Aalberts N.V. (AALB) Earnings Call Transcript & Summary

[Presentation] Please welcome Stéphane Simonetta, CEO of Aalberts.

Good morning. Good morning to all of you here in Eindhoven. And good morning also to all the people joining via our webcast. Thank you for taking the time being with us today. I'm really thrilled to show you today how we are going to unleash the full potential of Aalberts. And today, we will show you why we are in attractive end market with leadership position and how we plan to set new ambitions. The agenda will be starting with a quick intro showing where we come from, where we are going. And then later on, you will hear from 3 of our segments: industry, semicon and building. And then we'll be back for a Q&A session, but before, let me share with you what I believe are the key messages that I would like you to take away. You may have seen it already in our press release this morning, but first of all, you can count on us to deliver our '26 targets. But at the same time, it's time to prepare for the future. That's why we have set up new ambitions for 2030. And the good news is that we are playing in attractive end market with very strong tailwind, and this is where we have leadership position, so today, we will show you how we plan to capitalize on that. And at the same time, with our strong balance sheet, not only we want to continue to deploy organic growth with our capital allocation, but at the same time, we are going to accelerate M&A, strategic M&A. We have a very clear strategy. And we know where we need to improve but also where we may divest, but we all know, also know very well where we are going to invest and where we can continue to grow. And at the end, you will see today much more transparency from all of us and also a better focus; and what brought us here, what we like to call the Aalberts way, our operating model, the way we work. You will see how we will continue but also improve it to unleash the full potential of the company. And to be very clear, what is new today that you may not have seen before: Yes, we are going to use share buyback as part of our capital allocation policy. You will see our new 2030 target, the new ambitions that we have set for the future. And you will see that, from now on, we are going to talk about 3 segments, where we are playing, where we see attractive growth and where we have leadership position. It's all about industry, semicon and building. And this is, of course, going next year, how we are going to report our performance, our KPI, our organic growth. This is what you will see, starting 2025, so at the end, bringing all of you more focus and more transparency. And after a year, more than a year as the CEO of the company. I've been traveling a lot, visiting many of our locations, talking to many of our employees, visiting and talking to many of our customers. And also I have a lot of dialogues with many of you in the room or on the webcast. I have learned a lot. I have listened a lot. And now I would like to share what is really top of my mind right now, 2 key things, short term and long term: short term, delivering our '26 targets but also at the same time preparing for the future, what I call preparing for the third evolution phase of Aalberts. And you will see 5 key points which are really top of my mind. The first one, it's a growth agenda; growing organically through our capital allocation, through our CapEx, through our business development plan based on our leadership position. Second, rebalancing our portfolio, doing strategic M&A and divesting where we don't see the future or where we see these as a noncore businesses; third, accelerating innovation, innovation to differentiate ourselves either in great product, either in great solutions or in digital offering; fourth, accelerating operational excellence, improving our margin, reducing our inventories and improving our free cash flow. But at the end, nothing will be possible without having the best team and the best organization. That's why I would like also to build the high-performance team. So that what is on top of my mind. And the good news is that we are going to do that based on very strong foundation. The company is strong. We are doing well, but now we have a clear path forward based on our purpose and values that will not change, based on our lean and effective structure and based on our commitment to sustainability. But at the same time, we will accelerate portfolio, technology and also the Aalberts way. Where we are going to enhance the most is through our operation excellence. And a lot of things have changed since December 2021, when we had the last Capital Markets Day. These were the target we set at that time. And I'm sure you know, many of the targets, we are already there, our leverage ratio, our SDG rate, our innovation rate. We are there, getting closer on EBITDA and still some work to do on ROCE and organic growth, but we still have 2 years to achieve this target. And in Aalberts, our purpose is unchanged: engineering mission-critical technology to enable a clean, smart and responsible future; and now 3 end markets, industry, building and semicon. And like I like to say, Aalberts is everywhere. For the one that do not know us: We are a more than EUR 3 billion company with 14,000 colleagues in more than 130 location. And you can see that we are very strong in building. 50% of our revenue is in building. We are very strong in Europe, 70% of our revenue being in Europe. And we have opportunities to grow in industry, in semicon and in North America, so now it's time to prepare for the future. It's time to go beyond 2026. The company is doing well. We have solid foundation, but it's time to go beyond what we have achieved, so far. That's what we call thrive 2030. We want to thrive because a thriving company is a great company; a great company for our customers, for our employees and for the society. And we want also to be a great stock because a great stock is a company that always deliver high returns for shareholders in a sustainable way, thanks to a very efficient free cash flow management. And the way we call our strategy, thrive 2030, is putting 3 simple words: refocus, rebalance and recharge. And you may wonder what these words mean. This is what we will show you right now, what it mean and how we are going not only to reach our short-term targets but also prepare for the future. And ambitions, our new objective for 2030. That's what you see right now. We want to move from more than EUR 3 billion to more than EUR 4.5 billion revenue. We want to move from more than 16% EBITA to more than 18% EBITA. That's the new ambition we are putting ourselves from 2026 to 2030. And how we will do that, first of all, is to use in the most effective way our capital allocation. It's always start when we deploy our capital with our commitment. Never we will compromise on health and safety, on sustainability. This is still our commitment. And always we will continue, like we have been doing, so far, spending capital allocation, with high returns with shorter payback, to continue to expand our capacity and continue to expand our footprint expansions, but at the same time, our CapEx will be used also to drive innovation. And you will hear later on today a few great example for our 3 segments. And when we talk about strategic M&A. I think I've been sharing that to many of you during the earlier dialogue we had, 3 key priorities that you can see here. In industry, it's about growing in the U.S. In semicon, it's about Southeast Asia and expanding our portfolio. And in building is also U.S. and portfolio expansion. So that's what we mean. That are our goals. That's how we will spend our capital allocation for thrive 2030. Now let me show you the how we will reach this target. Because you may wonder what it mean, refocus. And refocus, it's basically starting from our foundation, the Aalberts way, with our new team. And then I will explain you what are the 3 key enablers, our people, our customer-centric supply chain and our innovation. And the foundation, what unites all of us in Aalberts are our Aalberts values, our 5 values. They remain, more than ever, valid. That's something I experienced over my first year in the company. And this is what that will continue to drive. And that is what continue to unite us, taking care of our customers, reaching our commitment, reaching our results, being open mind and always going for excellence. And at the end, the benefits, all our stakeholder should experience it. And when we talk about the Aalberts way, that's really, for me, taking the best of 2 worlds: first, keeping what made us successful up to now, acting like a small and medium company, local empowerment, local proximity, speed and decision-making, full accountability in the business. We will continue to do that, but at the same time, as we are becoming bigger company, global company, I want to make sure we take also the advantage of the scale. I want to make sure we drive synergy. We do -- we use our financial strength as a global company, and we avoid to -- having waste or repeating a lot of things locally. And at the end, that will be the Aalberts way, taking the best of both world. And we are going through an evolution. It's not a revolution because, over a few decades, we started the journey. Next year, we will celebrate our 50 years anniversary. And we started as a financial holding company doing a lot of acquisitions. Then the second phase was going through 4 technology clusters, with starting to have a head office and leadership network. And now we are going to the third evolution phase with 3 business segments and functional excellence or group function that will be there and act as strategic business partner to support our business segment. So we will keep our lean and effective structure but at the same time improve our functional excellence. And who is the team that will deliver and will lead this third evolution phase is our new executive team. They are all here on the front row. And you see that, on top of me and Arno being in the management board, we have now 5 business CEO which are fully accountable with their KPI, with their financial target, with their innovation, strategic agenda. And you will hear from 3 of them later today. And 2 are brand new. They are in the room, and they will join the executive team on the 1st of Jan. And then our 5 functional leaders, with also 2 of them that join us over the last 6 months. Now let's go to our 3 key initiative. First of all, winning with people. We are going to invest to have a future-proof workforce because we will never grow, we will never achieve without having the best people. So we have identified 5 key initiative that will be deployed by our new Chief People and Culture Officer, Suzanne, which is here. Second, we are going to invest in customer-centric supply chain because we want our customers to experience best-in-class quality, best-in-class delivery. We want to do better in our cost structure but also in our inventories to reach our margin and reach our free cash flow target. And at the same time, we want to do that having the best team in all our footprint, in all our operations with the best health and safety condition, so we have identified 5 key initiative using the SQDICP framework. And this will be under the leadership of our new COO, Luca, which also join us. And to reach '26 targets and also prepare for the future, we have very key actions which are actually being deployed as we speak, driving more productivities in our factories, optimizing purchasing costs and getting lower inventories. And you can imagine that these are very relevant, especially for our building segment. And like I said, at the end is to do more with the same or to do the same with less. That's what is about operation excellence. The third element is innovation, innovation to differentiate but always to solve customer needs, not innovation for the sake of innovation, because we are good engineers and we love technologies. You see that decarbonization is definitely a trend that will allow us, that we will use to push innovation, but at the same time, it's about new technology. It's about repair and reuse. And for semicon, it's also having fully integrated system. And in building, this is maybe where there is the biggest opportunity for digital offering, for our recurring revenue, also offering full skids and full system solution. More to come later from our 3 CEOs how we plan to innovate more. That is how we will refocus Aalberts. Now rebalance, what it mean, rebalance. Rebalance mean rebalance our revenue between our 3 segments. Rebalance mean rebalance our revenue between 2 key geography, Europe and North America. This is what we want to be. And let me show you first what we mean by being in attractive end market with leadership position. We have CAGR which are there from many external reports. And you will hear more later today from our 3 CEOs, but industry, semicon, building long-term mid-single-digit to high single-digit growth. We are all aware that, short term, there are some challenges, but long term, let's not forget the big picture. It's still a growth place. And we see this growth supported by 4 tailwinds. More people will need to live in cities. And the buildings will need to be greener, smart home, smart buildings. We see the push for technology, the acceleration of AI, everything being connected, another growth driver for us. And we see, of course, the reshoring, which is going also to be a growth driver for us. So 4 tailwinds that are supporting our 3 business segments. And this is where also you can see we have leadership position, leadership position in where we are playing. And in industry and semicon, more than 50% of our revenue is with leadership position; in building, less than 50%, so we still have some opportunity to increase market share and grow our business. That's what we want to do in leadership position where the market is growing. And how we are going to do it. Actually, what we have been doing over the last 12 months, we have looked at our full portfolio. And the way we have been looking at our portfolio is based on 2 dimension. Are we able to win? And is the market growing? And you can see that, as an illustration, we have many of our businesses which are on the top right. And you can assume that this is where we are spending our capital. This is where we are growing. This is where we are making acquisitions. And we have some business which are in the bottom left. This is where we need to improve. This is where also we are looking at divestments. And this is where also we are making restructuring to improve the performance. And let's not forget that we have a lot of our businesses which are in the middle, where we are managing for cash and optimizing margins. And as an example. You have seen one of the divestment we did during the summer. It's a business that was in the bottom left -- and some acquisition we did and some acquisition we are working on are on the top right. This is what is our methodology. And this is what guide us in the way we allocate the capital. And for every time we have divestments and an acquisition, we are asking ourselves a few questions, but the goal is to move as many of our businesses, of course, to the top right. That what is about also rebalancing our portfolio. We are always asking 6 key questions when we look at an assessment of our portfolio. I think you now understand ability and market attractiveness, but also we want to make sure there are synergies within Aalberts. It can be a great business doing financially very well, but we are asking the question. Are we the best owner? Or maybe someone else would be the best owner, whatever is the financials. So that's what is guiding our choice and that's where we'll be using. And the last initiative to rebalance our portfolio is North America. Our ambition is very simple. We want to double the revenue by 2030 because the market attractiveness is there. And we have defined 3 action: first, organic growth. We have fantastic brand. We have local footprint. We have local team, up to us to grab the market and win share. The way we will do that, through innovation, through operational excellence. We can still do better in term of availability, in term of quality but also through footprint expansion. And you will see us, at the end, doing some acquisition, especially in industry and building, to expand our footprint and support the growth agenda. As a consequence of doing portfolio review, acquisition, divestment, organic growth, doubling in the U.S., you will see us moving. From today where we are roughly 50% in building, 14% in semicon and 36% in industry, you will see us going to a more balanced portfolio. And you will see also U.S., North America going roughly from 1/4 of our revenue to 1/3 of our revenue. And something that will not change while we rebalance the portfolio is our commitment to sustainability. We still want to reach our net 0 carbon by 2050 or earlier and keep more than 70% of our revenue linked to sustainable development goals. All the initiative will continue to be under the leadership of Anne-Lize, which is here, our sustainability leader at Aalberts. And we are pleased to share with you 2 new things today, releasing our 2030 targets on scope 1 and 2 CO2 intensity, as we want now to be at minus 50%; and at the same time, setting 2030 target for our scope 3, focusing on raw material and waste, because this is where we can have the biggest impact for the environment. That's what we mean by rebalance. So now you have seen how we will refocus the company. You have seen how we will rebalance the company, but of course, now you should see how we are going to deploy our capital, so let me welcome on stage Arno, our CFO. And let's talk about our financial ambitions. And I'm sure there are a lot of expectation, Arno, right?

