Andritz AG (ANDR) Earnings Call Transcript & Summary

Good morning from ANDRITZ in ANDRITZ, the place of our regions 174 years ago and also where our headquarters is, a warm welcome to the ANDRITZ Capital Markets Day 2026, and thank you for joining today. I'm Matthias Pfeifenberger from IR, and I will guide you through the day. 100, actually more than 100, we have 120 registered participants, bankers, analysts, investors and our Board members, and we are really pleased to have this level of participation. Speaking of investors, we have our largest shareholder here in the audience and our Chairman. Please give a hand to Dr. Leitner. I hope you have enjoyed the corporate video. It's what we do at ANDRITZ and what we stand for. And before I walk you through the agenda, let me highlight what we try to accomplish today. We like to present you ANDRITZ from a different perspective with a focus on the two areas that you see on the slide. So please enjoy. I hope you had an espresso pulled because it will be a day of full of information. And now let me guide you through the agenda of today. I need to click. So first, we're going to start with Executive Board on a strategy update followed by the financial update, we present new medium-term financial targets to you, our positioning in energy businesses and also our digitalization strategy followed by Q&A. We will then resume the morning with a focus on our energy businesses in detail and the deep dives on large Pulp & Paper, our Metals diversification strategy and then end with closing remarks and key takeaways before launch at 11:30. In the afternoon, we have the pleasure to open the new ANDRITZ Experience Center for you, showcasing ANDRITZ capabilities in automation, digitalization and AI and guide you through customer value cases and digital solutions and will also have a tour of our manufacturing site. We will divide you into four groups, two of them running on one track AC, followed by the manufacturing and then the groups will basically reverse. You're already assigned to your group on the VIP cuts we distributed, so see the individual agenda items there below. Then we will come back to this presentation room. And you will be distributed Fair World presence, and there will be transfers to Graton Vienna Airport. Before the AC visit, there will be a safety instruction and you will also get safety equipment in this room. And now it's an even greater pleasure to introduce our speakers to you. Please welcome with me the ANDRITZ Executive Board, our CEO, Dr. Joachim Schönbeck. Our CFO, Vanessa Hellwing, our CEO, Pulp & Paper, Jarno Nymark. And last but definitely not least, our CEO, Hydro Power Frederic Sauze. Yes. Click nice for us. And now it's my pleasure to welcome Dr. Schönbeck to the stage with initial remarks and an update on our long-term profitable growth strategy. Dr. Schönbeck, please join me on stage.

