Arbonia AG (ARBN) Earnings Call Transcript & Summary

[Interpreted] Welcome. Good morning to the Capital Markets Day of Arbonia here in Erfurt. A very warm welcome to the participants on the site. Thank you so much for coming all the way long to Erfurt. And I know what it means because you did this every twice -- second week for 5 years. So it's great to have you here. Erfurt is a very special place for us. We have our second largest door plant, the GARANT that we will visit this afternoon and also one of our most important shops. This is where we do business, and this is something that we want to convince you that our controlling, our [indiscernible] department is here and is [indiscernible] to work through our concept, so we decide to not to go through its constructions wherein that newly [indiscernible] on this date [indiscernible] here in Frankfurt that we were looking for in [indiscernible] approved if this construction markets journey after this [indiscernible] in this very challenging [indiscernible] and that's not enough [indiscernible] in Erfurt, and this is where the new Arbonia content was born, and this is our new construction market we present you today. Let's have a look at our agenda. I will have a brief introduction to the [indiscernible] and Uwe Schiller will then have the market outlook and present [indiscernible] markets. And then we will back to answer your questions during the Q&A session. And you can also visit the Arbonia Next exhibition [indiscernible] in one single place. And then we will visit our second largest plant called GARANT. Unfortunately, I will not be able to attend. Even though I really plan visiting our construction plants, and I can promise that you will like this [indiscernible]. So thank you very much for your appreciation. [indiscernible] that we are taking [indiscernible]. But we'd like to show that we [indiscernible]. At the same time, it represents [indiscernible] and [indiscernible]. So we're trying to align many different approaches [indiscernible] for our strategy [indiscernible] together with our management group [indiscernible] Arbonia and [indiscernible] we designed windows [indiscernible] and our strategy back then used to be the idea that someone who [indiscernible], and that helped. But unfortunately, we were never really able to offer all of the products. Let's talk about lightning and so many different single products involved, and we were not really able to offer [indiscernible] customers solutions. And on other the hand, we want to make sure that [indiscernible] specialized manufacturers who wishes to be #5 or #6 compared to other companies, which is why we want to [indiscernible] position, and this is why we left Arbonia finance with division because [indiscernible] were not able to continue [indiscernible]. We try to focus on the business where we knew that we were able to be one of the top players, being an important player of CHF 600 million in sales, which is the case in the [indiscernible] the doors business, because [indiscernible] in the end is simply glass door [indiscernible] and our top target is to become the #1 player in Europe [indiscernible] still compete with Nordics and U.K. Apart from this, we are already a leading provider -- door provider. Now what does this mean, a leading provider of doors? Together with our management and our client, we design a new concept, which is all about delivering performance. We want to deliver the doors rapidly and in a complete manner. Our doors and showers, they are installed in a very last process of a building procedure. And if we do not deliver the door on time, a hotel, for example, they will not be able to open on time. So our construction -- our constructors or our builders are very much dependent on our delivery performance. The same is true for spare parts. When there's no spare parts available, we are not able to deliver our performance. Then what it will [indiscernible] was the product range or product portfolio. For our clients, it's important to have -- to not have too many contact persons because construction sites are extremely complex. There are so many different things that have to be taken into consideration, emergency exits and so on. So what our clients look for is to have one product portfolio with one contact person [indiscernible]. People appreciate us for our top quality products. The analytic part [indiscernible] is sustainability. It's an ongoing trend. And if I look at the panel discussions, we had meetings with the young architects this week. And for them, sustainability is extremely important. They really want to make sure they reuse materials in the existing buildings. And if we do not approach things in a sustainable way, we won't be able to deliver a top performance. We saw the same thing in topics like digitization and artificial intelligence. There's a big hype of artificial intelligence. And though I think it's a bit too much of hype, all we know that this is going to remain extremely important. Customer service product range because we have certain limitations, so we have to make sure that the customers trust us, trust our work. So we take 2 weeks in order to design a plan to tackle the challenges of our construction sector crisis. This, and many of them were not aware of the wide product range that we offer. Customer service like preparing already existing doors, which plays an important role in hospitality sector when teaming up with big hotels, there's a huge potential in Switzerland. 