Absolutely.

How much acquisition are we going to do? How much divestment are we going to do? And what do we exactly mean by share buyback, right?

I will explain, Stéphane. And thank you for your good introduction, yes.

Thank you, Arno...

Welcome, everybody, also from my side, and also welcoming the webcast, to this Capital Markets Day in Eindhoven. And let me start with my key messages for you today, where we of course want to make crystal clear that we are proud to have such a strong track record. And that is also the reason that our red line in this ambitious plan towards 2030 is that we are committed to reach our objectives also for 2026. Disciplined capital allocation, the base for sustainable profitable growth for 2025 to '30, that is how our business teams drive more profits and more growth going forward, with making the right decisions for capital allocation. And of course, we can do that because, the strong financial base that we have with our balance sheet, we are able to make the right choices and to allocate it really to the right projects. A divestment program to even accelerate our portfolio with acquisitions, to even accelerate our market position. Because that is why we do acquisitions. We never forget that. We do acquisitions to accelerate our market position and to accelerate our organic growth potential. And then last but not least, already mentioned, the share buyback now part from our capital allocation policy. This is the Aalberts way as a winning formula for driving returns. And let me start with the financial foundation. I already said organic growth. Approximately 2/3 of our growth plan is still organically. So we believe that is the best return for your capital employed. And that's also why we are still driving our business plans and allocate our capital and management accordingly. Besides, we drive constantly lean programs to reduce operational costs and to improve the performance of our businesses. And then the portfolio optimization; as said, rebalance, rebalance the company also from a geographical point of view but also from an industry point of view, from a [ second ] point of view. We try to bring it more in balance. And for that, we are aiming to acquire approximately EUR 800 million to EUR 1 billion of revenues in the coming years until 2030, where at the same time, we will try to dispose EUR 400 million to EUR 500 million of revenues until 2030. So the net growth from this part of our financial plan is approximately EUR 400 million, EUR 500 million of revenue growth. And then financial control. We focus on free cash flow conversion ratio, in relation also to our increased CapEx spend for the good plans that we have; continuous operational excellence to lower inventories, lower working capital to really perform the healthy free cash flow that we need. And the disposal proceeds, we'll also allocate, our acquisitions, already said. These guidelines are driving our objectives towards 2030, and let me start with that. Revenue, a target, an objective of more than EUR 4.5 billion in 2030. It's ambitious, but we strongly believe it's achievable. And besides which is strong revenue growth, we also want to improve our EBITA margin. And everybody knows that our objective is more than 16% in 2026, which we are committed to realize. And we are raising the bar for 2030 towards more than 18% EBITA margin. And besides, we have a free cash flow conversion ratio, for a healthy free cash flow that enables us to continue to invest for the future, of more than 65%. And then we have another, new objective, the ROICE, the return on incremental capital employed. What is that? That means that -- the incremental return EBITA divided by the incremental capital employed that we allocate to our balance sheet. That is a percentage -- that's the outcome of that percentage, more than 18%. And that is over the last 10 years. That is the number that we always report in our annual report and also explain that, that actually shows the effects together of all the capital allocation that management put to the business and the return out of that. We believe, given our growth agenda for the coming years, that this is the best KPI to measure the success of our capital allocation policy. And last but not least, we do this all in a very responsible way by keeping our leverage ratio below 2.5. We can never be successful if we are not very disciplined with our capital allocation. So let me take you through these capital allocation policy. First, as said as always, stable, we allocate 30% of our net profits, of our growing profits going forward, to our shareholders with a cash dividend policy. We believe it's very important that also our investors know what to expect from their share. And secondly, organic growth remains a very important part of our growth ambition. And we allocate EUR 250 million to EUR 300 million annually in value-creating business plans from our business teams. Third, strategic acquisitions and divestments. We will have a net M&A employment -- deployment of EUR 200 million to EUR 250 million annually. That means the value of money that we have to allocate to our balance sheet as a balance of acquisitions that we buy and the disposals that we sell. And then last but not least, share buybacks when excess cash is available, and that is very important for us, not delaying our strategic M&A agenda and our organic growth plans. Because, of course, that cannot be the idea of share buybacks, but yes, we are aiming for an annual share buyback. And by disciplined capital allocation, we are strengthening our leading positions in the marketplace. Then M&A playing a crucial role in our future and also as it has been doing in the past. Also, in the future, it is important. And we are quite experienced there. As you all know, we have a playbook where we really work towards to get the best targets into our company. And yes, we remain very critical. We remain very disciplined and we will not make an acquisition when not everything is right. We -- that is also the success of the past, and that is what we will also continue to do going forward. And we have a clear focus. Therefore, the building, we are looking for adjacencies in the source-to-emitter portfolio. And besides, we are looking for a footprint expansion in the U.S.A. In semicon, footprint expansion, Southeast Asia, we believe crucial to be there, represented, to also deliver our growth agenda for semicon business and also help to serve our customers in their own growth plan globally. And besides, it remains very interesting also to strengthen the portfolio in semicon there. And then last but not least, in industry, footprint expansion, also U.S.A., for customer proximity and the end market diversification. It's a continuous portfolio and strategic optimization of the company and, I think, a very clear direction for the future. Then on the request of many of you, we also have changed a bit in our reporting, in our reporting structure. First of all, as Stéphane already said, we are now moving towards 3 business segments. So from 2 reporting segments, we are moving towards 3 business segments. And actually, as you will all understand, the industrial technology segment will be split into semicon and industry. That is the big change. Besides, we are also changing the calendarization. So we have been doing trading updates for the first 4 months of the year and the first 10 months of the year, which was a little bit different than other companies did, but we believed in the cadence, that it was also giving the right information structure at that time. But you all have given clear feedback that you would appreciate more the quarterly reporting, so we will change also towards quarterly reporting. And we will change with the new segment reporting, first, in 2025 but with the full year '24 numbers, so in February, we will, for the first time, report into these 3 business segments. And then in Q1, we will give the first quarterly update. And it will be key financial metrics for [ the segments, ] for Aalberts total, including an qualitative description as you were used also in the trading updates. For the first half year reporting and the full year report, no changes; of course, the full deck. So actually, I think, Stéphane, that was what I wanted to explain about the financial guidelines of your growth plan, but I think everybody is now really waiting for the recharge part because it's the most exciting probably, yes.