Thank you, Matthias. Good morning. Ladies and gentlemen, not too many ladies in the room, but some -- that's very good. So thank you very much for coming all your way to Graz, to join us here for the for our Capital Market Day. And if we move now right into the middle of it. We believe that ANDRITZ is relevant and will remain relevant for the industry. We have, I would say, diversified and well-balanced portfolio through Pulp & Paper, Metals, Hydropower and Environment & Energy. While Pulp & Paper represents about 40% of the business volume, Metal, Hydropower Environment and Energy fluctuate at the moment around the 20% with Hydropower on a very steep increase in terms of volume and relevance for the group. What is driving ANDRITZ is the need for electrical energy, for renewable energy, for circular economy and for digitalization. This has been developed over the years, and we believe these will be strong drivers for the business to come. And while we hear a lot many people or also investors say that Pulp & Paper is very is very boring business, wood biomass, basically is the only renewable raw material that has a critical meaning for the industry. And therefore, we believe being in that business with a long expertise and understanding and developing how much more you can do from wood than just paper is really -- is a key asset. And as we are not -- even though we report every quarter to you, we are -- we go beyond the quarter and we will go beyond the year and we believe that on the long term, a lot of these technologies we are currently developing and have developed will be very relevant. So we are coming from ANDRITZ, here is where you are where the company has been born, but we believe we are a true global player. We don't even have the majority of our employees in Austria, it's 12%, and we are -- I would say, we are regionally well balanced among the globe, 14% in China, 14% in Germany, 15% in North America, 13% in South America. I think that is well balanced and we are driving -- we are basically driving the trend out of Europe further on, bringing as much value at close our customers as we can. We have about 30,000 employees in 280 locations in more than 80 countries, which is a strong value proposition to our customers knowing that wherever they go, we probably are already there and can help them. We are particularly proud that we managed a couple of years ago to surpass on our manufacturing footprint. The emerging markets have now the majority and that trend is continuing as we are shifting value add close to our customers into the emerging markets. We are leading well diversified industrial group. We do what we do with leading technology positions. We are in attractive niches that are big enough for us to grow and small enough not to attract too many others. We have significant barriers for entries, new competitors through a very extensive and good references and we have a long-lasting customer relationship, which secures a lot of our business model. We in each market we are in, we only -- actually, we only have a few customers. So also for us, it's important to deliver to behave well, because we cannot lose the customers. And therefore, I would say, it provides a good discipline for us. We have a global setup, which for our business model is very important. We can execute locally. We can source locally, and we can keep a good customer proximity. Developing the service business is one of the well-proven growth engines. For ANDRITZ, we have now 45% service revenue. We had an increase in service revenues of 8% compound annual growth rates now for many years. This not only provides a closer tie with the customer, but it also lowers the cyclicality of ANDRITZ business over time. We have a strong balance sheet and we are financially as independent as you can be in this world. We believe this is a critical qualification to do large-scale projects over significant lead time because also our customers, they want to be sure that the supplier exists not only at the beginning, but also at the end of a project. We, as I know from many discussions with some of you that what we call the diversification is not always what we really love. But what is holding our group together is a, I would say, a good operation model, providing complex customized projects to our customers worldwide. And you need to have a certain volume and you need to have a certain also financial stability to do that trustfully and reliably and that is what our customers -- what our customers like bringing complex projects to, I would say, many remote parts of the world require certain skills, requires local expertise, requires a robust business model, and it also requires that you can -- that you enable exchange of information inside the group because the countries are very different. The industries are different, but also the countries at front. And when you know your way around in Uruguay, you for sure do know you we in [indiscernible]. So you need to be aware. And I think we can bring a lot of that to the field. We exchange on joint customer relationship but also on best practices in project management, supply chains, but also local partners for installation, civil works is a very valid point. So we believe that from that setup that we have, in particular, in that respect, our business and our customers benefit a lot from our I would say, structured approach into different industries. Our business model has also, I would say, true financial benefit for our investors. We operate extremely asset-light. And we can convert good margins in a very, I would say, very efficient capital utilization resulting in a, I would say, very high return on invested capital. If we compare it to our WACC, it's a very solid gap, but also if we compare it to our peers, I would say it's quite an impressive figure. We have -- we select very carefully on our value-add debts in particular and manufacturing. We are heavily engaged in the engineering because this is where we create the value for our projects for the customers. The margin progress also uplifted the return on the employed capital. And through that, we can generate steady cash and provide significant shareholder returns. So we believe this is a -- it is a good model and the variety of industries we are serving is benefiting here in particular. If we look back to our last Capital Market Day in '24, we can see today that the businesses we are in, they are in a, I would say, different cycle than there have been two years ago. We are in Pulp & Paper. And in Metals, we are basically in the beginning of a cycle, which we believe is good for the future to come. In particular, in Metals, which is a lot of your concerns, we see light at the end of the tunnel. In Hydropower, we are climbing up. We don't believe that we reached the summit yet, as we see a good future to come. Where we are a bit unclear where the market is in particular, when it will develop favorably is on the green hydrogen and carbon capture where a lot of the expectations on future growth has not materialized over the past two years, and we will come to that a bit later. As what -- let's say, we did what we could do, we developed technology and we are ready to deploy that when the markets will come. What is truly a game changer for ANDRITZ is the, I would say, this significant energy exposure and the demand of the world for electrical energy and for renewable energy is definitely driving our business to an extent we did not expect a couple of years ago. We have approximately EUR 3 billion of our revenue is energy related. Of course, the majority 2/3 of that is driven by Hydro, but also all other business areas have a significant exposure to the energy market, it's Metals, Pulp & Paper, and Environment & Energy. It's the business we are doing in the energy, is well diversified over several steps in that value chain. It's related in power generation, grid stability, electrification and e-mobility as well as energy transition, storage and decarbonization. So we can basically -- we can benefit from all these areas and a lot of investments need to go on there. You can see that the share of our energy exposure has increased over time, and we expect more to come. We will go in a deep dive. We will go into the details what we are doing in which area. Our underlying strategy has not changed. We focus on customer service, digital and decarbonization as the main drivers. We want to grow in revenue, we want to grow in profitability, and we want to grow in our service share. That's very simple, and it's not changing and most probably will not change very quickly. If we see how the growth has been driven in the past could be an indication for the future, we definitely see the significance of service, while our total revenue grew by approximately 4% over the years. Service revenue increased by average 8% annually, that is a very good trend. The margin expansion over that time by more than 200 basis points also driven by the strong growth in service revenue. And when we see where does the growth come from, is it about -- it's almost 50% organic and the other 50% coming from NA. Disciplined M&A, for sure, is a strong growth accelerator for ANDRITZ, it always has been and it will continue that way. We basically focus in four areas. The first and foremost, and basically our historical M&A agenda is complementary technologies. So we try to complement our offerings towards our customers to complete the value chain to provide them a one-stop solution and provide them a better service than they had before, that is not only good in terms of the customer that they know us that we have a reputation in those markets, but it's also a significant element for us to derisk M&A processes because we basically know our targets already for many years. We know how they behave in the certain industries. We have a feedback also from the customer side. And through that, we have maybe -- not maybe, we definitely have more successful M&A and less riskier targets than many others. So we understand their products, their culture and the risks and the risks are lower. We have a good track record with three to five acquisitions per year. And since 2018, we invested EUR 1.5 billion here, and we believe, with a very good return. The next main area where we focus our acquisitions on is customer service because if we want to grow in customer service, we also have to understand that all customers that have planned are already serviced by somebody. So acquisition is a very natural way to grow into these markets. You can see that the portfolio expansion is across all business areas, definitely a heavy weight is the acquisition in Pulp & Paper, but it's also as it is the largest business area that is very good. We had -- in last year, we had, we'd say, particularly successful year in M&A with six major acquisitions that we made this year. Unfortunately, we did not report anything yet. So growth in Service business, as I told you, is a key priority and a key driver of our equity story. 