Andritz AG (ANDR) Earnings Call Transcript & Summary

Ladies and gentlemen, welcome to the Andritz Full Year 2025 Results Conference and Live Webcast. I'm Sergun, the Chorus Call operator. [Operator Instructions] The conference is being recorded. [Operator Instructions] At this time, it's our pleasure to turn over to Matthias Pfeifenberger, Head of Investor Relations. Please go ahead, sir.

Good morning, and a warm welcome from Andritz out of Vienna this morning. After preliminary headland results a few weeks ago, it's my pleasure to welcome you to the final full year earnings call and webcast. I have the pleasure to present our CEO, Dr. Joachim Schönbeck; and our CEO, Vanessa Hellwing. The earnings presentation will be structured as usual. We will present the CEO highlights, followed by the financial performance, followed by the performance across the business areas and then ending up with guidance. We'll also conduct a Q&A session, and please register with your full name. And now I'd like to pass on to Dr. Joachim Schönbeck for his elaborations.

Thank you, Matthias. Good morning, everybody. Thank you for being with us this morning on the disclosure -- not the disclosure, but on the details of our last year's results. If you look back to the year 2025, we can we say the world has been cautious on investments but rich and geopolitical surprises. For Andritz, this means we go back to what we can do best, giving out our clear priorities and executing with a high discipline. And I'm very proud how well our team achieved what has been asked to do and the dedication they put into it to achieve the results we finally came up with. The trust of our customers helped us through this difficult year and we are happy that they showed the confidence with many orders they placed with us. We definitely came back to growth in order intake we had a strong order intake in the full financial year, strongly driven by Hydropower but also by Pulp & Paper. We saw a slight decline in Environment & Energy, where I would say, investment decisions were pending and postponed. But structurally, we believe demand is okay. And Metals, we definitely are faced with broader structural issues in the industries in automotive as well as in the steel and metals industries when investment was not at highest priority for the last year. Our revenue declined a bit, but due to our disciplined execution and cost discipline, we could keep the comparable EBITDA margin stable, very happy that this turned out very well. We compensated a significant FX effect translation and through the improved order execution on the 1 side, and the timely implemented capacity reductions, we could protect the bottom line very well. We even saw margin progress in Hydropower as well as in Metals. All in all, we are confident to propose to the general assembly to increase the dividend to EUR 2.7 per share, up from EUR 2.6 per share in the previous year. And the payout ratio increases from 52% last year to 58% in this year. So that's all well in line to what we have promised to you how we want to manage that part. If we have a look to the Q4 in more detail, the order intake reached the EUR 2 billion. That's down from the previous year, revenue at a high EUR 2.3 billion, up 3% from the previous year. Order backlog reached record high in under history, EUR 10.5 billion at year-end, never had debt, 7% up from last year. EBITDA margin in the two -- in the fourth quarter at 9.7% and at EUR 228 million. The reported EBITDA was at 8.5%, EUR 200 million, and the gap is basically all costs for restructurings that have been done and that well are prepared for this year. Net income is at 6.6% and EUR 154 million. If we have a look to the full year order intake, a bit shy of EUR 9 billion with EUR 8.9 million, up 8%. Revenue, EUR 7.9 billion. So a very positive book-to-bill ratio. Order backlog, as I said, 10.5%, and the comparable EBITDA margin for the full year was at 8.9%. And exactly where it has been last year, EUR 698 million. The reported EBITDA is down at 8.2%, down from 8.6% at EUR 648 million. So here, the gap is the cost mainly for the restructuring that we are that we have done in the year '25, and that we will do in the year '26. Net income is with 5.8% at a good stable level, EUR 457 million. Project activity, as you can see, is on a considerably high level, now 5 quarters in a row with more than EUR 2 billion order intake in a quarter and with a project, I would say, push over from Q4 into Q1, we expect also that trend not to break. If we go into the details of the business areas, you see a nice increase in order intake. If we look on a quarter-to-quarter base, we increased to previous year in all quarters, but in the last quarter where we dropped that was driven by a very large order we booked for Hydro business and the project [indiscernible] in the fourth quarter of 2024. So that's, I would say, more a onetime effect. If we look to the business areas, we can see very