I think you are right. You have seen how we will refocus, rebalance, but at the end, where are we making an impact in everyday life? It is in our business segment. So I'm -- I think we are really excited that now you will see from 3 of our business leader how they will unleash the full potential in their segment. So will -- you will hear from Oliver that will show you how he is going to recharge industry. You will hear from Patrick how he's going to recharge semicon. And then you will hear from Maarten how he's going to recharge building. Let's go.

Yes. [Presentation]

Please welcome Oliver Jäger.

Okay, good morning, everybody. So I'm delighted to welcome you here in one of our most exciting facilities in my own backyard here in Eindhoven, where operation happens compared to normal office environment. Here to my right-hand side, you can see one of our most recent investment into HIP technology. So just 4 weeks ago, we have opened that 1,500-square-meter facility, giving that HIP facility a proper home. So what does HIP stand for? It stands for hot isostatic pressure, but nobody knows what that means too. So we have materials which have defects, and we eliminate those defects in an extreme environment of more than 1,000 degrees C [ and 1,000 ] bars. And those, let's say, defectless parts, they will find their home, for example, in jet engines, in industrial gas turbines, in medical implants or parts being additive manufactured. So you could see it's a high-technology specific application, demonstrates once more the mission-critical engagement of Aalberts. As the industry leader, you may expect me to talk about the further improvement of durable material, the production of industrial products. And you're right. We're doing that with surface treatment, with precision extrusion, with precision stamping and also producing industrial end products for diverse end applications. You also think that we enhance the surface of certain materials, and I'll demonstrate you how we can do that. And again you're right. In surface treatment, it's all about the improvement of the material below the surface. And that what I'm willing to do in the next 10 minutes or so, give you some insights and unlock what's below the surface of the industrial segment. I will make you comfortable with the achievements and success we have achieved during the last years. And I even further will unlock what is going to happen in the years to come while we as Aalberts -- preparing ourselves for our 50th anniversary next year. As all of us, we have key messages to you to make the whole thing, as an introduction, understandable and easy. When you would like to have 2 focus segments, 1 is the technology area where we look in. And on the other hand, we look for regional things bringing us forward. On the technology side, we have an increase of electric and hybrid vehicles going to be produced as well as a lot of materials being used for air traffic. It goes on lightweight material. Air traffic is increasing. On the regional side, we see a lot of reshoring activities into Europe and into North America. That facilitates us from the location, from the geographical point of view -- fueling those developments on the technical side and also on the regional side with acquisitions to drive growth further and more specific. So where do we stand in the industry segment? So with a workforce of 6,000 highly diversified people, we're doing amazing things through all of our technologies, whether that is surface technologies, whether that is stamping and extrusion or the production of industrial end products. With more than 100 locations, we are well placed regional-wise in the key end markets we are delivering, whether that is automotive, aerospace, power generation or the industry in principle. So how is value created in those diverse end markets we are delivering into? When one [ grab out ] the sector of surface technologies -- so we do heat treatment, surface treatment, polymer technologies and reel-to-reel coatings. In stamping and extrusion, we make precision stamping parts predominantly for electronic end applications and do extrusion of lightweight material for the aerospace industry and also for the optical industry. Industrial products, we do, for example, fuel efficiency systems for the maritime industry. And we do valve technology for air conditioning and also for the hydrogen industry. So hydrogen industry. You may wonder what that is. I got the questions in the preparation. What does hydrogen stand for? So hydrogen is predominantly a storage medium for renewable energies. So whether you look for electrolyzers -- you store the hydrogen and then you can reuse it at a later stage to make you a bit independency from the occurrence of wind and solar. You see that is quite an important technology to drive the sustainability of the industry forward and getting more independent from alternative energy sources. And with our key development, we play a key role in the development towards renewable energies. Beside all those technical and geographical things and our good organization, we have also exciting end markets. So with a minimum CAGR of 4%, we're looking like positive forward for the years to come. Whether that is in automotive or aerospace or maritime or the machine build, we have exciting development to see. So where does that growth comes from? In automotive, we -- as I mentioned, we see the increased production of electric vehicles and hybrid vehicles, which fuels, let's say, our production in that market area. When you look at the aerospace environment, we see an increased demand for lightweight material. And on the other hand, you can see that air traffic is still increasing, which is a natural fuel of that business we are into. Fuel efficiency systems in the maritime market give us a further boost into that area. And in machine build, we have a wide application of different products we are offering for the machine build industry, where we see positive in the future for further development. Beside the fact that we have good markets which are promising, a good organization and a -- good technology skills, we're also [ participating from ] major tailwinds in the market, or megatrends or however you would like to call those. Urbanization plays for us a key role. While people are living closer together, there's more proximity of the people; and that needs more requirements for sustainable mobility. Technology acceleration needs higher-complexity and more developed products, which we are able to offer. The reshoring activity I have mentioned at the beginning, that gives us a need for a closer supply chain or supply chain proximity, which fuels our system because of the nature of the business we are into. And last but not least, decarbonization is one of our nature in a lot of areas we are working on. We have a strong footprint on lightweight materials supporting the CO2 reduction. As having said that, growth, that comes not by itself. We have just mentioned the HIP vessel we have invested in, where we have invested into that building, which offers obviously room for more growth. We also look for regional expansion. So we just recently have started an expansion in maximum (sic) [ Mexico ] for reel-to-reel coating, where we're predominantly serving electronic end applications with highly specified coatings. We also do the same thing for electric and hybrid vehicles in Hungary, where we're doubling our capacity in Eastern Europe. As I mentioned in the beginning, we're also looking for acquisition. And we did one in North America, widening our footprint, with the acquisition of Steel Goode Products, offering thermal spray coatings for diverse end markets. If you have more interest in digging in one to the other, perfectly, on our website, we have movies giving you more explanations. And I will say that the Q&A session allows you to dig a bit more into that. So what is our competitive advantage towards other players in the markets we are playing in? So number one is the global network we have that brings us into the position as being the engineering partner for global key accounts; secondly, the combined offering of highly specialized surface technology solutions. The deep industry expertise brings us in a position to offer tailor-made processes and innovations for one or the other bigger industry partner we are doing -- running with. The fact that we deal with lightweight materials and that we're active in fuel reduction system makes us into a front-running position of sustainable production and a sustainable industrial environment. So while Aalberts is focusing on its strategy, thrive 2030, we talked about refocus. We talked about rebalance and we talked about recharge of the industry, so if you would like to conclude that, then you could see that business development fueling organic growth is one of the key drivers of our success. The decarbonization of the industry is one of the major tailwinds offering us future opportunities to grow. The reshoring activity in Europe and in North America gives us more opportunities due to supply chain proximity, for example. And further on, we can fuel our growth with acquisition. As lined out, we have a good pipeline for doing that. So you could see that the industry segment is perfectly placed for further development and underlining and underpinning what Stéphane and Arno has pointed out and they're into from an Aalberts perspective. I would like to come here to an end. And I can tell you, with all those positive points I have in my hand, I'm really looking forward for the upcoming 50 years to run that business. Maybe my age comes to a restriction area, but at least I'm looking forward for the years to come to develop that business further. And I would like to thank you so much for your attention. [Presentation]

Please welcome Patrick de Groot.