8% compound annual growth rate over the past 7 years is a good track record. We grew over that time, we grew the Service share from 35% to 44%. And of the total -- of our total revenues, we have worldwide, we have about 120 Service locations with more than 7,000 people dedicated to serve the customers. And what you probably have not been aware of so much the Service market usually is 5 to 8x larger than the capital market. And with the volume, the market shares we have there, it's basically always the opportunity for us to grow and that is particularly attractive for us as on the capital market with the high market shares we have in many areas, we cannot grow against the market. When the market goes up, we will go up and if markets go down, we will go down. And that's the burden of being a market leader and having a high market share. we will grow further. We will grow our market share in the existing fleet. So also the good capital business that we are doing is growing this field. We will move more into operation and maintenance models for our customers, that, I would say, tightens this life cycle partnership and also our customers more and more understand the value of leaving the maintenance and in some areas, also the operations to the OEM who understands the technology and the design to a very large detail. We employ digital solutions to provide a better service with in particular analysis of the assets and also predictive maintenance approaches. And of course, we will continue to look for M&A targets in the Service area. We are serving basically with a strong portfolio we provide field services for all our customers, on-site repairs, emergency supports, training and consulting. We heavily engaged into spare parts and consumables, there is a huge demand, fast-turn items and there are many critical components where we need to be very close to our customers. We do retrofits and upgrades on a regular base as an order of magnitude for industrial assets like we are producing, you usually spend our customer spend usually the original investment amount within the first 15 years once more. So there is a significant business behind that. And that is -- that's also sometimes larger real -- larger projects, we need to run with the systematic of a capital project. And then what I said, operational and maintenance, we are working on service contracts for the O&M predictive maintenance in the AI-powered digital solutions definitely will provide us in the future, a better position in that area than what our customers usually can provide. In the -- if you look to the Service revenue share, you see that in Pulp & Paper, we already reached the 59%, which is very high, partly that's first half '26, partly because the capital is lower than we like to have it. On the other side, also 50% is quite high. If you look at Metals, we are only at 29%, which we can say it's a pity. But on the other side, it's a big opportunity and growing the Service share in that market also was the 50%, definitely provides good opportunity to increase the profitability. Overall, the target midterm is to reach the 50% of our revenues in the Service. And you can do your mathematics yourself, if we keep the [ 8% ] when we reach 50%. But as I said, capital revenue is more fluctuating. Therefore, the numbers are not that predictable. But you can see Service revenue share constantly rose over the past years, but also the absolute value of the Service revenue increase. And that is what is really important. It makes our business more robust makes the returns more stable and a bit more predictable. Maybe that is something that investors like to see. On the digital side, we have -- I would say, we have two different approaches to the digitalization in ANDRITZ. The one is our vision and mission for our customers, what we provide for our customers. We want to be a leading partner of our customers for digital solutions, fulfill the customer needs with the final target to enable the autonomous plant and raise the productivity. That is basically what we are focusing and developing around our customer solutions. And then we have an internal perspective to provide the ANDRITZ organization with the right digital set up, the state-of-the-art tools and technologies to provide good solutions to the customer. And that's basically standing on three pillars. The one is a secure foundation and that first and foremost is operational resilience and service security need to deploy our tools highly efficiently and to create a competitive advantage through what we are doing. And if we go maybe into a bit of a detail, AI is in everybody's mouth. And I would say, also in ours. And if we would characterize where do we stand between our peers who are some of them are, I would say, very AI-euphoric, and some are very AI-cautious, I would say, we are right in the middle. We are very pragmatic. We definitely are a first mover, but we do everything we do against measurable business value. We have chosen a 4-step approach. We moved in very early beginning of last year to onboard as many of our employees to AI tools. We have now more than 10,000 AI users in the company on a regular basis. And we gave a lot of freedom to our people to develop to, let's say, play around with the new tools to see what can be done. And what came up. We have now more than 10,000 agents that are regularly used, which tells us that a lot of creativity is within the people. We are steering that through our AI Competency Center, they govern an orchestrate what is being done and they connect the people who are working on similar topics. And through that approach, we could then create some of these key areas where we wanted to really excel and get a competitive advantage. That is what we call the ANDRITZ engineering assistance, where a lot of activities have been combined. There is this analysis of terms and conditions from the customer, knowledge preservation plays a big role, field service agent, contract assistance and also the entire area of quality management with the NCR analysis and the lessons learned, vast amounts of data resting there and probably there are too much for a human to really go through. And then we have in the middle, we have this one step, we call Accelerate. This is where we where we work with our partners, in particular, the software providers in the engineering area because they provide good AI solutions we can connect, and we can work on that. So from that point of view, we believe we are on a good path there. And we at least this is what we have been have been told by others that for an engineering company we are moving well ahead. For you that might be also important to feel safe with what we are doing in our IT that we are -- security is a solid base of our IT system. We basically provide a security by the design of our systems. We have a significant cost advantage if it comes to cyber insurance on retention level and insurance premiums, we are well below industry average. On the certification and compliance, we -- I would say we are really good. No major nonconformities have been reported through these audits and we are on a measurable maturity level on the CIS-18, ranging from [ 0 to 5 ], we have a target of [ 4 ], which is considered very high in class for in industrial company like ours. We are currently at 3.5 and by end of the year, we will be at 3.6. So we protect the group and to ensure that also tomorrow, we are able not only to deliver the solutions to our customers, but also on time, pay all the salaries of our people. Looking to our customers, we're having -- we are looking from basically to move our customers on their path from automation to autonomy. We have, in our global automation, we have more than 100 locations with more than 2,000 employees, 12,000 installed base, systems installed with our customers. And we are focusing on the assets, keeping them productive throughout the lifetime. We want to turn the complex processes, our customers are running into stable and predictable operations. And we want to convert the operational data into a measurable efficiency improvements. All that we do with a target to a fully autonomous operation and our experts will provide more details to you in the Experience Center that we will see in the afternoon. On the financial side, we talk in our Automation business. We talk about roughly business volume of EUR 800 million, which has been grown with 10% approximately over the past 5 years. That's the speed and the growth rate we would like to keep. And we are working in three areas. The one is the classical automation, electrification, which is basically the basis you need to set in order to get something moving. We are moving then in with smart products, especially robotics and vision systems. These are the most the most drivers as well as advanced analyzers. And then we move to Digitalization. Digital Twin Solutions, operator training simulators, physics-based simulators to really test new ways to run the operation without risking the assets. So these are the areas that we are working in. To implement that, we have developed an open vendor-neutral automation platform, we call Metris. And here, we are running on top of the shop-floor level, which is provided by the major automation suppliers. We are running our models for asset optimization, process optimization and operational efficiency. So basically, it's the shop-floor level provides the network on which is running, and we are providing the Netflix content to make it better to have an idea how that works. We are delivering I would say, a strong customer value through this Metris approach, we -- on the process optimization, we can reduce the OpEx by up to 20%, increase the output by up to 3%, through asset optimization and life cycle management and driving the operational efficiency 10 percentage points up. And that is all without major hardware investments that's only basically through analyzing the data, choosing better set points at decreasing downtime of the assets. We have our business model, we go through supply contracts. We have performance-based contracts but we also have software as a service contracts. On the AI journey for our customers, we believe we have been early mover. We joined with [indiscernible] data science company from Germany, we took an equity participation already in 2018. We have now machine learning implemented in our Metris all-in-one platform. You will see about that in the afternoon. We have innovative products, moving computer vision into autonomous operations. And we are happy that it has been externally recognized when we received this Intelligent Manufacturing Award from Microsoft, which was a nice recognition of what our people are doing. On our ESG, there is not a lot of new things to report to you. We have set up last year our new sustainability program, enabling the green transition, supporting people to grow and govern with integrity. That is what we want to achieve. And we have set up KPIs to measure the progress in these dimensions towards 2030, that impact revenue, that greenhouse gas emissions accident frequency rates, women in leadership positions. And on the governance side, we are very much focused on our supply chain. Short update where we are. First half '26, we are well on track in all dimensions. And so we are confident that we will meet these targets by 2030. Also, our ESG performance has been externally recognized the [indiscernible] rating agencies have increased their the ratings. And in particular, I want to point out this top 5 rating of ECOVADIS, which is really a good achievement of our teams. We had high hopes for several new technologies that we have presented to you on the last Capital Market Day. And if we put it in short, we had one of these new products that really met market -- our expectation that the synchronous condenser here the market really developed very favorably. Then we had three areas: the side streams, the biomethanol and the textile recycling where we could see a decent market, not a brilliant market, but some progress. And then we had three technologies, the green hydrogen carbon capture and the battery, where we did not see the market developing in a way that we expected that, and we will come to that in a bit detail. So we also provide you today with new midterm targets financially. These are the targets now we have set up for 2029 and we are targeting for revenue of EUR 10 billion and a comparable EBITDA margin of 10%. And you might be, as you're all quick in mathematics, you might be surprised about the high ambitions we have because it would require a stronger growth than we had in the past. First of all, we want -- of course, we want to be -- tomorrow, we want to be better than yesterday. But also, we have a particularly strong backlog in our orders. And we also see that on the cyclical side in the markets, we are in a better position than we have been two years ago. And just for the books, these will replace the 2027 targets we have put out. But of course, we continue trying to achieve that. But the new targets are now the one for 2029. On the -- we also reviewed the corridors, the margin corridors for the four business areas, and we have uplifted the business area Hydropower and Metals that has been increased by 100 basis points each. So Hydropower now is targeting 8% to 10% comparable EBITDA and Metals is starting 7% to 9%, while Pulp & Paper remains stable. We have harmonized Environment & Energy also to this 2 percentage point bracket, and we have lowered the 13% of our margin to 12%. So that's -- even though it has been revised, I would say, it's still on a very strong profitability side, well above the 10%. We believe -- why we believe we can achieve that. We have a backlog well above the EUR 12 billion. That's the strongest in our history. We have more favorable positions in the cycles. We see a continuing strong growth potential in Hydropower, and we also see that on the Metal side, we have -- we will collect some fruits and harvest from the heavy restructuring we made over the past years. That's -- with that, I'll come to my end, and I would like to hand over to Vanessa, our CFO, she will give you more guidance on the financial strategy update of the group. Thank you very much, and we would be available for Q&A later. Thank you.

