The New Germany Fund, Inc. Price & Performance (GF)

Highlights of the year 2024. Thanks to our strong global presence in attractive markets as well as a proactive cost [indiscernible] GF delivered a solid performance in a challenging environment. Our comparable EBIT margin came in at 9.590.4% a tad below the record level of the two previous years. Through strategic acquisitions, GF was able to strengthen its presence in the attractive American market and builds on diversified European presence.

In 2024, GF announced the most significant transformation in its corporate history paving the way to become a global leader flow solutions. Integration of Upono has increased traction. And is well on track.

Key milestones were on the one hand the divestment of GEF Machining Solutions, We expect the closing of this transaction in the first half of the year. And on the other hand, the evaluation of divestment options for GF casting [indiscernible] a process which is ongoing. To underscore our strong ambition for the Flow Solutions business, we will be sharing first side posts of our midterm targets today. Upon completion of its transformation, GF has the ambition to grow organically 4% to 6% per year reflected in a readily increasing profitability reaching a 16% to 18% EBITDA margin by 02/1930. Will further introduce the free cash flow conversion as a key metric for value creation, and target a conversion rate [indiscernible] more than 50%. The detailed Strategy 02/1930 we will launch later this year on our Capital Market Day. Let's take a look at the key performance indicators on Slide four. Sales decreased organically by 2.6%. On the one hand side, we saw an ongoing subdued European construction sector and challenges in the automotive industry. On the other side, our Industrial Water Treatment and Microelectronics business in Asia Pacific and Europe has been affected by delays in industrial projects. Negative currency effects affected both top and bottom line.

Amidst these changes, GF delivered a solid EBIT margin 9.4%. Excluding items affecting comparability. Including these effects, the reported EBIT margin stood at 8.1%. The comparable EBITDA margin came in at 12.9%. Free cash flow before acquisitions reached CHF184 million, even accounting for the adverse cash impact of acquisition related financing costs and certain items affecting comparability in the range of approximately CHF 80,000,000. Financing costs are expected to decrease substantially following the company's successful refinancing through corporate bonds the completion of the announced divestment of GF Machining Solutions. At the upcoming Annual Shareholders Meeting, the Board of Directors will propose a dividend of CHF1.35 per share This represents an increase of CHF0.05 versus the previous year. Let's turn to Slide five. Where the charts illustrates GF sales split in twenty twenty. Twenty twenty four, and the projected outlook for 02/1930. Highlighting our strategic transformation and ambition to become the global leader in flow solutions. [indiscernible] transformation gained significant momentum in 2023 with the acquisition of and accelerated further in 2024 with the announced divestment of GF Machining Solutions to UGG. And the evaluation of the divestment options in regard to GF casting solutions. Going forward, GF will focus on its three business areas: Industry, Infrastructure and Buildings, Leveraging attractive megatrends to drive profitable growth GF strives for a well balanced portfolio of flow solutions doubling down on one common denominator, excellence inflow.

Slide six.

Global presence of Flow Solutions. With €1,000,000,000 in sales, GEFlow Solutions has reached a critical scale in the attractive but also competitive American market their size is a key success factor. With a comparable footprint to our operations in Europe, our activities in this region are set to become increasingly relevant in the years ahead. Beyond The Americas, we have strength strengthened and diversified our presence across Europe. Balancing our position in Central View with a significant foothold in the Nordics and Baltic countries. [indiscernible] in the MENA region reported on the rest of world, has been accelerated by the 2023 acquisition of Corus Piping Systems. Asia Pacific remains an important driver of growth albeit with a reduced exposure to China, reflecting a strategic shift towards diversified regional Our global footprint offers great opportunities and allows a strong localization while maintaining world class standards in brand, quality and innovation. On average, we expect only 15% of our products across [indiscernible] Slide seven. The swift integration of Oppenor is well on track We've realized synergies already exceeding our initial target of €5,000,000 to €7,000,000 for 2024. Aligning with our increased Ambitions. A key driver has been leveraging procurement synergies as the two Flow Solutions divisions collectively manage a CHF1.5 billion per common budget, Notably, only 30% of the current supplier portfolio overlaps.