Good morning once again. Isn't it amazing, that mankind has created technology to squeeze more than 1 billion of transistors onto these little, tiny chip? And with that, we're able to connect, communicate, industrialize and automate across all corners of the globe. And yet, at the same time, we find ourselves to having to build more complex, more expensive and more bigger tools than ever. And behind here me, you see some of just what is needed of the technology that is created in the Eindhoven area, which is also called the Silicon Valley of Europe. So let me spend a few minutes explaining what it is that we do to help our customers to continue this technological journey and create the next breakthroughs in this amazing industry. And I will do so by touching upon some of the interesting market trends that we see, the tailwinds that we have. I will talk about, more importantly, what are the strategic actions that we're executing to make sure that we are ready for the next phase in this really amazing industry. And also I will talk about some of the very, very important things that we're doing -- and that I'd like to underline the ever greater focus we're putting on integrating all of the capabilities we have into one offering. But before I do that. Stéphane, Arno, Oliver -- and they already talked about the 50 years of Aalberts. I'd like to go back to the remarkable progress that we have made in the rather new field of semicon. And to do so, we draw on the 1,500 people that we have, from technologists and engineers, all the way to skilled workers in our factories, creating the tools and components for our customers. You will see that today, mostly, we do that out of Europe, but going forward, you can expect us to grow in the U.S. and Asia to be able to serve our customers in the regions where this equipment is needed. We are faced -- focused on 3 distinct areas of technology that I will highlight a little later. And you can see that today more than half of our revenues is coming from lithography, but there's advanced nodes. Do not stop with lithography. We see more and more of our technology also being introduced in other sides of the supply chain for semicon. So how do we create value in this interesting industry? It all starts with the huge frames that are needed to build these tools. Simply put, if you're not capable of getting the accuracy and the stiffness of this basic frame right, you simply won't get to the level of accuracy to print those high-accurate lines on those wafers. And we combine that with precision frames and modules. That's all about entry of gases and fluids and bringing them to the point of use. Going forward, as nodes will get smaller and smaller, the accuracy of those gases and fluids will become even more important. And thirdly, it's all about mechatronic technologies. It's about quick movement times and quick settling times. Because you might not feel it today, but we're constantly exposed to microvibrations, so the key thing is that we cancel out those microvibrations through active vibration isolation. And that allows us to quickly go into printing of new lines, improving both yield and output. And that's why at Aalberts we work so hard to have a leading position in this field. And later today, you will be able to see some of that technology. And we'll demonstrate the capabilities of that. Let me make a quick step to market dynamics. Obviously we all know this market is growing. It's very fast growing. The opportunities are endless. And yes, it's cyclical, but make no mistake it will continue to grow. It's a predicted rate of more than 8% year-over-year. And within that, the semicon production equipment is even growing faster; and that's exactly where we play. And that's exactly where we support our customers in bringing new technologies to the market. We do expect lithography to pave the way, but also, in the other fields of applications, we will expect speed and increasements to make sure that we continue to move on to the next nodes. Then we already touched upon tailwinds. Stéphane talked about it. Oliver talked about it. I just want to highlight a few: increasing demand. And semicon chips will be needed to power our cities, urbanization. The smart grid is the only way forward to create solutions that allows us to connect the solar panels that we're using with the energy that we're creating; at times that we can't use in our factories and then stick them into batteries, maybe of our battery electrical vehicles. So there will be a lot of chips needed to power these cities going forward. And then the number of new applications that are created every day, connected devices, AI. We simply are not capable yet, I think, to fully understand the impact that will have on the future. And as new GPUs will come to the market with even more capability, faster processing times, we will see engineers experimenting with the new large language models that are being released as we speak. And we simply will not be able to fully comprehend how that will continue to change our lives, the way we work and the way we live. There's just one but. There's a major challenge as well in this. As these chips are using quite some energy, studies have shown that, if we do not change the energy consumption of those chips, we will find ourselves consuming more than 30% of world energy by chips alone, 30%. And that's just not sustainable. That's a thing that we as an industry have to solve. And that will further drive new requirements for technological breakthroughs to make sure that we solve this problem as an industry and continue to drive Moore's Law in this remarkable journey. So how do we translate that, as Aalberts, into the major growth initiatives that we're executing? Obviously we will continue to invest in the existing technologies that we have. We will continue to build on them. We will continue to improve them, but going forward, we'll see quite some expansion happening as well in Southeast Asia not only because we have our customers there but also because we believe that there is this regionalization as chip becomes much more of a regional play. So going forward, we'll expand into Southeast Asia. On the sustainability front, we're opening a repair and reuse center. That allows us to bring equipment back from the field but also support our customers to do upgrades and retrofits to make these existing machines that are typically there for many, many years more efficient and more capable of producing chips. There is a nice video on our website, so if you're interested, later on and -- take a look. And it explains a bit how we see this and what we do. And then on innovation. We're investing to further develop new black IP, wide IP solutions in collaboration with our customers. And let me highlight 2 of what I call the main initiatives in this field of semicon. One is the new state-of-the-art factory we're building here at the heart of the Netherlands. And I'll talk about integrated modules for a bit. So at the heart of the Netherlands, we are building this mega factory to be able to produce those mega frames. And here you see simply the sheer size of the building, the foundations and the equipment that goes in. These milling machines are more than 12 meters wide, 8 meters high. And that's a requirement that is needed to machine these huge frames. And that's as tall as a 3-story building. So it gives you a bit of a perspective on what's required. And that allows us to also translate that into what I call vertically integrated modules. Because going forward, to deal with the challenges of this industry to provide the next-level technology in the new nodes and take care of the energy consumption challenge, we will have to work as an industry in a very integrated way. And at Aalberts, we have a lot of capabilities and technologies in house that allows us to combine that into vertically integrated modules. I'd like to show you a short animation of what is a remarkable capability we already have today and which we believe going forward will allow us to help our customers even further in driving progress -- sorry. [Presentation]

So here you see some of the big frames, [ machined in ] aluminum vacuum chambers, to be able to do processes. All needs to be isolated from the active vibrations that we have around the world by this vibration isolation technology. Wafer technology, wafer handling technology, robots, movements, motion, all kinds of technologies we have, combined with gas cabinets and gas flow solutions. And if you combine that all into a offering, you can see what we're capable of combining into one system. And we believe that, to drive progress, that is what will be even more needed going forward to help this industry get further into the future and solve the energy challenges as well that we face as an industry. So let me go back to where I started a few minutes ago, these big machines, these huge tools, those ever more complex systems that we have to build to create chips. At Aalberts, we have a unique combination of technologies combined with our own IP and a long-lasting relationship with our customers that help us co-develop this into new solutions -- and obviously not to forget the investment power and our capability to speed up decisions to make sure that we invest in the next things that need to be happening to further support this growth. And to summarize. In my short comments today, I wanted to provide a flavor of our position and strategy that will allow us to ride the semicon wave from now and 2030 and beyond. For us at Aalberts, it's all about enabling the technology road map of our customers in a more and more integrated way. And we will do so in partnership with our customers by focusing on the challenges we face together as an industry. We cannot do this alone. Our customers cannot do it alone. Our -- customers of our customers can't do this alone. This needs to be done in a fully integrated way. And that's the only way we can create better technologies and better tools that will fuel progress in connectivity and AI. And it's already happening today and it will continue. AI will change the way we work, the way we live in ways that we can't imagine. And that's why I am proud and excited to lead my team and be part of this industry with boundless opportunities. Thank you so much. [Presentation]

Please welcome Maarten van de Veen.

Did you know that buildings -- and because you probably know already, but did you know that buildings consume 40% of the global energy? And did you know, you maybe do, that Europe alone has 65 million inefficient boilers that needs to be replaced by renewable solutions like heat pumps and underfloor heating? And that's where prefabricated skids come in, like this [ great one ], filled with all the products of the Aalberts building segment like boiler room technology, like connection systems, like [ fall ] systems and like our heat water treatment solutions, solving the problem of time and labor shortage and helping us to tackle these issues going forward. And on behalf of my more than 6,000 colleagues of the Aalberts building segment, I can say with absolute certainty that's the opportunity we come to work every day to help unlock. And that's why, after nearly 3 decades with Aalberts, I'm as excited today with all the opportunities ahead of us and the power of entrepreneurship and innovation we are having in our company to unlock this potential as I was on my first day back in 1996, so allow me to tell you a bit more about what we are doing across the building arena to unleash the potential of our people, our customers and those they serve. So what are the key points about Aalberts successes and the plans that I would like to share with you today? These are the headlines. The greenification of buildings is absolutely driving the demand for renovation and for renewable systems significantly. And as a result, preassembly and prefabrication are absolutely playing a significant role in reducing construction and installation time scales. This kind of tailor-made solutions are also used in the fast-growing data center market, where we build skids like that one, including all our solutions and all our products. We are also actively increasing our share of wallet in projects through cross- and up-selling, and this is driving the growth in our product lines. And that's not all. We are also fully focused on growing our U.S. business. We are focused on the growth with our valve and connection systems, our boiler room technology, of course, but also we focus a lot on inorganic growth by broadening and completing our product range, especially in so-called adjacent technologies that are close to our core. And our dedicated sales teams are fully focused on increasing our market shares, of course supported by continuous new product developments. On some of these developments, I will come back later on. Finally, when it comes to energy efficiency, the quality of the water is super important. It's absolute super important. This water has to be increased continuously in order to get the right conductivity. And if you have the right conductivity in your heating water, you're really reducing energy consumption a lot. And that is, of course, this whole business is a major source of growth for our service business. Aalberts is really well prepared and positioned to achieve even greater growth. We have a well-balanced products and service portfolio, combined with a major focus on digitalization, but let's have a closer look. We have absolutely leading positions across our key areas and [ end ] markets, with our sales currently spread mainly across Northern America and Europe. And across our segments, we have a balanced exposure to renovation and new build as we also do between residential and nonresidential. And we are placing a growing emphasis on digital solutions because that's so important, to have these digital solutions also in place to support the whole maintenance and replacement market. So how do we create value in buildings? And the answer lies in a careful combination of our products and services. We have a really comprehensive offering of connection systems, valve systems and boiler room technology. And together with our water treatment services, we apply them in this kind of skids, these kind of skids that we supply also to data centers but this kind of skids that we also supply to the retail market [ or ] other commercial building to the district heating market segment as well. And of course, we support, we actively support, let's say, our customers with design services, digital services, as well because we are -- it's not only about products and services. It's about how we apply them across every step of the building process with an integrated one-stop product approach, so we focus on the complete building life cycle. And maybe some of you have seen this life cycle before because it's not completely new. We are focusing from the [ idea ] phase to the completion and beyond. We focus on design services in the design phase with technical drawings. And we support our customers there also with calculations, energy use calculations, for example. So when it comes to the next phase, the construction phase, we supply the prefabricated skids and other pre assembles - pre assemblies. When you look to the completion phase, we are adding services to our customers. We are making service contracts with the building owners, but we also supply all kinds of commissioning and training to the people that work with our products; for example, the maintenance people. And during the operational phase, of course, we supply digital services continuously and maintenance and service as well. And via our life cycle sales approach, we supply our skids and solutions again during the renovation phase. So that's the end of the circle. And then we create recurring revenue, recurring sales. That's how we call that. So to continuously be partnering with our customers like building owners, architects, owners and consultants, we really create finally recurring avenue -- revenue and sales for our business. So let's have a look into our market environment. We are benefiting from a market that is showing strong long-term growth. And Stéphane was already referring to it. There is a short term and there is a long term. This market absolute will benefit from long-term growth drivers. And we see that across all our businesses, all our market segments like the residential market, like the commercial market. And especially, of course, the whole data center markets is really growing significantly, as you can see also at this slides. And of course, there is no company or industry that is living in isolation. We are absolutely in a unique position to capitalize on a number of positive tailwinds that will help to propel our growth and success even further. And my colleagues have already mentioned these tailwinds, so I won't repeat what they have said. All what I would like to add is that, for Aalberts' building segment, we are really strongly connected with the whole energy transition. We are really enablers of the energy transition. And with this kind of solutions like this skids here but also the skids that you have seen probably at the entrance that are focused on the residential market, we can really accelerate, we can really help accelerate the energy transition a lot. So no matter how positive the market is, all strategy must be turned into execution. [ All ] strategy has to be turned into real action, and that's what we are doing. Many of our new product developments are focused on reducing the energy consumption. Others are focused on mitigating the effects of lack of skilled labor or reducing the failure costs in new build processes. Let me just highlight 2 of these new product development. One of them is, of course, the skid that you see next to the stage. And I think -- I already explained that this product is bringing together all kinds of Aalberts building products; solving the problem for our customer regarding time, absolutely solving that problem; and making the life of our customers much easier. Another product development, great product development, is this degasser. You just see black box maybe, but it is an degasser especially focused where you have heat pumps in combination with low-temperature systems, underfloor heating. All underfloor heating systems in the world should have this product because it is creating much more energy efficiency by taking away the small [ gars ] and air bubbles in a system. And the more small [ gars ] and bubbles in -- you have in your system, the more resistance. The more resistance, the more energy you have to consume. This is solving that problem, so when you go home, call your installer. Tell them that they have to install this VacuStream. It's a really great product with a great future. If you draw everything together that I've said: Why are we in such a good position to compete? Because we really combine a set of clear advantages in a way that positions us to drive really profitable growth and to maintain our leadership. And those sources of competitive advantage, that's including our complete integrated system offering that is providing a complete HVAC solution focused on including connection systems, valve systems, expansion systems, et cetera into the prefab and digital solutions. And our engineering knowledge and customer partnerships enable us to co-develop and customize project-specific solutions like that one. We work absolutely closely together with our customers, contractors, architects, installers, wholesalers, our distribution partners to provide perfect support in the field throughout the whole building life cycle. And our sales force, our extensive sales force, in more than 50 countries where we have local presence, especially in Europe and the U.S., do of course support our customers with market knowledge, with technical support, [ instilling them ] all the benefits of our products. And they, of course, also know a lot about all the local regulations. This is supported by a strong global supply chain. And our sourcing capabilities, of course, ensure product availability, a good quality of the products, good costs and lead time optimization. As you can see, we have a clear strategy and a clear plan to recharge the building business. And our commitment to energy efficiency, to clean drinking water and to time-saving solutions continuously is recharging our approach to the full building technology range. We think we are unique. We are unique in our offering of a complete, really complete, and comprehensive product range that is providing one-stop service for our customers, in combination with digital solutions. And as a result, there is probably no other company quite as well positioned as Aalberts to support the whole drive towards energy efficiency, the evolution of smart buildings. And in the way that Aalberts can, supporting the whole energy transition and the way to smart buildings will absolutely give us a competitive edge and will further recharge the building business in the years ahead. It has been my pleasure to tell you a little bit more about what we are doing in the Aalberts building segment. And I am absolutely looking forward to the discussion later today. Thank you. And maybe I can hand over to Stéphane again.

