D'Ieteren Group SA ($DIE)

Ladies and gentlemen, welcome to the D'Ieteren Group 2025 Full Year Results Conference Call. [Operator Instructions] Please note that this call is being recorded. Today, I'm pleased to present Francis Deprez, CEO; and Edouard Janssen, CFO. Gentlemen, please go ahead.

Well, good evening, ladies and gentlemen. Welcome to our full year 2025 conference call. It has been another year of good results, including a steady deleveraging at the Corporate and Belron levels. And let me start with the 3 main messages we would like to convey today. First of all, on an underlying basis, our classical KPI, the adjusted profit before tax group share grew by 3.8% versus 2024 at our guidance foreign exchange rates. Second, our free cash flow remained very solid at about EUR 374 million this year, demonstrating the robustness of our portfolio. And with those results, our Board of Directors will also propose a dividend per share of EUR 2 per share to the general assembly at the end of May. And then third, in terms of outlook, we expect to pursue our growth trajectory with a low to mid-single-digit growth percentage year-on-year in our adjusted PBT group share. And this again at constant foreign exchange rates, the ones, of course, then of 31st of December 2025. The comparable tables are to be found in our press release. Before I go into more detail on the numbers, there's also -- I would like to inform you also of an organizational setup change that we have made involving our investment directors more into our senior leadership as of now. Nicolas Saillez, our Chief Investment Officer, left the company at the end of last year, beginning of this year. And so he had, of course, over the years, the decade that he was with us, helped us shape the investment strategy of the group and really left his mark on the company. He also built a strong investment management team. So I thank very much, of course, Nicolas for all the work he's done in the past decade. But the fact that we have now a strong team in place, we have asked Charlotte Boucqueau, Timothy Muschs and Stephan Cammaert, 3 of our Investment Directors to be part of our senior leadership team going forward so that we can continue on our strategy that has been the same since many years on origination on the one hand and on value creation with our existing activities on the other hand. Before we dive into the details, let me highlight some of the key numbers at our activities. Belron basically delivered a record year on many metrics, more than 7% top line growth at constant FX and a strong 23% adjusted EBIT margin achieved. This exceptional performance absorbed the additional financial charges that did exist at Belron last year, of course, leading to a broadly stable adjusted PBT group share. D'Ieteren Auto had another strong year after what was already a record 2024, and that despite a market that was down. It was down almost 8%. But thanks to a favorable vehicle mix, notably in the BEVs, the electric cars and also the great efforts from the teams from D'Ieteren Automotive, the business did achieve another robust margin of 4.7%. PHE continued its compounding growth journey, driven by continuous market share gains but also excellent execution on their M&A strategy. The adjusted profit before tax group share at PHE grew with almost 10%, 9.7% to be precise, year-on-year. TVH then grew 1.1%, sorry, year-on-year at constant FX. thanks to some M&A. And while it was navigating, as we've talked before, softer market conditions, specifically in materials handling and agricultural segments but continue to grow in construction. There were some negative mix effects. There were some additional freight costs. There was also some higher noncash depreciation costs and all of these together led to pressure on the margin. And then last but not least, Moleskine continued to face a relatively challenging environment in its wholesale channel, although all the other channels, retail, e-commerce and strategic partnerships performed quite well with positive growth. But all of that together, given the size of the wholesale channel, did lead to a negative operating leverage overall. Let me now hand to Edouard to walk you through some of the financials in a bit more detail.

