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Operator: Good morning, ladies and gentlemen. Welcome to Vale's Fourth Quarter 2025 Earnings Call. This conference is being recorded, and the replay will be available on our website at vale.com. The presentation is also available for download in English and Portuguese from our website. [Operator Instructions] We would like to advise that forward-looking statements may be provided in this presentation, including Vale's expectations about future events or results encompassing those matters listed in the respective presentation. We caution you that forward-looking statements are not guarantee of future performance and involve risks and uncertainties. To obtain information on factors that may lead results different from those forecast by Vale, please consult the reports Vale files with the U.S. Securities and Exchange Commission, SEC, the Brazilian Comissão de Valores Mobiliários, CVM, and in particular, the factors discussed under forward-looking statements and Risk Factors in Vale's annual report on Form 20-F. With us today are Mr. Gustavo Pimenta, CEO; Mr. Marcelo Bacci, Executive Vice President of Finance and Investor Relations; Mr.Rogério Nogueira, Executive Vice President, Commercial and Development; Mr. Carlos Medeiros, Executive Vice President of Operations; and Mr. Shaun Usmar, CEO of Vale Base Metals. Now I'll turn the conference over to Mr. Gustavo Pimenta. Sir, you may now begin. Gustavo Duarte Pimenta: Hello, everyone, and welcome to Vale Fourth Quarter 2025 Conference Call. Last year, we delivered outstanding results by exceeding all production guidances while maintaining a strong focus on cost performance and capital discipline, both in iron ore and Base Metals. Our flexible commercial strategy in iron ore and the successful ramp-up of key growth projects such as Capanema, Vargem Grande, Onça Puma furnace 2 and Voisey's Bay expansion were fundamental in driving value for 2025 and will continue to do so in the years to come. At Vale Day, we outlined our strategy and presented our ambition to create superior value for our shareholders, driven by a relentless focus on operational excellence and adding high-quality growth projects to our portfolio, particularly in copper and iron ore, leveraging our unique endowment. I am extremely confident that by executing on this long-term strategy, we will generate significant value for all of our stakeholders. With that, I would like to now turn to the highlights of our 2025 performance. As I mentioned earlier, we were able to make significant progress in 2025. On our core value safety, we achieved a 21% reduction in high potential incidents, reflecting the continued evolution on our safety culture and on our focus on building an accident-free work environment. On tailings dams, in August, we fulfilled the commitment made to society in 2020 by eliminating all dams classified at emergency level 3 by 2025. We also ended the year with a 77% reduction in structures at any emergency level compared to 2020, and we expect it to reach an 86% reduction by the end of 2026. These are meaningful milestones in our commitment to nonrepetition. We also continue to make solid progress on reparations efforts, reaching 81% execution of the Brumadinho agreement and disbursing BRL 73 billion under the Mariana agreement, ensuring fair and comprehensive reparation. Operationally, 2025 was simply an outstanding year. We exceeded production guidances across all businesses while continuing to sharpen our competitiveness, once again delivering meaningful and sustainable cost reductions. I will cover that in more detail in the next slides. In February, we launched the Novo Carajás program, a transformation initiative that will help us double the copper output while enabling accretive growth in the world's highest quality iron ore endowment. Finally, the combination of strong execution in a more favorable cycle allowed us to exceed initial market expectations in terms of shareholder remuneration with a double-digit dividend yield. We entered 2026 with great optimism and the same focus to deliver strong results. Now let's look in more detail at our businesses, starting in the next slide. Iron ore production reached 336 million tons in 2025, 3% higher year-on-year and the highest level since 2018. The growth was primarily driven by the start-up of low capital-intensive projects such as Capanema and Vargem Grande, combined with a very solid performance in Brucutu and S11D. Together, these assets enhance the flexibility of our operations and strengthen our product mix. In the second half of 2026, we will begin commissioning the Serra Sul plus 20 million tons project, which will further increase volumes from our most competitive asset in terms of quality and cost. Enhanced operational flexibility, combined with our active product portfolio management enabled us to maximize value creation in the iron ore business while continuing to meet the evolving needs of our customers. Vale Base Metals also delivered