Presenting significant consolidation opportunities for common parts. Initiating commercial integration activities, our teams are active working to bring the combined product and solutions portfolio to market, unlocking new growth Slide eight. The operational footprint optimization in Europe is well on track. In Poland, we are in the process of consolidating four legacy Upono production facilities into a state of the art cost efficient manufacturing site. This new facility is designed with sufficient capacity to accommodate future product line expansions [indiscernible] infrastructure flow solutions. In Turkey, GF has successfully completed the consolidation of production facilities by closing the plant in Ulfa near the Syrian border.

This moves them streamlines resources and enhances operational efficiency the region. In Italy, we are progressing with the closure of a GF Piping Systems building technology plant integrating PAX and multilayer composite pipe production into our Building Flow Solutions facilities In Sweden, And Germany. These prominent examples of our footprint adjustments will serve as a key driver of operational synergies further optimizing our cost structure efficiency and production capabilities across the region. Slide nine. In 2024, we achieved further important milestones to reach our sustainability targets 2025 and taking a leading role the second time, GF achieved an A rating in CDP, an outstanding achievement In addition, GF is part of the Dow Jones Best in Class Europe Index. The share of products with social or environmental benefits in the group's total sales has increased to 76% surpassing the consolidated target for GF and Upono of 74%. This achievement underscores the strong integration of sustainability within our business model. CO2 equivalent emissions were significantly reduced by a further 14% such as more renewable electricity, efficient production processes, newly installed photovoltaic systems. Our accident rate further decreased to an LTIFR of 6.5 reflecting CHIEFS' commitment to highest safety [indiscernible] Let us now take a closer look at the divisions on Slide 10.

GF Piping Systems sales decreased organically by 3.7%. Sales totaled close to CHF 2,000,000,000. The division experienced a temporary slowdown in industrial projects which led to reduced demand for ultra pure water applications water reclamation and treatment as well as chemical processing in Europe.

Additionally, persistent challenges in the building technology sector had a negative impact on results. In contrast, The marine business continued its strong strong growth trajectory with both newbuild and retrofit activities surpassing pre COVID levels. Civil engineering investments in Europe remained stable, allowing GF Piping Systems to expand its market share in the water distribution business particularly in Eastern Europe. To pave the way for future growth in The Middle East, GF expanded its present and fabrication capability in Abu Dhabi. And opened a new sales office in the region. Additionally, in North Africa, GF inaugurated a new production facility in Cairo, Egypt further strengthening its regional presence. With a comparable EBIT margin of 12.7% and a comparable EBIT of two fifty three million in 2024 GF Piping Systems demonstrated [indiscernible] despite a challenging second half.

This is even more remarkable as we have been affected by a significant negative currency impact of CHF20 million on the divisional EBIT. Let's now turn to Slide 11, which highlights GF's capability in the growing retrofit market. In 2024, GF retrofitted one of the largest desalination plants in Dubai a region where desalination is essential and where nearly 50% of the world's desalinated drinking water is produced. [indiscernible] Desalination plants typically require a retrofit every ten to fifteen years due to the high intensity of chemical processes. At this stage, they often face severe infrastructure deterioration and original construction plans are frequently missing. Typically, the market relies on manual documentation and mapping process of the existing infrastructure. We have put up here in the room And installation, this is a scanner from the company Laika from Switzerland where we have an exclusive partnership We offer this kind of service around the world. With this scanner, you will be able to scan a typical installation after ten years. As you can see here, the deterioration of the installation. We have with this kind of concept, which is seamlessly integrated with a pad, an app, to a CAD drawing or high precision model which we then automatically can forward to one of our off-site manufacturing centers where we have 16 around the world to produce and ultimately the skid as you can see, symbolized and illustrated on the picture here in the room.

This end to end offering not only streamlines retrofit but also creates long term opportunities for new businesses. By providing accurate digital models, GF builds strong customer relationships, often securing further projects that are two to three times the size of the original. Let me move to the second business area of Piping Systems. Slide 12, Infrastructure. With global attention increasingly focused on resource conservation, water utilities play a crucial role in maintaining reliable water supply and infrastructure. They face growing challenges such as severe weather events, an aging infrastructure, and shorter asset life cycles. GF is at the forefront of innovation, providing sustainable water solutions that ensure efficiency, reliability. Our field engineers and installers offer on-site project support enabling owners and planners to focus on their daily operations without disruption. A prime example of GF's expertise in our recent retrofit project at Berlin's largest wastewater treatment plant. In the project, an outdated 50 year old concrete infrastructure was replaced with a state of the art solution. A highlight of this project was the installation of a large diameter repair coupler as well as the integration of Upono pipes produced in Poland.