nice increase in Pulp & Paper and Hydropower, 20% up for Pulp & Paper and 16% up for Hydropower, while in Metals it's down by 13% for the full year and Environment & Energy, basically 3% down. So I would say Pulp & Paper, very happy to have to be successful on the, let's say, this wave of investments we saw in China for backward integrating the paper industry. In total, we received 5 orders for complete pulp mills in China, very huge success showing that we are really well positioned in the market itself, but also technological-wise. In Hydropower, strong demand on renewable energy, but also our new offerings around trustability, energy storage and turbo generators is picking up. So I would say, overall, it's the energy demand. And in particular, the demand in electrical energy is really supporting us. In Metals, the investment climate is down. And basically, we saw the third year in a row where the market declined, and that is true for this deal as well as for the automotive industry. Environment & Energy, we saw interest in the market for these new green technologies for the green transition of industry namely green hydrogen and carbon capture, but we did not see investment decisions in the markets where we are in, namely Europe and North America. Regulatory uncertainties playing definitely 1 role. High energy prices still in Western Europe or in large parts of Western Europe play another role. But I would say on the positive side, we had received many orders for engineering studies, both for carbon capture and green hydrogen. So we see there is a demand. Industry is preparing, and we, Andritz, we seem to be a trusted partner for these endeavors. Looking to the revenue, we see a decline compared with the previous year of 5% year-on-year. And you can see that we had a decline in the first 3 quarters, and we had basically the turning point in the fourth quarter, where we exceeded the revenue of the previous year's quarter. So also here, we believe that this trend will continue in the upcoming year, because the good order intake and the significant backlog we have will definitely help us there you could see in the fourth quarter, all 3 business areas, Pulp & Paper, Metals and Hydropower increased their revenue compared with the previous year on environment and energy dropped a bit. And over the full year, only Hydropower could increase the revenue. That's basically in line what I've told you in the previous calls that we had together that in the Hydropower, the large order intake that we have takes a bit more time than in other businesses to turn into revenue. But as we execute disciplined and in time, this revenue will come. And you see this trend starting now and will prevail. One word to the, I would say, a significant impact on the revenue side is definitely the FX translation, which was EUR 85 million in the fourth quarter and EUR 222 million for the full year, significant impact, a strong euro, and we will see what this impact will be for this year. The backlog as I said, record high, EUR 10.5 billion at year-end. And you can also see that the historical balance between Pulp & Paper and Hydropower is now largely driven towards Hydropower now 43%, almost 50% of our entire backlog from Hydropower and therefore we can drive the revenues out of that very effectively over time. Looking to the EBITDA Comparable EBITA margin remained stable. The absolute EBITDA went down by 6% along with the revenue I would say we are quite happy that despite the downturn, we could keep the margin. Main drivers for that is timely implemented and executed capacity reductions in the area where needed, namely in Metals and in Pulp & Paper, but also significant improvements in project execution and there, I can specifically name metals on the 1 side and Hydropower on the other side, we've really made strong improvement on that discipline. The -- I would say, looking a bit forward, while Pulp & Paper, some residual capacity adjustments need to be done, but it's mainly rightsized for what we see to come in Metals. We will continue the restructuring this year because we see the markets will demand it, and we also see that the business is really capable of delivering good operational results at the same time when they are restructuring. So very, very happy to see that. Turning to ESG. We have finished our ESG program, which was targeted for 2025. I would say, with a very satisfactory result. We reached all but 2 goals. And these 2 goals, I would say, we missed only slightly the 1 we missed was the share of green products. We wanted to have 50% of our revenue based on that. We ended up with 47%. Still it's a record high level for Andritz, and I believe, for sure, targeting in the right direction. And we significantly increased the share of women in the workforce. You also see it in this panel. We are not -- so but in total, we are not on 1/3, so we wanted to be at 20%. We ended up with 17% at the end of maybe the target was a bit