Thanks, Francis. Indeed, as previously mentioned, our headline KPI, the adjusted PBT group share declined by 10.3% year-on-year on a reported basis from EUR 1.065 billion to EUR 956 million. This is primarily due to 3 things: Of course, the additional financial charges, both at Belron and at the Corporate levels; a significant foreign exchange headwinds, particularly the weakening of the U.S. dollar throughout 2025; and finally, the decline observed at both D'Ieteren Auto and TVH due to difficult market conditions. Now if we exclude the net impact of the additional financial charges and apply December 31, 2024, FX rates to both years, our adjusted PBT group share was EUR 1.104 billion in 2024. This was the basis of our guidance. And let me remind that it included some EUR 30 million of financial revenues from the cash we had on balance sheet before the 2024 year-end financing operation. The comparable figure for 2025 is EUR 1.146 billion, representing an underlying growth of 3.8% year-on-year to what we had called the slight increase at the beginning of 2025. In 2025, additional financial charges at both D'Ieteren Group and Belron level were roughly EUR 160 million, our share, and the adverse FX impact amounted to around EUR 30 million when restating 2025 at December 31, 2024, rates basis. Now if we look at the decomposition of our KPI in 2025, you can see that Belron represents approximately half of it, while auto is at 23%, PHE close to 20% and our 40% stake in TVH represents roughly 8% now. Now looking at the group share financials. Sales were broadly flat but operational profitability grew by 3%. Free cash flow declined as 2024 contained exceptional items definitely at D'Ieteren Auto and also a nonrecourse factoring utilization at PHE. Yet as introduced by Francis, it remains strong at more than EUR 373 million. Moving on, on indebtedness, our net financial position at the Corporate segment improved throughout the year. Excluding the intersegment loan to Moleskine, it decreased from EUR 908 million at the end of 2024 to EUR 542 million at the end of 2025. This is explained, of course, by the extraordinary dividend of EUR 400 million we received from D'Ieteren Automotive as well as EUR 160 million from Belron and EUR 45 million from TVH, which had allowed us to reimburse anticipatedly our bridge loan of EUR 500 million in the first half of 2025. Now looking at the latest developments. Over the past year, the group and our businesses have continued to evolve significantly. As just mentioned, we benefited from solid dividends flows from our businesses, and we were pleased to relaunch our solidarity-based EUR 100 million share buyback program. Most importantly, our businesses were also active on the consolidation front. First, PHE successfully completed the acquisition of Top Part in 2025, marking its entry into the promising Irish market as well as the acquisition of AD Freco in Spain. And more recently, PHE announced that it has entered into exclusive negotiations to acquire a 51% stake in 2 large distributors in Spain, further reinforcing its leadership position in that country. On the Belron side, they completed 18 acquisitions in the year across all regions. And finally, TVH continued to position itself for growth through significant moves in its distribution network with the opening of 2 new distribution centers, one in the U.S. in Reno and one in Poland, while also making progress on the construction of the sizable Plant T in Waregem in Belgium. There were also some significant management changes throughout the group. The collaboration ended with Christophe Archaimbault at Moleskine, the very complementary team of Thomas Boucar until recently Investment Director within our group at D'Ieteren Group; and Laure Browne, formerly CEO and Senior Executive of several consumer goods brands, including VEJA, [indiscernible], they took over as co-CEOs. In addition, in 2025, the strong credit profile of our businesses supported significant improvements in the pricing of the term loans at both Belron and PHE with strong demand from lenders. Now Francis will take you through a great year at Belron.

Thank you, Edouard. Yes, indeed, 2025 was a record year for Belron on many dimensions. We're proud to have delivered fully in line with our outlook, posting a 7.1% growth as a guidance foreign exchange and an adjusted EBIT margin of 23%. Belron contributed over EUR 0.5 billion, EUR 518 million to be precise to the group's adjusted PBT group share and continue to demonstrate strong cash conversion as well. That enabled the company to distribute more than EUR 300 million in dividends to shareholders while also reducing its leverage to 4.5x. As a reminder, the additional financing that we completed in October '24 has temporarily brought leverage first to 5.5x and 5.2x at the end of 2024, and now we're at 4.5x. So this once again evidences the ability of Belron to deleverage quickly. As I mentioned, Belron delivered top line growth of 7%. And while the company is, of course, active around the world, all 3 regions did contribute to that growth in 2025. The growth was also mainly organic, close to 6%. There was almost 1% of acquisition contribution. And not surprisingly, the foreign exchange headwind was rather negative, almost 3% for Belron. Particularly in the United States, in North America, we were pleased with the performance there. It finished the year on a very strong revenue momentum. And so we ended up with full year organic growth above 7%, marking a clear acceleration versus the first half of the year. The region did benefit from an improved situation around claims avoidance that has been with us for almost 18 months. And so we've seen increased claims volumes again and continue to also made progress on some of the customer segments, it was focusing on the commercial market, the cash markets in particular. It's also important to highlight the excellent operational execution at Belron. The dedication, skills and flexibility of our technicians around the globe allowed the business to capture demand seamlessly with a continued focus on customer satisfaction and NPS scores reached once again historical levels in the high 80s. I am very happy about that. The number of total jobs, basically the vehicle glass replacement and repair jobs but including also the recalibrations was at 17.1 million, which is an increase of 3.2% year-over-year. Belron also continued to capture value from increased in shield complexity, adding its recalibration services and of course, also the VAPS, the value-added products and services. Now we are happy to have achieved the ambitions we set back, you may recall 3 years ago in 2022, almost 4 years ago, actually, in a very different environment at the time, delivering both strong top line growth and also the 23% adjusted EBIT margin. As anticipated, we saw a meaningful margin step-up in the second half of 2025, supported by an additional trading day but also strong focus on efficiency and cost management, which contributed as well. Another notable achievement was to end the year with a nearly stable adjusted profit before tax group share, and that despite the additional financial charges, which, of course, were also quite significant at Belron. And on that point, the Belron lenders have clearly recognized the operational strength of the company. In July already last year, we secured a 25 bps repricing on the dollar tranche. Then there was an automatic 25 bps step down on both dollar and on euro tranches in October. And then at the beginning of this year in '26, we did another successful repricing, leading to a further margin reduction of 25 bps in the U.S. dollar tranche and a 50 bps in the euro loan part. So evidently, cash conversion of the business is solid. We had an adjusted EBITDA growth north of 11%, EUR 1.8 billion. We generated close to EUR 430 million free cash flow, and that despite the additional cash interest costs, and this supported deleveraging and it supported the distribution of more than EUR 300 million in dividends that I talked about before. Now looking at 2026 for Belron, what do we expect? Well, we expect a continued strong performance. As a reminder, our outlook is now based on the December '25 foreign exchange rate, and you'll find all the reconciliation tables in the press release and in the presentation later on. But our expectation is that sales will -- are expected to continue to grow by mid- to high single-digit percentages year-on-year, and our adjusted operating profit margin will also continue to evolve, improving towards the 2028 ambition of greater than 25% that we set at our Investor Day last year in the month of May. Edouard will now take us through the performance of D'Ieteren Automotive.