In the image, you can see one of three cascades being replaced while the plant remained fully operational. Initially, we thought we're going to bring in one of these couplers with us. You're going to see it on the roll up on the left. This is the original dimension of this Varga coupler, Varga is a GF company in The Netherlands. It's the quality leader in repair couplings in Europe. The coupler over there is a 400 kilogram part. So therefore, we have refrained to bring it along with us. What is to mention here throughout this entire high pressure project, our technical manager for infrastructure played a pivotal role, providing expert guidance as well as on-site support to ensure a smooth and efficient installation. Slide 13. In 2024, GF Building Flow Solutions reached sales of 1,100,000,000.0 reflecting an organic decline of 6.7% on a full year basis. For the second consecutive year, the division showed strong resilience in profitability, despite ongoing subdued European construction markets. Despite the continuing in the market, we saw regional stabilization towards the end of the year. Driven by the political uncertainty and the decreasing affordability for housing The U. S. Saw a softness in the residential markets in the last quarters However, worth mentioning is that since December, housing starts have been improving again. [indiscernible] comparable EBIT reached CHF112 million.

The comparable EBIT margin under Swiss GAAP fair stood at 10.3%, reflecting the benefits of its margin resilience initiatives and the transformation of the operating model. Important to mention is that excluding the acquisition related PPR step up depreciation, on property, plant and equipment, the comparable profitability is roughly 100 points higher. Aligned with our transformation strategy, the division has streamlined its operational footprint by launching a new complementary offering and joint innovations paving the way for enhanced commercial [indiscernible] Let's turn to Slide 14. Which highlights a compelling example of how GF is leveraging commercial synergies to expand the attractive U. S. Commercial potable water market. GF creates synergies by combining building flow solutions strong sales force, comprising over 400 sales professionals focused on potable water distillate with piping systems industry and infrastructure expertise in PVC, to bring chlorinated water into buildings. Together with the Up and Up brand, our solution portfolio includes now the rigid floor fit system, which brings water into the building and distributes across floors. The flexible AquaPEC system, which distributes water to kitchens and bathrooms as well as a newly developed transition fitting enabling seamless connections between the two systems even in tight spaces.

And this may sound very easy and simple, and I have been asked why does it take that long to [indiscernible] like the new adapter fitting, which is an embedded plus item in a plastic injection process is not something which happens overnight. It needs to last for at least twenty to twenty five years. Therefore, you're going to have to simulate a lot of tests before you can release such kind of a product to the market. And it didn't exist before. The typical new adapter replaces approximately five individual fittings which have been glued together in the installation on-site You can just simply imagine the risk for failures by combining five fittings on-site You see it here, the reduction on the T like that one here. And then you have this brass element here, which is over pressed then by a pack system, allows a quick, fast and super safe installation It's pretty unique. Market launch will be in April. We have released it on one of the biggest installer exhibitions in Florida. In January got a very positive market response. And here also on this piping system, on this installation, you see the advantages of the PEC system.

If you would have a copper system, you would have to implement here a fitting whereas our PAX flexible systems can be bended with a support therefore, you're going to save two connections now, one on the left and one on the right. Less connections, as safer the installations, as more peace of mind you will have in a leak free installation in an apartment. This is very unique, and we are the only one offering now the rigid system, which is used for the vertical conveyance of the water in big office commercial buildings, versus you have here the floor distribution for the water, for the restrooms, but also for the kitchens. Which goes there normally that way. So it's unique. It's a one stop shop with one solution provided by the market leader for this kind of installations.

Now to GF Casting Solutions, Slide [indiscernible] After a very promising start in the year, GF casting solutions faced major challenges in the European automotive industry in the second half of the year. Organic sales declined by 5.6%. Mainly supported by the ongoing accelerated demand in the aerospace sector, the division's comparable EBIT for the year stood at $56,000,000 resulting in a robust comparable EBIT margin of 6.7%. In line with the disruption of the European e mobility transition, GF casting solutions results was impacted by the closure of a e mobility related operation [indiscernible] Germany, which led to a negative one term effect of CHF14 million. The evaluation process to identify the best strategic options for GF casting solutions is progressing. In the meantime, GF Casting Solutions remains fully committed to maintaining all operation and pursuing its Strategy 2025 targets. Let us now turn to GF Machining Solutions, Slide 16. After a slow start, the division saw a recovery towards the year end and mainly driven by The U. S. And China. Especially the aerospace industry and the continued strength of the energy segment contributed to the good momentum in the second half.

