Geberit AG ($GEBN)

Good morning, ladies and gentlemen, and welcome to our analysts and media conference. The presentation is structured as follows. And as usual, first, I will provide you with an overview of 2025 and present the sales development last year. Afterwards, Tobias will present the operational and financial results of 2025. Thereafter, I will talk about the outlook of this year and summarize our presentation. And as usual, at the end of the presentation, you have the opportunity to ask questions. Let me start with our key figures, 2025. After the significant decline of the European building construction industry since mid-2022, the market stabilized last year. In this flat market environment, we increased net sales by 4.8% in local currencies, almost entirely driven by volume growth. The EBITDA margin reached 29.4%, a slight decline versus 2024 caused by the onetime effect of the Wesel plant closure. Excluding these planned closure costs, the EBITDA margin had reached 30.0%, an improvement of 40 basis points compared to previous year. EPS increased by 8.4%, 5% in local currencies and excluding the planned closure costs. Our strong operating results are also reflected in the industry-leading free cash flow margin of 20.8%. Simultaneously, we achieved strong results in the area of sustainability. We reduced the relative CO2 emissions by 6.9%. And finally, the Board of Directors proposes a dividend of CHF 12.90 per share, which corresponds to an increase of CHF 0.10 per share. Let me continue with the overview of our main activities and achievements in sales and marketing last year. We again invested in our customer relationships and further increased our customer activities. Professional customer contacts increased by 2% and reached 478,000 individual contacts. Customer trainings increased by 16% and customer participating in Geberit events even by 48%, driven by the introduction of the new installation element Duofix 4. At the same time, we also strengthened our interactions with end consumers. Based on several B2C marketing activities, we generated 114,000 new end consumer leads, an increase of 34% versus previous year. Let me give you a few examples of other important sales and marketing activities last year. We launched the new brand and marketing concept, Mastering Water to demonstrate Geberit's core competence in guiding, controlling and using water inside buildings. This new brand and marketing concept was used for the first time at our new booth at the leading industry fair called ISH to present our entire product portfolio, including interactive displays and hands-on areas. We welcomed a record number of 50,000 professional visitors at our booth at ISH. A third example is the extension of our digital WSC product finder with wash place products. In 2025, over 280,000 end consumers used the tool to navigate through our bathroom system product portfolio. 2025 was again marked by important product introductions. The highlight last year was the introduction of our new installation element Duofix 4. It consists of a new frame with numerous new features, which make the installation for sanitary plumbers easier and faster. Also in the product area of installation and flushing systems, we introduced the new Sigma 40 actuator plates with a thickness of just 4 millimeter, the new plates are 3x slimmer than their predecessors to address modern and slim design requirements. In Piping Systems, we further rolled out our Super Tube concept to our existing noise insulating drainage system, db20. The upgraded system reduces noise and saves space in mid- and high-rise buildings, thanks to optimized hydraulics. Finally, in Bathroom Systems, we further rolled out the toilet flushing technology called TurboFlush to the mid- and basic segment to enter the project business with best-in-class flushing technology. Let me now comment on our operations last year. We continued to improve the productivity of our 26 manufacturing plants. Overall, and supported by volume growth, we increased productivity by 4.1% in 2025, driven by further automation, process improvements and the specialization of our ceramics manufacturing network. Since 2014, we have increased production productivity on average by 3% per year. Let me now comment on our sustainability achievements last year. We reduced absolute CO2 emissions by 2.4% and relative CO2 emissions even by 6.9%. The main driver for this strong environmental performance were efficiency gains in ceramics manufacturing. Since 2015, we reduced relative CO2 emissions by 69% and absolute CO2 emissions by 55%, which we think is a very strong result. Main drivers of the significant reduction in CO2 emissions were process improvements leading to lower energy consumption, investments in energy-efficient ceramic firing kilns and systematically increased sourcing of renewable energy. Social responsibility is another important pillar of our sustainability strategy. In 2025, we directly employed 291 full-time equivalents with disabilities. We consciously sourced products and services in the amount of CHF 10 million from external workshops, which employ disabled or socially disadvantaged people. In total, we support around 740 disabled or socially disadvantaged people, which corresponds to approximately 6.5% of all employees. Finally, let me again give you an example of a social project that we conducted last year. In Kenya, we renovated and equipped the sanitary facilities of a local girl school with 1,200 students. The work was carried out by Geberit apprentices and was fully financed by Geberit. Our sustainability efforts and focus on our environmental footprint and social responsibility were again recognized by many rating institutions. Among others, our commitment and sustainability results were acknowledged by Sustainalytics, ranking a great 4th out of 135 companies in the building products sector. EcoVadis, which ranked us in the top 6% of all rated companies and MSCI, which awarded us an AA ESG rating. Let me conclude our overview with the results of the company-wide employee survey last year, a survey which we conduct every 4 years. Across all survey dimensions, survey results improved versus 2021 and exceeded the industry benchmark. The overall results are a testament to the high satisfaction level and commitment of our employees. The best results were achieved in the dimensions, corporate social responsibility, innovation, clear and promising direction and development opportunities. After this overview, I continue now with the review of our sales development last year. Net sales in Swiss francs reached CHF 3.16 billion, an increase of 2.5% versus previous year. In local currencies, net sales grew by 4.8%. This means we faced a negative currency effect of CHF 72 million or minus 2.3%. The increase of net sales in local currencies was almost fully driven by volumes. In light of the flat European building construction market in 2025, we consider this as a strong result. The main reasons for this market outperformance were our undiminished market presence and sales efforts since mid-2022 when the European building construction industry started to collapse. Second, strong sales with newly introduced products; and third, the success of dedicated sales initiatives and investments outside Europe. 25% of total growth last year was driven by markets outside Europe. Let me briefly comment on the quarterly sales development last year, which was influenced by 2 major factors. First, sales volatility in the first 3 quarters was mainly driven by the introduction of the new Duofix 4 installation system, which was rolled out in several waves. Second, Q4 was positively influenced by disproportional purchases from wholesalers in December to achieve better bonus levels. Let me now discuss the sales development in more detail on regional level. I start with Central Europe. In Germany, net sales increased by 6% with double-digit growth in Bathroom Systems despite a still slightly declining market, driven by a still weak new build sector last year. In Switzerland, net sales grew by 1%, negatively affected by selected ForEx-related price adjustments. Net sales in the Benelux region increased by 7%, driven by growth in both countries, Belgium and the Netherlands. In Italy, net sales were up by 2% despite a softening market with strong growth of new products. And in Austria, we also benefited from strong growth with new products and the market stabilization after 2 years of a strong decline. Let me now turn to the rest of Europe. Net sales in Western Europe achieved previous year's level. Sales growth in Iberia and the U.K. was compensated by the market-driven sales decline in France. The market in Northern Europe stabilized after a strong decline over the last 2 years. Net sales grew by 3% with growth in all Nordic markets. Net sales in Eastern Europe increased by 4%, driven by sales growth in almost all countries, which was particularly strong in the Adriatic region. This brings me to the markets outside Europe, which account for only 11% of sales but contributed 25% to growth last year. Outside Europe, we recorded strong growth of 25% in the Middle East, Africa region. This is the fifth year in a row in which we have achieved double-digit growth in this region. Net sales in Far East Pacific declined slightly by minus 1%. Strong growth in India was almost fully offset by the sales decline in China due to the ongoing real estate crisis. In America, net sales grew by 4%. The Chicago Faucet portfolio delivered strong growth without major effects from tariffs. Let me now comment on the sales development per product area, again in local currencies. Net sales increased across all 3 product areas, both in Swiss franc and local currencies. Installation & Flushing Systems increased by 5% with double-digit growth outside Europe, driven by the ongoing penetration of concealed system technology. Piping Systems increased by 3%, negatively affected by its higher exposure to the still declining new build market last year. Bathroom Systems increased by 6%, benefiting from strong growth with our shower toilet business. For the operational and financial results, I will now hand over to Tobias.