Yes, indeed. Thanks, Francis. D'Ieteren Automotive, as a reminder, had a record year back in 2024, and we are proud of what the team achieved in 2025 despite a much more challenging market environment. Sales declined by 5.5% year-on-year, yet the business managed to maintain a very strong operating margin of 4.7%, which is a remarkable achievement given the context. In addition, D'Ieteren Automotive still generated close to EUR 150 million of free cash flow over the year. This solid cash generation allowed D'Ieteren Auto to close 2025 below 1x net leverage, even after distributing an exceptional dividend of EUR 400 million. Now let me briefly frame what happened in the market in Belgium as conditions were quite different from those we experienced just a year earlier. Gross registrations fell by 7.5% to 415,000 new vehicles. In that environment, D'Ieteren Automotive gave up a bit of market share, but importantly remained the leader in the electric segment with up to 28.8% market share. Besides electrification continued to progress with fully electric vehicles now making up for 35% of new registrations, while the buyer mix continued to normalize with B2C customers accounting now for 42% of registrations. Turning to how this translated into results. D'Ieteren Automotive deliveries decreased by 13% compared to 2024, 15.5% for passenger vehicle, partially compensated by an increase of 5.7% for light commercial vehicles. However, thanks to a very supportive mix across brands, notably driven by electrification, the decline in reported sales was limited to only 5.5%. This was further supported by sales growth in scale-up activities. Margin performance at D'Ieteren Auto also benefited from electrification. BEV models contributed very positively to the margin with strong unit margin, particularly at Audi and Porsche, of course, the most premium brands in our portfolio and mainly in Q4 of last year. Other activities also supported the overall margin mix, notably with the scale-up pole contributing positively for the first time in 2025. Altogether, this resulted in a very strong adjusted operating margin of 4.7% coming from a record level of 5.1% in 2024. The contribution from the equity accounted entities, especially essentially VDFin improved significantly versus 2024, which had been negatively impacted by the decline in residual values and is now back in profitability. Altogether, these elements led to an adjusted PBT group share of EUR 215 million, down by less than 10% year-on-year. Free cash flow also remained robust, as we said, close to EUR 150 million despite the slightly lower operational performance. Net debt increased to EUR 260 million at year-end as a result of the exceptional dividend paid out of available liquidity with the leverage ratio remaining very much low and under control at 0.8x net debt to EBITDA. Now on the outlook for 2026, we remain relatively cautious in this tough market environment. The market is expected to stay challenging and increasingly competitive with further mix normalization likely weighing on the top line. Combined with expected pressure on distribution margins, we anticipate a material decline in the adjusted operating margin after 2 consecutive years at exceptional levels. And now Francis will elaborate on PHE.

PHE, we again demonstrated the strength of the business model of -- in 2025, and the company delivered 6.3% year-on-year sales growth, of which 3.9% organic and a solid adjusted operating profit margin of 9.1%. If you think about it, its contribution to the group's adjusted PBT group share is now almost 20%, EUR 250 million and the company continued to generate free cash flow while maintaining the leverage at a reasonable level, 3x net debt to adjusted EBITDA. If you look at the breakdown of the sales, and we knew there were fewer trading days. There was lower price inflation. There was some down trading in specific product categories. But nevertheless, both France and the international activities delivered organic growth of 2% and 7%, respectively. And this performance reflects a continued gain in market shares across its different markets and also an outstanding and consistent service level, effective product category management aligned with what customers are asking PHE to deliver. The M&A did contribute nicely as well in 2025, an additional 2.4% contributing to total sales, notably through its entry into the Irish market in the beginning of 2025, that was, and the continued consolidation in Spain, where we added one region, AD Freco in particular. Now the operating profit margin adjusted remained strong, 9.1%. It's marginally lower than the one of 2024. But what is important to note is that the profitability in France continued to improve, disciplined execution, disciplined cost management, and that despite some inflationary pressure that continue to exist throughout the year. At the same time, the company also made strategic investments in its international operations, which typically are also a bit of margin dilutive our acquisitions abroad. And so that explains the slight decline in the margin, but a very nice 9.1% nevertheless. In terms of the adjusted PBT group share, we are now at EUR 182 million at PHE. That's up 9.7% versus '24. This reflects, on the one hand, some lower financial charges because we did reprice again the term loan in September last year, which basically highlights the strong credit profile PHE has been able to build over the years and its attractiveness to institutional debt lenders overall. Free cash flow-wise, you may remember that in 2024, we benefited from a positive working capital inflow that was related to the release of a nonrecourse factoring reserve. This was now normalized in '25. We didn't have it anymore. So it results in a working capital outflow. So when excluding that effect, the free cash flow did improve and of course, mainly thanks to the strong operational results of the company. The net debt remains broadly stable, and our leverage is 3x, as I already mentioned before. Now looking at 2026, what do we expect? Well, we expect another mid-single-digit organic sales growth rate at PHE. We also expect M&A to continue to contribute to overall growth in exclusive negotiations. We mentioned it before to acquire over 50% stake in 2 Spanish distributors in relatively large regions. They together generated about EUR 340 million in sales last year. So if that closes, this would help us representing a significant step forward in what is an important Spanish market for us overall at PHE. We do expect also the adjusted operating result margin to be broadly stable in 2026. We will have continued operating leverage. We'll continue to be disciplined on cost control. There may be some cost inflation here and there, maybe some dilution from acquisitions as we usually have. But overall, we expect a broadly stable margin there. And with that, I hand it back to Edouard to talk a bit about TVH.