Yes. Thank you, Joachim, and warmly welcome here in Graz and also online wherever you are. So we just heard from Joachim that long-term profitable growth remains our key objective. And I would like to start here directly with our ROIC steering, we here ensure that our growth really creates value. As many of you know, in the last few quarters, we have focused a lot on ROIC and economic value creation and ROIC is indeed embedded in how we assess our business, investments and M&A opportunities. And our metric here is deliberately clean, without any adjustments and full goodwill intangibles. We are prepared also to accept temporary ROIC dilution when we see a clear strategic or financial rationale behind this. And this is also what you could see in last year, '25. What remains important for us here is that over the time, we keep a healthy spread above our WACC on the ROIC level. So in fact, we could increase the ROIC by 550 basis points since 2018. And also increasingly, we use ROIC as a monitoring tool for our M&A targets, which we evaluate in terms of their impact to the ROIC of the group. And I will also come to that later. So the resilience of the model is very important here. Even in weaker times, ANDRITZ has historically generated substantial returns and you can see this here on the chart in 2019 and 2020, we had huge restructuring measures and the impact is seen here also in the gray bars where we are indicating the comparable EBITDA. And even with this, still the floor has always been nicely above the WACC. In 2025, we had quite concentrated M&A spend, as you might know. And you see a bit of a dip from this and already can also see the recovery in the first half of this year is visible. So we think we are operating at a quite industry-leading value proposition also amongst our peers. And our steering will certainly remain focused on this KPI, making sure that we use our capital to grow with sustainable value. And that also brings me directly to our capital allocation because with our strong returns and the cash generation, this gives us a significant strategic flexibility. Our capital allocation, we actually see as an integrated framework of four parts, which over the years are pretty well balanced. As you can see here, we are looking at the combined figures from 2020 to '25 and see here that, of course, share buyback is naturally the smallest and most opportunistic part of this instrument. And for M&A, we predominantly do bolt-on deals. However, we do have the balance sheet capacity for larger strategic transactions. But as always here, also the discipline on target selection remains across the priority. So we obviously dedicate also a relative fixed part to our dividends with our progressive policy and a target payout ratio of 50% to 60%. And you may remember that we increased our dividend per share to EUR 2.70 in '25, and that was the seventh increase in a row. On the CapEx side, Here, the main part was 40% over the years. As you know, we are quite an asset-light model, and that also means that our CapEx for maintenance is structurally quite moderate. So what comes on top is basically selective capacity expansion also for service, which is very important for us and then also for IT investments, digital infrastructure and sustainability of customer-related investments. We are actually frequently asked about our M&A strategy and Joachim already elaborated on the strategic criteria. Let me also share some view on the financial perspective here. Generally, we buy, we improve and integrate, we create synergies and thereby, we create value. Synergies and operational improvements can effectively reduce the acquisition multiple in about three years. What you see here and the businesses that we acquired since 2018, at the time of acquisition, had an aggregated EBITDA margin about 380 basis points above ANDRITZ margins. So these numbers are revenue weighted, not only simple average of the takeover multiples. And that clearly shows that our M&A strategy has obviously not just added incremental revenue but has consistently also contributed to improve the margin profile of the group and thereby is our main lever also to profitable growth. You can also see from our balance sheet that we have acquired in a very disciplined manner, leaving goodwill and intangibles on quite a low level of our total balance, especially if you see this in comparison to our direct peers. And this also translates very well back to our ROIC effectiveness. And speaking of strong financial headroom on our balance sheet, this is also, as you can see, much stronger compared to our direct peer group. Which, in fact, brings me also to the next slide. Financial headroom remains significant with our strong financial position, EUR 600 million net liquidity and close to EUR 1 billion gross liquidity and an additional flexibility that is provided through our revolving credit facility of EUR 500 million. So even theoretically considering a leverage indication of 1.75x. Our additional transaction capacity, it could be more than EUR 2 billion. And this is ready and available through strong commitments of our core banks. Thank you for this at this time. So we are not indicating here that we will do a large-scale M&A transaction anytime soon. But if the right strategic opportunity comes along, it shows our balance sheet gives us the ability to act. We have also shifted our focus in the recent quarters to operating net working capital. And our objective here is not to minimize net working capital at any cost. This is to optimize while protecting also our profitable growth project execution and especially our supply chain security. On the contract, working capital, of course, the clear target here is to structurally stay negative over the project life cycle, and this is with strong order intake and advanced payments of our customers very well supported. Trade working capital on the upper side, we, of course, optimize it, but not to the expense of profitable business and supply chain resilience. You have seen significant supply chain disruptions and geopolitical events in the last years, and we can consider that this also might continue to a certain extent. So therefore, net working capital can deliberately increase here, where we see service activities requiring availability of stock. We have geopolitical risk really justify additional safety stock and also we have locked execution requires it. And fluctuations on the backlog, this can be about EUR 300 million quarter-over-quarter, that's what we can expect with our business model. Following frequent conversations in our investor meetings and also in some earnings calls last year, I would like to shed some light on a more structural topic here, which is, in fact, very close to my heart. We have embarked on a global transformation initiative over the last two years and have started the One ANDRITZ program last year. So this program is about the enterprise architecture of our support functions. And based on actually three pillars, which is legal entity optimization, business shared services and also the residual SAP rollout at ANDRITZ. The clear objective is here to maximize the degree of automation based on standardization and global data and financial governance in order to approve accuracy achieving more real-time data access and thereby also enabling faster financial analysis. This goes very well hand-in-hand with our overall digitalization strategy, that Joachim just introduced to you. So this is not a restructuring program. It is about building an operating and financial backbone that allows ANDRITZ to grow without adding further complexity and to easily scale tools and best practices globally. And I mean with a history of almost 175 years, constant transformation actually should be part of the daily operation, especially for the central functions. So we have grown significantly during the last decades and need to reconsider lean structures from time to time. And talking about the development of the last decades, you might have heard that ANDRITZ also celebrated the 25th year anniversary of being stock listed at the Vienna Stock in June this year. And as a reflection of our long-term profitable growth story, we really created substantial shareholder value in this period. And so since the IPO, ANDRITZ has increased its workforce 7x from 4,000 to 30,000 employees, revenue 8x from EUR 1 billion to EUR 8 billion and earnings 16x, from EUR 40 million to approximately EUR 700 million in reported EBITDA. And of course, we expanded our global presence to more than 80 countries. We generated 6,600% total shareholder return, including '25 dividend payments worth EUR 211 per share in total. So we substantially outperformed also our peers in Austria and European indices and reached an all-time high share price in the anniversary year just two weeks ago. So I could close my part now with this wonderful marketing remark here. But as a CFO, I probably cannot have a presentation on the 6th of October without current trading information on Q3. So let me briefly share this. On a preliminary basis, our order intake in Q3 should have remained on the level of the last eight consecutive quarters, which is above EUR 2 billion. And we have had the opportunity here to book another large-scale hydro order in Slovakia, very great success. We reiterate here our fiscal year guidance for '26 and see ourselves well between our target corridors for growth and comparable EBITDA margins. So ladies and gentlemen, I thank you very much for your attention, and I would open the floor now for any questions and I would ask you Joachim to join me on the Q&A.