too ambitious, but that is the way it is. So we see we are moving in the right direction. And as it was well executed this program. We gave way to a new ESG program for environment, social and governance, we want to enable the green transition. And we still believe there is demand, and we will -- we can cope with that. We want to support people to grow people in hundreds and outside hundreds. And we want to govern with integrity. That's -- these are our commitments for the new ESG program. We have targets laid out for 2030 on the environment, the social and the governance. I don't want to go through with you in all the details. No major differences to what we have done before. Maybe 1 main difference is that on the greenhouse gas emissions, we got certified and approved SBTi. So our reduction targets on greenhouse gas emissions is now fully supporting the Paris climate targets that is good. On the social, we focused on accident frequency rate because that everybody returns safe from working in hundreds is still 1 of our key priorities. So you want to go below on ambitious targets, but I believe we have the tools in hand to do that. We're focusing on women in leadership positions. We want to move above 15% and we want to keep the voluntary return over below 4%. Very important employee engagement index. We want to stay there above 75%. We believe in a people's business like we are doing that's very important to deliver to our customers what they expect when they engage with Andritz. On the governance, we put a focus on supply chain, as you rightly expect that we ourselves will govern in full compliance. And so therefore, we have moved the targets into the supply chain, supplier social audits, supplier prequalification supplier rating on sustainability by third parties. So that's the area we are focusing on. In the our -- the excellent work of our teams in the ESG has also been recognized by the outside world and the top rating agencies all rated us up with very nice results. We move to the science-based target. So I believe we are -- we have made up the gap that has been communicated to us in the previous years. So I would say we are on a good track there. We had a very successful year in 2025 regarding M&A. We had made 6 major acquisitions. I think they all have been communicated individually anyhow, 2 acquisitions that completed our portfolio, the 1 was the Salico Group, and metals basically being fundamental closing of the gap between letters processing and the Schuler part of our Metals business, we have portfolio completion done in the -- on the paper side. We acquired A. Celli in Italy. They are strong and supporting our business on the tissue machines, but they are particularly strong under winder technology that was 1 of the key technologies we were missing. On decarbonization, we acquired LDX solutions in the United States, that's an engineering company offering a clean air technology, ideal addition to our product portfolio, technology wise, but also excellent addition for our strategy to increase our local content in the United States, and we are now well positioned there to support the industry for their environmental investments. In China, we acquired Shangcheng. It's a technology provider for induction heating technology. They are specialized in induction heating for cold strip. So ideally, a combination with our edge processing group. We know them from -- already from several projects we have done together with them. inside and outside China. And so therefore, we believe it's an excellent acquisition and can really give us a more complete offering to the customers in an area where they really are looking for single-source solution from us. On the customer service, we have made 2 acquisitions, both acquired from Babcock and Wilcox in the United States. The 1 is Diamond Power, supplier company for boiler cleaning, and the other is a material handling company, taking care of the ASH that is coming out of the boilers. Both are very good. We know the company is very well Diamond they are, I think, 130, 140 years old. It's an ideal fit, not only that we know them from the industry, but also our culture-wise, so we are very confident our 6 acquisitions will fully deliver what we expect from the business plans that we have concluded. Service business reached another record level and that is very exciting, especially if we know about the decline we have in the -- on the paper side, in the paper business and with the paper machine utilization around the globe, not above 60%. Also, the service revenues are down. So we are very happy that we could increase revenue once more and keep the growth stable in that very important area. We did not only reach all time high in the service revenue, we also increased the relative share to 44%. So you see we are moving closer and closer to the 50% we all wish that could be. Having said that, I hand over to Vanessa to learn about the financial performance. Thank you.