At guidance FX, TVH grew by 1.1% in sales, primarily driven by M&A. The trends seen in the first half of the year persisted in the second half and adjusted operating profit margin as anticipated, declined to 13.4%. Realized and unrealized negative FX impact in the net financial result led to a decline of 26% in the adjusted PBT group share. Free cash flow remained strong also as anticipated and leverage remained broadly stable at 3.1x. Starting with the top line, as mentioned, at budget effects, sales grew by 1.1% year-on-year. If we look at reported figures, sales slightly decreased, which is basically explained by a flat organic growth rate. 1.2% increase, thanks to acquisitions, mainly Sincanli in Turkey and then the negative FX translation headwind of 1.6% at TVH. The environment remained one of continued typically soft activity levels, mainly in material handling and agriculture despite some improvement in the volume trends at the end of 2025. Given our more recent positioning in some of the construction segments, notably mobile elevating platforms and smaller moving equipment, TVH continued to grow nicely in these construction segments. That sales development was also marked by some adverse mix effects. Segment mix on one hand but also client mix on the other hand, with larger clients performing better volume. This, together with increased freight costs and noncash costs understand depreciation from previous growth investments led to a negative margin development as we anticipated despite a strong focus on other costs, also because if you remember, 2024 had been positively impacted by an insurance payment of EUR 6.6 million related to the cyberattack back in 2023. TVH managed to absorb the new U.S. trade tariffs by price increases. So the impact there was minimal. However, it remained gross margin dilutive. Adjusted net finance costs evolved negatively, largely explained by some realized and unrealized FX losses and adjusted PBT group share declined by 26% versus 2024 to EUR 72 million. The lower operating result impacted free cash flow, which remained at a robust level of EUR 72 million, EUR 29 million our share. Net debt and leverage increased slightly, and TVH distributed EUR 112 million of dividend to its shareholders in 2025, which compared to EUR 73 million in 2024. Looking at 2026, we remain relatively cautious about the trends likely to unfold for TVH. And as you know, a CEO hiring is still ongoing. We saw some improvement on the volume side at the end of 2025 and expect for 2026 at year-end 2025 exchange rates, sales to grow organically by a low to mid percentage year-on-year. While we continue to invest in future growth, we will see some ramp-up costs related to the new distribution centers in the U.S. and in Poland related to people, inventory shipments and depreciations from previous year's growth capital expenditures, which will altogether weigh on the adjusted operating result, which we expect to decline in 2026. And now to Moleskine.