7% to 8% of our sales are generated by maintenance, and it's quite a crisis resistant sector. We see that with other competitors, too, who succeed in the maintenance sector. Process cost is also a big topic here where we are under pressure, and we have to make sure that we produce more efficiently, lowering costs, becoming leaner, which leads me to digitalization and artificial intelligence. We have to make sure that we are an attractive workplace to attract specialized workers here in Erfurt when. We have an urban sector and young people, they usually find it more attractive to become an application developer than working night shifts from 10:00 p.m. to 6:00 a.m. in the morning. You also have to know how to handle the machines that we use. What we like to reach is a cash flow effectivity. We like to make sure that profitability and cash flow is generated in a sustainable way. In 2021, we had an EBITDA margin of almost 15%, but structurally, we did not perform very well. So nowadays, we have improved in many ways in terms of machinery, in terms of becoming more effective. One also starts one phase to the customer. When we team up with Garant and so on, clients don't want to have different contact persons each day of the week, but they rather want to make sure that they have a streamlined process with one single contact person to reach out to. One stop for the customer, which means that we'd like to have a comprehensive product portfolio, meaning that if a client needs a door, he'll be able to get them no matter whether we are talking about a metal door, a glass door, one overarching brand. Some of you will know that we used to be simply a share or a holding. Now we try to make sure that we are a premium brand. We want to be a one-stop shop for our customers and one production footprint. We used to be a conglomeration of several single companies. And now, 60% of the sales that we reach are produced in our GARANT factory. You'll see that there are many different types of doors. For those where we used to produce 6 doors or 6 lots, we only do 2, and we only produce 2 or 3 doors. We have to reorganize our equipment, our machinery. This is we why decided to produce on one single production site, such as with Prüm, which makes us much more efficient. The prerequisite is to have fully integrated systems. A door is extremely complex, which combines 48 features. And nowadays, we are unable to deliver a door to them automatically, but every single feature has to be introduced manually, and this is where errors may occur. With the new SAP system, the way we designed this project that was safe with GARANT can then be forwarded to Prüm with one single click, which makes that way more efficient in terms of production. Our goal is to have one vision. Nowadays, it's all about having one single vision, one single mission, one single strategy, a common strategy, vision and mission. Now what is our vision all about? We aim to be the most attractive door brand. There are lots of brands available for furniture, for kitchen design, for lightning, but there's no brand specializing in just brand -- in doors. So it's extremely important to focus on this feature, and this is where our branding plays an extremely important role. We don't only want to look at doors as doors, but we rather want to see them as an architectural feature. And this was a debate that was raised within our panel discussion. An open door stands for accessibility to rooms accessibility to people, but a door may also stand for safety for isolation. So this is why doors play a very important role in our own architecture. Just to wrap up for those who are already familiar with our work, you can see our starting point back then in 2016 with EUR 71 million when I started out with Arbonia in Switzerland. German produces delivered products to Switzerland, and then we made a deal with the Loza Holding, Loza family. Then GARANT joined, and we reached a level of EUR 300 million. And then in 2021, we said showers are all about doors because in the end, they are glass doors. In 2022, we integrated a specialized door manufacture brand. We offer craftsmanship and highly specialized doors that cost several thousands of euros. But at the same time, we also offer very cost-effective doors. We have specialized manufacturers for specialized production. And then in 2024, Dimoldura joined the leading player in France and Spain. And lately, they are marked the leader in Czech Republic. Let's have a look at how we are organized as a product label. The first clients are already migrating to the Arbonia brand, where they're able to access the entire product portfolio, together with established brands and established distribution channels with KIWI. We had a digital player and a project with a volume of EUR 1.4 million in the housing market, and then Prum where the main owner is present here today with Matthias. So we are trying to think these things together, aligning different ideas. So we have a participation of 17% of [indiscernible]. Let's have a look at one of our main slogans. We are an international premium brand. This is the way we are perceived by the architects. We had visits from Taiwan, from Japan, from the Middles East. One of our most important partners, from Hungary, all of our international partners visited us. And the Arbonia showroom goes to Budapest next, in the middle of the