Thank you, Joachim. So also from my side, a warm welcome. And based on the good overview that Joachim just gave, I would now like to walk you through the financial details of our results from '25. But let me first start with some key highlights from the CFO perspective. So Andritz has generated a strong operating cash flow again. We closed with EUR 653 million for '25, which is 3% above last year. Throughout the year, we have used our cash to expand spending on M&A significantly, as you have seen, to EUR 329 million outflow. And despite that, we continue a very strong financial position. We have actively reduced our net liquidity by almost EUR 200 million in '25, while generating quite remarkable cash flow the fourth quarter of almost EUR 340 million. And that way, we managed to increase our net liquidity sequentially. Therefore, we follow our focused capital allocation by proposing higher dividends to the AGM this year. With EUR 2.70 per share, this is not only representing an attractive dividend yield, but also implying a significant increase in dividend payout. We will discuss our performance on the operating working capital and return on -- sorry, and ROIC in more detail in a minute. But to give you a quick review already here with an increased management focus on working capital, we have improved our net working capital as a percentage of sales sequentially and leading to a strong cash inflow in Q4. Our return on invested capital decreased in accordance with our M&A activities. However, it remains strong an industry level and still substantially above our average cost of capital. Turning now to our usual EBITDA to net income bridge for 2025. Our EBITDA margin remained relatively stable at 10.4%, while absolute EBITDA decreased by 9% to EUR 823 million, which is in line with the decrease in revenues in the course of the year. Depreciation remained flat year-on-year, resulting in a reported EBITDA of EUR 648 million. Reported EBITDA margins slightly declined year-on-year to 8.2%, which is based on higher net NOI, so nonoperating items, summing up to EUR 50 million in 2025 compared to EUR 30 million in the previous year, '24. IFRS 3 amortization increased to EUR 65 million naturally driven by our enhanced M&A delivery. The amortization of Xerium, you might remember, a large acquisition done in 2018 amounted to EUR 18 million in the fiscal year and was now fully amortized in Q4 '25. Our recent acquisitions on the other hand, have been adding EUR 25 million to annual PPA amortization. In the financial results, you see a big swing from minus EUR 15 million in '24 to a positive EUR 16 million in the recent -- in '25. This comes basically from decreased interest income by EUR 26 million based on a lower interest rate in combination with the reduced gross liquidity that you see. And furthermore, we have seen the negative impact of EUR 24 million from the deconsolidation of Otorio already in 2024 and hope you remember that. In the meantime, we have sold Otorio to Armis and received a consideration in Armis equity. We have now divested our Armis shares which resulted in a positive net effect of EUR 36 million that we have gained from the transaction in the course of '25. And just to recall, Andritz has sold its stake in Otorio to Armis, which is a leading supplier of cyber exposure management and security. And for Andritz, cybersecurity is certainly a key element of our business, but it is not part of our core activities. And that way, with this sale, we will continue a close cooperation with Armis and participate from their high innovative services. And here to complete the picture of the net income elements, the tax rate slightly increased by 0.5 percentage points to 23.7%, which is basically reflecting also a one-off effect that we have already reported for 2024. Summing up, the decline in net income to EUR 457 million in '25 is caused by the revenue and consequential EBITDA decline as well as higher nonoperating items. Our net profit margins, however, as already mentioned by him, remained solid at 5.8%. So on the next slide, let me walk you through the free cash flow calculation for 2025 and start again with EBITDA at EUR 823 million. Our enhanced focus on working capital management has paid off. And therefore, outflows for net working capital are quite decent for '25 compared to an impact that we had with minus EUR 115 million in the previous year. Cash outflows from income taxes remained broadly flat year-on-year. And changes in provisions and others were slightly higher with minus EUR 17 million compared to last year, generally driven by personnel-related provisions for our pensions and severance payments. Also to mention provisions on projects remain stable here. Adding up the items mentioned, it leads to a slightly improved cash flow from operating activities of EUR 653 million for '25. So deducting higher CapEx of EUR 270 million. We arrived at a free cash flow of EUR 383 million, which is slightly below the EUR 399 million from the previous year. As Joachim reported, our M&A delivery exceeded recent year's levels with a number of deals that we have signed. Our M&A CapEx