Thank you, Edouard. In February of 2026 of this year, Christophe Archaimbault, CEO stepped down from his position, and he's replaced by 2 co-CEOs, Thomas Boucar, who is Investment Director at our group since a number of years already. He's bringing 20 years of international experience in investment strategy, operational leadership. And then Laure Browne, 30-plus years of experience leading and transforming global consumer brands, retail brands as well, most recently as the successful CEO of VEJA. And we are convinced that Thomas and Laure's complementary areas of expertise will help guide Moleskine together with the rest of the team through its next phase of development. So that's a bit of an ongoing statement, I would say, on Moleskine. And when I talk about its financial highlights of 2025, the wholesale channel, which is, of course, quite significant at Moleskine continued to weigh on the results. We had a 2.2% organic decline overall. The adjusted operating profit was at EUR 8 million. And there were also EUR 16 million financial charges, mostly related to the shareholder loan we have with them. And this led to an adjusted PBT group share of minus EUR 8 million overall. The trading cash flow, however, was nicely positive at EUR 15 million. What is also important to note that we do our usual impairment tests every year. And so at Moleskine, the impairment test performed at the end of the period on the Moleskine CGU, the group did account for a net of tax impairment charge of EUR 77.4 million, reporting that in adjusting item. So as I said, organic decline was about minus 2.2% year-on-year. It's actually quite a differentiated picture if you look at the channel per channel. All the channels did post a positive organic growth, except wholesale. Now not surprisingly, that's the biggest channel, and that one continued to suffer, particularly in the U.S., where some of the larger customers did continue to show a cautious inventory management that didn't really help. Now there was also foreign exchange translation like in all activities was negative. As the case of Moleskine, it was minus 1.5%. And this decline in sales as well as this channel mix, which was a bit different than before, did lead to a negative operating leverage overall and therefore, also adjusted EBIT margin that was lower and is now standing at 6.5%. I did cover some of the other figures in the highlights but there's also a EUR 16 million financial charge, including leases, EUR 14 million of which related to the shareholder loan and then the resulting PBT group share of minus EUR 8 million. Free cash flow wise, it's a good situation, even a better situation versus '24. So despite the lower operating results, there was less cash interest paid, lower taxes paid and a higher working capital inflow. The net debt now stands at EUR 270 million, of which the majority, EUR 255 million is the shareholder loan. Now what do we expect for 2026 with the new team? Well, we do expect to reconnect with sales growth, low to mid-single-digit growth is what we anticipate year-on-year, and we also anticipate a growth in the operating results, thanks to some operating leverage we will see. Let me finish by the Corporate segments briefly. Overall, on an operating level for the corporate segment, we did have an improved rental income. And you remember, D'Ieteren Immo is also part of the Corporate segment. And so we had a more than 9% increase year-on-year on rental income. But of course, the majority of the results at the Corporate segments are impacted by the financial charges we now have in '24, we still have financial income. In '25, we have financial charges linked to the debt raised at the end of 2024, which is, of course, quite different from the year before. We did, and I'm sure you remember that, reimbursed EUR 500 million, the bridge loan already by the summer last year. And so the net debt position, if we exclude the shareholder loan of Moleskine is now standing at about EUR 540 million overall. So let me conclude the presentation part of this results call by reiterating the main elements of '25. One, the results are actually highlighting clearly the very solid underlying fundamentals of each and every one of our businesses. That proved once again being very [Audio Gap] future stamina, and we're very optimistic about the future prospects of the group overall. Let me now pause here and open the floor to any questions that you may have. So operator, can you please take over?

[Operator Instructions] First question will be from David Vagman at ING.

So the first 2, let's say, on Belron. So is it correct that you assume organic growth of high single digit to low double digit for 2026, given that you probably include FX headwinds of, say, likely around in the guidance. And if we zoom on the organic growth for 2026, is it related to a volume recovery? Does it include the volume recovery in the U.S. So if we could zoom on the normalization of insurance claim avoidance so in that area and how much operating leverage is anticipated from this volume recovery? Yes. And if you could give us your analysis of the normalization, let's say, of insurance claim avoidance, if you've seen it trough in Q4? Or is this expected in 2026? And then my third question -- yes, sorry, on the group guidance. So I think there is something like an 8% gap versus consensus, it seems you're especially more cautious on TVH and Auto. So if we could zoom on these 2.

Okay. On Belron, if I start first by the top line. so our guidance for '26 is mid- to high single-digit sales growth is what we're guiding towards?

Indeed. And you have, of course, to use the year-end '25 -- at year-end '25 FX, right, which we communicate in -- the restatement is communicated in appendix, right?

Yes, exactly. You will see on our appendix, we have a column that shows exactly when you use now the December 31, '25 foreign exchange rate, what's the top and bottom line basically. So our guidance is always taking a stable foreign exchange, and we take the most recent one, which is one of December 2025. And so when we talk mid- to high single digits, it's related to that, that you have to compare it to. And I think then you mentioned about the volumes and the claim avoidance in the U.S. as a sub element of the top line development in Belron. While you may recall that we had, in the whole first half of last year, seen that claim avoidance really being present. But then over the summer, we saw some encouraging signs that it might be getting a little bit better and that we actually in H2, we ended up the year saying that claims were again really there. And so we saw claims volume improving from our point of view, if you know what I mean. And so basically, what it means is that when we guide for 2026, we are operating in an environment which is closer to normal again on this whole claims avoidance issue. We've seen the insurance players, yes, they've come back a little bit more to their profitability again last year. They're present again in some of the states that they may have retreated from. They're doing their usual competitive behavior, if you like, and that typically drives again people to sign up first of all, the insurance contracts and second of all, to also use their claims when they have an issue to do that. So we are in a more normal environment again from a claims avoidance point of view. And then you had a third question, which was...

So it was on the group guidance. So where do you think you basically consensus is too high. So is it mostly TVH and Auto? And what are we missing? So especially, I think on Auto you mentioned the distributor margin...

Yes, I don't know exactly how the consensus -- the components of the consensus are but I can imagine that D'Ieteren Auto is probably something where you have noticed that in our guidance, we had '24 and '25 that were quite exceptional years and we are guiding and planning on a more -- I would call a normal year but a more difficult year where we do anticipate, yes, continued top line pressure and a material decline in the margin. And the main explanation of that may not necessarily have been reflected in what people were thinking about for 2023.

Yes. Just reinforcing that message indeed, the decline in top line and lower margin definitely...