city center. So our aim is to be an international brand. What we also aim for is to offer world class and metal solutions, such as steel doors, which used to be a deficit, and we were able to fill this gap. And we'd like to further expand in this field in order to cover the full demand. We also aim to make life at home and life in public more comfortable, stylish and safe. We know that the housing sector's challenge was under big pressure, faced many challenges, and I'm sure they're going to benefit from the new laws that the federal government is going to facilitate. You'll see it in our exhibition. We have very innovative products, for example, with temperature control within a glass feature. And you can see that, basically, it's all about offering the complete product range. We had EUR 12 million product -- the biggest project in our company's history. So we want to make sure that we always offer a customized one-shop solution. We also offer first-class maintenance throughout Europe. You can scan a QR code, for example, and you will get a maintenance service within seconds. [ WD ] celebrated its 150th anniversary last year. You will see that it's always a combination of trying to offer large quantities but combined with high quality. So we are rethinking doors and fittings. We try to offer doors together with the fittings, and what we saw was that different industries or craft did not communicate well enough because in the end, a door always comes with the fitting. So you have to make sure that we think doors and fittings with [ grip ], we have a very rapid fitting where you don't have to drill in the way that we used to, but it makes things much more feasible and effective. Talking about investments, let's give you a brief summary of our investments, where our capacity reserves are less than 30%. The last machine at GARANT was delivered last week, which was the squeezing machine. So we'd like to extend our capacities. We knew that we had to get new machineries. And with the new investments in the industry in the last 5 years, we invested less than EUR 300 million. And thanks to new technologies, we are able to produce more doors with less personnel because once the market goes up again or when demand goes up again, we will probably face similar challenges to what happened to the hospitality sector back in the pandemic where many people, when demand decreased, went to other sectors. And once demand went up again, companies let stuff and they traveled a lot. We offer a visual 3D configuration, which we launched at Arbonia Next. We then talk about technical configurations, which we do with our calculation program called DOORIT. You can have a look at it, and we invested a lot -- lots of money in order to make those calculations way easier. And from DOORIT, the information is then forward to our SAP program, and then the information is forwarded to the MES, our logistic partner and then further to industry 4.0, our machines. So you get a seamless solution for all of the processes involved. We did not only invest in production, but also in energy supply. In 2023, when energy prices skyrocketed, we decided to build a new waste generation plants, one at the Prum and one at the GARANT factory. And also you'll be able to transport our waste into energy. Our chips, for example, will then be bent, and we'll be able to get energy out of our production base. We will save between 28% and 30% of emissions. What is a key to success? Steel frames cause 12x more greenhouse gas emissions than wood. We are able to save CO2, which is a great feature provided by wood. So when you combine it with the wooden frame, you're able to save greenhouse gases. In Germany, we try to make sure that many of our products made of steel are replaced by wooden frames, which would equal to 50,000 combustion vehicles per year, just to give you an idea on how we are trying to reduce our ecological footprint. We will also promote wooden doors in order to make them more sustainable. We developed a great product, a linoleum surface, which is a completely natural material. So together, we've developed a door with an advantage to buying much more carbon dioxide than other laminate products. So we would be able to save 6.4 kilograms less CO2. 1.5 million CPL doors are in Arbonia, so we could save 10 million kilograms of carbon dioxide. We had a great reaction to this communication, to this product, especially in Germany, where there is financing for schools, for example. Linoleum is used on a wide scale. Of course, we are open for aspiration -- for aspirational products, aspirational clients, customers and investors and analysts, of course, and I'm looking forward to our discussion. And I'd like to pass the floor to Uwe Schiller.