Thank you, Christian. I will start with a general remark. All P&L result lines were significantly negatively affected by the currency development. Nevertheless, all lines of the P&L showed an improvement year-on-year. Also, the impact on margin was limited due to our strong natural hedge. Excluding the negative effect of our plant closure in Wesel, our EBITDA and EBIT margins improved. In numbers, EBITDA increased by 2% in Swiss francs and reached CHF 931 million. In local currencies, EBITDA increased by 5.3% -- the EBITDA margin reached 29.4%. Excluding the negative margin impact of the Wesel closure of 60 basis points, the EBITDA margin would have reached 30.0% and exceeded 2024 levels. EBIT increased in Swiss francs by 0.7% and reached CHF 767 million, resulting in an EBIT margin of 24.3%. In local currencies, EBIT increased by 4.3%. Again, excluding the negative margin impact of the plant closure of 70 basis points, the EBIT margin would have exceeded 2024 levels. Net income in Swiss franc remained stable at CHF 598 million, but increased in local currencies by 4.8% EPS was supported by the share buyback program, resulting in a disproportional high increase of 0.5%. In local currencies and excluding the plant closure costs, EPS increased by 8.5%. Free cash flow increased by 7.4% to CHF 659 million, resulting in an increase of the free cash flow margin to 20.8%. Finally, our industry-leading return on invested capital increased slightly and reached 23.2%. I would like to give you now some more details on the negative currency effect of CHF 72 million or 2.3% on the top line last year, as mentioned by Christian. The euro and currencies in Northern Europe, which together account for 70% of our net sales only contributed 48% of the overall top line FX effect. Most of the negative currency effect was driven by a basket of small currencies and the U.S. dollar, which significantly weakened against the Swiss franc last year. Although these currencies only account for 20% of our net sales basket, they were accountable for 52% of the negative currency effect. Let's now review the cost position of the P&L in greater detail. Two major factors favored these. First, the currency development; second, lower direct material purchase prices. The following comments are all currency adjusted. Cost of material increased by 1.5%. We will come back to this position on the next page. Personnel expenses increased by 7.8% due to onetime costs related to the plant closure in Wesel as well as wage inflation of 3.8%. Other operating expenses increased by 5.0%, driven notably by higher energy prices and investment in IT and digitalization. Depreciation increased by 12.8%, impacted by the plant closure in Wesel, while the amortization of intangible assets decreased by 8% -- the low cost of materials increase of 1.5% seen on the previous slide was supported by tailwind from direct -- from lower direct material prices. In 2025, there were currency adjustments adjusted around minus 2% below those of 2024. In the fourth quarter of 2025, average direct material prices were flat versus the third quarter of 2025 and minus 2% below the fourth quarter of 2024. The personnel cost increase was only slightly driven by the number of total FTEs, which increased by nearly 1.5%. The main areas of increase were operations due to the increased volumes and sales driven by growth initiatives outside Europe and by selectively strengthening expertise in Europe. From personnel costs, let's now turn to the marketing expenses in Swiss francs. In total, we spent CHF 88 million for marketing last year, which corresponds to 2.8% of net sales, roughly equivalent to the previous years. The slight decline in Swiss franc versus 2024 can almost fully be attributed to the strengthening of the Swiss franc. I will now comment on R&D expenditure and investments. We continued to invest in our innovation pipeline last year. In total, we invested CHF 86 million in R&D, both as OpEx and CapEx. This represents 2.7% of net sales and is in line with previous years as well. As a result of our R&D efforts, we have filed 18 patents for upcoming product innovations. The full year EBITDA margin bridge on this page highlights the most important factors that impacted the 2025 margin. The positive volume and product mix effect positively influenced our margins by 130 basis points. It was driven by the positive operating leverage effect and efficiency gains. The net price effect was positive, contributing to 40 basis points due to lower direct material prices. Other cost effect had a negative effect of 110 basis points, mainly driven by 3 factors: wage inflation, higher energy prices and investment in growth initiatives, IT and digitalization. The FX effect of 20 basis points on the EBITDA margin