And 2025 may have landed a bit higher than what people also had expected.

And you discussed -- you talked about the distributor margin being under pressure. Is that some specific pressure from Volkswagen?

No, I mean, as you know, this is always the case. Each time a new model is being launched, they use it and on occasion, I would say, some additional pressure on the bottom part of the value chain, which are the importers, the distributors, the dealers, et cetera. And so that's been the case since several years. And of course, that's also the case now. What you do have to note in automotive is that we are now at the beginning of, let's say, the smaller electric vehicles that will increasingly start to be offered. And so that will also have an impact on the mix overall. And so when you say distribution margin, yes, the overall sales price of some of those smaller cars are a bit lower, while you do have a euro effect on that as well, even if the margin is more or less the same in terms of percentage.

Okay. And maybe a very quick follow-up on TVH. Then what about the search for a new CEO? I mean, how close are we to the hiring of the CEO?

The process is going very well. But as you know, these type of things always take time. And so it's -- I mean, it's a very attractive business. So we don't have all the difficulty to find strong candidates. But of course, this process is taking the time.

Next question will be from Michiel Declercq at KBCS.

I have 2 on Belron, please, and maybe a third one on TVH. So the second half margins were very strong at Belron, 24.4%, if my maths are correct. And I know you give a bit a wide range for the guidance and improvement. If I look into next year, you mentioned that the claim avoidance has normalized, so that should be a tailwind in the first half. You also don't have the transformation costs next year. I think there will also be some price increases as well. I'm just wondering why -- is there any reason that margins in 2026 should materially differ from the second half? Or if you can just highlight a bit the things that we should take into account? And then the second question on Belron is on the North America, the organic sales growth. If I do the math correctly, that's almost 11% in the second half. Can you give some color here on the volumes? I assume they must be positive as claim avoidance has come down, but how positive are they? And how do they compare to the other regions? And then maybe as a third question on TVH. Yes, we have seen you lowering the guidance there on the organic growth in the first half. Now you come in a bit short in the second half despite there being an additional trading day, if I'm not mistaken. You expect a recovery in 2026. Can you elaborate a bit on this on why you think this will be the case? Those would be my questions.

Okay. Well, I'll maybe start with the Belron question. You cannot just extrapolate the H2 margin of '25 and say this is the basis for the margin of 2026. It's not as simple as that. There's always a number of factors that determine what you ultimately end up having in a particular trimester or semester for that matter. This can be sector trends like claim a volumes that you talked about, it can be miles driven. Q1 is a bit more weather-driven than the other quarters in the year. There may be some cost phasing that plays a role, some operating leverage that plays differently depending on the year, some trading days effects you may have here and there. So you really cannot just extrapolate the H2 margin to H1 every year is somehow a bit different to have in there. Yes, to the degree that claims avoidance is a bit more normalized. You should see some effect, as you say, in H1 versus H1 of last year. On transformation costs, yes, the transformation program is over but that does not mean that there are no more programs or, let's say, IT investments going on that may link to system integration or other migration costs that may somehow have an impact on the way transformation is being accounted for. So there's always -- but it's more business as usual now really. Country per country, there are certain things that may be happening. But you're right that the actual transformation program as such is somehow over now.

One more element on the volume side.

That was the other question. Yes.

In the U.S. is the fact that, yes, there was a significant improvement in the claim avoidance side. But as well, let's not forget continued progress on cash and commercial segments, right? As we had stated earlier, especially in the cash segment, they continue to -- they have rebuilt the team earlier, and they continue to deliver on that segment helped, of course, with the more favorable environment in H2. And then you had a question on TVH and its recovery. So we guide to a continuing declining margin at TVH. So yes, a recovery from the top line, low to mid-single-digit top line growth because we saw also a more favorable environment around the end of the year, mainly in material handling and agriculture, although construction remained -- again, let's say, of TVH remains strong. And in that environment, we remain cautious let's say on the margin at TVH.

Next question will be from Alexander Craeymeersch at Kepler Cheuvreux.

I would have 3. So the first one would be on TVH. I'm just wondering how you see the path back to the 16% EBIT margin target by 2028, considering that the mix and the pricing pressure that you mentioned seems to have altered that business dramatically. Second question would be on PHE. I mean, I see acquisitions being done in Southern Europe but you probably noticed that some of the -- basically competitors in somewhat Western Europe are also announcing that they are revising their strategic options. So I'm wondering how you look at or whether you are revising your strategic options with PHE on the back of their announcement. And then the third question, and I hope you allow me to do this, is that basically the elephant in the room, you had 2 articles, one in Financial Times and one on Bloomberg, where you're planning -- where it's stated that you're planning an IPO for Belron. I mean in the past, you've publicly stated that it's likely that one of the PE players in Belron will look for a liquidity event considering their investment horizon. But yes, I'm considering that one of the PE investors is past that horizon. I'm just wondering what, in your view, would be an ideal environment for such a liquidity event.