significantly increased to EUR 344 million compared to only EUR 76 million in '24. And the spend was well covered and digested by our free cash flow in 2025. Now let's turn to the net working capital development. Here, we focus on the quarterly development of the operating net working capital. As you can see, we are pretty lean overall with current run rates of some 12% to 13% of revenue. And just to recall once more for a project engineering company like Andritz, the operating net working capital consists of the typical trade working capital as well as contract assets and liabilities and prepayments related to our POC orders. What you can take from that picture is that operating net working capital has increased somewhat over the last few quarters. coming from a level 3 years ago, where we received several large projects with respective prepayments. The structural increase in operating net working capital also results from the growth in Service business, where generally higher inventory levels are required. The good news is that after the increase throughout the last year, the operating net working capital has been well reduced in Q4 '25, after the all-time high that we saw in Q3. And important, this also includes working capital from acquisitions. It has been reduced in absolute terms but also in percentage of sales. 12% is now in line with the average of the last few quarters again with the increased management focus on net working capital in general and the full consolidation of the acquired revenues in the course of this year, so '26, we will continue, of course, to monitor that KPI very closely. To discuss the sequential improvement in Q4 in more detail, let me now turn to the next slide. As you already saw, we have split the operating net working capital into its 2 components: straight working capital on the upper blue part of the chart and contract assets and liabilities with advanced payments, and those are displayed in gray at the bottom of the chart, reflecting our project cash flows, which are rather typical for us as a project engineering company. On the prepayment side, we have seen a constant improvement over the last few quarters, which created additional contract liabilities, of course. On trade working capital, we achieved a sequential improvement in Q4. This reflects stronger management focus and also normal seasonality. Typically, we see a buildup in the first 3 quarters followed by a release in Q4. And as mentioned on the last call on the Q3 call, the full year increase was largely acquisition-driven. Revenue from acquired businesses are included only on pro rata basis, while the assets are fully consolidated from the first day of consolidation and this creates a temporary distortion, especially in relative terms. One structural factor is also shaping working capital and sales conversion. We actually see a shift from large-scale projects to more midsized and smaller orders. And as a result, we have less POC business and more completed contract orders. This leads to a lower overtime revenues, but also to a higher work and progress that needs to be managed here in the working capital. So here, I would now like to turn your attention to more details on the development of our operating cash flows in '25. Operating Cash flow amounted to a strong EUR 339 million in Q4, supported by the working capital improvement mentioned before. For the full year, operating cash flow also improved year-on-year to more than EUR 650 million, which is a reasonable achievement considering the absolute EBITDA decrease. Also here, our increased focus on operating net working capital is becoming visible. In general, we are still seeing a usual volatility in operating cash flows on a quarterly basis, which is very typical in the project business, of course. Important to emphasize here again is the overall high level of operating cash flow that we are maintaining compared to the historical level. This is driven by higher top line levels better margin and also improved cash conversion. It becomes evident when we look at the right side of this chart showing not only the absolute level of operating cash flows for each year, but also the 3-year rolling average that you can see in light gray. And 2 to 3 years actually reflect the average execution cycle of our capital business. On this slide, we turn our focus from generating cash to allocating it properly. And I'm very happy to present here, again, our dividend proposal for the fiscal year 2025 to you, subject, of course, to our 26th Annual General Meeting. To highlight again, EUR 2.70 per share proposed does not only represent the fifth consecutive dividend increase but also a significant increase in our payout ratio to 58% coming from 52% last year. And this is in line with our progressive dividend policy and with our 50% to 60% target corridor for the payout ratio. And despite declining earnings per share we are here proposing to exactly balance it through higher dividends once more. Since last year, we are providing transparency on our capital allocation, and we can now add 2025, which somewhat alters the historical average that we have