outstanding results in 2025, achieving double-digit production growth in both copper and nickel. In copper, production reached 382,000 tons in 2025, 10% higher year-on-year, supported by record output in Brazil and solid performance across our polymetallic assets in Canada. Nickel production also showed a strong growth of 11% year-on-year, driven by the ramp-up of the Voisey's Bay mine extension project and the commissioning of the second furnace at Onça Puma, reaching 177,000 tons. This strong performance at Vale Base Metals underscores the exceptional work of our team in unlocking value from our existing assets and positioning the company to deliver on its long-term growth ambitions, particularly in copper. In 2025, we delivered cost reductions across all 3 commodities. This year-on-year improvement reflects the success of our efficiency programs and greater operational stability, which continued to translate into lower unit costs. In iron ore, all-in costs reached $54 per ton, representing a $2 per ton year-on-year reduction despite a much lower contribution from pellet premiums. In copper and nickel, all-in costs declined by 77% and 27%, respectively, driven by higher byproduct prices and volumes. Looking ahead, we remain firmly committed to further strengthen our cost competitiveness across the portfolio. We are very confident in our ability to deliver our guidance once again in 2026, reinforcing Vale's position at the very low end of the global industry cost curve. Before passing on to Marcelo, let me briefly touch on capital allocation. Our capital allocation remains robust and disciplined, combining consistent organic growth with above-average shareholder remuneration. The new Carajás program continues to advance as planned. In January, we received the construction license for the Bacaba project and construction works started on schedule. The start-up is expected in the first half of 2028, with an annual copper production capacity of 50,000 tons. We also conduct a thorough review of our CapEx program in 2025. This resulted in an annual optimization of more than $500 million and allowed us to establish a new long-term CapEx guidance below $6 billion. Finally, in November, we announced a $2.8 billion in dividends and interest on capital. In 2025, Vale delivered a dividend yield of 16%, reflecting our confidence in the long-term prospects of our businesses. As I mentioned at the beginning of this presentation, our ambition is clear. We are committed to creating superior value within the sector, and I'm highly confident we will achieve that by consistently executing on our strategy. I will now pass the floor to Marcelo Bacci, who will walk you through our financial performance. I will return afterwards for closing remarks. Marcelo, please. Marcelo Bacci: Thanks, Gustavo, and good morning, everyone. As Gustavo highlighted in his opening remarks, 2025 was an outstanding year for Vale with strong performance and consistent execution across all 3 businesses. We delivered robust results and entered 2026 with great confidence and clear momentum. In the fourth quarter of 2025, our pro forma EBITDA reached $4.8 billion, representing an increase of 17% year-on-year and 10% quarter-on-quarter. As shown on the slide, this strong performance was primarily driven by an excellent quarter at Vale Base Metals, supported by favorable pricing conditions for copper and byproducts, while continuing to capture meaningful operational gains across our polymetallic operations in Canada. As a result, Vale Base Metals EBITDA more than doubled both year-on-year and sequentially, reaching $1.4 billion in the quarter, clearly demonstrating improved operating performance as well as the earnings power of this business. In iron ore, we also delivered strong results with EBITDA remaining at a solid $4 billion with higher sales volumes and improved realized prices compensating for the BRL appreciation in -- the quarter. Now let's turn to our cost performance. During the quarter, our C1 cash cost, excluding third-party purchases, increased by 13% year-on-year. This was primarily driven by the unfavorable BRL exchange rate and higher planned maintenance activities in the northern system with a clear focus on optimizing performance and ensuring long-term asset reliability. In addition, higher production volumes in the Southern and Southeastern systems contributed to higher overall average unit costs. However, this impact was more than offset by the positive contribution to EBITDA, reflecting the strong operating leverage of our portfolio. Importantly, this cost increase in Q4 was expected and fully in line with our 2025 guidance, which closed the year at $21.3 per ton, right at the midpoint of the guidance range. Looking ahead to 2026, we expect C1 cash costs to range between $20 and $21.5 per ton, representing a further year-on-year reduction supported by continued operational discipline and efficiency initiatives. The all-in cost also performed in line with full year guidance, reaching $54.3 per tonne in the