Sales for the year 2024 amounted to CHF885 million, reflecting an organic growth of 2.4%. Comparable EBIT for 2024 was CHF 52,000,000, [indiscernible] Of 5.9%. The divestment process of GF Machining Solutions is well on track The transaction is expected to close in Q2 twenty twenty five pending regulatory With that, I will hand over to our CFO, Matt Ziemens, for a detailed look at our financials.

Thank you very much, Andy. And good morning, everybody.

Welcome Let me now take you through the financials As you've heard from our CEO, we had certain changes last year.

Also triggered a review on how we present our income statement. So you'll see for the course of transparency that we will be presenting our income statement in this continued and continuing business. The discontinued business is, of course, GF Machining Solutions. Let me now start with an overview of our net sales on Slide 18. In 2024, net sales for GF Corporation up by 19% year over year. Increase was driven by the full year consolidation of GF Building Solutions, that's without acquisitions and currencies, the net sales of GF Corporations declined by 2.6% to 4,800,000,000.0. Net sales of GF Piping Systems declined by 3.7% organically, all three segments industry utility and building technology being subdued. Net sales of GF Building Solutions building flow solutions came in at SEK 1,100,000,000.0. We only compare the period November, December twenty twenty four, with the same period of 2023, net sales was up organically 1% However, if we compare the full year of the division, the sales of Upono reported in 2023, we see a decline of 6.7% on a pro form a basis. Building Flow Solutions still reflect the original structure at the time of the acquisition. This means that the figures at GF Piping Systems contains industry utility and the building technology, whereas the building flow solutions contain also the numbers from infra. [indiscernible] Net sales of GF casting solutions dropped by 5.6% organically, while we recorded a positive development in the first half second half was a decline of 12%.

It was driven by Automotive and Industrial Applications, whereas as you've seen, the aerospace continued its very positive momentum. Finally, GF Machining Solutions net sales increased by 2.4% organically, after relatively weak H1, net sales organically declining by 5%. The division saw a very strong recovery in the second half with net sales up more than 10% on a year over year basis. And growth across all segments. Looking at net sales again from the corporation on Slide [indiscernible] You see first an organic decline of SEK105 million a currency effect of a negative SEK128 million. And the effects of the acquisition of UPONOR and the Dubai based Corus, It lifted our net sales with combined SEK $983,000,000.

For the additional ten months from January to October 2024. On Slide 20, we present the details to the income statement Please note that while we highlight the split between continuing and discontinuing, operations, which was the Machining Solutions business, the percentage changes on the right hand side of the table only refers to the total at corporate level.

You will see that the gross value added increased by 18% almost in line with sales growth. Personnel expenses increased by 20% close to the growth of net sales. Net reduction of approximately 800 employees, curbed the personal cost during the year. Euros It was impacted by the interest expenses from the Upuno acquisition these interest expenses were expected to decline in 2025 due to repayment of the debt as well as the refinancing. I'll present more details here too later in the presentation. Income taxes have increased by SEK 7,000,000 and our corporate income tax rate increased from 22.7% to 26.1%. This was the result of a changed geographical mix as well as the limited deductibility our transact related finance expenses in 2024. Finally, our net profit and our earnings per share declined by 9%, If you only look at the continuing business, the net profit decline was only minus 3%. Turning to Slide 21. The comparable EBIT margin for the corporation declined by 30 basis points from 9.7% to 9.4%. While we enjoying the positive effects from the full year consolidation of Building Flow Solutions Margins in the other divisions declined mirroring the adverse market effects as we've seen Turning to Slide 22.