presented. In the last years, and especially in '25, we have increased capital allocation significantly. And this actually while keeping a strong financial position and sufficient net liquidity. Our cash was allocated, especially to the M&A side, where we have used '25 to close a much higher number of value-accretive deals compared to previous years. And we have talked about the dividend increase just a minute ago. But also on the conventional CapEx front, we have increased our investment in service and green solutions and digitalization and also in R&D. And we are planning to provide more disclosure on this going forward in the course of the year. Our capital allocation strategy remains balanced across CapEx, dividends and M&A. And we also might also place some opportunistic share buybacks as a more flexible option on top of this. And we can say capital allocation at Andrtiz remains internally funded. Our aggregate cash outflows in the last 6 years have been more than covered by operating cash flow generation. And in my opinion, that's a very sound picture. So let me now turn from capital allocation to our strong financial position and walk you through the changes in our net liquidity profile. Over the last 3 years, we have steadily decreased our liquid funds by termination of bonds and promissory notes. We still maintain a strong financial position, especially when including our EUR 500 million revolving credit facility. Our net liquidity declined further from EUR 905 million at the end of 2024 to EUR 713 million by the end of '25. We saw lower net liquidity levels also in the course of the year. So you remember, due to the outflow of the purchase price for acquisitions and also for our annual dividend payment in Q2. Net liquidity has been restored again towards year-end, and that was driven by the strong cash flow generation in the fourth quarter. So as mentioned, FX also had a negative effect, and this is also on liquidity, of course, with roughly EUR 50 million which is translation effect only. And before you ask, yes, of course, we do hedging on all our projects where relevant. With EUR 700 million net liquidity and more headroom from our revolver from our RCF, Andritz continues to hold a strong financial position with sufficient liquidity as a part of our DNA. Following these details on capital allocation and net liquidity, let me provide you a quick update here on our ROIC performance. To recall, RIC is our main metric, monitoring the value generation over the long run. It has [indiscernible] restructuring costs. On the 1 hand, this is obviously driven by the organic EBITDA decline. But more importantly, this is because of our recent acquisitions, which with purchase price allocation leading to higher goodwill and intangibles, of course. Nevertheless, Andritz balance sheet ratio of goodwill and intangible is still very low in industry comparison and our equity position remains strong. And also important to keep in mind that EBITDA from these acquisitions is only included on a pro rata basis. If we would adjust the acquisitions for '25 entirely, our ROIC would remain close to 20%. However, our aim is to restore ROIC in the future, of course. At the end of my presentation, let me quickly summarize the development of our headline financials again. So our main leading indicators are still pointing upwards. Order intake increased notably in '25 by plus 8% year-on-year, resulting in a book-to-bill ratio of 1.13 Order backlog stands on a record level for the year-end. The notable increase in order backlog in the last year to this record level already secures material part of the next year's revenue generation. As a consequence, of high revenue recognition from the completion of larger orders in '24. Our revenue trajectory is still pointing downwards. But we have reached the inflection point as consistently addressed in the course of last year. And so we returned to revenue growth in the fourth quarter despite the significant FX headwinds, as outlined by Joachim before. And even though not stated in our official disclosure, I would like to proudly mention here that we reached a historical high monthly revenue volume in December only of EUR 1 billion, indicating the capability of our global organization and management. Along with lower revenues and restructuring expenses from capacity adjustments in pulp and paper and metals, our reported EBITDA decreased, but we were able to maintain our comparable EBITDA and net profit margins stable on a high level. Operating net working capital and ROIC remain in high focus going forward. The development this year was obviously impacted by the many acquisitions we had. And our enhanced capital allocation and higher M&A delivery support value creation and have reduced our net liquidity position, as mentioned. And as mentioned, FX has been significantly headwind, especially from Arch. And also, the tariffs have still not impacted our key end markets so far. We will provide further details on that later in the presentation. And for now, I thank you for your kind attention, and Joachim will now focus on the key developments across the business areas.