fourth quarter and averaging $54.2 per ton in 2025. This annual performance reflects the downward trajectory in our C1 as well as gains from our long-term affreightment strategy. Turning now to Vale Base Metals. Once again, both copper and nickel delivered consistent reductions in all-in costs. In copper, all-in costs decreased by $2,000 per ton, moving into negative territory at minus $0.900 per ton, the lowest level in the history of the business. This outstanding performance was driven by strong byproduct revenues, supported by higher gold prices and increased gold production at Salobo, combined with solid operating performance in our Brazilian assets. In nickel, all-in costs declined 35% year-on-year, reaching $9,000 per ton. This significant improvement was mainly driven by higher byproduct revenues, particularly copper, as well as stronger performance at Voisey's Bay and Onça Puma, which helped dilute fixed costs. Looking ahead, we expect Vale Base Metals to continue delivering operational improvements throughout 2026, further reducing operating costs beyond the positive contribution from byproducts. In nickel, our focus remains firmly on achieving at least a cash breakeven position by the end of the year and we are clearly on track to deliver on this objective. Now let's move on to cash generation. Our recurring free cash flow generation reached approximately $1.7 billion in Q4, more than double versus a year ago. This improvement was driven by our strong EBITDA performance as well as cash inflows from exchange rate swap settlements, reflecting the appreciation of the Brazilian real. Our annual CapEx closed fully in line with the guidance we had announced, totaling $5.5 billion. Looking ahead to 2026, we remain firmly committed to disciplined and efficient capital allocation with expected CapEx in the range of $5.4 billion to $5.7 billion. We are confident that we can deliver all the growth initiatives discussed at Vale Day while keeping our operations at a very high standard with an annual CapEx below $6 billion in the long term, positioning Vale as one of the most accretive growth opportunities in the industry. Also in 2026, we already expect to see a significant reduction in cash outflows related to reparations and then decharacterization commitments as these programs advanced meaningfully over the last year. As a result, we anticipate a reduction of approximately $1.5 billion in cash disbursements compared to 2025. Finally, as Gustavo highlighted, we announced $2.8 billion in dividends and interest on capital. Of this amount, $1 billion were extraordinary dividends paid in January, while the remaining amount is scheduled for payment in March. As you can see on the next slide, our strong cash generation in the quarter led to a significant reduction in expanded net debt, which closed the period at $15.6 billion. Our target range remains unchanged at $10 billion to $20 billion with a clear objective of operating at the midpoint of this range. This level will continue to serve as our reference for additional shareholder remuneration. Before handing back to Gustavo, I would like to emphasize that the strong results we delivered in 2025 were made possible by clearly defined priorities and a company-wide focus on disciplined execution. Our value creation is anchored on a consistent, disciplined approach to capital allocation, which will continue to guide our decision going forward. With this foundation in place, we expect to continue advancing our growth strategy while consistently returning value to our shareholders. With that, I turn the call back to Gustavo for the key takeaways. Gustavo Duarte Pimenta: Thanks, Marcelo. I would like to highlight the key takeaways from today's call. First, safety remains at the center of everything we do, and our performance over the last years reinforces that we are on the right direction. Second, our culture and strategy are strong enablers of our ambition to consistently deliver superior value to our shareholders. Third, operational excellence continues to be a core pillar of our performance. We have delivered on all of our guidances in 2025 and we remain laser-focused on maintaining a solid operational performance in our businesses. At the same time, we are accelerating value-accretive growth opportunities such as the Novo Carajás program, offering a highly competitive and compelling value proposition. And finally, our disciplined approach to capital allocation remains unchanged, supporting our ability to deliver attractive shareholder returns. Before we open up the call for questions, I would like to reaffirm our confidence in the company and in its ability to unlock even greater value in 2026 and beyond. We experienced the strongest operational performance in Vale's history, allowing us to maximize value from our existing assets while positioning the company for accretive growth opportunities. All of that at a special moment for the industry, where mining becomes essential to everything we do from energy transition to AI, and we believe