Implenia AG (IMPN) Earnings Call Transcript & Summary

Hello, and warmly welcome to our Analyst and Media Conference on Implenia's 2025 annual results. We're delighted to present to you our results once again in our HQ Implenia Connect and also warmly welcome those following us on the screen. My name is Silvan Merki. I'm Chief Communications Officer, and I will be taking you through today's event. We'll be holding our presentation in German today and the live stream, you can select English translation. You can ask your questions in the Q&A in the chat stream in German or English. We're going to be presenting today as follows. Firstly, our CEO, Jens Vollmar, will give you a business update on the annual results. CFO, Stefan Baumgartner, will then take you through the financial figures, and then we will have an outlook by Jens. Following this, we will then answer your questions in the Q&A. I'm now going to hand over to CEO, Jens Vollmar for the first part.

Thank you very much, Silvan. I'd also like to welcome you. Welcome to our business figures 2025. For Implenia, this is a very special year. We are going to be 20 years young in 2 days' time when Implenia was listed on the stock exchange for the first time, but we also look back to 160 years of our history, and we'll celebrate that appropriately. To conclude 2025, what a year, a year full of highlights, to be honest. Markets continue to develop positively. We see that the demand for our skills is extremely strong. We see that in our order book, which grew significantly, not just in terms of the quantity of the turnover, but also the margins. We've been able to work on our vision. But -- and most importantly, we've worked on profitability and projects with operative excellence. I'll come back to that in more detail. Some financial highlights. The order book grew by almost 25% to a new record of CHF 8.5 billion. We achieved our EBIT goals. I was particularly delighted by not just the absolute figures, but the margin of 4%, which is a lot closer to our midterm goal of 4.5%. Free cash flow was also great, CHF 125.3 million, that also shows that we've really been focusing on cash, on improving net working capital management and the equity rate is also much closer to the midterm goal of 25%. I will now going to go through the individual divisions and present them. I'm going to start with Buildings. That's our construction sector active in Switzerland and Germany. We specialized in data centers. I'll go into that in more detail later. It's a brilliant market. We are also involved in Life Sciences and Defense. We are very specialized and varied. So we continue to expect high margins there. Civil engineering, that's essentially our large infrastructure business, tunneling in particular, this sector is growing strongly organically. We have received a lot of orders and our prealculated margin is also higher. Service Solutions sector, that's been the sector which is essentially dominated by Wincasa, but we also have BCL, our building logistics company there and also Planovita, which is our building technology specialist planning. I'm going to take you through the 3 divisions. Buildings, you can see a slight decline in the revenue. That's the bad news. But what's positive is that we've been able to significantly increase our order book. We showed that in the first half year already and we showed an increased order book buildings. The positive news continued in Germany in the second half of the year. So we're expecting a significant change in the trend there, and we're experiencing a 2-digit growth figures this year too. I would like to express how delighted we are that we have increased our EBIT margin by 0.8% to 75.6%. And that's because of the specialized way we -- the specialized things we are focusing on such as defense, data centers, health and better management. Here is a project we won for our master builders business in Bern, laboratory building. Bottom left, interesting for highly complex logistic modernization services in cities, building remodeled for Swiss Prime Site and with a preconstruction phase, which we looked at date costs and optimization with the manager, we were able to generate much better results than in traditional management models. So now let's just move to Civil Engineering, where we've increased our margin and operating results, in particular, the order book in our complex infrastructure business. There are not very many other players who can do this. We are extremely competent and we are in demand in tunneling. Tunneling sector is not just about tunnels. We also build repositories. We don't just build rail and road tunnels. We build cable infrastructure and access tunnels too. So the market is really exciting there. We are focusing on optimization in engineering compared to our capital invested margins are under average. So we'll focus on improving that. Some examples of projects which show our competence. And not everyone can do this. Implenia can do this. We're well positioned. On the top left, you can see the expansion of Railway, a very big project, which we were able