Very well. Vanessa, thank you very much for this detailed overview. Now let's move to the business areas. So pulp and paper market recovered on the Pulp side, still flat. On the Paper side, we're happy to really benefit from the move in China in the paper industry to backward integrate into Pulp as mentioned before, we had been awarded 5 complete pulp mills in China, and we see this trend continuing in the year. So we are -- in Asia on that side of the world, we are quite optimistic on the investment climate. And we usually also see that the Chinese industry is then moving ahead. with good the good order intake and the good references we have, we believe that we also will take our fair share of the market. We have a strong momentum last year in power boilers. Basically, these are not only boilers. These are small power plants, sludge incineration in Germany with special focus on phosphorus recovery. Here, we have a special technology, and we took 100% of the market in Germany. These were 3 small power plants very, very good achievement of our teams. We also saw momentum on the pipe side picking up in the U.S. So smaller modernization started and we might see more to come on the -- for sure, investment environment and climate in U.S. is definitely also a bit influenced by some of the political decisions taken. On the revenue side, we believe that we've gone through the valley and we can grow that the good order intake of '25 will now go into revenue this year. And we are happy to see that although steep decline in revenue that through the timely capacity reductions we have done in Pulp & Paper, we could keep the margin on a nice level. We dropped from 11% to 10.8%, so I would say, a rather small drop on a very good level. Also, of course, supported by the strong increase of the service share now up to 59% of the total of the total revenue. In Metals, I can tell you the industry is in a difficult situation. However, I can be really proud of our teams, how they coped with it on the few projects that have been on the market. They have positioned themselves very well. So we got the trust from our customers. And that is true for Asian market as well for the European and the North American market. We went through significant restructuring taking out around 500 employees in the past year, closing several locations in Germany, so really protecting the bottom line through some cost discipline and very happy to report that it's not only an increased profitability for the fifth consecutive year. But with a 6.1% EBITDA margin the first time in our profitability target for 2027. So we are very proud how that develops in difficult times. Hydropower, I would say, we're also very proud, very good development. But here, we, for sure, have a support from a market, strong demand, I would say, worldwide on renewable energy, on -- but also our new offerings for grid stability, energy storage and turbo generators support that strong growth. we could increase the order intake for the full year by 16%, could grow the revenue by 12%. And on the EBITA margin, we moved up from 6.1% to 6.8%. So very close to the targets we have said we see this trend continuing. Environment & Energy. Here, we, I would say, faced and surprisingly subdued market, which, frankly, we did not expect and this is why we also were not, I would say, in time with our capacity adjustments that we have done on the green transition side, a lot of interest. We received many orders for engineering studies, but no orders for equipment and plant deliveries. Clean Air developed very well, both in Europe and in North America. And our separation and pumps business, we saw many projects delayed lot of exposure to the mining business and also here uncertainty on the green transition definitely have played a role. So at the end of that, our margin dropped from 11.1% to 10.6%, still on a high level, still within our target margin. But here, you can see the effect that we had been prepared for growth and started with our capacity adjustments a bit too late. What is to say on tariffs and FX, I would say we can confirm no direct impact on the tariffs yet on anything we should report and can report. So we will, of course, monitor that we cannot allocate the indirect effect. So what I would say no. No direct impact on the FX translation, we have mentioned several times strong impact for the year, increasing over the year. Now let's see how the euro develops in this year, but you see that's basically -- that's a nominal loss of EUR 222 million in revenue. But at the end, it's not a loss, not a single equipment has been supplied less and not a single customer has not been served. So that's a pure financial effect. 2026, what can we expect? I would say, project activity, we expect to stay on that level. We would expect from that revenue growth. And for sure, it's supported by growth and service, which we believe we can continue, but also our record backlog will help us. We will further improve profitability and restructuring is ongoing in Environment & Energy and in Metals. So we guide for this year a revenue between EUR 8.0 billion and EUR 8.3 billion and comparable EBITDA margin between 8.7% and 9.1%. The midterm targets basically have been confirmed and looking to the time, no need to repeat that. Instead, give me 2 minutes here. You see we have now Environment & Energy in the target margin range, we have our, let's say, child of special attention, the Metals business area for the first time in the target area, we believe the trend that you see here on improving profitability will continue. This is why we continue the restructuring. And you see the Pulp & Paper and Hydropower, they are only 0.2 percentage points out of the range. So we are confident that we can grow in that direction. We have learned that even in difficult markets, we can do that. And if there is anything left, you want to know we have not told you so far. Now we are ready for questions and answers. Thank you very much.