Thank you, Vanessa. Thank you, Dr. Schönbeck, for aberrations and the strategy update. [Operator Instructions] Please, we'll take the first question from the room, Akash.

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

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

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

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

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

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

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

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

Patrick Steiner, from ODDO BHF. Two questions from my side. Firstly, on your 2029 EBITDA margin target of 7% to 9% for the Metals division. How much is coming from Service revenue growth in terms of a better margin -- better mix from expected market improvements and further from cost improvements and efficiencies? That's the first one. And the second one, your 6.6% revenue CAGR to EUR 10 billion in 2029, should we again expect roughly 50% or a little bit less coming from M&A?

We were -- so starting from the back, we will continue our M&A strategy. So we expect to end up also in the same 50-50 share that we had. On the Metal side, I would say majority comes from the much better cost point we have. We have lowered our breakeven substantially through the restructuring. And then we have significantly improved on order execution. So I would say the majority maybe comes from that business. The Service growth has been slow, as you saw it in the -- on the Metal side over the past years, we do not expect that we can accelerate that heavily even though we are pushing hard. It's market is not very easy to accept new offerings as both major customers grow steel industry and automotive industry are themselves under very high cost pressure. And so that also limits us there. So to put it together, 2/3 from the capital side, 1/3 from a different split.

Daniel Lion in the back.

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

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

So we're still expecting to reach them even if it's not officially stated? Okay. And then the second one, could you maybe provide a breakdown or split on Automation Service business within the divisions or at least some kind of comparison how automation services may be different in profitability itself? And yes, just to get a better feeling on how they contribute maybe overall?

We'll think about it.

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

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

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

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

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

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

The next question comes from Sven Weier from UBS.

My two questions. The first one is also on the 2029 guidance because you have a point target for the revenues of EUR 10 billion, well understood but you guide a range of 9% to 11% on the margin. And I was just wondering what's defining the lower end of that range in the high end? Is it you may be uncertain about the divisional contribution in that year? Or what is the final range? And the second question is just coming back on Services. You already alluded to Metals, and it's difficult to raise that share, but what about Hydro? I remember that there's been also a long-term goal to raise the Service share in Hydro. I think will shift. Do you see currently that it will be easier to raise the Service share of Hydro?

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

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

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

Thanks a lot. I think this concludes the first Q&A session. We are slightly behind schedule. So I would ask you to come back here at 950 and 10 minutes for a short coffee break. Thanks, Dr. Schönbeck, Vanessa for the elaborations.

Thank you. [Break]