to win last year. And in the center in the bottom, you can see a geological repository in Sweden that shows what we can all do with our tunnel building skills. And now coming to the Service business, Service Solutions. We're not showing you the order book, but assets under management is mainly Wincasa. On the left at the top, you can see that they've continued to grow. We've also been able to win a great new mandates, for example, for PUBLICA, that's going to be coming into our order book under our assets under management next year for the first time, that's been to further improve the margin. EBIT has also been improved. This is a good mix in our portfolio alongside traditional construction. We also have services. The risks are less and the margins are higher, and it's going in the right direction. Here, we will continue to look at whether we'll have abilities to grow in addition to our traditional implementation phase inorganically at the top and bottom of the value chain. To left, I presented this in the half year as well as shopping center in [ Bern ], why I'm presenting that again? Because it emphasizes how we can work with our integrated skills and, Wincasa manages it. Planovita planned the building technology and with our modernization, we were able to renovate the whole building. A similar project we were given this year -- this week rather, we are able to modernize and renovate shopping centers with this integrated model. And so combining services and construction in our business is extremely important. Alongside the division, we have also been able to launch continue initiatives across divisions. Last year, we were able to certify [ 90 ] new lean experts last year. They implement our use cases and our toolbox in the organization that is extremely important for us. We want a specific calendar planning for each project. We have analyzed new ways of paralleling digital processes being faster. And an example is the Gubrist tunnel, which was able to be completed 44 days before the due date. Sustainability is also an important imperative. It remains relevant to Implenia. We have a few example projects as to how we can reduce the CO2 footprint significantly. Last year, we were able to reduce the absolute CO2 emissions. We were able to publish a sustainability report with new objectives. How do we do that? It's also important for us, we want to become more sustainable. We no longer just want to report. We want to become more sustainable in our projects. Our sustainability experts help us with the selection of materials, for example, and that helps us a lot. Buildings logistic companies helps us to improve transport and journeys and how we can use railways and conveyor belts to remove excavated materials and how we can use CO2 reduced concrete and how we can optimize. I mentioned the productivity in project. In the first half of the year, we had certain use cases presented for AI. The second half of the year of 2025, we were able to conclude a framework agreement with Oculai, that's a provider of visual AI. We have a lot of use cases here in security at work, for example, camera was automatically audit who's moving where, who's safe, who's not in post-order management. We have use cases also in monitoring the development of construction projects. And as I said beforehand, we're also trying to maintain our value assurance approach and continue to optimize it. Last year, we were able to introduce an optimized -- more optimized calculation. This year, we calculate norms with BIM models and as a standard, we also have benchmarking tools be introduced and in the offer phase, we also make sure that the building costs we've calculated are the right ones. We do not just look at building costs from a calculation perspective, but with post calculated projects, we look at different perspectives with publicly available data and internal databases. We ask the question, are the building costs we calculate in the zero base adequate or not, that's extremely important for us. And I also talked about new contract models in the first half of the year, which are extremely important because the market is growing and the master builders cannot things contract in all cases. So we need new partnership models, new management models. We need to understand them. And that's why we have set up a center of excellence, which ensures that in all projects outside of the headquarters people understand what the contracts are and how you can obtain information and what the things look like technically. Last year, in the second half of the year, we were able to set up a center of excellence on that. And we have the first full-fledged IPD project in the company in last year. We were able to win a part of this project. And these are great projects for us because the building cost risks are not taken by Implenia. So we develop the costs together with the coordinators of the building and then contribute our skills to this. Before I give the floor to our CFO, Stefan, I'd like to show you a video to give you some insights into the daily work we do in our projects. [Presentation]