Which provides details of items affecting comparability. [indiscernible] IAC in short. First, we have the final effects of the inventory step up from the Building Flow Solutions purchase price allocation. Secondly, we have the items relating to the value creation program, which refers to the post merger integration of Upanal. And finally, we incurred significant IACs relating to the performance improvement program, that was announced by midyear twenty twenty four. Besides effects from reductions in headcount, the performance improvement program also includes one off effects from the closure of the Verdoal casting facility of GF Casting Solutions. In total, these items affecting comparability amounted to 60,000,024. We the current year, we expect a substantial reduction in the number of AICs compared to this year. Let's take a closer look at the EBITDA bridge. On Slide 23, starting from 2023 with a comparable EBIT margin, of 12.7%. As you can see, the organic profitability level was kept constant despite decline in sales our implementation of the performance improvement program enabled us to retain high level of profitability.

Year, the EBITDA suffered from negative SEK 30,000,000 impact from foreign currencies.

Acquisitions mainly relating to Juporno positively with 138,000,000 In total, the comparable EBIT margin increased by 20 basis points from 12.7% to 12.9%. Deducting the EBITDA relevant items affecting comparability to the amount of NOK58 million brings us to a reported EBITDA of €560,000,000 and a corresponding reported EBITDA margin of 11.7%. [indiscernible] moving to Slide 24, [indiscernible] [indiscernible] was another year with significant adverse currency effects. Almost all major currencies developed negatively against the strong Swiss franc The total effect on sales was minus SEK128 million The reason for the relatively small effect on Building Flow Solutions that we only compare the consolidation period November from 2023 to 2024. On the EBIT level, the effect was negative 24,700,000.0 Please note that the positive effect on the Turkish lira of 2,400,000.0 is because of the situation of GF Hakan, which was negatively impacted by the closure of [indiscernible] As explained by Andy earlier in the presentation. Moving on to the asset side of the balance sheet on Slide 25. Our cash and cash equivalents was improved by SEK115 million, reflecting the positive free cash flow. Trade accounts receivable and inventories decreased as a result of our net working capital initiatives.

New in this reporting period is the recaler classification of €130,000,000 of non current assets of the division, GF Machining Solutions, to current assets, as you can see. And overall, the total assets increased by SEK 165,000,000 to SEK 4,284,000,000.000 Slide number 26 show the liability and equity side of our balance sheet. Although liabilities in total are almost unchanged versus prior year, were some significant changes caused by the refinancing of the transaction related bridge and term loans. In November 2024, we placed SEK $650,000,000 of straight corporate bonds at very attractive conditions. The proceeds were used to repay the lion's share of the acquisition related bridge loan. [indiscernible] you can see that our equity increased from €22,000,000 to 168,000,000 Now to free cash flow on Slide 27. Starting with reported EBITDA, it was SEK74 million higher compared to previous year. Our focus on net working capital management has yielded an improvement to the tune of $71,000,000 The increase in interest paid stemmed from the interest payments for the acquisition related bridge and term loans Cash flow from operating activities, therefore, improved euros euros As you can see, we continue to invest in our operations, hereby additions to property, plant and equipment.

We $2.00 €2,000,000 in 2024. [indiscernible] €72,000,000 outflow from acquisitions, which relates to the squeeze out of the remaining shareholders of [indiscernible] And overall, the free cash flow before acquisitions increased by €50,000,000 to 184,000,000 On Slide '28, we provide additional detail details on the expected Transatlantic related financing costs going forward. To finance the acquisition of Uprenor, we relied on a bridge and a time loan. Both with variable interest rates [indiscernible] placement of the two bonds in November, we refinanced the bridge loan The projected proceeds from the sale of Machining Solutions as well as the issuance of additional bonds in by mid-twenty twenty five, latest by mid-twenty twenty five, will be used to repay the term loan. With these measures, we expect the interest rates relating to the transaction to decrease by approximately 30,000,000 to an estimated 25,000,000 for the full year of 2025. Moving to the key figures on Slide 29. Net debt was only reduced slightly, but as our EBITDA is higher, net debt to EBITDA decreased from approximately 3.9 at the end of twenty twenty three to 3.4% at the end of twenty twenty four. [indiscernible] assuming no acquisitions, we would expect the net debt to EBITDA to come down well below three times at the end of twenty twenty five.

Equity ratio was also improved from 0.5% to 3.9%. The comparable return on invested capital of Corporation decreased from 21.5% to 19.9%. While comparable declining for Piping Systems Casting Solutions, Machining Solutions, As mentioned earlier, the effective corporate tax rate increased from 22.7% to 26.1%. Turning to my final slide here on number 30. The dividend proposal. Based on an earnings per share of CHF2 and CHF61. Our Board proposes to the General Assembly to increase the dividend by 5% to This implies a payout ratio of 52%, slightly above previous year.