All right. Well, on TVH, of course, we stand very much by the ambitions that we mentioned at Investor Day for 2028. So they still very much hold. We have de facto 3 years to go. And as you've seen in the last 5 years, lots of things can happen for a global business, both positive and negative. And so we see many positive contributors that allow us to get to those margins that we have highlighted for 2028. So we don't change that at all. At PHE, you wanted to know whether we change our options with some of our competitors revising it. Well, our strategy is very clear at PHE. We're very happy to be in the leadership positions in the markets that we're in. And when we can, we add something from time to time like we've done in Ireland, for instance, last year. And so for us, being part of the consolidation that may or may not happen at the European level is very central to our strategy. So we very much believe in the European market of spare parts that PHE is doing, and we very much believe in our approach of growing our market share, doing organic performance and complementing it here and there with some acquisitions as we do, for instance, in Spain. So for us, there is really no change in strategy. On the contrary, it just strengthens our belief that we're on the right track with PHE in Europe. Yes. And then on the last question, yes, the Financial Times in the Bloomberg, I mean, I cannot comment on rumors that they are right about. What I can talk about is that, of course, as you know, we are at the table at Belron with other co-shareholders that at some point in time, will want to exit. That's nothing new. When that time will come, I cannot say because it's them more triggering that moment than we are. We are a majority shareholder at Belron, and we're very happy to be in that position. At some point in time, they will want to exit. What is an ideal environment for such a liquidity event, I can think of several ones. And as you know, as our leverage at Belron will continue to go down, the number of options available or the number of environments that could be a good and attractive liquidity event for our co-shareholders will only increase. And so I think it's a dynamic statement to make of what would be an ideal environment for such a liquidity event but we'll tackle that when that moment comes. And so I know I'm maybe repeating myself a little bit, but that's not because there are rumors in the press that there's anything new to say from my point of view, from our point of view.

Okay. On TVH, could you just maybe -- coming back to TVH, I mean, could you just maybe clarify that path because, I mean, obviously, we start from a very tough environment right now. The way you see to that 16% EBIT margin, is that back into a -- from a better mix? Or is that from volumes? Or how do you see that?

Well, you need some volume. You can actually leverage -- have operating leverage from the fixed cost base that we have with the logistics footprint at TVH. We need a bit of price support, which we didn't have at all most recently but I'm very confident that also price support is there from time to time and will come back. And if you have those both elements and you combine it with good cost containment, then there's absolutely no reason why you cannot rapidly work on the margins again. And so for you -- but you need a bit of all 3. That's what we've seen in some of the very strong years that we've had, and we haven't been around so long at TVH. But in some of those years, we had a combination of those 3. And you have the combination of those 3, then there's no reason to be -- to exceed even the margins that we mentioned in our Investor Day last year.

Okay. Congrats on the good results.

Next question will be from James Rowland Clark at Barclays.

Two short ones, I hope. Just in Belron, you mentioned there that Q1 is heavily impacted by the weather usually. I just wondered if you could help us with year-to-date trading, whether you have seen any impacts from the weather? And then also on the back of the very, very strong second half performance in terms of Belron organic growth. I don't know if you provided it earlier but could you just give us an idea of volumes across North America and its other regions? And can we assume that sort of running into your year-to-date figures as well? And then my second question is just on Belron margins. Again, you had a strong second half. You hit your 23% margin. There's a lot of talk about how you could get there after the first half results. Can you help us unpack how you did that in the end? I assume there's plenty of operating leverage but I'm just interested in the impact of pricing, marketing and so on. And then also what are the main levers for margin growth in 2026 beyond operating leverage?

Okay. Starting with the year-to-date trading, it's very early days, and we've typically given trading update at the end of Q1 in the month of May on top line, including for Belron. But you may have noticed, of course, that there has been some serious winter in the U.S. in the beginning of this year, even a little bit at the end of last year, by the way, which helped in December but also in the beginning of this year, both in January, February and even early March. And so [Technical Difficulty]

Please standby.

Can you still hear me?

Yes, please go ahead.

I can go ahead. Thank you very much. All right. So that was a part of the year-to-date trading, which is a bit early to tell really what that impact of that extreme winter will be. You should just note that in the midst of a real snowstorm, people stay at home and maybe blocks for a couple of days, so to say. And then it's a little more in the aftermath of that snowstorm and people get out again that you do see the effect on the windshields that are there. And then that, of course, our service centers gets lots of demand and in there. So you may have some timing differences between when the actual snowstorm happens and then the impact it has on the number of jobs that show up in our service centers. But of course, we're trying to be as agile and flexible as possible in matching capacity, supply and demand of technicians, et cetera, together. That's point number one. And then point number two, on the -- you asked a bit on the volumes, I think, for the U.S. I mean, volumes overall, we ended the year with, I think, 0.5% job growth overall worldwide. That was, of course, higher than in H1, where we were still negative in volume. So you can assume that in H2, we did have a somewhat higher overall volume growth, probably around 1.5% or so. And so the U.S. did contribute over proportionally to that. So the percentage in the U.S. has been higher than this 1.5%. So it did contribute to that. So I think you had the question there on volume U.S. And then you asked a little bit about -- yes, the overall margin effect of H2 in the U.S., it was really a combination of factors. We did have a good cost elements and containments. We had an additional trading day. We had the transformation costs were a bit more in H1 versus H2. We had supportive pricing. We had talked about [ that ] before but there was overall supportive pricing. And there was just operating leverage given that we did have stronger volumes in H2. I talked about the claim avoidance support or rather lack of avoidance, I would say, in H2. And then the good matching of supply and demand, which is always important because it's one thing to have the volumes and you have to have the capacity at the right place. So I think all the different pieces of the puzzle fell nicely together in H2 and helped explain the good operating leverage we have.