[Interpreted] Thank you. Thank you very much. Welcome. I find it's a bit difficult now after looking at our beautiful doors and other products to start talking about financial figures. I'll just give you a recap of 2024. I'd be brief on this. And then we will try to remember the guidance for 2025, which we communicated at our last conference. And then we'll talk about the outlook until 2029 and our midterm target objectives. Claudius said it already, we are the new Arbonia. We are focusing only on interior doors business. 2024 was a very important year for us. I, like, on the 1st of October, I don't know about the others, but I just couldn't wait for the sale of the Climate division. Many other things happened, too. We acquired Dimoldura and LIGNIS. I'll talk about that later. We sold a building in [indiscernible], which is not part of our core business anymore. And with all those activities, we were able to prepare the start of the new Arbonia, which we are going to show you today. Looking on what we did with Dimoldura and LIGNIS. This will be a key pillar of our new strategy. We will look on our markets, where have we been present and where we will be present now after having acquired Dimoldura and LIGNIS. The factory in the Czech Republic will not be as big as the one we have in France. But before, we had a much smaller sales team. And now you can see our team -- our sales team here. We will be much more present in the new markets. Let's just have a closer look at the sale of the Climate division. We got permission at the end of January, and the closing on February 26. After that, nothing changed. We -- I don't have a final balance sheet for this now. Those are still the estimate we communicated at the beginning of March. We are awaiting that about -- of about EUR 132 million, and we'll have assets of about EUR 50 million sales price. And with the first step, telling the public about the new acquisition in Russia where -- so we will go to the closing on that part as well. Talking about the media conference. We will -- the shares, the dividends will be decided at the Shareholder's Meeting, and payment will be done on the April 25. Nominal value repayment is included as well. So we launched the debt call, which will be closed soon as soon as the Shareholder Meeting will give -- will approve this. Let's look at the summary for 2024. We have the pro forma figures here. We are a business with sales of CHF 604 million EBITDA, CHF 48.7 million corporate costs, especially in '24, comprises the cost for the Climate division as well. So we have a large potential for savings, and we talked about that at the media conference. Including those high cost, we still have an EBITDA of 8.1% -- an EBITDA margin. This will be the last time we are presenting slides like this. We are still looking at the CHF 58 million EBITDA, without the headquarter costs, in 2021 already, we had a very attractive margin of 14%. And if we can increase our volumes, our margins will increase. We will have between 75 and 100 points of EBITDA margins. In March, you asked me why we decreased that estimate. We said we are always talking about 100% because of Dimoldura, which has a higher EBITDA margin. So we have less operational leverage here than in the core business where I am already -- I'm still seeing the 100 basis point. Let's look at the competitive landscape. Claudius already mentioned this. Looking at the market where we are present, the key markets, not only the export markets like the Nordics and U.K. We have a very good positioning in those markets already. And we are also seeing that our position is very good as compared to our competition. Of course, our sales decreased as well, but decreased net -- but it decreased less than the competition's sales. And then the EBITDA, we have a decrease by double digit, but we could stabilize our EBITDA, and we still have small currency exchange differences here. So in 2025, we will be able to have some growth. There is nothing new compared with our guidance. We are having for CHF 16 million of adjusted EBITDA, 3% to 5% net revenue growth and an expected cash flow improvement. This is our continued business AFG. Russia will not be included anymore in these figures because we already took them out of our calculation. So now I'd like to talk about the new part, which we have not shown yet, and we will try to have a look at the European market and at the German market. So when we managed to decrease our dependency on the German market in '23, we had -- 61% of our sales in Germany. This has gone down to 49%, but Germany is still one of our most important markets. In Spain, we increased our sales by 12%. Now the market share has changed, and it's clear that the dependency on the German and the Swiss market is increasing. And -- but what happens on these markets is still important for us. So it's important for us to talk about market development because that's the basis on which we are communicating our midterm results because we have our plans there, and we need to pick and take margins. So what we showed at our media conference, I'll show you again, is market estimates. What happened in '24, in '22, in '23, we saw the finance developments there. But I think at the mid of -- in the middle of 2024, the market outlook improved but worse by 23%. If we have a market share of 50%, we have to take into account this decrease. So we might increase our market share in this market, but still, we have to take into account the market outlook. Of course, our market position is very good. And I'm very happy to look at the exhibition today with you, and we will still be able to reach a position where we can grow. Now some of these are new slides. You have read it. There's a great financial package for the federal government in Germany. And this will certainly give an incentive to the market. There will be new buildings or schools for kindergartens, hospital. And we are all foreseeing that regulations changing Germany, the e-building regulation will be implemented. And this will -- hopefully, this will make the housing market more lively. And this will mean a positive