[indiscernible] Flexible hybrid solutions, lying batteries and Hydropower that we also offer through our hybrid controllers. The grid stability is also under pressure because there is a huge retirement of traditional fleet from gas, from coal, from oil worldwide which is putting a lot of difficulties on the grid because all those rotative power, which were massive on the grid, providing inertia are disappearing are not replaced by photovoltaic and wind which provide little [indiscernible] short circuit contribution. So although there are some electronic solution to these features, Hydropower is also very well positioned together with our Syncon to give those additional features, which are needed in the grid on very sudden basis and the blackout in Spain two years ago is a good example of grid, which are performing very well, which can failed due to impact on voltage and frequency. AI data centers are also, as I said, a major driver even if it's isolated, but that provides some difficult features because they need continuous stable power to operate and therefore, only thinking that PV will fuel those, AI is not sufficient. They need additional features, which are given by grid operators or by local grids. So triggering a lot of utilization of gas power, and we are also well positioned here because we are one of the top 5 suppliers for generators, coupled with gas turbine from our past, and we have been increasing that recently. I will come back to it. The aging of the fleet. It's not a new topic. More than 40% of the Hydropower fleet installed worldwide is older than 40 years old. They were designed to operate in baseload power when now the needs of these grids are completely different. They require flexibility, they require storage. So conversion to a conventional plant to open storage, it's quite frequent. There are plenty of needs on the grid on the system that are there. Funding is not an issue. G2G organizations are very active giving better facilities for renewable projects and fostering not only the funding, or the financing of projects, but also development programs in innovation again on grid stabilities and so on. And there is a lot of private funding available worldwide. We connect a lot of our customers with those available funding and that works pretty well. What is very important is this hydropower industry developing market contracting models. So we come only three years ago, or let's call it, five years ago from a traditional buyer to supplier relationship through a contract, which were highly nonflexible to now two different things. One is early contractor involvement. I've mentioned that in the last CMD, we were looking at it as a starting phase. This has increased exponentially. The early contractor involvement is a very nice feature. You will see it on my presentation of [indiscernible] storage, reducing lead time, enabling more collaboration and derisking the project significantly for the investors and for us. So this is a win-win situation that more people are taking. It started with Hydro-Quebec. Now new utilities in Europe are doing it. And worldwide, India is using it very, very actively. The second aspect, use partnership. So Hydro-Quebec started with a partnership working chunk-by-chunk, rather than buying the full EPC project in one shot. They will buy first, the engineering development then when the engineering is completed, we move together with the supply part of the contract on open basis where origin of supplies are shared decisions are made where to buy what in parallel or not. And this is clearly derisking the project. But the most important part is on-site installation, which is always a very difficult exercise to plan in the long run for projects which last up to 6 years, 7 years. And therefore, this is ordered separately. So it started very well. We have benchmarked that with plenty of our customers worldwide, and this is adopted more and more. The last point is important, digitalization linked to our lifetime asset management. It has been reported before. it's an environment where our customers are widely equipped. They are knowledgeable, they run there, they operate their power plants. They maintain them, most of them being large government-owned utilities but we see in some aspects with more private investors coming, people with less knowledge about operation, requiring more of those services. We are already using our data from many decades to be able to optimize design, to optimize operation mode and predictive maintenance. This is coupled with digital twin that are more and more used to simulate relationship from these power plants with the grid. And this is very useful in this continuous evolving environment. And I said last night at dinner that most of the headaches are with the grid operators today more than the generators because they have to deal with all those intermittency frequent variation of the grid, and they need solutions and features for that digital twin house for them to simulate different utilization of our assets. Cybersecurities at the heart of the worries of the generators or the grid and we are thankfully from development from the past able to provide solutions. So how do we respond to those market trends? If you remember, two years ago, I introduced the fact that cyclicity of hydro would need us to do something else in addition to prevent that in the future. and to enable us to grow. So we introduced this grid evolution dynamic, and I will expand that a bit more, coupled with our traditional long-lasting service approach to the market. Our ambition is to grow revenue to EUR 3 billion in this area, which went down to EUR 1.2 billion just before COVID. So this is a strong ambition for the coming 3 to 5 years. But as you see, the result from 2025 are on its way. And this year, will continue in that similar positive trend. In Hydropower Solutions, we are clearly #1 in revenue, in none of plants or units or projects sold our Chinese competitors are well positioned, but they only dedicate their attention to turbine and generator activities. The rest is contracted with other companies which make them lower in revenue, and they are very much centered in China. Ourselves, we are clearly covering the rest of the market in all continents. In Grid Solutions, our ambition is to grow this business from a low 300-digit revenue to EUR 1 billion. Obviously, this amount is not included in the EUR 3 billion. This is going through organic developments that we are currently preparing and through acquisitions that we are actively seeking. And in Service, we -- as I said, we have, through our global network of representation in more than 25 countries, the local attention region by region to our customers, not only for Service, but also for capital project development and cooperation. So going through a snapshot of what are our products and solutions that we offer on the market, the First one is Pumped Storage. We discussed it in the last CMD. It has grown exponentially. As I said, China is ordering between 10 and 20 power plants per year, pumped storage plants per year. Last year, it was 22 in 2025. They are growing towards 30 plants per year until 2035 at very competitive prices, low margin. We take their some share, very limited compared to what was the share given to non-Chinese companies 5 years or 10 years ago, but we are still present in this market. Behind China, the rest of the world is equivalent to the Chinese volume. Most of it is driven by India, where we see big plants, mainly driven and invested by private investors compared to what we are used to in the past, the government-owned utility, which was a bit more difficult to work with. So we have a very strong attention to those private investors who are now moving even outside India, a bit more easily than the Chinese investors. The -- and we see a balanced market for the rest of the world. In Europe, it's mainly conversion of existing into pumped storage, but we see in Southeast Asia, a lot of push. We are running a very big project in the Philippines, called [indiscernible]. We are tendering significantly in this region. The Americas is a bit slow in the north and in the south, but plants are there, and they will have to get there sooner than later for their grid stability purposes. So our position is clearly a #1 position, we have commissioned over the last 2 years, 2 power plants, 1 fixed speed in India, 1 variable speed in the [indiscernible] working well. We are solving some technology difficulties on some projects, but the evolution of this market is very positive. We are well positioned with standard technology, which give us a mid-triple-digit revenue landscape for these solutions. What are the solution here? As I said, standardization is key because pump storage compared to a conventional hydro power plant is not so sensitive to efficiency. So you can come with a reasonable size of equipment for a given site and implement it on a more standard base. So this is clearly the Chinese market. They are always very standard, 300-megawatt units, but we see worldwide, three ranges of pumped storage, the big ones, 350-megawatt Europe, which is more 150, 250 megawatts. So between those three stable ranges, we are enabling to standardize, which when you couple that with early contractor involvement, and partnership makes the project much faster. So the clear topic here, I can give you an example of one of the running plants in India, [ Pinapuram ], that we commissioned beginning of last year. The project was a total of 5 years compared with the 6, 7 years that we see for a plant of 4x250 megawatt plus 2x 150-megawatt basically, the first two years of technological development for us was made in parallel from the customer closing their permitting side and the financing side. So this time, which is normally sequential was made in parallel at reduced cost for the investor, and we save two years on that. Then the installation of the six equipment, full term team, our customer was taking care of the civils, took 2.5 years so which is very agile. And when we look at some regulations in Europe, in North America, still a challenge, but this is achievable in a country like India where 5 years ago, we were struggling. And then 6 months for commissioning one unit one by one. So that gives around 5 years of a full project, which makes in terms of competitiveness of pumped storage versus battery, a good start. And obviously, we are investing a lot on reducing those cycles and the cost. I will move to the next -- sorry, I will skip this one. The next one are Hydropower newbuild solution, still an important player in the market. So what do we do there? Different kind of [indiscernible] that you will see today in this workshop here. Obviously, a lot of runoff river solutions, Kaplan, small size or bigger size. So this is still a very active market. This is basically, again, worldwide. We see more development in Asia, in Africa and in Latin America than in Europe. And so we have very big projects like [indiscernible] projects on the Mekong River, which are huge Kaplan being installed on a very fast-tracked project. And we do have a lot of compact Hydro solutions, medium size that we sell all over Europe, selecting profitable projects. Our position here oscillates between #1, #2 year, it depends on big projects, but we are clearly on a leading position as well. The next one are modernization and service. So I group that modernization can be of different style, the very big ones, where a plant with 6 units is fully modernized, looking for more output power, looking for more efficiency to produce more megawatts with less water, looking for flexibility because, as I said, hydro power is not so much anymore used as base loss power, but as regulating power. So the operators require this flexibility to stop and start the units when they want to reduce the load, increase the load in a flexible manner, and this has impact on the design of our equipment, both mechanical, electrical and electronic this -- the very large projects for us are classified as capital projects. They are quite big, quite long lead time. Customers will give us access unit by unit, not to stop the operation of their running plan. However, this is part of our service attention to the market. The rest of the market will be more on single system intervention. So we do a lot of modification, of automation turbine generator. And we provide, as I said, before lifetime support to our customers with different solutions, digital and mechanical. Will accelerate a bit. Turbo generators, it's a niche market. Those are equipment running behind gas turbines. So we provide those equipment to some of the gas turbines suppliers, technology suppliers is specifically to one where we have close relationship, and we are developing investment to both here in Europe between Hungary and somehow in India to be able to provide these turbo generators in a growing business, which is mainly driven by grid stability first because gas turbines are very flexible, but also by AI data centers. And so the market for gas turbine, you know it, it's mainly centered at the moment in North America, in the Middle East, but somehow starting to expand in other regions of the world. I will finish with the Grid Solutions. So in grid, we started and Joachim mentioned it as a growth initiative three years ago, to use our knowledge on generators, technology to be able to design and produce synchronous condensers, which are basically generators working in short-run the grid to absorb excess of energy coming from intermittent power in special peaks and prevent blackout like in Spain. This started very actively in Australia some years ago in Brazil, but we are now seeing country by country the growth. We got a significant amount of project last year in Europe in isolated grid to start with, like Ireland, U.K., but progressively, all countries are developing the investment. We are booking -- we have booked this month projects in Spain. We are actively developing Europe. India, we are -- we have been selected for the first in [indiscernible] project in the country, and we will see that, and we are running a few projects in North America. So this is a temporary device to stabilize our grids. And this is our backbone of our grid strategy. And from there, what I explained is that we are developing organically solutions to attend substations because the use of substation is completely different than it used to be 5 years ago. So that requires modernization in automation system in new device, and this is an area of possible growth through M&A. So in conclusion, we are attending a booming market that we expect to continue mid-run even long term, mainly driven by this grid stability positioning where Hydropower is the only renewable energy enabling more wind or solar power, driven by security of energy from different countries, looking more at endogenous electricity supply than supply relying on import of gas or other technologies. Then we have a good complementary strategy with grid, as I explained, enabling us to look at stabilizing this level of revenue or, let's say, reaching it in a sustainable manner, even if there is some drop in Hydro, as we have seen in the past. And then our historical and long-term oriented service base is our core business. We are continuously investing on that, being close to our customers. And that's probably one of the reasons of our success to listen to the customers and be present when they have capital plan. So this concludes my presentation for Hydropower Solutions. I will hand to Jarno Nymark for Pulp & Paper. Thank you.