Good afternoon everyone. Hello, everyone. Welcome [indiscernible]. All divisions this year too were successful. And therefore, we were able to increase our results. In the year 2025, we were able to grow our order book by CHF 1.7 billion to a total of CHF 8.5 billion. This is a growth of 25% over the previous year period. Moreover, we were able to grow the precalculated margin by 0.5 percentage points to 7.8%. The revenue lay just under the previous year for 2024, in line with the development of the order book in the previous year. In particular, the buildings order book, which had declined meant that the buildings revenue in financial year 2025 was lower. Foreign currency effects in 2025 were negligible. The operative units, there is natural hedging. And now let's continue with Implenia's profitability. In 2025, we have an EBIT of CHF 140.5 million, which compared to the previous year's period represents growth of CHF 10 million, that is 8%. The EBIT margin grew by 0.4 percentage points to 4.0% and was generated by all divisions. We were able to improve the results before tax and despite higher external financing costs and among other things, because of the early refinancing of 2 bonds. The tax expenditure in financial year 2025 was in the normal range and unlike 2024 financial year '24, which was affected by one-off tax effects. In this period, the free cash flow grew significantly by CHF 179 million to CHF 125.3 million. The free cash flow was improved significantly this year through a higher EBITDA, around a 10% growth compared to the previous year and increased focus on net working capital, in particular, through higher advanced payments. Our objective is to continue to generate growing free cash flow conversions. At the end of December 2025, the cash and cash equivalents were CHF 533 million compared to the previous year, that represented a growth of CHF 131 million. Moreover, we have CHF 125 million in short-term time deposits on our balance sheet, which were used for the bond maturing in March 2026 and refinanced early. We see great potential for improving net working capital, in particular in change order management. Our equity rate grew as of the 31st of December 2025 to 23.5% adjusted for the time deposits from the early refinancing of the bond maturing in March 2026. Alongside the good operative result, overfunding of Implenia pension fund contributed to this positive development. As per the 31st of December 2025, all lines of credit were fully available to the company. Moreover, we were able to extend the maturity profile through 2 successful issuances of bonds in '25. On the basis of the business success and the strengthened balance sheet, the Board of Directors request that the AGM of the 31st of March 2026 agrees to increase the dividend to CHF 1.40, which is an increase of 56% per share. To sum up, the operative cash flow was improved by 218%. Net debt was reduced by CHF 61 million. Maturity profile was lengthened with both refinanced bonds. The next bond which is maturing, which is not yet refinanced is due in 2028. We have been able to further increase our equity rate by 2.3 percentage points to 23.5%. In the financial year 2025, Implenia has been able to improve its position and a strong company, which is financially well positioned, sustainable growth in the next 5 to 10 years. And now I'm going to hand back to Jens for the outlook.

