comment on it, because U.S. is of great interest to us, as you know, as a growth driver, is our West Coast efforts where we still are in very, very, you can say, early days of developing that market and where we are currently setting up more and more distribution, getting ready for getting our Wallula factory in the state of Washington online. So, those are the three main factors in the U.S. market.

Okay. So if I can just quickly follow up on that. So you're saying that even in residential in the U.S., you're growing both, of course, driven by your point-of-sale expansion, but even on a same-store sales basis, that's quite an outperformance versus what the underlying market seems to be doing in residential in the U.S. right now. Anything specific you would attribute that to? Is that just penetration growth? Is it because you're still so small and of course, the smaller you are, the more disconnected your volumes can be from the overall market? Or how would you explain that?

But it is a category shift. So you had a different word for it, but we're shifting the categories. If you look at Canada, we have stone wool and we have a market share, I think, between 13%, 14% of total insulation. If you look at the U.S. stone wool is 3%, 4%. And in general -- but that becomes a longer explanation. In general, this is a market shift from other insulation products, foam and glass into stone wool. And we are the only real stone wool manufacturer in the U.S. So regardless -- because that is a correct observation, regardless of -- at least to a certain degree, regardless of macros, we have great opportunities to grow our business. That's also why we keep on investing in capacity.

[Operator Instructions] The next question comes from Zaim Beekawa with JPMorgan.

The first one is just on the higher CapEx comment. I appreciate you won't give a range from now, but how do you think this may weigh on ambition or ability to do further share buybacks in the coming years? And then secondly on Switzerland, is it set to come back online in Q1? And how long once you get the equipment, will it take for you to run back to your previous capacity?

I will not get to add more detail to the CapEx, nor, of course, share buyback programs. I simply can't. I can add a little bit of flavor on what drives our CapEx. It's not just capacity requirements. It is also new legislations in mainly Europe that require us to upgrade various of our factories to reduce our emissions, also notable emissions non-CO2 related. So it's both regulations and market demands that are driving it in that direction. And it's also -- we see it, of course, as a great opportunity, but also something that needs to be done timely in order to meet the demands of the more regulatory side of our demand side.

When we say we are back online in Flumroc early next year, then it's including getting our spare parts and testing, et cetera, et cetera. So all these -- what was needed from a spare part perspective, and what was needed from a cleaning perspective have already been started a few weeks ago. So, we're optimistic that we get up and running early in the next year.

Your next question comes from Katherine Hearne with Barclays.

Just wondering if you could provide any early color on your thoughts around pricing and cost inflation, particularly on the energy side for 2026? And then I appreciate you can't give too much color on the Russian business, but just wondering if the EBIT contribution reduces significantly there, does that change how you're thinking about ownership of the business going forward?

Let me start the first point. So our pricing, we sometimes articulate as a drumbeat. And after some years with very high inflation and very high price increases, we're back to a normalized drumbeat and foresee and plan at 1% to 3% price increase next year. As I said earlier, the price increases we put in this year with approximately 1% effect this year are sticking, and we expect this more normalized drumbeat of 1% to 3% also to stick next year, because it is a more normalized level.

On the input cost, it's fairly flattish. Our forecasts on the various most important, both on COGS and gas, electricity. So all in all, it will -- it's a fairly balanced picture between the price increases and the larger input cost groups. So flattish.

I missed a little bit of your second question, but I think you asked about Russia and ownership. There's no change in strategy there. So we're sticking to the statements that we already have made. We are keeping the assets in a passive ownership, as you could notice before. We don't have any operational insights or influence on the business, but I've chosen simply to keep it in a passive ownership.

Your next follow-up question comes from Julian Radlinger with UBS Group.

Just a quick follow-up. So you said earlier in the call that at the moment, you can cater for about half the volume in the Swiss market from Germany and earlier you thought it was more. Can I just double check, does that mean that we should think about the entire kind of Swiss plant outage related one-off costs in Q4 is actually more than EUR 15 million because of that? Or is that already included in that number?

The EUR 15 million includes everything. And maybe I should have been more specific about it's approximately 50%. What I meant was 50% of our sales, we can handle -- we're seeing 50% of our sales maintained in this period. Of course, there are some customers who are...

In Switzerland, yes.

Yes. I mean, the customers know it's a temporary situation. So it's really hard to say what is simply people not stocking and waiting until the products are available again and what is other effects. But EUR 15 million includes more or less the whole thing.

Okay. Is there a possibility then that you might actually have some catch-up in Q1 once the plant comes back online because people waited for the product?

That is very, very plausible. But for the group numbers, it is not material at all.

The next question comes from Aman Saxena with Bernstein.

This is an Aman from Bernstein. I think every question has been answered. Just one smaller one regarding the Flums plant disruption. I know you've shown to the root cause. How do you want to prevent this in the future with the other plants? And just one question.

We have a standard operating procedure for when we have incidences in the group. So basically, what you do is, of course, first of all, make sure everyone is safe, then you make sure that you start planning for restart and testing, et cetera, et cetera. But you in parallel, of course, also look at if there are other plants who have similar equipment and if that needs to be upgraded. In this case, and I don't want to get into great detail about it because it's about technology, but it was a fairly banal mechanical error on a single piece. And that can be handled both with redundancies in mechanics, but also ensure that no other factors encounter something similar.

Your last follow-up question comes from the line of Yassine Touahri from On Field Investment Research.

Maybe more a question on strategy on the long term. I think a lot of your competitors such as Saint-Gobain, Knauf, FedEx and Kingspan are adopting a system selling strategy, where insulation is only part of the building of system such as roofing system or external insulation system or interior solution system. Do you see a risk of being sideline need from projects if you only offer stone wool and your competitor offering a full system? I've seen that you've done a small acquisition in Etex. I'd like to understand how do you think about the group long term?

That's, of course, something we have looked at ongoingly in our strategy work, but we're convinced that it's the most valuable play for us is to stick to stone wool. We are the arguably the best manufacturer of stone wool in the world, both quality-wise, productivity, efficiency and, of course, also sustainable. So, we're not concerned about being marginalized or becoming irrelevant. There's so much for us to do in maintaining a pure player both in Europe and in North America, there's so much more growth to capture.

We have benefits as stone wool over glass and foam that leaves ample space for growth. So, we are sticking to our very pure focused strategy of staying in stone wool. But we are also, of course, having a System division where we have the logic that as long as it's stone wool or the lion's share is stone wool, i.e., we're moving stone wool with these activities, so Grodan, Rockpanel or Etex market. But then it's relevant for us to be in. But the underlying logic is that we want to be and maintain being the most relevant and the highest performer in stone wool.

This concludes our question-and-answer session. I would like to turn the conference back over to the management for any closing remarks.

Thank you very much. Jes and I, thank you for today's earnings call, and we would like to thank you for all the questions and the audience for listening on today's call, and appreciate your interest in ROCKWOOL A/S. If you have any further questions, please feel free to reach out to me. You may find the contact details in the investors section on our corporate website. Have a very nice day. Thank you.