was very limited, thanks to our strong natural hedge. Finally, the onetime costs related to the Wesel plant closure led to a minus 60 basis point decrease. In sum, this results in a slight margin decrease of minus 20 basis points. Excluding plant closures, the EBITDA margin would have increased by 40 basis points. I'm now turning to the positions below the operating profit. Financial result decreased to minus CHF 33 million due to FX losses. The effective tax rate decreased slightly from 19% in 2024 to 18.6% in 2025. Excluding the plant closure costs and in local currencies, we achieved a net income increase of 8.1% and an EPS increase of 8.5%. The more favorable EPS development versus net income can be attributed to our continued share buyback program. Turning to the free cash flow. This one increased by 7.4% to CHF 659 million, thanks to our strong operational performance and lower capital expenditures. This corresponds to a free cash flow margin of 20.8% and an EBITDA conversion ratio of 70.8%. Net cash flow from operating activities increased by 2.3% to CHF 867 million. Paid net capital expenditure decreased by CHF 30 million to CHF 159 million. Interest and other financing costs were almost stable compared to 2024. I will now comment on our balance sheet at the end of 2025. Net debt decreased by CHF 196 million, mainly driven by the higher cash position. As a result, both our equity ratio and net debt-to-EBITDA ratio improved to 39% and 0.8x, respectively. The net working capital decrease was driven by timing of VAT payments. And finally, the increase in property, plant and equipment was due to continued strategic investments. Let's review our 2025 CapEx in more detail. CapEx reached CHF 173 million or 5.5% of net sales. The investment were driven by our continuous efforts to modernize and rationalize as well as the phaseout of several multiyear investment projects. Overall, 60% of investments were dedicated to modernization and rationalization, 29% to capacity expansions and 11% to new products. On the following page, let me give you a few examples on the investment projects that concluded last year. In Pfullendorf, we invested in 2 key projects. Firstly, we built a new modern customer training center spanning 3,500 square meters to enable state-of-the-art formats and exhibitions for a large number of customers. In total, we invested EUR 37 million over 4 years. Secondly, we in-sourced the production of Duroplast seats and Lids invested EUR 8 million over the last 2 years. In Pune in India, we invested CHF 4 million, starting the production of drainage PE pipes for the local market. Let me now comment on the 5-year development of our industry-leading ROIC and free cash flow. We have increased the return on invested capital to 23.2%, only slightly below the 5-year average, which is positively impacted by the extraordinary high values in 2021 and 2022, driven by the COVID-19 home improvement trend at the time. Turning to the free cash flow. Despite the market decline since mid-'22, we have a stable free cash flow generation, accumulating around CHF 3.3 billion since 2021. This corresponds to an average and high free cash flow margin of 20%. Let's turn to the dividend. For 2025, the Board of Directors proposes a dividend of CHF 12.9, an increase of CHF 0.10 or 0.8%. This is the 15th consecutive year with an increasing dividend per share. Since the IPO in 1999, the dividend has continuously increased apart from 2001 and 2010. The payout ratio of 71% of net income is just above our policy of 50% to 70% payout corridor. This proposed dividends mean that the dividend per share has increased by 55% since 2014. We are now coming to the share buyback program. In September 2024, we started the current share buyback program with a maximum volume of CHF 300 million. The execution period is a maximum of 2 years. Since then, and until the end of 2025, we have bought back around 229,000 shares amounting to CHF 126 million. With the current dividend proposal and the ongoing share buyback program, Geberit continues its stable and attractive distribution policy, which has been applied for many years. This attractive distribution policy is reflected in the cumulative payback to shareholders over the last 5 years. During this period, the whole free cash flow amount of CHF 3.3 billion was paid back to shareholders via an attractive mix of dividend payments and share buybacks. In 2025 alone, we distributed CHF 503 million to shareholders through the dividend and the share buyback program. These numbers confirm Geberit's ability to consistently generate stable cash flows over an extended period even during crisis and our commitment to a shareholder-friendly distribution policy. And with this, I hand over to Christian for the 2026 outlook.