Thank you very much, Stefan. So how will things keep going? Let's look to the future. Implenia is extremely well positioned. Some of you all know this slide. In Switzerland, we are market leading in various domains in research and education, data centers and health. And in our European home markets, we're also #1 in tunneling. We're extremely well positioned, that has an impact on our order book. We are in demand, lot of people come to us frequently. And it's much more important than the increase in the order book is the precalculated margin. That's increase and it's the best way we have to estimate future profits aggregated from all the orders we receive, we calculate it and it's increased by 0.5 percentage points to 7.8%. In the order book, we still have other older orders remaining with lower margins. That means that the new margins of the new orders were much higher. We remain selective. We are focused on the profitability of projects, we don't risk volumes. It's good that we're able to benefit from this market development and that we're well positioned. On the left-hand side in the graph, you can see the top line or the production output, which is secured. You can see that for each year at the end of 2024 and 2025, we have pretty much the same secured as end of '25 to '26. So we don't expect a significant increase for this year. But if we look at the end of last year for the end of this year for '27, we have 24% more top line than at the end of '24 secured to '25. So if things continue in this way, we will be able to expect a high growth in revenue from next year and the same will apply for the following years. Here you can see some of projects which we have recently won. These projects need time before the revenue is generated. Our project intended teams look together on the basis of the project calendars where -- when which project will generate how much turnover. This is an aggregation of all projects here. So the graph, I mean, now back to this next slide, you can see that certain projects generate most of it. On the top right, you see the expansion of Zurich-Winterthur to double track. It will take a couple of years before the tunnel machines are running and that it's only then that will generate the revenue. So that's explains the order book. The megatrends are continuing probably the direction is growing. The population is getting older. The need for defense infrastructure has not changed. Maybe there's even more demand than in the past markets on the basis of current predictions are positive. Everything is positive, in particular for Germany, we can see a positive development there. The availability of construction loans has improved through various legislative improvements on promoting Germany as a place to do business. Private bonds are better able to invest in infrastructure through change in law. The demand is there, needed. So we're playing in a great market. And now let us look, therefore, at where Implenia is positioned. Our growth is even much higher. Data centers in Switzerland and in Germany are a great area of growth. We are being asked to provide a lot of projects, we can't even cope with the demand. The Board of Directors and group leadership on the basis of this market context has continued to work on our vision the basis for our action for our staff. What have we done? Well, we have polished our vision, our key priorities. We have -- we're focusing on performance now in our values. We want a cultural performance. But in terms of the strategic direction and in terms of strategic direction, too, we want a mindset and setup which enables growth. We're expecting capital efficient resource allocation. We don't just want to invest capital. We also want return on this capital. We want to generate cash flow, and we want to grow. We want to grow profitably in the domains in which we are active. So that's why we have set up a culture program this year, which will be rolled out to all domains of Implenia to improve the performance culture and performance in all areas and to ensure that the economic conditions are provided for us to implement across Implenia. What we invest year? It's an investment year. We will be investing a certain fund in this. We want to build more teams in data centers, more teams that we've had before. We have been cautious in employing people. We'll continue with that approach. We want to go -- we want to have the right people for the project in value assurance, if we calculate a project, we want to have competent staff. That's why, in particular, in data centers in the division [indiscernible] we will be expanding our staff in health and laboratories, particularly in Germany, we will be hiring teams, which can cover this additional demand, which we have not been able to cope with so far. As I mentioned, in engineering and civil engineering, we really want to streamline that we'll continue to work on that. We continue to make sure that profitability grows. We have not reached our objectives yet. It's clear that certain organizational measures within the division of Civil engineering will need to be made some small changes to organization will put some units together, structures of work sites will be changed that will cost something this year, but it will allow us to benefit from higher margins next year. And we also want to expand the top and bottom of the value chain in organic growth but that costs money and that is also having a negative impact on our balance sheet this year. So that's what we're expecting around CHF 150 million EBIT. We're expecting higher profitability from the core business, but we want to make targeted investments of CHF 10 million to CHF 20 million, it's clear what's going to come out of it. We want to -- we have a target of over CHF 150 million EBIT next year based on these investments. The midterm goals remain unchanged. We want to achieve them 25% equity ratio and over 5.5% EBIT margin. Now I think there's nothing has caused this change. We have 2 changes in group leadership. Anita Eckardt will focus on her Board of Directors' career and her role won't be replaced. I will take of her role as Head of the division. We have our own businesses with our leadership such as BCL, Wincasa. I think Anita Eckardt spent over 6 years doing a great job here in positioning the forward division specialties and now the service business. And with Claudia Bidwell, we have a second person leaving us who is CHRO of Implenia for also more than 6 years, and she's been replaced by Peter Feigl, who is extremely well placed to push forward the next growth phase of Implenia from the HR perspective. So we look forward to her joining Implenia on the 1 of September. So to sum up, Implenia is extremely well positioned. We have growing markets. We can benefit from these markets. We are doing very well placed financially to drive all these growth investments. The capital-intensive small-scale businesses will be reduced, and we will focus on the areas where we can show clearly that we're different. We will grow, therefore, with a range of offerings. And so I thank you, Silvan, for listening and hand back to him. Thank you very much.

Thank you very much, Jens. Before we move to the Q&A, there are various events we'll invite you to this year too to give you insights in our activities. One is the Marienhof project in the center of Munich. The second one will be Zurich Steel City, a center managed by Wincasa. On the 3rd of June, we'll run an Investor Day. At the heart of Zurich, we will give you a detailed insight in the strategy we have just presented. The modernization of the Jelmoli also visited. On the 5th of September, we will also celebrate 20 years young, 160 years of creating the future with a large celebration. We look forward to seeing you there, too. On the 31st of March, our Annual General Assembly will take place. On the 19th of August, we'll present our midyear results of 2026. If you have any questions, we will be able to ask them over the lunch or you can contact your contact people.