development for us. From this package and from the discussions they are having at the moment, we see lots of positive impulses. And of course, we hope that bureaucratic costs will decrease as buildings are concerned. So that will make things easier for us. Look -- if we look at the interest development. and if I look at German and the European Central Bank, they decreased their interest rates. In Germany, building loan interest is increasing, but it might decrease in the future. At the moment, in Switzerland, we decreased to -- now we are at 1.7% for building loans. But since the interest rates are decreasing, the ECB is decreasing interest rates. So we will probably have more new building activities in Switzerland and Germany. The second topic is a very heterogenous development in Europe. I don't think Germany is the best growing market at the moment. This is -- the most dynamic markets are Spain and Portugal. So if you look at the growth rate there, especially Spain, it's very interesting to look at the prospects for new buildings. So you can see that development in different countries is differentiated in -- it's important to be present on all European markets, so we can profit from growth in the markets where we are present. So if we look at Spain and Central and Eastern Europe, it's quite important. We see that permits for constructions are decreasing in the German-speaking regions. But of course, if buildings become older, they need renovations. And in renovation, there's higher increase than in building of new buildings. Talking about Iberian Peninsula. We have talked about it a lot. It's one of the best growing regions at the moment, and Central and Eastern Europe is growing as well. A second topic, which is important for us is organization. Even if Germany is -- has decreased in urbanization -- in population, we still see population growth in big cities. So apartments are needed, housing is needed, and buildings will have to be renovated. Apartments will have to be built or renovated. And once this increase is coming, it will be a big increase. There will be growth in the building sector in all the cities, in all the regions, and we can do that. Let's just look at the market distribution. We have about 10% of market share, depends if we look at the sales or at the number of doors. It's 10% as the number of doors is concerned, 12% as the value is concerned. And we can grow. We have the capacities for growing. We have potential here for increasing our market share, and we also have more potential for increasing our production capacity. So let's get now to the most important slides, so that's the midterm guidance. You might have read it this morning. Maybe you have questions for that. But I'd like to look at these slides carefully together with you. I already said it and Claudius said it, too, Arbonia is -- has a great position in the market. There's been a very positive development last year. Market share increased, new products. We have a great reaction from customers here, and we also believe that we can increase our sales up to CHF 850 million. This midterm guidance is without the merger and acquisitions. The last midterm guidance was including the M&A. I'm not really in favor of that. Mergers and acquisitions has got 0 or 1. Either you do it or you don't do it. If it's lower than 50, I cannot take it into my results. If it's over 50, it will be there. So this only is 0 or 1. It has nothing in between. So this is our guidance. Without acquisition, that has to be taken into account if you look at the guidance, which was there before. So with Dimoldura, we have a new profile now with a different capacity in the factories, and we are looking at an EBITDA margin of 14% to 15%. I talked about the qualitative aspects now. I'm about quantities. The last plant have been delivered. But as -- since they are not in production, we cannot do it -- we cannot have the depreciation and amortization for them. We can start with 2026, and permit will be a few months later. So there will be an activation drive from these acquisitions, and this will help us to reduce taxes. Of course, this is against EBITDA. It will help us to keep our taxes on a low level. Net working capital, we are at about 8.1%, 8.5%, including the acquisitions we did. We are expecting a low increase of net working capital. So I would expect that increasing sales will lead us to build more net working capital. We have to increase that slightly. They will have to be new investments. CapEx will normalize below 4%, and this will be positive for our cash flow. If we take everything together, on the one hand, I have increased -- sorry, I forgot one thing, the lease payments. Many have asked us for our lease payments. This was one of the figures missing for 2024. We have CHF 4.2 million in leasing cash out. CHF 3.5 million was payment for leasing, and CHF 700,000 was interest. So I'm -- we are expecting an increase to CHF 6 million. We have one in GARANT, which have this kind of effect. There will be compensation as energy costs are concerned. And Dimoldura in -- we have Dimoldura in leasing, and we have the effect for 2025. If I take everything together, we have increasing EBITDA, we have a decreasing CapEx and we have potential for taxes. And so they will not increase as much as our EBITDA. We will have an increase on free cash flow, thanks for that. What will we do regarding our dividend policy? CHF 405 million will be