Thank you, Maarten. So you have just seen how we will recharge our 3 business segments. You have just seen what make us unique. You have just seen how attractive are the end market where we are playing. And you have seen our plan to reach short- and long-term targets. And now that we come to the end of our Capital Markets Day, before opening the Q&A session, I would like to summarize it all. Thrive 2030. It's about setting new ambitions for Aalberts. It's our road map for the long term. It's our path to unleash the full potential of the company. And as I mentioned, we are committed to our 2026 target. We still have 2 year to reach them. Some of the KPI are on track. Some obviously are under challenge, like the organic growth and the ROCE, but that's still our commitment. As you have just seen today, thrive 2030, it's in 3 words: refocus, rebalance and recharge. And refocus is where we can lead, leadership position based on the Aalberts way, investing in people, investing in operation excellence and investing in innovation. Rebalancing between our 3 segments, between Europe and the U.S. with our capital allocation, with our accelerated M&A, divesting what is noncore and doubling our revenue in the U.S. Recharging our 3 segments. You have seen it today. You have seen the commitment from our business leader. You have seen the excitement. They have shown you how we are going to recharge our 3 segments. And at the end, thrive 2030, it's about us reaching these 2 targets, being more than EUR 4.5 billion revenue and more than 18% EBITA but, again, not only being a global company but being locally driven. That's what for me is very important. That remain the way we work and that what make us win at the end, the Aalberts way, so we are ready to unleash the full potential of the company. And thriving, for us, will mean that we are a great company for our customer, for our people, for the society, but at the same time, we are a great stock for all our shareholders with the returns we will deliver. Thank you very much. It was a pleasure to host all of you today. And now we are going to prepare for the Q&A session. Thank you very much.

Please welcome Rutger Relker.

Yes, good morning. It's time to start with our Q&A session. I would like to invite everybody also joining via the webcast to submit questions because we will try to answer all your questions. We will start, nevertheless, with questions here live from the audience, so let's see. David Kerstens from Jefferies.

It's David Kerstens from Jefferies. 2 questions, please. First, on the rebalancing, how will you -- can you elaborate on how you will grow the semicon business to 1/3 of your revenue by 2030? I think that compares to around 10% to 15% maybe today. Does it mean that all the M&A you're targeting, the EUR 1 billion in incremental revenue from M&A will mostly come from semicon efficiency? And it probably means that building will become smaller. Is that where you see most of the divestments? And then the second question: Arno, you talked about allocating EUR 200 million to EUR 250 million to M&A per annum. And I think that's net of divestments. How do you see the prices that you're going to pay? And what are the opportunities you're seeing in Southeast Asia [ and ] semicon efficiency?

Let me just make an intro. And then I'll hand it over to you, Patrick. And first of all, I think in all our business we have an organic growth path. And in semicon actually the organic growth based on the long-term commitment we have and agreement with our customer is there. The factory we are building are for the long-term growth. So the growth is already there, so I will say it's going to be also a balance between organic and inorganic also on semicon, but let me hand it over to Patrick.

Yes. And to add to what Stéphane said. Obviously we already have quite substantial growth in -- organic growth in semicon for the last few years. And we expect that to continue, but as we see this market evolving into more integrated systems, we believe that we also need to expand our offering. And that is not only M&A to create a bigger footprint, but it's also to make sure that we integrate more technologies to be able to serve our customers better, so you can expect us to look at all kinds of opportunities to expand our portfolio. And M&A will be one way of doing it, but we'll look also at what we can do organically to further innovate and create more solutions going forward.

I will add before I hand it over to Arno that actually we see also in our M&A agenda a balance between building, industry and semicon, so you should not expect us to do most of the acquisition in semicon. Because in building, again like we mentioned, portfolio and U.S.A.; and in industry, in U.S.A. So you should expect a very good balance of acquisition across our 3 segments. Now about the...

Yes. And clearly, of course, there is some difference in pricing, when you look to the different segments, for acquisitions, but I think we also always are very clear in how we look at that, yes. So if you talk about disciplined capital allocation, we really clearly look to the payback, yes. So in how much time can we earn back our money that we deploy on such an acquisition? And for that, we always have a very solid, let's say, criteria. It should be between 7, 8 years time. So even if you have to pay a little bit more for a company or for a segment where apparently that growth is also stronger, still you are able to earn back your money in an acceptable time. So for us, that is how we look at these projects. And you're right. I'm not sure if I mentioned correctly, but the net deployment of EUR 200 million to EUR 250 million annually is the sum of, of course, cash-out acquisitions and cash in of disposals.

Yes.

Thank you. Martijn, ABN AMRO ODDO.

[ It is from ] Martijn den Drijver, ABN AMRO ODDO. My first question is about that target for 2030 to EUR 4.5 billion. If you take out the net of the acquisitions and divestments, I think Arno will say that it's about roughly EUR 500 million, you get to EUR 4 billion. You're now at EUR 3.1 billion or around that number. If you calculate that growth rate, that's exactly the same as '21 -- '26, 4% to 5%, so why do you need more CapEx to realize the same organic growth? That's question number one. And my second question is for Maarten and Patrick. Speaking a little bit more incremental, not in generalities, can you add examples, real examples, of products that you're going to add to the product line?

Okay, let me maybe take the first one, about the CapEx. You say it correct, yes. The organic growth is still the main part of it, but it's in the benchmark of 4% to 6% that we are also at this moment. On the other side, first of all, the company is growing, yes, so the relative spend of CapEx in this growing business is going down. And secondly, yes, if we don't continue to invest in innovative product lines with pricing power and higher margin, we can also, at the end, not achieve the increased EBITA target, so it's a combination of that.

And then on the question of where to add project, I cannot be very specific on where it will be, but I can tell you that we continuously look at what are the challenges this industry is facing. And that's no surprise. It's all around making sure that machines are able to produce chips faster with higher output, higher yields, smaller lines. And that is putting a lot of requirements on all the technologies we already have, including maybe some of the additional adjacencies we're looking at, so we'll be focused on those areas that can improve yield and output.

Yes. Martijn, if we -- if I tell you what companies we are looking after, that will drive up the price, so I'm not going to do that, of course, but -- wait. What we are looking for is, let's say, adjacencies to our core. So we are really strong, let's say, in the boiler room, but maybe you are not complete. So that's the reason that we acquired a few companies in water treatment, such an important market for us. That's what we did over the last few years, so you can think about this kind of opportunities. Secondly, in the U.S., we still have the opportunity to broaden our product range. Arno was already mentioning the source-to-emitter philosophy. You also know that already because you have seen that many times in our factory in Almere, how we do this. We are in the U.S. not complete, so we are starting all kinds of initiatives to focus also on organic growth, starting with the production of expansion vessels, for example, but also we are looking to further complete our whole product range.

Thank you, Maarten.

I think I -- just to add. I always, I think, mention, when you go in a boiler room -- and please go whenever you are in a building or at home or in your hotel, everywhere. Go and look, and you will see all the Aalberts product, but look also in this room. What is not part of our portfolio? That's [ where all are the candidate ]. And that's why Maarten is looking at what will make sense for us to add in our portfolio but always in this [ square meter scope ]. There you'll see a lot of opportunity to expand from a portfolio point of view.