And now we'd like to get started with the Q&A. Just to remind you, Jens and Stefan, you do come to the front. You can ask questions in English or German in the stream chat or you can also ask them on site also in German or English. We're going to hand around the microphone. Please let me know who you are, for whom which group you are here and please speak into the microphone so that we can have the translation. Can we get started with the first questions here.

Holger Frisch at Zurcher Kantonalbank. I have 3 questions. Firstly, the EBIT development, EUR 150 million this year. That's 50% split from associated companies and the working communities and classical Implenia. Recently, the associated groups were only at 10%. So what direction things going into? The first question.

Do you want to ask all the questions together at the same time?

And I've seen cash flow means dissolving over 30% of [ CHF 30 million ] in provisions. Where does that come from? And I'm interested in the business development of Wincasa. What's its EBIT margin and what are the ambitions?

Yes. So associated group companies in civil engineering the JVs, the joint ventures are in civil engineering. There we've got growth and we work on the basis of resource availability and local partnerships, which we need in these joint ventures quite often. In the complex infrastructure projects, it's often necessary to work in joint ventures. This trend is important for sharing this. That's an important part of that. We work together with strong partners. We have a sophisticated process for selecting them. So we check them thoroughly beforehand. The trend, and these are very profitable projects, much more profitable than the small de-central projects. So therefore, the trend is understandable. And [indiscernible], I'd like to add something. We want to grow on large projects. But in 2025, there was an additional effect of Swiss properties, an associated company through the new valuation or the revaluation of a significant part of -- so it had a significant impact. So the dissolution of provisions. It's not something which we run centrally in terms of managing our results. We have -- we look at each project individually with the project management and the legal team, we plan the projects. And sometimes that requires the formation and the liquidation of provisions. Last year, we saw that our predictions were much safer in terms of final cost and legal cost of projects. So that's why it's a result of a lot of individual decisions and it's not -- we don't take on decisions on provisions on their own. In terms of bookkeeping, it's creating, using and dissolving provisions and the net result of that. That only [indiscernible] account. We look at the line, we are getting better in the precision of our predictions and that has an impact on our provisions. Now the business development of Wincasa, we are following our plan with Wincasa. The margins there are very high. We have been able to expand existing partnerships, extend existing contracts significantly and also assume that as originally planned, [indiscernible] will take place next year, we are expecting CHF 5 million assets under management with PUBLICA. And so we are very positive on the development of Wincasa.

Tommaso Operto, UBS. I have 2 questions, both on guidance. For 2025, the CHF 10 million to CHF 15 million growth investments. So how much of that will also be in 2026. So how much is staff cost and how much are one-off costs, how much will other costs will also have to pay in 2026? And looking to '27, you said CHF 150 million EBIT. That can mean a lot of different things. Could you break it down a bit more? Because the lower end, that would mean that there would no longer be any organic improvement. The organic EBIT would be CHF 150 million in 2026, which is from CHF 150 million.

Yes, I'll start with the second question, if it's all right. So the outlook of over CHF 150 million for 2027, what we mean with that is that we're going to be better on the line. And we'll give you an update on that at the end of the year. We'll tell you exactly where we are. We will be much more secure in our predictions there. Over CHF 150 million does not mean CHF 150 million or CHF 151 million, we want to be significantly over CHF 150 million we conclude next year. We'll give you an update on that at the end of the year when we know how the order book and the precalculated margin, all these things have developed. We will then be able to give you more reliable guidance for next year. For now, it's over CHF 150 million. And based on current figures, we can look positively to the future. And the other question was how much of the CHF 10 million to CHF 20 million is attributed to what section and this M&A due diligence that costs tens of millions. We will -- we're very cost sensitive. We'll have to look at that in detail. That's why we have given a range of CHF 10 million to CHF 20 million. Those are one-off costs. And then there is a figure in single digits millions, we will invest in developing skills and teams that will be less than CHF 5 or maximum CHF 5 million. These costs will remain on the P&L, but they generate revenue and therefore, margin. So the exact breakdown, I can't give you because we still depend on how much we expand independently of the cost we have for M&A and such things.