the dividend if the Shareholder Meeting confirms. I can't promise that from CHF 300 million investments, we will have an -- we immediately have a very effective EBIT. So I don't have -- there will be positive tax effects, of course. But we will have a lower limit. I know we have an upper limit, about 50% free cash flow. That was the midterm guidance. Let's look at the M&A strategy. We have no surprise this year. We are looking at what happened in the past years. If we have the possibility to 30 new markets, we will take that opportunity If we can acquire new product ranges. We like our product portfolio and buy new capabilities. We'd like to do that if we see the possibility to get a good combination with existing market channels that would be good. Of course, there are great stores, which I would like to have in our product range, but also great to have the great sales in France. So thank you very much for your attention. I know after this great product, we are sitting here, and it was a -- this financial presentation with lots of figures. Now I'd like to start with a Q&A session. So let's wait for your questions.

[indiscernible] questions from the audience and [indiscernible] color on the slide on Page 58. I'd like to know the interpretation of what's happening there. Interest rates are decreasing. The market volume is decreasing. What is sort of counterintuitive. This is the case indeed, but investments in construction and the construction sector had a lot to do with a personal point of view or personal outlook into the future. In security is very high in Germany as we see in the automotive sector too. There's a lot of insecurity amongst the population. No one is really daring to invest in the renovation in building, in construction. In the last 2 years, people saved much more money than they used to in the past which means that the money is not -- hasn't disappeared. It was just not spent and once people feel more confident or optimistic. I'm sure that spending will go up again. What we saw is that the base rate went down, but the mortgage interest rates did not go down. You can see that the credit loan volume decreased. In the beginning of 2024, the volume went up. A few weeks ago, I assisted a panel together with the board of a major German Bank and I asked -- just this question why in Germany, banks do not cause the decrease in interest rates to their clients which is indeed the case in Switzerland. So the situation in Germany according to the base rate is much different in Germany. Interest rates were at 2.3% and then we're 3% or 3.8%, but actually, they could have adjusted near interest rates accordingly, but they simply were not willing to increase their own risk because they felt quite insecure regarding the future of Germany, and that was the answer I received by the group -- from Board member I interviewed. One more question. You mentioned a capacity of 30%. This was a question I was not able to understand because according to my calculation with [indiscernible] production capacity went up to CHF 3.4 million, and we produced approximately 1.9 million last year in Dimoldura which sums up to 75% of reservation reserve. So if we take the whole group into account, we have between 30% and 40% with [indiscernible] reserves higher. With whom we saw at the slide, they have a capacity of 1.3 million doors. And at the moment, we are between 800,000 and 900,000. Then 1 more question regarding the guidance. There's one sentence which says until 2029, we intend to normalize the CapEx of less than 4%, which does this mean in the short term at the last Capital Markets Day, it was said that CapEx was aimed to be below that figure in 2028. Maybe I can hand over this question to my colleague here. Of course, we had a look at this picture. And as mentioned, we made new acquisitions and capacities may vary according to the production side, but we can expect that production capacities are going to decrease within the following years, and we will probably be below this CapEx rate, which means I'll have to invest more than I had expected. No, I will not agree here. Well, I just tried to translate this into a free cash flow margin. So when I have an EBITDA margin of 14% or 15%, and a CapEx of below 4% at 10% or 11%. This is what I reached before taxes and 10% or 11% after taxes. So that would be CHF 55 million or CHF 60 million of free cash. Do you agree? I'd say that this figure is basically not totally out of order to put it like this. One more question regarding midterm guidance, the CHF 850 million to CHF 120 million. Can this be understood as a low and high scenario? And what about further risks apart from the financial markets in Germany that we touched upon. In general terms, when you set up mid-time guidance, you look at how markets evolve? What about CapEx, what about interest rates? What about the risks? And these were all the factors that we involved in designing the midterm guidance when I say all of the risks were involved. Of course, not because if I knew all the rest of by 2029, I probably have a different job. So you will not be able to give to make sure that there is no risk involved at all. There's no guarantee and we have a very heterogeneous market development across Europe, which we took into account. And we also expected... What about the tax rate for next year? This is a interesting or insightful figure because when I have the consolidated result and the tax rate