Thank you, Tobias. Let me start our market outlook with some preliminary remarks. The outbreak of the war in Iran 2 weeks ago and the heightened geopolitical tensions significantly increased the macroeconomic uncertainties. This makes a forecast of inflation, interest rates, consumer confidence and so on, all important drivers for the construction industry, very difficult. The following market outlook, therefore, is made under the assumption that the war in Iran has no significant impact on the macroeconomic environment and therefore, the demand for the building construction industry, except for the Middle East region. For the Middle East region, we are currently refraining from a market outlook. However, keep in mind that we only generate 3% of our total net sales in the Middle East. The direct sales impact of the escalation in the region on the group is, therefore, limited. With these preliminary remarks, let me now start with Europe and the new build sector. In Europe, overall building permits stabilized in the first 9 months of last year since the slightly declining nonresidential building permits were fully offset by the growth of residential building permits. Therefore, we expect after the strong decline over the last 3 years, a stabilization of the new build activities in 2026. Compared to the new build market, we expect a growing environment in the renovation sector, which accounts for around 60% of our business. Indicators for renovations started already in the course of 2024 to improve and have continuously improved since. In particular, housing transaction increased by 11% in the first 9 months of last year, indicating a positive renovation market this year. Based on the stable new build and positive renovation market, we expect slight growth in Europe in the course of 2026. However, no broad recovery yet. Outside Europe, we expect a mixed picture for the building construction industry. Some markets should see good demand, for example, India. Other markets will continue to decline, for example, China, due to the collapse of the new build sector in China. Let me finish our construction market outlook with a trading update for January and February. Like-for-like sales in January and February were up low single digit, somewhat negatively affected by wholesalers prebuying in December and selectively by bad weather in North Europe. Let me finish our market outlook with an update on the direct material and energy prices. We expect a sequential increase of direct material prices in Q1 this year compared to Q4 last year. However, year-on-year to a level still below Q1 last year. Due to the continuous increase of copper prices since several months, we will implement a selective extraordinary price increase for copper piping products of 5% as of April this year. This price increase is not related to the outbreak of the war in Iran 2 weeks ago. We took this decision already before. Energy prices are also expected to sequentially increase in Q1 compared to Q4 last year, but year-on-year also to be still below Q1 last year despite the price surge since beginning of March due to the escalation in the Middle East. Please keep in mind that our energy costs are limited and represent only 1.9% of net sales. Thereof, we only spend 1/3 or 0.6% of net sales for natural gas. Let me now come to the Geberit outlook this year. I start, as usual, with our new product introductions. In the product area, installation and flushing systems, we will introduce customized finishes for our WC actuator plates, Sigma 40 and our urinal actuator plates, Typ 40. 50 customized finishes will allow for matching colors and materials to major faucet brands to enhance our offering for premium projects such as luxury hotels or high-end condominiums. Another new product is the upgraded prefabrication installation system called GIS-Pro. The system increases rigidity for better transportation of prefabricated installation modules and reduces weight by 30%, all at a competitive price point. An intuitive software solution for professionals facilitates the planning of these prefabricated GIS-Pro modules. In Bathroom Systems, we launched 3 important innovations in the area of showers this year. The first product is the CleanFloor30, a new slip-resistant shower surface available in 3 colors. The integrated hair comb and seamless surface ensures easy cleaning for the end consumer. Second, building on the well-known Duofix system, we introduced a new shower installation frame that enables up to 3x faster installation compared to conventional systems. It is compatible with both the new CleanFloor30, but also third-party shower surfaces. The third shower novelty is the slim shower channel CleanLine30, available in stainless steel or black. The established effortless installation makes it an easy-to-install solution for installers. For end consumers, we have developed a new and easily removable hair comb that facilitates cleaning and maintenance. Also in the area of bathroom systems, we are launching a new wash place siphon this year. Thanks to its new space-saving design, it's no longer necessary to cut out the back wall of bathroom furniture. In addition, its optimized hydraulics allow for a high flow rate, which prevents blockages. Finally, in Piping Systems, we are extending the assortment of 2 key systems that we have introduced in recent years for FlowFit and for Mapress Therm. For FlowFit, we launched connectors to third-party systems. These connectors have several advantages, for example, allowing in a renovation setting to connect existing pipe systems in a stack with FlowFit in the floor distribution. For Mapress Therm, we are releasing union not adapters, which will allow flexible connectors with other systems and walls, which is particularly advantage in industrial applications. Two other important initiatives this year include new marketing activities and further efforts in the area of IT and digitization. We will leverage our new state-of-the-art training and exhibition center in Pfullendorf to roll out new training and experience formats for our professional customers in Germany. Let me show you a short video about this new training center. [Presentation]