Torsten Sauter from Kepler. I have a question for Mr. Vollmar. I understood correctly, in a real estate journal, I read that Implenia always to be twice as big under your leadership. That might be your vision. But where and how should Implenia grow? And how much M&A is part of the program?

Yes. That is my personal ambition. I'm still young. I've got a few years to achieve that still. So how large should we become? Well, I don't know, but we're convinced and I'm convinced that we can become twice as big at least. We can generate a lot more margin and revenue than currently. The markets are ideally placed for that. We are ideally positioned in them. And what's great is that we can grow without generating additional structure costs. The structure we currently have, we can generate a lot more revenue. Now how do we want to grow? I don't think I can answer that for the whole group. I just have to answer it per division. In real estate and buildings, we want to drive forward specialization, in particular, in data center building. And we see margins which are much, much higher than our classic building sector, much, much higher by several factors. And this trend, the age structure of the population, it's clear. We're getting older and population is becoming older. We need more health care, health buildings. And in the sites we are active on, there's a lot of research underway and we need laboratory buildings that data centers, that's done. But in terms of civil engineering, we don't have to be extremely innovative because we are -- with the right skills, we are well positioned. We can grow organically. We have requests for hydro power or tunneling infrastructure. You can see the growth rates, the studies which there are currently there, we're growing organically. We don't need to buy anything up there. And in Buildings, we can build up our teams. If one of the specializations that we have an ideal target, for example, in buildings, then we'll look at that. But inorganically, we want to grow. We only want to grow in services. There we'll get -- we'll develop new skills. There are new skills which we can't develop so quickly inorganically. In planning, it will take a few years for us to have the skills and experience needed to grow. So within the divisions, we will grow in this way. The inorganic part has a certain importance, but I think in civil engineering, in particular, we don't actually need inorganic growth.

Alexander from UBS. I have a follow-up question on this inorganic growth M&A. Should something be bigger in the service building, would you then finance it via shares? How commitment are you to an investment-grade credit rating?

We hope that we'll receive credit ratings. We don't have them already or it really depends. But our equity increase or buying shares, well, that's not an option at the moment. We assume that we have enough firepower for the objectives we have. If necessary, we have a loan framework for that, but equity is not really necessary at the moment. We have significantly strengthened our balance sheet over the last few years. We are in a very different position few years ago. And therefore, we do not see any need to increase the capital, but we will be prudent with M&A. We'll look at that with great care. But an indirect increase of capital we have -- we're not planning that. M&A needs to be accretive in the margin and for shareholders. That's clear without taking into account any synergies or planning of synergies. On the basis of the existing business, we want to be able to do accretive deals. Business planning is stand-alone. That's nothing optional. Any further questions here?

Johannes Brinkmann here at the front. You said that there's massive growth in data centers. How many projects are you building and where are they?

The number of projects being built, well, we have a handful in Switzerland. In [indiscernible], for example, we have a big project. And what's interesting is that we're not just talking about [indiscernible], but also the MEP sector, the fit out and these are projects which easily cost several hundred million francs for one data center and these are big volumes which we can do. We have developed specialist teams. We have a handful of projects which we're working on in Switzerland, just in Switzerland alone. And we have things which we're looking at in Germany, we don't have any being built at the moment.

I have a few questions in the chat. [indiscernible] Can you say how much will the real margin differs from the precalculated project margin?

Hopefully less and less. In the past, 5, 6 years ago, we were about 1% away from what we calculated. That was before the introduction of value assurance. So now we have much more precise predictions in general. And as we saw last year, project close as we estimate and the surprises at the end of the project not really there anymore. We constantly revise project margins every month together with finance and project management. And if necessary, the project management changes the project -- the planned profit margin the predictions are precise.

Do you have anything else to say?

No. Over the last period, we've improved significantly value assurance, we've had no big surprises. This reliability is really important in this business.

Lukas Spang from Tigris Capital is asking 3 questions. Firstly, how much revenue you have in the finance year in the data center domain? And what's your outlook for 2026 and the following years?