which is used at the statutory accounts. So if you have a look at our tax rate in 2024, we had approximately CHF 20 million of taxes, which can be divided into 1/3 belonging to climate, 1/3 to special effects and 1/3 that remains in the cash taxes. And according to our guidance, we will stay on this level and with an increasing EBITDA, we will also have an increasing cash tax but probably not in the same growth rate. Because our amortizations write down will look different. We discussed this a couple of things ago according to the figures that you use the final figure may vary because you also have to take a different evaluation that vary according to Latin taxes because there are differences between local GAAPs and IFRS at the tax rate of 24%. This is the average tax rate that is applied at our financial statements. When we have a look at Nordics in U.K. this an implicit indication that Arbonia is aiming to increase its intake unlike this Nordics market. Nordics is extremely dominant. We're talking about 60% to 70% market share is in another company, which doesn't belong to the group. So I would probably exclude the possibility that something is going to happen at Nordics to local producers with U.K. with the Nordics and [indiscernible] , both are in a very bad shape on the European Mainland, there are only a few competitors. Now when I look at the new construct figures, Poland and Hungry seem to perform very strongly in 2025 and 2026 in terms of growth. Could that be a region where further acquisitions could be made in order to close the gap. Europe is a very exciting market, especially in terms of the real estate market in Eastern Europe, which is extremely liberal because there are no tools available in order to limit and income because that we're able to increase the rents because in construction, there are 3 factors involved. It's about construction costs. It's about funding, financing and what about the rents and possible income? So in Germany and France, we have a very regulated market. But in Eastern Europe, there's almost no regulation, which is why rental prices were went up a lot and it became much more attractive to get involved in the construction sector. I think we have a strong position in Eastern Europe. We have our partner who is in charge of Central Eastern Europe at Arbonia and who's very familiar with the Eastern European markets and I'm sure that this person is going to have exciting new ideas for the future. Thank you. Two more questions. One question regarding Slide 48 and the nonresidential sector. It says hotel, health and education growth grows much more than the other markets. What does this mean for you? Does it mean that some of the products are going to be more expensive. We stem from the residential market, especially in shower and door sector. So we've very much involved in [indiscernible] construction sector really make 70% to 80% of our sales. Now we have a big advantage in terms of hotels, they have many more doors than other holdings. And we have strong regulations in terms of higher projections and we have -- all people [indiscernible] in adversities the most demanding sector probably hospitals. We should have made acquisitions 2 years ago but we were unable to do so, which is why we did not get involved in the hospital sector but in the future I'm sure we'll find new ideas to work walk around this. Regarding the funding program in Germany, could this have an impact on if we were to be implemented the way it was designed. I think in Germany, it could be a bit of a disappointment because there is a great hype going on at the moment. But just bear in mind, until you get the licenses and all the final decisions are being made, where schools are being built and how and all the regulations in place. There's -- this is going to take lots of time. And will only be involved in the very last stage of the construction phase. So it will probably not have any impact for the next year, but possibly talking about 2028, 2029, that -- we also have to think about where investments will go, whether this is going to be invested in the German armed forces, which would actually be a very interesting client, too, but this is yet to see. I think we can only adapt the guidance once we have a fact-based situation. And I'm sure that we'll have many more meetings to discuss this until those ideas are going to be implemented. One more question. What about the sales in Germany for schools, hospitals in Germany? Maybe just a comment here. I do not want to split any longer. Indeed Prum and GARANT are primarily involved in shell construction. With [indiscernible] , we have got in several school projects with great references, where you will see which companies are involved in schools, which is primarily [indiscernible] in Germany. So you'll see that there is a great potential but we do not have enough capacities to get involved in schools, but we intend to increase our fast capacities. We will launch a new stock in the warehouse and we'll be able to produce at LIGNIS where we will increase our capacities in terms of good products and which leads to very attractive production cost. Thank you. One question regarding the production marginal volumes and regarding its effect, would this be on top of the profitability. There's certainly much of a potential to improve here. But we want to give a realistic guidance that has the potential to evolve in the future. The potential