Next question will be from Jeremy Kincaid at Van Lanschot Kempen.

I also have 2 on Belron to start. Firstly, back to the IPO topic. One of the newspaper articles suggested that you had engaged an investment bank yourself and we're considering strategic options. I was just wondering if that means you're considering selling a portion of your Belron stake or if that's still a sacred cow to you? And then my second question on Belron is just back to the second half margin. Looking ahead into next year, you've said the weather should be favorable. You should have a full year contribution from the State Farm contract. Also, the second half is usually softer, which suggests that the full year could be better into '26. So I'm just looking at a lot of things that I think suggests that the margin should improve. But clearly, you called out some investment in IT and trading days. But I suppose I'm still just struggling to understand the guidance or the commentary around the margin and why there should be potentially a step down from the second half. It seems like a large investment in IT. And if that is the case, can we get an idea of when that investment might come to fruition? And then finally, just on auto, the guidance is also a little bit soft there. You mentioned that there's going to be a material decline in the margin. My understanding from those smaller vehicles was that the margin would actually be okay, but clearly, they have a lower dollar value. So it was just going to be an impact to the dollar margin. But it seems like that's not the case. I just would hope to -- if you could dig into that in a little bit more detail, that would be great.

Sure. Well, on the IPO, first of all, so we are a happy majority shareholder of Belron and have been for quite a while and will continue to be so. So indeed, it's us triggering any liquidity event reflections and so on. So we are very happy to be a majority shareholder. That's always been our base hypothesis. But as you know, we have the flexibility when the time will come when the event is being looked upon. We will have the flexibility to either keep our stake, increase our stake, decrease our stake, et cetera. But again, the base hypothesis is the one that I've been talking about in the past, is that we will remain the majority shareholder. And therefore, that it's not us triggering access to liquidity, but more our core shareholders. That's on the first point. The second point is on the guidance for Belron. I think we were quite clear. What we said is we expect a continued adjusted operating margin improvement towards the 2028 ambition. You know the 2028 ambition. You know where we've landed in 2025. So when you say we expect a continued improvement, that's exactly what we do. We expect a continued improvement. And so I think that's quite clear. There's no particular big IT investments or what have you in the making and so on. I was more referring that in the past, we had this transformation program that's behind us now. But there will, of course, still be country per country. I mean, there's lots of stuff going on with AI or other type of things. So it's very normal that anybody -- everybody is continuing to invest, but it's not anymore as it was in the years behind us. So in that sense, you should not look at a major IT investment that suddenly pops up.

We can add that there is not an exit rate, right, in terms of margin. So important to say, okay, '25 was closed very successfully with a 23% margin and now let's say, starts a new year with the guidance repeated by Francis.

Exactly. And then your question on Auto. Yes, it's true that smaller cars have a smaller dollar value or euro value in our case. And sometimes they have also a little bit of a lower margin percentage. It's a bit of a combination of that, that gives a less margin. And so some of our costs are, of course, fixed. Sometimes you still have to do the same advertising or what have you for a smaller model versus for a larger model. You may be in competition with more brands or different brands that may require you to invest a little bit more in the market to get to the expected market share, et cetera. So it's a combination all of these factors that we have intensified competition overall. We are in a model mix, which is more average overall. And so there is, of course, pressure also from the OEM. You may have read it in the press. So even today, I think the Volkswagen Group is continuing to work on its costs, and it's good at the factory level but of course, also passing along part of that pressure to the downstream of the value chain of, which we are part. And so not surprisingly, everybody is -- yes, is working hard to do good cost containment. But nevertheless, we think we had a better result than planned in 2025, and it will be a bit more tougher again in 2026. So every year is a new year, and that's why we've remained more cautious on the outlook for Auto for 2026.

[Operator Instructions] And at this time, gentlemen, it appears we have no other questions registered. Please proceed.

Well, we are at 7:30 p.m., which I think more or less when we anticipated the finish of this call. So in that sense, I will thank you all very much for your presence in our '25 results and look very much forward to meeting you in the course of either of the coming days or the coming weeks or the coming months. So thank you very much, and have a great evening. Bye-bye.

Thank you, sir. Ladies and gentlemen, this does indeed conclude your conference call for today. Once again, thank you for attending. And at this time, we ask that you please disconnect your lines.