Another second marketing focus this year are architects and designers. We will open a new Geberit experience center in Milan to showcase the design and functionality of our products in front of the wall. And finally, we will launch a new dedicated B2C marketing campaign to increase end consumer brand awareness and demand for bathroom systems, especially for shower toilets and the entry-level shower toilet Alba. Besides marketing, we will also further invest in various IT and digitalization activities this year, specifically in AI initiatives. In total, we will increase our operational expenditures for these initiatives by CHF 20 million this year. Let me finish our outlook with our CapEx plans for 2026. Overall, we plan to invest around CHF 230 million this year. A major CapEx initiative will be in the area of logistics with 2 main projects. The first project consists of the construction of a new greenfield logistics center in Ibbenburen, Northern Germany, as already announced last year. The purpose is to increase capacity and to mitigate risks from our existing main logistics center in Pfullendorf . The second project comprises a new distribution center in Bromolla, Sweden to consolidate and modernize our logistics activities of our ceramics business in the Nordic region. Both logistics projects are currently in the final planning phase. Construction starts are both planned in the second half of this year with the objective to ramp up operations in 2029 to 2030. Total CapEx for both new logistics centers is estimated to be around EUR 250 million and will incur over the next 4 to 5 years. In addition to these 2 large projects, we continue to invest in our production network to address selected capacity needs and also further improve productivity. Let me give you a few examples. We are investing in our Swiss plants, CHF 12 million until 2028 to increase the production capacity for our supply piping system, FlowFit, to cope with the ongoing strong market demand. In Langenfeld, our plant for metal pipe systems in Germany, we will commission fully automated production lines for straight metal fittings with a total investment of EUR 17 million. The last example includes 4 fully automated pressure casting cells for wall-hung WCs and washbasins in 2 of our ceramic plants with a total investment of EUR 8 million until 2027. Let me close our presentation with a short summary. With a currency-adjusted top line growth of 5%, we achieved strong growth last year in an only flat market. These results confirm that we are successfully navigating the significant market decline of the European building construction sector over the past 3.5 years. The strong top line was driven by our undiminished market presence and sales efforts, new product introductions and sales initiatives outside Europe. Excluding the onetime impact of the Wesel plant closure, we improved our industry-leading EBITDA margin, thanks to further efficiency improvements. This led to a strong EPS growth of 8.5%, excluding plant closure costs and currency effects. We again focused last year on the execution of various strategic and operational initiatives. We demonstrated with an increase of free cash flow of 7% and a free cash flow margin of 21% that we generate very high and industry-leading cash flows even in a flat market environment. And finally, the employee survey proved the high level of satisfaction and commitment of our organization. Geopolitical risks and the macroeconomic uncertainties have significantly increased since the escalation of the Middle East conflict 2 weeks ago. Under the assumption that the escalated conflict has no major impact on the macroeconomic environment, we expect in Europe overall a slight market growth. However, no broad recovery and outside Europe, a mixed picture. We expect sequentially increased direct material and energy prices in Q1 compared to Q4 last year, however, year-on-year to a level still below Q1 last year. Our focus this year will be again on various strategic and operational initiatives, for example, the introduction of new or recently newly introduced products, several new marketing initiatives or the renewal and expansion of our logistics center. Geberit remains strongly positioned to further expand its leading market position also this year. The fundamental success factors of our business remain a proven and stable strategy, a resilient business model, strong focus on innovation, efficiency and productivity improvements supported by continuous investments, a functional and lean organization with a high level of expertise and finally, a strong and down-to-earth corporate culture that suits our customers and is lived by motivated employees. This is the foundation for further value creation also this year for our customers, our employees and our shareholders. With this, we are at the end of our presentation. On this slide, you see the important key dates this year, and we are now ready to answer your questions.