So the figure for the data center I don't have it here, we have to take it and respond less than 5%. So I don't have the precise revenue, but it's less than 5% of revenue. The margins are much higher but we can also take on the question and provide an answer in detail. But the share should grow significantly in the future and the growth rate is also much higher than in traditional buildings.

Now a second question by Lukas Spang. You spoke about higher expected revenue growth in 2027 and following years. From today's perspective, can we quantify that more or less? Could you give a lower limit, perhaps.

Good question. Thank you very much for that. What we can see now is that for next year, we have secured production output, which is 25% higher for '27 than the production output we had at the end of '24 to '26. So if everything continues without change, we have this -- if we acquire the same amount of projects or revenue, then the production output next year will be 25% higher. If we assume that nothing changes, that will be the case. If we acquire better, it will be higher. If it becomes worse, then it will be a bit lower. But our best prediction today is that it will not change. We will still have 25% more top line next year than in this year.

Great. Third question from Lukas Spang. How do you view the German investments outside of the [indiscernible]? Is the money coming -- having an impact in terms of profits on the market? I would be interested in your estimations and your outlook.

We are asked about that a lot. In Germany, we have been able to receive a lot of mandates. I was in Germany recently, you could have regularly. And what I saw is that there are a lot of bridges which need to be modernized for various reasons. So they need to be repaired or because it needs to be expanded for defense infrastructure. How the process are financed, however, be it with a traditional state budget or with the investment excluded from the debt brake. Well, it is not something we know. We just see that we're receiving a lot of contracts, the [indiscernible] bridges or East bridges projects east of Frankfurt, been able to win big projects there. We don't know whether the money comes from the standard or the exceptional investment just benefit from the need to improve infrastructure in Germany we assume that the investment beyond the debt brake will lead to further investment we're not aware of. It doesn't matter that much.

[indiscernible] says in English, you have received good levels of profitability in Buildings and Service Solutions. But Civil Engineering EBIT is still at only 2.9%, which seems below your European peers. How do you explain this? And what are your targets for this next year or this year and next year?

Thank you very much for the question. Yes, that's correct. In civil engineering, we are expecting higher margins, in particular in large infrastructure projects. Why is the margin still low though? We have a significant share of decentralized and small and scale engineering projects, particularly in Switzerland. This business has a margin lower than average. We want to reduce this sector. That's why we're expecting higher margins. We have developed projects in line with this, which go a lot beyond the current profit margin. And our division is saying we have managed here. We agree that this is -- we're committed to these higher margins.

[indiscernible] to ask, you set out EBIT targets of above 45% for the medium term quite a few years ago. And we consider 2027 to be the medium term of 5 years ago.

We always said 3 to 5 years are midterm objectives. We are now at 4%. So that means that we've come a lot closer. And we also think that next year will come a lot closer to 4.5%. And as soon as we get to the 4.5%, we will then confirm new objectives. But the 4.5%, as you'll see, each year, we have added 0.3% more or less, and we expect a further positive development of the margins.

You can also continue to ask questions in the chat window. Do we have any further questions here face-to-face, microphone is coming, hand going up.

[indiscernible] Zurcher Kantonalbank. I have 2 questions. Firstly, you often spoke about optimizing net working capital. Where do you see a sustainable band in terms of turnover and where are the -- what are the biggest levers to get there? Second question is external financing costs after the refinancing of CHF 125 million, which is due in 2026. Could you give me a value or could you give me a range as to where you expect costs and what direction you think this could go? So what are the levers on the net working capital management?

We don't give you any specific percentages, but what are the levers? So checking the scale of the project, measuring quickly, billing quickly, dealing with claims quickly, solving things quickly with the building managers in tunnels in case of geological changes in the past, projects were very -- process were very slow. We have very ways to tackle this and avoiding suits, making settlement early so that we don't have outstanding costs. There are other major levers. We're focusing on cash flow, for example, that's a strategic priority. And this year, for the first time, we have committed to financial incentive staff to ensure that their action -- this kind of action is promoted with bonuses. Net working capital was already part of our -- always part of our bonuses, but we have created further incentives to optimize it. And debt financing costs, I'll start with 2025. We had high debt financing costs. We had -- we refinanced 2 bonds early, that generated one-off costs. There were also higher interest rates while we had 2 money at the same time. And don't forget, we had 2 bonds matured. They were from the negative interest times with lower cost, and that played a role. And that's why the costs were higher in 2025 and in 2026 because we won't have to refinance bonds and because we have 2 running at the same time, and we expect that debt financing costs will be reduced. We have any further questions here in this room? I can see a hand going up there.