Thank you for the addition, Stéphane. Luuk?

Luuk Van Beek, Degroof Petercam. One question about the profile of the companies you're looking to acquire because I know in the past you've been a bit reluctant to buy large companies because there's more competition for them. They tend to have noncore [ perhaps ]. And sometimes there are turnaround candidates, which you're not looking at. Has that changed? Or have you identified new large targets that don't have those objections?

What do we mean by large targets, right? I think...

Let's say, I think, of course, when you look at our M&A plans, when we talk about portfolio, these not necessarily have to be big companies, but when we talk about footprint, for instance, for Maarten in North America or for Patrick in Southeast Asia, yes, it could be a bigger company. It could be a larger company, but then automatically you have less overlap because it's outside the area of -- or you're not strong yet in that area or it's outside the area where you're active at this moment. So we see good opportunities there also from bigger acquisitions.

I can just tell you we have a very strong funnel of target which we are looking at, right? And then the question is the right valuation because never we will overpay, right? And whether we will be able to conclude, we'll see next year, but the funnel is there according to the 3 priorities, so I think you should expect more dynamic in 2025.

Yes.

And on the divestments, is that spread more or less evenly across your portfolio? And can you say anything about the average margin of the company that you're looking at?

I will not mention the margin, but you can understand that, with our ambition to be more than 16% in 2026 [ and ] going beyond 18%, this is area focus, but I will just say that you should expect most of our divestments between building and industry. That is where will be most of the activity, not obviously in semicon.

And maybe to add, yes, maybe to add. The 18%-plus objective for 2030 is for all our 3 segments, yes. So at the end, we are targeting all our 3 business segments to perform above 18%.

Ruben Devos from Kepler Cheuvreux. I just have one question related to the data center opportunity. And just how could we assess that? I think you talked about resi, nonresi, the sort of CAGRs you expect, 4%. Data center is 10%. Just, of course, what's the exposure today to data centers? And I think, if you look at your comprehensive product portfolio within building, what is most accustomed to the data center demand? How easy could that scale? So any thoughts you could share on that [ would help ].

Yes. First of all, that market is growing very fast. And we all know that, of course. We did not start very -- a long time ago with, let's say, approaching this market, but we are really well established, I think, to make all, let's say, this kind of solutions like these skids we build in one of our factories in Poland. We already were building there skids for the district heating market. And we are really creating more space, let's say, to -- or we already have created more space there to ramp up very fast. We have a focused sales team, both in North America and Europe, on this market. And it will absolutely become a more significant part of our revenue in the future. It's currently quite small. It's not really big but growing really fast. It's absolutely growing really fast not only, by the way, in the data center business but also in the commercial market. Retail is very attractive market for all of us. And I would say, later on, you can, of course, have a closer look into this skid, but it's mainly boiler room equipment in combination with all kind of, let's say, connection systems, valves, but also the water treatment, if I -- as I said in the beginning, is absolutely very important. We are really capable, with the expertise we are having in our factories, to answer this demand in the market. It's not only in the -- in Poland, by the way. We also have a factory in Germany, where we can build the smaller skids that you have seen at the entrance for the, let's say, more residential market. And that's already part of our DNA for a long time, I would say, so we're really capable both on the technical side but also on the, let's say, production capabilities and also on the sales part to cope with this much higher demand that we -- that's coming into the market.

And I will add on top of that, that in the U.S., right, our team are actually working on that right now, trying to make an offering, because there is such a huge growth in the U.S.A. And Maarten, with his team, now also with Jacob, our new CEO for IPS, they are working together and see how we can bring some complete offering for the U.S. data center. So it's one of the key growth driver in our doubling revenue in the U.S.

All right. And then just a second question, related to semicon. And I think you talked about strategic footprint expansion in Southeast Asia. I think today you have more than 90% in Europe; yes, very curious whether you could talk about, yes, is that because of sort of you want to set up support centers for a lot of local production that's taking place in that region. Are you looking to make inroads maybe in non-litho because you have a relatively concentrated customer base today in lithography? So yes, interesting to hear whether you're also looking at opportunities in that position [ and edge in ] these types of...

Yes. Basically the answer is yes, yes and yes. We will look at all options. It's clear that our customers today are not only in litho. We are already supplying some of the technology as well outside of litho, and that is growing quite fast. And most of that is already in Asia. So some of our shipments already go into Asia. Going forward, we will see more production regionalizing in the different regions in the world. And that requires us to also make sure that we can supply them out of those regions. And then on top of that, it will allow us also to cross-leverage the capability and sometimes the lower-cost structure that we can see in Asia and utilize that as well into our European customers. And we need to anticipate on the fact that, going forward, also our European customers might not always continue to do production only here in Europe. And we need to be ready for that. And that's why we're so adamant on making sure that we have our future footprint there.

Thank you, Ruben. Tijs?

Tijs Hollestelle, ING. Sorry to -- circling back to the disposal program, but is it, let's say, [ 4 ] companies of EUR 100 million you're going to divest? Or is it smaller pieces? To get a sense for then, yes, how quickly you could achieve the full disposal program.

It's some bigger and some smaller, Tijs. It's in a mix of sizes, I would say.

And in relation to that, what are the parameters to -- for us to calculate the potential share buyback and also the size of these share buyback programs?

Now let's say, first of all, we aim to do it annually, yes, as already said, but secondly, we see it as in with -- when we announce the full year results, that we also announce, of course, the share buyback proposal for that year. So I would like to wait for the full year 2024 closing before we announce it, but then we will make it clear, yes.

Maarten Verbeek, the IDEA!. Just a follow-up. Do you have then some kind of criteria for leverage ratio, that it needs to be within below a certain level? Or what kind of financial criteria do you use to determine the amount for your share buyback?

Let's say it's not only leverage ratio. It's also what is on the table, right? So when we -- and therefore, I believe the period of the closing of the year in the beginning of the next year is the right moment to make the right estimation of what we still need to allocate for our growth plans, both for CapEx as well as for acquisitions. What is on the table for disposals? So we will make an annual analysis of that before we announce it, yes, to the outside world.

To come back to the organic growth you foresee, the 4% to 6% range. Actually, a bit surprised. First of all, [ it ] already was mentioned, a much higher, elevated CapEx level; and on top of that also, a sizable divestment program, of which I do believe that, that organic growth is below the average of the group. And so why shouldn't we -- or why should -- have we -- why do you expect still this 4% to 6%? And with respect to this 4% to 6%, how much do you think will be price; and the other half, volume?

I repeat my answer to Martijn, of course, that the relative CapEx is going down because the business is growing at about 50% from where it is today to 2030. And what we now give as a guidance is in, yes, a slightly higher CapEx allocation on an annual basis. So I think it goes down relatively. Remind me your second question...

The price impact for the...

Yes. Let's say we always assume a normal inflation of, let's say, 1% to 2% per year. That's how we anticipate for future plans.

I'd like to get back on the CapEx because I think that's 2 time the same question; maybe to try what we mean, that. If you look at the next 2 years, we see the CapEx is going to peak without including M&A. So when you take the business we have right now, that's what we mean that the CapEx intensity should go down beyond 2 years. Then when you see an increase of CapEx, it's in anticipation on the M&A we will do because, of course, when we acquire business, we add CapEx. We fuel the growth to drive additional profitability, so expect us -- and I think that -- when I was maybe talking to some of you over the last month, that in the next 2 years, you will see a peak. And then you'll see more normalization, excluding M&A. And now when you see the absolute value, you see an increase but -- because of the M&A we plan to do beyond the next 2 years.

And lastly, with respect to transparency of your financial reporting, is that just presenting Q1 and Q3 results? Or do you -- are you also willing to provide more financial KPIs?

Let's say, in the quarterly reporting in Q1 and Q3, we will give revenue organic growth, EBITA and EBITA percentage; and in the half year and the full year, of course, the full financial pack, including free cash flow and CapEx and et cetera, but we will -- in the segment reporting, what we will disclose in the half year and the full year will be the same as what we do today. So revenue growth, organic growth; revenue; EBITA; EBITA percent; and CapEx.

Thank you, Arno. Chase, Van Lanschot Kempen.

This is Chase Coughlan, Van Lanschot Kempen. Just maybe one more question on the EUR 4.5 billion 2030 target. I think you showed a lot of slides that included the expected CAGR for all the businesses you have. Mostly were all around 4-plus percent, some even higher, so I'm curious on this target. As we've already discussed, if you strip out the acquisition growth, you're looking at around 4% organic. You just mentioned 1% to 2% inflation. Is there some conservatism there? And what other sort of factors are you baking in? Also, if you expect some market share gains, that seems a little bit, yes, conservative to me, but just curious on any more commentary for that.

Thank you. Thank you for the push and for the question. I think, first of all, we need to deliver our '26 target. So let us reach our goals in '26. And then we can talk even for beyond 2026, but we still believe it's ambition because we are also very cautious of what is happening on the short term. So that's finding the right balance between short term and long term; a bit, you could say, confident with what Patrick shared with semicon as we see mid- to more high single-digit growth, but with building and industry, more mid-single-digit growth. And that's why, between the challenge on the short term and the excitement on the long term, we believe these are the right, realistic target.

And by the way, we are proud on our track record, yes. So to overdeliver and underpromise. So that is also, of course, important when you set your goals further.

And one more, final follow-up. Just I believe there was a slide that talked about some further footprint optimization in the presentation. I'm curious on the size of that, if there's a number of facilities you want to close. Or any more commentary on that would be helpful.