With this final comments, I hand back to Andy for the outlook and some additional interest information. Thank you very much.

Matz, let's move to Slide 32. [indiscernible] In line with our new strategic focus, GF's guidance on the outlook for 2025 applies only to the two flow solutions Despite persisting short term global challenges, GF is well positioned to capture growth and size the opportunities offered by providing innovative and sustainable flow solutions for the industrial, infrastructure, and building sectors. For 2025, a year of transition, GF expects a flat to low single digit organic growth and an underlying profitable profitability before items affecting comparability in the magnitude of 10.5% to 12.5% for the EBIT margin. As said, these figures apply only for the Flow Solutions business, excluding the divisions identified for divestment, or under strategic review. Slide 33. It is my pleasure to share with you a first insight into our vision for the years to come driving our strategy 02/1930. On Slide 34, going forward, GF will focus on its three core business areas: Flow solutions for industry, infrastructure and building leveraging key megatrends to drive sustainable and profitable growth. With its comprehensive portfolio, GF, delivers mission critical solutions for industrial flow processes, sustainable water management in urban areas and energy efficient building systems, ensuring long term value and impact.

Slide 35. What does excellence in Flow mean? It is the common denominator of four competitive advantages.

GF ensures process quality at the highest level by providing advanced process automation solutions, enabling precise control over operations and increasing operational efficiency. With our tailored solution portfolio and service [indiscernible] GF becomes the peace of mind for its customers. Our holistic approach includes custom product design, prefabrication and engineering assistance, as well as ensuring that each system [indiscernible] Customer requirements. GF's product portfolio consists of high quality designed to create seamless and reliable connections minimizing the risk of leaks and enhancing the longevity of these solutions. Our innovative products and technology, GF enhances installation efficiency ease of installation, for our customers and reduces ongoing maintenance needs by providing [indiscernible] flow solutions. Slide 36. Upon completion of its transformation, GF expects an average organic growth range of 4% to 6% per year over the new 2026 to 02/1930 strategy period to reach our sales target of €4,500,000,000 to €5,000,000,000 including acquisitions. Our EBITDA margin has to gradually increase towards 16% to 18% Our target is to reach a free cash flow EBITDA conversion rate of more than 50% and an ROIC 2126%. These ambitious targets are built on a strong foundation of four strategic thrusts: Maximizing the core business means accelerating the growth of our core operation and expanding our customer base through superior solutions end to end services and execution excellence.

Additionally, we aim to expand in high potential regions segments, and applications, supported by a strong business development [indiscernible] Further growth should stem from value adding M and A activities as well. In line with our company history, innovation remains a key enabler in achieving our ambition to become the leader in flow solutions. Equally important is our corporate culture, which is a critical pillar of our new strategy. It will focus on fostering a one gf culture and enhancing collaboration and synergies across [indiscernible] business areas. Let me move to Slide 37. To achieve our ambitious targets, it is key to align our organizational structure with our strategic vision. We will establish a streamlined flow solutions organization led and defined by our three business segments. This includes two divisions: Industry and Infrastructure Flow Solutions spanning of these two segments and formerly known as the GF Piping Systems and the Building Flow Solutions division. [indiscernible] Both divisions will operate within a corporate wide standardized framework that ensures consistency in processes, [indiscernible] and strategic oversight. This process will be enabled by leadership boards focused on sales effectiveness, Innovation and operational excellence. Additionally, streamlined and centralized corporate functions will ensure best in class [indiscernible] Slide 38.

With the new strategic cycle, GF manifests its new ambition explicitly in its vision. We strive to become the leader in flow solutions. Let me conclude my presentation with Slide 39. With that, GF is embarking on a promising journey over the years ahead. However, our core purpose remains unchanged. Becoming better every day since eighteen o two.

Thank you very much for your attention. And I will now hand over to Nadine start our Q and A sessions. Thank you, Andy.