Thank you, Frederic. Good morning, ladies and gentlemen, and it's my pleasure to shed you a bit of the light of what we do in the Pulp & Paper area regarding the Energy business. And this is namely our Boiler business and the related Services. And if we start with the recovery boiler for the pulp mills. And those who know a pulp mill typically call this the heart of the pulp mill because the heart shall never stop, and this is the same with the recovery boiler. And we are the global leader within recovery boilers. We have the largest operating boilers. I think the four largest are operated by us. And within the last 10 years, we have supplied the market with over 40 recovery boilers. Of course, the recovery boiler size is very depending on the production of the mill. So you have the extremely large boilers and then you have also the smaller boiler and especially the smaller boilers that we are supplying currently to the Chinese market because they are integrated mills. And of course, the delivery project type also varies from our EPCC in Latin America to EPC in Europe to EPS in Asia Pacific and North America. But there is no pulp mill without a recovery boiler today. And I'm sure that you're all wondering what does the recovery boiler do. It's a simple process. So it takes the black liquor, the so-called linking from the cooking process, we burn it and we generate energy and also recover the chemicals so that the chemicals can be reused in the pulping process. So as you can see, the recovery boiler can render a pulp mill from a big energy consumer to a net producer of energy and at the same time, improve the sustainability footprint significantly. And if we look at the growth drivers for the Recovery Boiler business, it's clearly you can see it is related to the increase of the production in China, Asia Pacific, but at the same time, also the possibilities for retrofits and looking at the improvements in the chemical recovery but also in the energy efficiency to produce more from the existing recovery boiler. And the USPs in this area is like the rest of any of the pulp mills. The key strengths that we have in the recovery boiler areas are the proven technologies the high efficiencies and the long running times without the stoppages because typically, a pulp mill stops every 15 or 18 months and the recovery boiler has to stay open during that time. and then the ease of operation and the fast ramp-up curves on the boiler. And of course, with this large installed base, there are also potential then for the service business and not just the upgrade but also the maintenance repair because it has consuming or wearing parts that needs to be changed in each of the annual shutdown. Then if we look at another boiler type, so let's talk about the power boiler business for a few minutes. So power boilers in fact, turn a diverse range of fuels into sustainable power, steam and heat. So as you can tell, they are not only related to the Pulp & Paper industry. So this is -- the power boilers are used in a rather diverse set of end markets. And so the power boiler converts biomass, sludge, residuals, waste-derived fuels into the steam, heat and power. And we offer complementary technologies for these various industries. So the type of the boiler varies on what is the fuel that will be burned. And here, we see a market that is expected to continue to grow significantly in the next few years. And then this is also driven by the decarbonization, the increasing of the planned sustainability footprint and especially also that we have customers replacing fossil fuels with biomass. And this, of course, gives the opportunities for new modernizations of these large conversions. And if you saw in Joachim's presentation with some of the mergers and acquisitions that we have done, for example, last year with the acquisition of Diamond Power, these are products, the suit blowers, which are very well. These are the mostly used in the recovery boilers and the power boiler areas. Compared to the recovery boiler and you compare the power boiler, here, you have more competition than just a few competitors in this area. But we are among the leaders in this industry, in the power boilers as well. And really to mention again that the power boiler serves multiple industries, Pulp & Paper is just one of these industries, but we work also work with utilities, independent power producers, with municipalities and district heating for waste and sludge to energy. And we are not just a power boiler supplier. We're actually a power plant supplier because the recent reference that we have done is really from the fuel feeding combining the automation, electrification and including also the turbine. So we have a leading solution for any type of the fuels to be burned in our boiler. And that was a short summary on the Pulp & Paper, then I would like to hand over to Joachim for the Environment & Energy and the Metals side. Welcome, Joachim.