Thank you for asking the question because indeed we are still on track with 2026. And what were the target we set up in 2026 was to go to 108 sites from 130 today. So you can do the math. We are still on track to reach the 108, but I want to be very clear. The goal is not the number of site because, if you look in Oliver business actually, more site is more business, more margins. So the goal is to reduce cost, improve margin and reduce inventories by optimizing our footprint, but for '26, you should expect 108 sites, so still 22 to go.

Do we -- yes, another question, from Christoph, Berenberg.

Christoph Greulich from Berenberg, yes. I wanted to follow up on your commitment regarding the 2026 targets. So you mentioned that some of your KPIs, yes, seem like they're under challenge, including the organic growth. Do you already see any more positive signals from, let's say, the key end markets or -- that make you more optimistic or that give you that confidence? And are there any ways for you to mitigate potentially if the end market weakness will last for longer? And then secondly, another one for Patrick on the semicon business: So you talked about the importance of the integrated solutions. How much of the current revenues in this segment are already coming from such integrated solutions? And is there, yes, any target for the medium term in place, how much they should contribute?

Yes, let me answer the first one. I think -- we just did our trading update 7th of November, where we gave, I think, colors about the market dynamic. I have to tell you that, 3 weeks later, we don't see major changes: still the same challenge on the building side, especially in France and Germany; and still better outlook in Middle East, in Asia and in the Americas. So I will say, no major change. And we don't foresee a major change also at least in the first half '25. And then in the rest, in semicon, it remained very volatile, right, different dynamic. And it can go from the top to a lower in a short period of time. And in industry, like we said in the trading update, automotive slowing down but still some growth in the power generation, in aerospace. So I will say, no major change compared to the last trading update, at least for the first half next year. Patrick?

Yes. And on your question of how much is already integrated, I'm not going to give you any percentages, but I can tell you that we're already shipping quite some stuff from the different sites to each other and then integrating that. But typically this ecosystem way of working that we have in this industry has a lot of potential to further optimize that. And for us, that means that we can fully integrate what we're already offering and supplying out of one plant. That's step one. And then on top of that, there is a huge opportunity to further think about how can we optimize designs going forward, take cost out and offer more value to our customers. And that's why I wanted to highlight that, that is definitely something that we're already doing partly, but there is much more opportunity going forward. And it is needed. It is needed in this industry to bring it to the next level.

Another, Kristof.

Kristof Samoy, KBC Securities. Just a few questions on the disposals. Regarding the timing, is there any chance you would require additional restructuring before fetching the right price and doing the disposal? And then on your website, you published a release in which you announced the deduplication of leadership in IPS. How should we read into this? Is this part of the disposal agenda? And then finally, now that the share buybacks are part of the capital allocation policy, does this mean that maybe you first want to dispose before you do a big acquisition?

Thank you. A lot of question. Let me start, but something which I want to be very clear: The leadership change we have done have nothing to do with divestment. It's, for me, a way to accelerate growth, to accelerate proximity, to accelerate innovation and to accelerate operational excellence because the agenda in U.S. and the agenda in Europe are quite different. And that's why I'm so excited to have 2 new colleagues that are here in the room that will drive that. So the goal is margin expansion, cash optimization and growth. Because I have seen and I was so pleased to meet many of our customers. And I see the potential with the footprint we have in the U.S., with our brand, with our portfolio, with our people. I think I mentioned to many of you it's up to us to grow this business. So that's for the first questions. Talking about divestment, do you want to...

So divestments. The major topic, of course, is timing, yes. So we will, of course, prepare divestments in a good way, as we have always been doing also in the past, to create the maximum value for our -- also for our shareholders in that perspective. And we are not in a hurry because we are -- it's not necessary to do first a divestment to be able to make an acquisition. That's exactly the reason that we always want to be comfortable in our leverage ratio, because we can move forward for any opportunity that passes by and not necessary to wait for -- before we're doing a disposal. So that's not the issue.

Yes, [ your front. That's good ]. Veikko, ING.

Veikko Silvasti from ING. Trying to understand the semicon acquisition landscape in Southeast Asia. So are we kind of talking about tens or over EUR 100 million, companies with relevant revenue range of, let's say, EUR 10 million to EUR 100 million annually?

Do you want to go first...

I don't -- maybe you start.

Well, the landscape of possible candidates is obviously big. There are many companies in Southeast Asia. What is important to understand is that it requires quite some capabilities to be able to serve this semicon industry, from cleanliness to accuracy, to process, to methods. And then when you dive into that, then the landscape is getting already a bit smaller. And for us it's important to make sure -- and that's why we're continuously evaluating all options. What are the best possible ways to increase that footprint? And we will do so with scrutiny to make sure that this will truly add value to what we offer to our customers.

Thank you, Patrick. Second round of questions, Maarten.

Maarten Verbeek, the IDEA!. Besides the, let me say, official targets you set for '26, there was also one concerning your inventories between, I do believe, 17.5% and 18.5% of revenues. Is that still one you believe is achievable in 2026? And is that still one which is maybe also valid for 2030?

Yes.

Let's say we -- as you know, we are working on these inventories all the time. And that is really driven per business team. Everybody has an inventory improvement plan and is on top of that. We are making progress. Although, of course, when organic growth is as it is today, it is a little bit more difficult to really reduce the number of days in a short time, but also there we focus 1, 2 years ahead. And we are still comfortable that -- we have always said we want to come back to the 2021 situation in 2024. Now that looks that we are close. And besides, we will further improve it down towards a better level. It's a continuous process. And for sure, we see opportunity to improve it further also after '26, so that is one of the reasons that we are also comfortable with this free cash flow conversion ratio objective of 65%.

I think, yes, I will say to your answer, especially in building, this is where we have the biggest opportunity to lower inventories. And that's what operational excellence, with what I present, should deliver. This is where, while improving service level, we can lower inventory in our building segment. Because you can imagine in our industry segment it's less relevant, as most of it is about services so we don't have a lot of inventory. And in our semicon, this is not yet, let's hope it will never become, an inventory issue at least inside us, but building is where -- so in 50% of Aalberts today, this is where we need to do better, especially in 2026. And then we will raise the bar even more 2030, but let's deliver, first, 2026 target.

Thank you. Another question. [indiscernible].

[indiscernible] from [indiscernible], long-term shareholder since 2007. Thank you for the clear presentations, but besides refocus, rebalance and recharge, we missed rerating of the shares Aalberts. Aalberts went public in 1987 for 30x price-earnings multiple, and now we are around 12x. So we are glad, very happy that -- besides the capital allocation plans with the share buyback, what is the definition of the cash available, the cash excess? Please explain.

The definition is that we should not delay -- be delayed in our growth plans for capital allocation. So both for CapEx and for acquisitions. So yes, it is an -- I understand that you are looking for more, let's say, definition, but that is the open definition that we can give you. It is one of our allocation priorities, but this is also the #4, of course, yes. So it's, first, the dividend; then the CapEx; then the acquisitions. And then when still cash is available and not blocking our growth plans, we will -- we have the ambition to do an annual buyback program. So I will say be a little bit patient for February, where we will announce the first program.

David?

A follow-up question, Arno, on your targets for incremental return on invested capital of at least 18%. Can you remind us where you are today? I think you're probably already almost there, right? And previously, you targeted 18% to 20% average return by 2026. That's with an EBITA margin of 16% to 18%; now 18% EBITA margin, 18% return. Does it mean your business is becoming more capital intensive?

Let's say we believe that the return on increment capital employed is a better KPI to evaluate the success that we have with the allocation of our capital, with increased allocation of capital. That's correct. So we are going to intensify acquisitions. CapEx, I don't fully agree because also the business is growing. So that will be more or less the same, but that should drive, at the end, profitability higher. But for sure, we -- of course, we are going to acquire companies, so that is normally dilutive for your ROCE, where CapEx projects are accretive to your ROCE. So in that balanced way, we believe that return on incremental capital employed over the last 10 years gives a good performance indicator. At this -- you know, last year, we were 20.9%, yes, in 2023. So my expectation is that it is a little bit under pressure in the coming years because of more capital allocation, but still in 2030 we should be able to perform again above 18%.

Thank you. And the webcast -- anyone?

[indiscernible], [ Norwegias Capital ]. I've been a very long-term shareholder in Aalberts.

Thank you.

I'm happy to be on the journey still, so I'm looking forward to the next 5 years. Now my first question will be your key global clients. I wonder. Over the years, has the composition of that group changed? Is it growing? Are your key clients performing better than your average performance? Can you give us a little color on this first question, please?

Thank you. I think, first of all, our key global clients are for us global clients by segment. And you can imagine. I mean, building, actually it's even more by regions. So we have global client in Europe in building, global client in the U.S. And that's where we have a growth opportunity either to increase our share of wallet or to make them even more successful. When you look at semicon, they are all growing. And that's part of the growth, all right? Patrick is [ serving ] the top 5 key global OEM in this industry, so we follow them. And actually we could grow even more, so the challenge is on us to have the right footprint, the right capability and to be there more as a technology supplier to help them to reduce their complexity. So semicon, they are doing well and we follow the wave. And I think, in industry, it also depend because of the global account on automotive, on aerospace, but don't forget we have also very local presence. So the global account, I think maybe Oliver can say something about the global key account. I will say they are also quite regional. And I can tell you some regional accounts are super excited. I think this space is a very good example. When we did the inauguration, many of our customer were in the room. And I can tell you they were just asking, "Expand capacity. Where are the next module? We are ready for the growth," because they see, on aerospace, a full order book. That's where is the potential for us, but maybe Oliver...