If I understood correctly, you have reduced the staff. And I think that's because Implenia wants to become a white-collar company, a scalable company, if I understand correctly. If there is a building boom, however, then you will depend on joint venture partners and [indiscernible]. Now if -- so are there enough people? Are there enough business partners to scale up if -- or you have a bottleneck if we receive a lot of orders due to the German investment beyond the [indiscernible]?

We are not reducing staff for its own sake for us. Staff are not relevant cost. We focus on margin projects and key staff and skills. And I think that's important. And SG&A area, we have reduced staff because we think that's not a key competent -- they don't have key competencies for Implenia. We are committed to ensuring that there are enough blue collar staff, we think we have. Where have we reduced staff or where we think that margins will be declining or turn to 0 in the midterm. We have some projects we have said no to. We are not, however, concerned that it will be difficult to find blue collar staff because all key staff such as building site management, polishers, for example, will be retained. But blue collar staff work -- well, we're not concerned about the technical skills, key staff for building sites. We are not going to reduce them currently. Can I add, it's all about the sub companies and [indiscernible]. We have over 1,000 strategic partnerships with sub company suppliers. We've worked with them for years successfully together. We ensure their skills and capacities, and we need to be a very reliable partner for them. And that's why we have -- we have a higher priority for them. We are managing that very closely, and we're sure that we will -- that they will be available for us, they'll provide capacity for us.

I have another question from Lukas Spang from Tigris Capital again.

In the building of hospitals to many -- multiple millions should be invested -- to be invested, EUR 6 billion in Germany this year from outside of the debt brake. How relevant is the sector nowadays and what expectations do you have?

Thank you very much for the question. It's a very important sector for us, health and laboratory building and data centers, those are the main drivers of our growth in buildings. The German health market is gigantic. We have a lot of skills in Switzerland. We have -- we're building up dedicated teams in Germany, too. But the future projects we developing partnerships with large German companies for buildings. We have projects of several billions in Munich [indiscernible] we have one, just by our [indiscernible] we have in Hamburg too. We're going to do this with our partners in Germany because we have -- we can't build a hospital for 1 billion there on our own to share resources, risks and skills. We need to work with others, and we are convinced, we hope that we are going to benefit from that approach.

Another question from Lukas Spang.

This year, too, do you expect further growth in the order book after the very good level achieved in 2025? Just to make it comprehensible, how do we approach contracts?

Stefan and German Gruniger our General Counsel council say that we are level 1 in value assurance. We win projects when we have resources and technical staff to carry them out, but we only accept them then. We only accept them when we have solid contracting when we can confirm the calendars, we can say that makes sense. That's realistic when we have the capacity to provide offers when we have the right JV partners and contractors, that's when we accept things. And so we say yes to the calculation offer phase and then we say yes to a contract. But the contract situation has developed so positively, and we've been able to increase the margins so that we are well positioned. Now will the contract situation continue to improve. The market situation suggest it, and we believe that we'll be able to continue to acquire selectively. If there's further growth, we'll need more staff. We work [indiscernible] this year, that's why the investments in staff will not yet generating turnover. And so we are not guiding based on the order book, but profitability. But I can say the environment is positive to sum it up.

Do we have a last question here from people face-to-face. Many thanks for your questions. Many thanks for your answers, Jens and Stefan. We will now conclude the Q&A here. And of course, we'll be available outside for you. And we will also close the event here physically and in the stream. I'd like to wish you a good meal here in Implenia Connect and have a great rest of the day for everyone in the stream. And see you next time. Thank you very much. [Statements in English on this transcript were spoken by an interpreter present on the live call.]