Before we start now our Q and A session, I would like to highlight one some of our upcoming events for the year 2025 for your information. So we will have our Annual Shareholder Meeting in April we will publish our half year results as usual in July 2018 and important for you to mention is November 4. Where we will have our Capital Market Day. We will launch Dare to full set of our Strategy 02/1930, which Andy just gave a glimpse on As mentioned earlier, we will first answer the questions in the room and then the questions in the webcast. For all webcast participants, who would like to ask a question, please press the star button and then one This allows you to enter the question queue.

All right, Valeria and Sarah will with questions. So I would go with your question first.

Walter Pammat from Tirk.

Can we have a deep dive on The U. S. Because this is at the critical point in time and you certainly reflected a lot about what Trump could mean to the company if you say it's not really relevant then perhaps you say why and in which areas which product are flowing into The U. S. From other regions? And also a second question regarding The U. S. What's your assessment of the economy there? Do you see an acceleration or a slowdown I think the press release today was showing a mixed picture there.

Thank you very much, Mr. Bamat. I think it's a very good question. GF producers in the region for the region. Approximately 92% of the products sold in The U. S. Are produced in The U. S. We have 11 production facilities across North America or across The U. S. When you consider also Canada, we have even 13 production facilities there. So we believe the minor import, we do out of Switzerland will not be substantially affecting that business also due to the fact that the other supplier of that kind of solutions are all based in Europe. So there is now none of that products being produced at this point time in The U. S. So we rather consider a strong resilience when it comes to tariffs and all that sorts of which might affect the S. Business.

Nevertheless, also to mention, we don't support any tariffs at all because we're going to believe that at global trade, without having tariffs is most likely the better one. Looking at the industry in The U. S, we see a strong development in industrial projects. So we have seen them already in the year 2024. Going forward, I think this is an unproven [indiscernible] Also due to the fact that many of these large scale industrial plants planning spends and realization spends of more than twelve months, normally in the size of twenty four to thirty six months.

So it starts from large chemical plants, but it also continues with further announced semiconductor projects as you may all Okay. Mr. Foletti?

Thank you, Alessandra Folletti, Octavian.

Thank you for taking my questions. Good morning, everybody. Just a understanding question on your outlook. For 2025. If I understand you correctly, you are pointing to a margin of 10.5% to 10.5 for the Flow Solution. This is basically GFP piping and [indiscernible] If I add the numbers for 2024, that margin was 12.2 So I have the impression you're pointing towards a decline in that margin, and I would like to understand why.

I think, first of all, thank you very much for your question. It is also concerning all the remnant costs of the corporate functions, which is normally being distributed in a consolidated way. So at this forecast, we have taken the conservative assumption that [indiscernible] covered corporate costs would be part of the Flow Solutions business going Okay. That's really the only one driver then.

That's the one driver, yes.

Okay. And then maybe just very quickly ask you this question. Are you changing the reporting structure now? This year, For the shifting the infra business on the left and the construction on the right?

Yes. We are the reporting sort of by midyear twenty twenty five will reflect BFF Building Flow Solutions only being building having the legacy GF business in there and the infrastructure and the industrial in this newly renamed division So infra will be shifted into that one. You will see the new structure by mid-twenty twenty five.

Would be great if you can provide some pro form a ahead of that.

We can look into that, yes.

Maybe my last question then on casting. You mentioned it is on [indiscernible] I wonder If divestment process is sort of improving or less the interest from potential buyers or not, I understand that at the beginning when you announced there was interest, then it sort of faded away. And I wonder if now I think this is a good question. And obviously, we have been expecting this question. We currently entertaining discussions with three potential into sub parties and we hope to strike a deal towards the end of this year. But nevertheless, it's usually in M and A businesses, are going to need two parties to agree. Mr. Posenov? Thank you. Reba Rosena, Helvet Schibank.

Just to come back on Alessandro's question to precisely a bit. So the midpoint of your guidance is 11 As Alessandro pointed out, 2024 was roughly 12.2 So if you assume kind of an underlying flat margin development the corporate costs you would incorporate is then around 0.7% of sales.

That is the mechano more or less. Correct. Okay. Then on Building Flow, Solutions, Last year, you provided a pro form a figure. For 2023, which I found in my notes, you said that was 12.3%, the EBIT margin. Of course, I guess without PPA and stuff. This year, it was 10.3%. Then you said without PPA, it would have been 11.3%. So the margin decline in Building Flow underlying was around minus 100 basis points. Is that the right way to look at it? [indiscernible] Yes.