Yes, but to bring a bit in that context: I mean the market I have referred to was, one, automotive. And the other one was aerospace and gas turbine. If we look in the automotive industry when you go some years back, development cycle was 6 to 8 years. So Mr. OEM, he thought about making a new vehicle, so then he investigated what he must do. You have 6 to 8 years change. When you look at the current market dynamics and people looking for more electrification of cars, that is not market-driven. Where people are having a certain amount of time, that is from rules-driven. So that means it has to go faster because -- think. Yes, in whatsoever years, you have to have electric vehicles. So that makes the whole thing more capital intensive for the entire supply chain. When you go down and to the Tier 1 suppliers, Tier 2 suppliers, that is normally our customer structure, so when we talk about growth acceleration because of that development which is faster than, let's say, the normal market dynamics, we have opportunities, especially when you look at the business segment where, as Stéphane said, it's a local business where we -- because of the proximity which is required in that business, that we have the capital strength and the balance sheet to -- also to follow investment requirements. And when you come to the aerospace industry, we demonstrated that here with that HIP vessel, which everybody has seen. That is a capital-intensive piece of equipment which not everybody can invest to. And we followed, so to say, technical developments by investing into newest technology which gives us that unique position, which also facilitate growth in certain areas partly above the normal market dynamics. And that is why we are so confident for -- let's say, for the development of the future.

Well, probably one more question on the share buyback and your new proposal because it's not very like Aalberts. In the old days, Jan Aalberts used to call me and said, "[indiscernible], I'm going to do a [ sub 10 ] again. Are you in again?" And I normally would have been. Today, as my old colleague [indiscernible] just mentioned, there's a big discrepancy between your share price; and all the specialists here involved, their target price. On your website, one can calculate the average share price target of Aalberts today is a little over EUR 45. Today's share price is only EUR 37 and a little bit, which means a discount of 18%, which I think is not a fair reflection of the quality of your great company, your great stock, so I would suggest -- but it's only a suggestion of long-term shareholders. Maybe the priority of a share buyback should be a little higher on your list.

Do we have more questions from the audience? Yes. Martijn? Here you are.

Yes, a follow-up. Martijn den Drijver, ABN AMRO. You always talked about a drop-through rate target of 25% based on your current portfolio. Now you're shaking that up. And you're divesting underperforming businesses or -- that don't fit your target anymore. You're acquiring higher-margin businesses. Is that drop rate of 25% still a target, or should it actually go higher given the portfolio changes you envisage?

First of all, not all disposals are below average margin because we are looking at market attractiveness, yes, and the ability to win. So that can also be still a company with a high margin but not growing that fast, for instance. So that's first. And let's say, secondly, we are still -- we still have the ambition for that drop-through percentage also in our future growth.

I think, if you -- it's a great question, but if you look at the potential portfolio optimization and what could be in the agenda, you have 2 type of company that will be candidates for divestment, right, the one that are underperforming that we don't see a path to growth and we don't see a path to reach our EBITA targets. So we will improve. We will restructure and prepare for divestment. And then you have some which are already doing very well financially like Arno was saying, but we don't see the fit in Aalberts. And this is not where we want to invest, so this one, we will just keep them, continue to have good return and wait for the good opportunity to get the best valuation and deploy the capital in more strategic and [ adjacencies ] M&A.

Thank you, Stéphane. I think it's time to go to some of the questions submitted by webcast audience, yes. Let's hear the question. Is there a new target of percentage of new products developed over the last 5 years? The innovation rate, I think that's what's meant with this question.

It's -- first, it's the last 4 years. And it's our ambition is more than 20% innovation rate, so going forward, more than 20% of our revenue should be coming from innovation which has been done in the last 4 years.

Excellent. Thank you for clarifying. Then we have some questions about CapEx, whether it's possible to specify a little bit the CapEx in capacity expansions and then innovation.

Let's say -- when you talk about CapEx, I would say approximately half is maintenance. And the other half is always a combination of innovation and capacity because, for every capacity expansion, of course, you also take the newest production technology. So it's not so easy to make a clear distinction there, but you could assume that about 50-50, yes.

Okay, thank you. There's question about the free cash flow conversion. "Can you please explain a little bit more, what are the key components in that -- [ contained in that ] equation?"

It's free cash flow, so it's the cash flow from operations deducted for the CapEx spend cash out. And that is what you divide on your EBITDA. So that is the free cash flow conversion ratio.

Excellent. Then I have a question for Maarten about recurring sales in buildings, especially coming from services and digital. "And what could be the potential percentage [ where ] that could become in the future, percentage of your total revenue?"

We -- yes. We think, of course, that this will grow significantly. And it will absolutely be much more than the 5% that I was showing earlier. And it is already growing very fast. And it will even grow faster in the future is our expectation. It's difficult to say an exact number. I don't want to do that, but it will absolutely become a significant part of our business in the future.

And it's an enabler.

And it is -- especially the digital part is absolutely an enabler for the rest of our business, so the more digital you sell, also the more, let's say, products you sell as well.

Again the -- like Maarten said, it's the goal is not about digital sales, so this should not be a stand-alone KPI, right? The goal is to solve customer challenges either through an best-in-class product, through a solution or through a digital offering. And sometime, digital offering is the enabler to sell more of the core product, so by experience, I think we'll need to be careful to not just be targeting digital for the sake of digital. It's just one tool when the customer want this. And of course, we see the potential to have higher, but to put a target, it's always for me challenging.

And I can show you that later on, but it is also already integrated in the products. So it is part of the products, so we sell it included.

Thank you. I have a question for Oliver about automotive business which face at this moment quite a bit of headwinds, especially in your home country, Germany. "You show a quite positive CAGR. How should we combine these 2 potentially conflicting signals, the growth you see in the CAGR versus the headwinds you face in this moment?"

I mean I, we laid out that we have principally a growth path in -- let's say, in entire Europe or the markets we have a presence in. When you have short-term headwinds, yes, you have short-term headwinds. And that is how it is. And that is how the business is structured. And we as a company have been, let's say, so long in that business, have our abilities to manage that. Also, on a short-term [ burden ], we could flex our costs as much as possible to keep the quality of the result alive, so we don't see that as a challenge which is a long-lasting event.

Let's -- I think the challenge on automotive is very fair, right? We got the question always, but that's also one of the reason we want to be more diverse in end market, right? So you see, in industry, between Europe and the U.S. And that also can help to balance automotive but also to have more balance. That's what we mean also, rebalance between automotive, aerospace, machine build and other industry. That will make our performance even more resilient for the future and be a bit less dependent on automotive in the long term.

Thank you. Then I have a question for Arno about return on capital. We have now an objective for return on incremental capital employed. "Will you still report on the return on capital employed?"

Yes, of course. Every year, we report on the return on capital employed. It's one of our normal KPIs, yes.

Excellent. Thank you. I think there's another live audience question, yes. Here you are.

Pieter Zandee, Antaurus Europe Fund. A question for Maarten, please, while we have some time. I'd love to tap your brain a bit on what you see in your renovation business. I think, if we were to be standing here a few years ago following the start of these energy crises in Europe, I think, by now, we would have anticipated to see more activity on the renovation side. I think it's a little bit more subdued perhaps than people had envisioned. Could you share some of your feedback, what you are seeing and hearing from the market; and when you anticipate that renovation rate to really start emerging?

Of course, absolutely, there is a need for the whole energy transition. There's absolutely a need to make buildings much more greener. And I think we don't have to mix up short term and long term, so to say. This whole energy transition and the greenification of building, that will happen on the longer term, but of course, it is a little bit tempered currently because of all the inflation, everything what's happening also in the -- in different governments. That is not really helping, but finally we believe that legislation will absolutely drive the long-term growth in this business. And we see already that countries where there is still -- where there's a stronger legislation, that -- the market is growing faster than -- let's say, than the markets [ for France, an example ]. There is very strong regulation also in the U.K. And that will come in more and more also in the other countries, so we still believe -- and once again, there's a difference between the short term and the longer term, but absolutely this will become a large growth driver for the future.

And maybe a small follow-up. If you, if we look at the status quo of your building products portfolio, probably everything related to new build is currently down -- sorry. If you look at the underlying end markets in Germany, France, et cetera, but how is the renovation portfolio doing? Is that also currently slightly down? Or is it flattish?

You can imagine, of course, that a new build is, of course, yes, developing different, I would say, than the renovation market. The renovation market is always more stable than in new build. New build market is always more cyclical, let's say, than renovation. And absolutely, renovation is more stable than in new build.

A question from Beini. Here you are.

It's Beini Zhou from Artisan Partners. Just a question on compensation, Stéphane; and for the 3 BU leaders on the stage, Maarten, Patrick...

Oliver.

And Oliver. Can you talk about the changes? I'm sure you've made some changes how you compensate these BU-level leaders. And what's the biggest delta when you compare now versus before? And what are you emphasizing more? What are you emphasizing less?

Thank you. You can imagine I'm not going to disclose publicly our remuneration policy and the breakdown of our incentive for all our business leader, but what I can tell you is that everyone is measured, like us in the management board, with their top, bottom line; and free cash flow targets. So that is what is driving them, but like also us, everyone has also some nonfinancial targets to achieve, which can be some for their BU or some on behalf of the group. Because the way to keep the lean and effective structure only work if everyone in the executive team is also acting on behalf of the group. As an example: Maarten has been leading one of our digitalization network to make sure at the company level we see what we can -- what we called share and learn initiative. That's a nonfinancial target to act on behalf of the group, but they are all measured, to be very clear, on their sales growth, on their EBITA and on their free cash flow and with some nonfinancial targets. And I think, for the rest, I will ask you to wait for our annual report, where we may share more a bit about the remuneration policy, but not for now.

Thank you, Stéphane. I think we have no more questions from the webcast nor from the audience, so I think this will be the proper time to end this webcast. Well, thank you, all five, for your presentations. Thank you, for the audience, for your great questions; also for the webcast. Thank you for your interest in Aalberts. So we'd like to close the webcast now. Thank you.