I have three questions, please. The first one will be on the pricing in 2026. You mentioned the 5% extra increase related to copper. How much would that be then on the group level? And at what point will you consider additional extra price actions for gas prices?

So this extraordinary price increase for copper pipe system has a positive impact, but a small positive impact on group level because the amount of sales that you generate with these copper pipe systems is not as big. To give you an indication, we don't want to disclose the number due to competitive reasons. We have CHF 1 billion sales with Pipe systems. We have roughly 10 systems and copper is rather a smaller one. So a tick positive impact on group, but not to be overestimated. And what would it take to take further price increases? I guess this question is in the context of the last two weeks, I assume. For the moment, we have not taken any decision because, obviously, there's too much volatility and uncertainty. We have been impacted on the cost side in that first two weeks basically only on two levels. One is energy. As I said before, we have about 0.6% of net sales, CHF 20 million cost in natural gas. There, we have an impact. And the second one is on the plastic part, which is highly correlated to oil or in other words, to commodity plastics. But the share of commodity or the cost for commodity plastic is also relative low. We have only about 2% of net sales are related to commodity plastics, and there we have seen an impact in March. But all the rest, we have not yet seen direct impact. Therefore, it's too early to decide should we take any pricing actions or not.

Much of that is purely [indiscernible]...

So we said it's half on -- it's AI and digitization is one part. Within that, it's difficult to make a clear part, but it's a larger part of the CHF 20 million is on IT and digitalization. There's a lot of preparation work going in there, so making data AI ready. So whether that's AI or digitization, hard to say. But I would really put that into one block, IT and digitalization, which is the larger part of the CHF 20 million.

Great. And the last question is on the CapEx. You framed the 2026 outlook with the logistics centers, but it will be a 4- to 5-year project, right, the 2 logistics centers. So would you say the EUR 230 million is a good run rate for the next couple of years, or is there a reason it will go up in '27 since you only start building in H2?

So we expect EUR 230 million roughly in average for the coming years.

[indiscernible]. You said that the Middle East is about 3% of total sales. Could you give us a bit of color on your activities in that region, how many employees, factories and what kind of markets you're active in those markets? And how does that affect your supply chain as well?

So the business in the Middle East accounts to around 3% of net sales. We have about 70 sales employees in the region. We don't have any manufacturing facilities. They are largely concentrated in the Gulf region. In Dubai, we have the head office for these countries. We have also activities in Israel with people on the ground. We don't have any sales in Iran and people since many, many years since the sanctions, so there's no business there. The actual situation in terms of supply chain is challenging, obviously. It didn't come to a standstill, but we have, especially in terms of supply chain, some challenges in terms of delays, rerouting, some freight forwarders also canceled their transportation. So it's challenging, more difficult, but it's not at zero. And maybe a word to the activities on the ground in terms of building construction, maybe not only supply chain. Obviously, that's impacted to a certain extent, but our construction sites are operating as far as we understand. Showrooms, for example, are open, but all, of course, on maybe a little bit lower level but construction activities did not come to a standstill neither.

And do you source a lot of material from that region or that goes through these routes? What comes exactly from there?

Directly, we do not source a lot of raw material from that region. For example, the commodity plastic I mentioned before, we source from Europe. But the price impact, for example, on the commodity, that has an impact. But on the supply side, we don't have any frictions on the supply side, we don't have any frictions at the moment. We get all our raw material. So there's no impact short term from that perspective.

Two questions. First of all, a cash flow question. You mentioned the VAT payments had an impact on net working capital. Can you provide a number here? And maybe also a number for the cash out this year for -- in relation to the Wesel plant? That's the first question.

Good. So VAT, it's a double-digit figure, but a relatively low double-digit figure. Cash out is very small in 2025. The majority will be in 2026. The bulk is the restructuring provision, which will be paid out in this year and the depreciation, which is noncash by nature.

And the next question in regard to the Wesel plant as well. As you, I think, already faced now all the costs or more or less all the costs in '25. What's the current status of this plant or maybe the positive cost effects for this year? Do we already see some productivity gains in the network for this year, or you still stick to the plan next year?

So the plant will only be closed this year. And as a result, the main benefit from that will be as of 2027. Question from the call, web call or...

Could you remind me on the price increase you plan on group level as of beginning of Q2?

How much we did or...

Yes. How much you're going to have price increase?

Around 1%.

Around about 1%. Okay. Second question would be on the share buyback program. I think as of March, you bought back, I think, some CHF 145 million, something like that. The program is around CHF 300 million ending September this year. So do we have to expect now an acceleration of this program, or you will just end up with only CHF 200 million instead of CHF 300 million? And what do you plan for after September '26?

So we're not commenting on ongoing share buyback programs also because it's a delegated program, which works on the algorithm. And therefore, the completion rate will really be seen at the end. As for a potential follow-up, we have not yet decided on that. But if you look at our history, there's a certain likelihood that we will. But again, that has not even yet been discussed at Board level.