So thank you, [indiscernible]. And indeed, we can continue with Environment & Energy and with Metals where we have also significant exposure to the energy market. I would say, first and foremost, definitely what we call Clean Air technology to clean the fume gases to the level we like to have in order to feel comfortable in the environment of a power plant. And that's basically dedusting the majority, you probably majority here is too young to really remember when it was for power -- for boilers without dedusting. But then, of course, deceleration and the nitrification which are the main drivers for flu gas and Clean Air technology. So that's a particulate and gases emission control that we are doing. Then another important part there is the heat recovery because we want to make sure that we can recover as much heat back from the flue gases as possible in order to increase the overall efficiency of the power plant. And then that what has been developed in that division is the carbon capture because that is also something the CO2 from the flue gases can be absorbed and recovered start or utilized whatever the lawmakers allow in the various regions. So we are doing that business for many years. We would say we would say that we are globally, we are #1 supplier of these technologies, and we are historically, I would say, a very strong position in Europe. We moved strong into India over the past 10 years. And we have made an acquisition last year in the U.S. also to participate a bit stronger in that market. We see a strong trend of stricter emission controls. So we see potentially good business to develop. And you might be surprised, but I can tell you against all prejudice we have, the stricter emissions do not origin in Europe, the region in China. And that is also something very important. If we don't go there and participate in these projects, then we will end up in a couple of years. We will end up with competitors who can reach much stricter emission control limits than we can. So therefore, we like to be also in this Chinese market. What is our strength? I would say definitely is a complete technology portfolio especially if we go to multistage processes like what you need to do with the dedusting and if you have catalytic reactions like you need in denitrification. So there are a couple of challenges to be done. We have an installed base of more than 6,000 units worldwide where we can develop the service, which we started a couple of years ago. So therefore, we see a good way forward. What is definitely the Champions League in Flue gas treatment is the waste-to-energy applications where we also are happy to report that we are at least globally, we are the #1. What is particularly challenging here is that at the end, you do not know the fuel. And if you do not know the fuel, you do not know what is in the emission, but you need to be sure that nothing leads the stack that you do not want to have in the air. So therefore, that is a growing market. It's for sure, it's a competitive market. And the waste to energy, we see also a structural increase as the restrictions to landfill waste is increasing. It's not only is growing and growing in Europe but also other parts of the world, this will become a predominant position. Then we have in Environment & Energy, we have developed this green hydrogen. As already said, we had higher hopes for that than what has materialized over the past years. However, we were able to build up a strong technology position over that time. We have been awarded two major projects. One is for Salzgitter, it's a steel company in Germany. It's a 100-megawatt unit. We are at the moment at the end of installation and starting commissioning plant will be operational in 2027, and we have been awarded a smaller unit, 12.5 megawatts from Austrian company, RAG. That's the largest gas storage facilitator in Europe, and they need the hydrogen to buffer what they call in Austria, the [indiscernible], which I'm not able to translate with my limited command of English language. So these two projects are important for us. I think we have with these projects and with a good start-up we will establish a good position in that industry. We are already acknowledged as one of the serious players who cannot only provide technology, but also deliver a project in time and in quality. And as I said, most of the money is spent on our side. We need to get the plants up and running. Whatever happens in the world or in lawmaking in the society, we can hibernate these activities without too much cost on our side. But I think the good thing is the technology is ready whenever the market will come, we are ready to provide it. What is good that what is missing in these markets is more the, I would say, regulatory framework as well as some infrastructure for the green hydrogen. Also in same schemes are unclear. However, without these incentive schemes, there are viable business orders for the green hydrogen. I think that is important. But of course, you made the cake even sweeter with some incentives and no investor would like to have that passed by. Another area where we have a significant exposure to the energy side is our Pumps business. And there are three main activities that we do on the energy side. The one and probably the most important is the main reactor pulling pump for a nuclear plant. That's a business ANDRITZ is doing for about 50 years. And I think in Europe, we are definitely a leading supplier of that technology. You will have the pleasure to see one of these pumps on the workshop tour. And it's really a machine. It deploys several thousand cubic meters per second, because if there is an emergency in a nuclear power plant, you better want that the water is moving at high speed. So you will be impressed then. The second main application we have is the small to midsized pump storage, where we are supplying pumps and for some of the projects going on in Austria, we are currently in having active projects. And then, of course, several auxiliary pumps in the nuclear thermal and hydro power plants. That's also part of our portfolio there. We see that market strongly growing with approximately 30% and in total until 2030. And that is significantly driven by the renaissance of nuclear. On the Metal side, we have two main exposures to the energy side. The one is what we call the battery. And to be very clear, we are not manufacturing batteries, and we don't want, but we are -- we have moved into the development of production equipment to produce batteries. And we've done this through an acquisition and then on that platform, made some development and innovations. We are currently, I would say, we are one of the leading suppliers of manufacturing equipment for lead acid batteries. We are, I would say, #1 for pilot lines for lithium iron production machines, and we are developing into production equipment for lithium iron mega factories. We have built, delivered and commissioned one of these lithium iron mega factories in Germany. It is operating. However, we have to admit it's -- even though it's what you call a mega factory, it's small compared to what the large Asian providers have built up. And we are also, I would say, behind in technology, what they have. They have -- we have to admit they are 10 years ahead of us. And now we have to apply what we have learned from the Asian suppliers that we need to start the know-how transfer the other way around because we do not believe that it's that it's good to be fully dependent and not have that production capabilities in Europe. So this was an area where we invested. We had higher hopes and we made a clear misjudgment of the market to come. And also, we made a clear misjudgment on how far away and well advanced our Asian competitors are. We keep that on a development basis for the lithium ion we move into service of the lithium iron mega factories, which are installed in Europe and which are currently operating with more or less problems. And we want to close that gap to our -- to the market leaders in that area. By -- during that time, it is -- these developments are financed by the, I would say, solid development on the net asset business, which is running well. The second exposure we have in Metals to the energy side is the electrical steel. As you know or you don't know, electrical steel is a high silicon alloy carbon steel. It comes in two ways, grain-oriented or not grain-oriented brain-oriented is what you need for still parts, meaning transformers, the nongrain-oriented you need for rotating parts or whatever is connected to a motor. We have about 20% of the world market is grain-oriented and 80% is non-grain-oriented. We have a strong position for the non-grain-oriented #1 or #2, however, you slice down the market. Why are we -- why is our equipment so important for that business? For -- to increase efficiency in these electrical machines, the reduction of the steel thickness is one of the main drivers of the efficiency as we have rolling mills that can roll this brittle and hard material to very low signals better than our competitors can do we have -- we enjoy a very high market share, and we believe that we can develop that. Just to give you an idea, normal standard for electric meters, you see in cars today, is a material thickness of 0.3 millimeters, and we have now one project under execution. One will to deliver rolling down to 0.03 millimeters. That is a quantum gap in efficiency. And I tell you, handling of that material is not very easy. So we see there is more to come, and we are happy that we are a good partner for the industry. And by that, I like to finish. And I think we have a Q&A now or not?

Yes. Thanks a lot Mr. Sauze, Mr. Nymark and Dr. Schönbeck. I'd like to welcome you back stage, and we conduct the second Q&A session. First questions may be in the room and then moving to the webcast. Akash?

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

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

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

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

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

The question from the Sven Weier from UBS.