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

I have a few, and I'll ask 1 at a time. My first 1 is on growth. So when I look at your guidance, EUR 8 billion to EUR 8.3 billion, maybe if you can help me with what is the implied organic growth we have in this corridor. The starting point is 7.9%. I think you may be having some exchange rate headwinds already embedded given we saw higher exchange rate headwinds in second half? And also, you may have some carryover effect of M&A. So first 1 is on what is implied organic growth in 2026 guidance. And then the second part of the first question is that if we then take the midpoint of EUR 8.1 million, what level of organic growth would you need in 2027 in order to hit the at least EUR 9 billion revenue target for next year?

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

And second 1 is on automotive in Metals as well as Environment & Energy. So yesterday, European Commission adopted Industrial Accelerator Act, where proposals to increase demand for low-carbon European-made technologies and products. I wanted to ask if you are seeing any optimism on project activity on the back of these regulatory changes in Europe. Or if not, then how long it might take before we see any activity on your end?

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

And last 1 is on CapEx in Hydropower business. So when we look at your competitors and especially in broader power generation market, almost every company is increasing quite substantial capacity. So can you talk about what sort of CapEx need do you anticipate in 2026 in Hydropower and would that have any impact on total CapEx for the year?

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

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

Increase.

The next question comes from Sven Weier from UBS.

The first 1 is just wanting to go through the order pipeline because you said it's stable on a high level. As usual, I'm particularly curious on pulp and paper because you also alluded to China.

We cannot hear you.

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

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

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

It is driven by the strong order increase we saw in Pulp & Paper and in Hydropower. On the 1 side and from the project structure itself, Pulp & Paper will turn more quickly into revenue. So what we see in order intake in '25, we will see a significant amount of that already in revenue in '26. While on Hydropower, it takes a bit longer. So it's a build up more over time. And this is why the outlook is a bit cautious. As we have reported, we had a decline in order intake in Metals and Environment & Energy, and this is why we do not see particular growth there. This is why the outlook is a bit cautious. This is also why we go to capacity adjustments in Metals and Environment & Energy to protect the profitability.

Okay. It's very helpful. Second question, you had a very good slide in operating net working capital as a percentage of revenue. Could you elaborate a bit how this is going to look like in 2026 after the acquisitions are fully included for 1 full year basically? And also how this would change with -- if you receive a larger project?

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

Okay. Last 1 for now. Your capital allocation has not been fully funded by within cash flow in the last 2 years. Should we expect this to change in '26 and '27 or are you comfortable increasing net debt in favorable opportunities to deploy capital occur?

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

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

Yes, exactly.

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

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

That's what we do.

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

The hope never dies. We have -- as I told you, what we can be pretty certain of is that this backward integration in the Chinese paper industry continues. And as that continues it also impacts a potential greenfield new pulp mill in South America because that's 1 of the major markets. So we cannot see these 2 topics independent. And I would say, as it is said in many areas of this world in [indiscernible].

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

If momentum continues, you are right. Yes.

Okay. Perfect. And then maybe ending with -- you also said on 1 of the recent calls that you're seeing increasing pricing pressure from Pulp & Paper peers. I guess that also has not changed much recently given that everyone is fighting for juicy projects?

Yes, you are right on that.

The next question comes from Daniel Lion from Erste Group.

I would -- could you maybe elaborate a little bit on the adjustments planned now in '26 how far are we actually in the Metals division. What would you expect to come in the E&T division? Maybe overall, how much should we include in our models for adjustments?

So we expect in total, I believe we are talking about 700 to 800 people. And this set provisions to some extent or to some, but not fully.

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

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

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

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

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

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

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

[Operator Instructions] We now have Sven Weier again from UBS.

I hope you can hear me now.

Yes. Perfect.

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

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

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

It's in the mid-3 digits.

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

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

Okay, yes. And those are kind of the known names like Siemens Energy and GE?

Potentially.

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

Yes. I can -- yes I can only confirm.

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

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

Or it won't be lower, let's put it this way, than Q4.

yes. We can agree on that.

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

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

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

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

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