Okay. So the decline in the market.

So the underlying operating decline around 100 basis points. That's right. Yes.

That's why it's important to reflect. That's why we are showing the minus point 7% really on a full year basis. Then you understand why there is a margin.

Yes, that makes sense then. Yes, absolutely. But it's not €200,000,000 it's €100,000,000 basically. Okay. Okay. Good. Okay. That's it from my side. Thank you. Ms. Dayford? Thank you. Jern from UBS. Would take the questions one by one. The first one is I'm glad to see that you're introducing cash flow guidance.

However, I think CapEx is remaining materially above D and A. Going forward. You maybe share where your investments priorities? Which end markets, which regions?

What kind of products in the next three to four years to start with the first question?

I can take that. Only talking about Flow Solutions, we probably going to be in the area of around €120,000,000 investment. The investment last year was unusually low in building flow solutions. They have a lot of catching up in Apple Valley in The U. S. And we also have a number of construction in Europe. In Poland, for instance, we're building a consolidated new facility in Poland We will be focusing our investments in Europe and North America in the near future for sure. Expect the CapEx to be around €120,000,000 €100,000,000 to €130,000,000 going forward for the Flow Solutions business.

Thanks. And the second question is when I look on your EBIT margin target, of 13% to 15% I think underlying when I combine the businesses the best was around twelve, twelve point five so far. So there is certainly support from the synergies. Going forward. Can you share with us what is your target for the next five years? How much is coming from putting production sites together of Upanor and Gf Pie being having better scale scalability, strengthening the key hubs, this is adding 150 basis points to come to this range. This how I should think about it?

Thank you very much. I think we have presented the value creation program with our targets going forward. They're definitely in the time span until the year 2027, should [indiscernible] There's a bit of a part we have been already realized in the year 2024. Okay. Then the last question, if I may, just technical one.

Can you give us a rough guidance about interest costs in total for 2025 tax rate, how you see it going forward? And also one off cost in cash.

Yes. Thank you very much.

Roughly half of what they were. Last year, so in the area of €25,000,000 to €30,000,000 for this area. Going forward, the tax rate this year should still be in the area of 25% to 26%. Unless Mr. Trump is going to lower the taxes in The U. S, we would expect it to be there at the same level. We are not being fined tax wise from Pillar two. We are paying above 15% everywhere in the world But we don't see right now in terms of where we're making the profit that we see a declining tax rate going forward. And interest expenses probably in total could come in around the €50,000,000 to €60,000,000 this year.

Thanks. And just a follow-up on the one off cost, the €30,000,000 or €25,000,000 to €30,000,000 How much of this is cash? And this is the last year of really cash costs? One off costs.

We cannot completely exclude that we will have something some AICs also for 2026. But definitely when it comes to restructuring of production plants, we've done most of the work this year. There's a significant portion in the plant closure in Europe.

Yes. Go ahead to the left.

Hi, Ingo Stoss also from UBS, but the credit side.

Regarding leverage, you were at 3.4 times now. I believe you guided for below three times at the half year results. Can you maybe provide us some guidance going forward? I think last year you had some midterm guidance of getting somewhere below 1.5 times.

I'm trying to get there. I mean, I see you're going to divest potentially divisions. You also need to acquire quite a bit in the coming years. Can you maybe give us some kind of idea of where we'll land in the next two, three, maybe five years?

I will do that right away. Just to be precise, it wasn't a guidance on 1.5%. I think the question was what where would you like to be long term? And I said 1.5 times. No. Assuming that we would not close a casting solutions hypothetically by the year. The year end will probably be 2.5 times at the end of twenty twenty five. And if we close Casting Solutions then by of 2026, we should be nicely below two times. And all the proceeds from the sale would be used draw down debt further. We're placing a new bond that's announced of you will then come to the conclusion I place too much. We have to refinance Next year, our €225,000,000 bonds, so that will probably be used partly to settle that bond as well.

Okay. It seems that there are no further questions in the room. So are there any questions from our online participants?

No?

Okay.

Ladies and gentlemen, with that We close our Q and A and, invite all participants here in Zurich, also for lunch, which will be served next door. On behalf of Jeff, I would like to thank you for your time and wish you a wonderful day. Thank you. Thank you.