I've got three, and I'll take one at a time. Regarding the new products that you were talking about last year, Alba, DuoFix, I think FlowFit, there was another one, if I remember correctly. Can you talk about the sales momentum that you've seen in January, February for these products and trying to figure out whether there's a continuation of the positive momentum that we saw last year.

We see a continuous positive momentum.

Okay. But no slowdown or just above average.

So slowdown would be a contradiction to positive development. It's still going positive.

Well, it's a matter of first to second differential, right? Second question is on Germany. Just wondering what kind of market sentiment you're getting there from wholesalers and what kind of order backlogs we're looking at for installers recently?

I would say relatively unchanged and very much aligned with what we say about Germany. So a better environment this year than what we have seen last year, slightly positive, but also a clear indication that there is no broad market recovery expected this year, pretty much in line with our statements before.

Okay. And the order backlogs.

I'm sorry. The order backlogs are no new numbers. That's 10.1 weeks, if I remember correctly. That's a decline if you compare it year-on-year. That's the installer backlog you are referring to, I guess, 10.1 weeks.

Okay. And Q4 was impacted by restocking, right, ahead of the -- because they wanted to get these sales bonuses. Just wondering do we have any new indications on inventory levels at wholesalers and what their procurement plans are as of March?

To be honest, no, we don't have any indications where they are at the moment. Therefore, I can't give you a precise answer. You're referring to the slide pre buying in December due to -- since they want to reach bonus levels.

I'm not sure if I got it correctly, just for understanding the January, February sales '26 are in the low single-digit percentage range higher than...

Correct. Yes. like-for-like, low single-digit growth.

We have a couple of questions from other participants from Pujarini Ghosh, Bernstein. How should we think about the growth and margins for 2026?

We will, as usual, give a guidance for these two numbers with our H1 results.

A question from Elodie Rall from JPMorgan. What are your expectations for new products contribution in 2026 versus 2025? I know already asked, but for the overall year?

I think as every year, I must say, new products are important in terms of growth contribution. We generate around 20% of our annual net sales with new products, not launched in that year. We count new products for the last four years. And also in terms of growth contribution, that was the case last year, we also consider this year as an important driver for growth, new products. How much it will be exactly, I don't know, but I'm sure it will be an important contributor, also referring to the still positive dynamic in January, February asked by Mr. [indiscernible] of these important new products.

And another question from Elodie Rall. Again on outlook, what is your Q1 sales expectations at this stage given weather impact mentioned and the Middle East impact?

As just said before, we said what happened in January, February. We don't comment in March, low single-digit growth, which was also partially impacted -- selectively impacted by some bad weather in the northern parts of Europe.

Next question from Jon Bell from Deutsche Bank. Can you clarify if the January, February figures is expressed in local currency terms?

Yes. Like-for-like means that we exclude currencies and also any working day effects.

And a follow-up question -- the next question from John Bell. Has there been any direct impact of the war on any of your sites?

Sites, no. Maybe that's a question coming back to before. Of the 70 employees, if that is the question, obviously, the people are mostly working from home at the moment at a little bit lower level, that's the biggest impact on our sites that the sales organizations are working from home in the region.

Okay. So I'm done so far, I think maybe some other questions from...

Maybe two more questions. One on the share buyback, you already mentioned the share, but you also had trading in your own shares, and you show a sale or sale proceeds of CHF 60 million of -- in the cash flow statement. Could you explain the rationale behind the sale of own shares?

So we're not trading our own shares. We're not making market making also. But we have an option program, and that's related to redemptions of options by employees, which leads to a positive cash inflow on our side.

Okay. And the second one would be about the contingencies. So guarantees ensure keys, they went up from CHF 130 million to almost CHF 200 million. So what was the driver behind this?

Say again?

The guarantees, inurtities in the notes of your financial statements, they went up from CHF 130 million to almost CHF 200 million. Could you explain the rationale or the driver behind the increase in the contingencies?

That's only linked to the -- there's been a new policy applied and then there's the sales increase, but there's nothing special behind that.

Two more questions from media people. First of all, Marvin, no from [ Suedkurier. ] Can you comment on the plans for Pfullendorf? Is there any plan of increase in personnel, especially after the recent opening of the new training center?

No, not structurally. The major driver of personnel in Pfullendorf is volumes, sales volumes and production volumes. And with increased volumes in production, we also need more people. But structurally, there are no plans to increase the number of people in Pfullendorf.

Okay. Then a second one from Danny Calligan from Thomson Reuters. You have given your market outlook under the assumption the conflict in the Middle East has no major impact on the macroeconomic environment. How does your outlook change in the event the conflict does have a significant impact?