of production footprint is enormous. We can see this with Dimoldura, maybe we can have a look at the production side here. The Dimoldura Group involves 4 production sites on the Iberian Peninsula. And what the previous owner did very well was to have 4 individual dual production sites where each of the sites produced everything. So a special aid site, each production side. So all of the production parts are all produced in -- were produced in Portugal. At the sites in Northern Spain, they only do white doors and then we have another production site in Toledo, which is very efficient, and maybe we'll be able to organize the Capital Market day in Spain and white [indiscernible] doors are extremely efficient. And when you have a look at the GARANT site, you will see that it's much more complex and which means less efficiency, and this is where there's still so much potential in our production setup which we haven't dared to write on paper yet, but we need the right systems because one door cost EUR 60 and has 48 features. And as soon as I'm able to deliver those features with one mouse click this becomes extremely efficient. There is a high potential regarding the setups. So I think this company is probably way overperforming for the Capital Markets Day. What about the drag of market situation and what about the midterm guidance in terms of glass solutions. It's probably the more challenging business in comparison to wooden doors. We had a significant EBITDA growth of -- in 2024 in wooden solutions and glass solutions are more challenging. There's much more of a dependency in Germany. We are more diversified in the wooden sector, eastern Europe and also in the Spain and France, which plays role here. And also the shower cabins are much more in the Army sector or in schools or in hospitals. So here is much more of a dependency on residential construction in glass and the diversification was much more limited than the past and with doors, we used to have very innovative products from -- with products where you were able to control the temperature within the glass feature. So I think there is yet a lot to happen in the future. So no more questions from the audience. Currently, are there any questions -- any questions from the stream? Could you please remind us what about the exposure [indiscernible] construction and difference between new constructions and conventional of innovation. Traditionally, that were quite equal. Right now we have 20% new construction and 70% renovation. We started out quite well in the beginning of this year. But you should divide renovation into subsegments. We should talk about energetic renovation, which was a segment which was extremely flourishing in 2024 with the heating act and the skyrocketing heating costs, which is not the case anymore in which we sold at Arbonia with the heat pump business decreased. So we sold it just in time. Now there's more budgets available for those mines to have renovations for kitchens, for showers, there's not a lot that has been done in these segments in the last years because everyone wanted to try to invest in heating solutions to make himself more independent from heating costs. So what about the split of residential buildings and nonresidential buildings. In Switzerland, we have a share of 50%. And in Germany, it's probably a bit more. Are there any further questions from the stream? Yes. What about visibility and the current evaluation both on hold projects. I'm sorry, the volume was very low. Could you repeat the question? What about the visibility and the current evaluation. Any information on on-hold projects. Visibility for specialized stores is relatively high when we have 50% to 60% of the annual sales and we are able to plan in advance. When we talked about residential sector market. We talk about 3 or 3.5 weeks that we're able to plan ahead. So I have no idea what's going to happen in May or June, I can only say what happened in the beginning of the year, which was very promising. In terms of wooden doors. We had much demand, but quite a lot of demand, not so much of a demand in terms of showers. Next question, please. [indiscernible] what about larger renovation projects? And what about the margins competitor. I think there's more of a renovation budget for doors and for showers compared to the situation that we had 2 years ago. Are there any further questions from the stream? No more questions from the stream. All right. So thank you very much. So maybe just in a nutshell to wrap things up. I'm imply convinced that this is an incredible company that we built and production sites are in excellent conditions. So unfortunately, there is no second Arbonia. Because if there were I do anything to get it. We have a great management team. The key staff members have been on board for many years. And you feel sorry for the numbers, for the figures, but there is not much that we can do about it. But I think that we evolved a lot and I'm sure that this company is going to perform outstandingly in a few years from now. We have a great potential, great setup, be it market positioning or the commissioning of new production sites. We have highly motivated staff members and I'm sure that anyone who believes in Arbonia is going to -- it's not going to be disappointed so your trust is going to pay off and I like to thank you once again for coming all the way here and to assist us today. Thanks a lot for your attention.