That was exactly the reason why we made this disclaimer. The point is, number one is, why did we make this disclaimer. We have no expertise in macroeconomics. We have no expertise in geopolitics. Why should we think about it at all? It's important for a company like Geberit it is that we are prepared to whatever might happen. And being prepared means that we have a clear strategy, which we will continue and that we are flexible to various scenarios. And if you're following Geberit for the last couple of years, I think we have shown that we are very flexible to react to various scenarios, and that's where we are focusing on. And I don't want to comment and speculate what could happen. But whatever happens, I'm sure we will cope with this situation. And if you allow me a bit provocative statement, the more difficult, the more uncertain, the more challenging the world, just from a business perspective, this is somewhat positive for Geberit because that's always, to a certain extent, an opportunity. And therefore, whatever will happen, I'm pretty sure that we will leverage this opportunity or whatever scenario might happen. And if you want to think about various scenarios, I would ask macroeconomic geopolitical experts. We are selling toilets.

And second question from Danny Calligan. How will the removal of climate reporting and certification requirements in the U.S. and amendments to EU corporate sustainability requirements affect future investments and strategy?

They will not have any impact on our investments, and I take the question -- expand the question a bit also to Europe, where all the sustainability reporting is at the moment under construction, let's say, or might change. And this will not have an impact on our investment. It will have an impact on our reporting, of course, there we will adapt. But our sustainability strategy was not largely driven by policies or even definitely not by reporting policies. We have a very clear sustainability strategy, which we are going to execute and that will not be influenced definitely not in terms of investments by regulatory reporting changes in the U.S. or in Europe.

Okay. Then the next question from Chase Coughlan from Van Lanschot Kempen. Can you elaborate on the moving parts of the margin developments in 2026? Wage inflation is 3% plus. Pricing now is more than 1%, higher investments in IT, et cetera. Should we expect margins to be as high as 2025, excluding plant closure costs? Any color here would be very helpful.

So no outlook for the margin, of course, but the main drivers to summarize and repeat, pricing, 1% as of April, maybe a tick better due to the extraordinary copper. On the cost side, direct materials in the first quarter, still below the first quarter last year. The same is true for energy. What happens in the rest of the year, no clue. But if it gets worse, we have the opportunity to adjust prices. And on the personnel side, wage inflation correctly, we expect around 3%. And maybe, sorry, the last one where -- which is not to be forget that we continuously work on efficiency and productivity improvements also this year, we don't have a number for that. But as a reference, as you see in the presentation, we improved productivity every year by 3% in average in the plants. So there's no number for that, but it's obviously also important driver. with that, you can make your own equation.

Next question from Harry Dow from Rothschild & Co Redburn. When you talk to installers, if we do get more cost inflation, how much more price inflation do you think you can pass on? Is there a risk that customer affordability in the renovation market is already stretched, which makes price increases difficult, or you are confident any costs can be passed on?

The price elasticity in our industry in general is relatively low. And this has to do with the fact that we are all component suppliers. We are not selling complete bathrooms where the end consumer decides, okay, it's too expensive, I don't do it. What you are asking for is typically a building, also renovation, often a complete apartment renovation. And that price point there you might have or you have an elasticity as a consumer. Do I do a new build if it's getting CHF 100,000 more expensive or not. But it doesn't depend directly on the component. We are contributing to it. Therefore, we can pass on that's one part of our pricing power besides market strength and reputation and strong products. So therefore, the price elasticity specifically for our components and even more specifically for Geberit is relatively, relatively low.

Yes. Maybe you kind of answered my question already with the price increase for copper-related products. But the fact that you have now achieved an adjusted EBITDA margin of 30% already in '25. I just wonder if you take this heavily into consideration when it comes to reaction on cost inflations to do further price movements up or because you reach this upper threshold already?

I'm not sure if it's the answer what you're asking for, but we are not looking just at the number and then we are 30%, and now we have to take actions. I think the philosophy is where do we have opportunities, of course, can we pay for it also from a margin perspective. If we have opportunities, we want to invest. The marketing initiative this year is a very good example that we spend more for marketing because we have a decent nice margin, but also at the right moment, very much linked now to shower toilets, the Alba, where we have now the right product, let's put more gas on marketing. So the key is more opportunities, creating value than just the number, are we now at 30.0% or 29.8%. Is that the answer to your question?

Yes, kind of. So maybe phrase it differently, you are not worried of a margin that could be above 30%. I don't know, due to your customers coming and saying that tops your upper band, please decrease prices.

So before we throw out money through the window to allow the margin below 30%, we will allow a margin to have a margin above 30%. We had that in the past as well. 2022, 2021, the margin was 31% driven by the strong bathroom -- COVID-induced bathroom renovation trend, but it's not a law that you're not allowed to be above 30%. This is it. And thank you for your questions on the webcast. For the people in the room, as usual, we have prepared -- colleagues from our organization have prepared two new product introductions, which we will introduce this year. One is on the shower side and one is on the prefabrication side, which will give you a hands-on insight into these new products. And thereafter, we will be also assort a small [indiscernible] to ensure that the margin stays below 30%. So if I may propose that we divide the room into half and then the left side, right then about 7, 8 minutes and then we will switch. Thank you for your participation.