Vale can play a key role in that future. Now let's move on to the Q&A session. Thank you. Operator: [Operator Instructions] Our first question comes from Leonardo Correa from BTG Pactual. Leonardo Correa: So a couple of ones for me. First one, maybe for Shaun on the very solid results coming from DBM, right, Shaun. So we saw a very strong cost performance, and my question relates to that. If we look at the copper all-in numbers, they were negative, right, around $800 per ton. Nickel was $9,000 per ton in the quarter, which I can imagine is highly influenced by the very strong byproduct credits that you guys are realizing in several precious metals and also gold, right? So curious to see, apart from that byproduct credit scenario, which isn't helping, I mean, just curious to hear about some other, let's say, bottom-up initiatives. In terms of the guidance, right, I mean, on this topic, the guidance at Vale Day is about $1,000 to $1,500 in copper all-in costs. In nickel, it's around, let's say, $13,000 all-in cost. So you guys are materially below the guidance that you delivered a couple of weeks ago, right? So I just wanted to understand whether you see, let's say, some upside potential or better, some downside potential on the cost guidance you gave some weeks ago. That's my first question. The second one, and this is for Gustavo. Gustavo, I think the introduction was very clear on how strategic this is all becoming, especially your copper assets, which the market for many years has not really looked into, right? And has not really valued. At this point, the market is still ascribing basically the same multiple for iron ore and copper, we think, right, something around 5x EBITDA inside Vale. You see a series of copper plays in the world trading at around 10x EBITDA or even higher. Vale has a lot of potential. There's a lot of growth in-house, which you guys are working on. I just wanted to hear a bit more of this opportunity and how to unlock this value, right? Is it going to be -- at some point, we're going to discuss again the IPO of VBM? Or you think it's more about delivering being consistent and just giving more, let's say, visibility on these projects? Shaun Usmar: It's good to chat to you again, and thank you for the 2 questions there. I think the questions around cost and ongoing improvements and sustainability. I mean, your thesis is correct. And I think we've talked a lot about this in the last year or so. You remember when I started in this role, we initiated a lot of restructuring, taking out significant -- about 1/3 of our global overhead. As a sort of catalyst as we changed the operating model for the organization to one that was more sort of lean and decentralized. Our targets at the time you'll recall, were about $200 million on a cash basis, almost half split between costs and capital as we improved capital allocation. And as we went through the year, we found more and more opportunity as we then also focused on operating execution. So as you think about this, we ended up over $400 million, so double what we expected. There is an intense focus on -- you've seen we successfully ramped up multiple projects. So we've reduced fixed costs. We've diluted fixed costs by increasing volumes, and we continue to focus on keeping discipline in copper as well as nickel. So you'll see that in our Vale Day guidance. You will see this year as we go forward that there's an increasing focus on getting our tons and also continuing to drive the cost performance of the business. So that's our commitment and we'll continue to update it. And as for guidance numbers, obviously, it's early in the year. I'd say we're well on track. You can appreciate the volatility on everything from gold price to the various byproducts that we have. But yes, it's definitely a feature. And I think if it continues in the sort of price regime, there's obvious upside. Gustavo Duarte Pimenta: So I'll take the second question. Yes, look, I think the market starts to appreciate and see the value that our Base Metals business can bring to the table. If you remember a few years ago, we had a series of discussions around turnaround, and it's great to see the business performing operationally well. That was our first objective when we did the carve-out, and I'm very happy to see the strong performance from the business. Now I think we still have a lot of work to do in terms of showing we can deliver growth. There is enormous growth potential within the endowment that Vale has. So we are doing, as you saw, around 380 kilotons a year. We can certainly work to double it and that's the mandate for the team. And the more Shaun and the team looks into our portfolio of assets and the development projects, the more excited they get in terms of the opportunity. So I think now it's on us to show that we'll be able to advance those projects. We got the installation license for Bacaba. We filed a preliminary license for Alemão last year. So things are moving forward. And I think once we can demonstrate to the market that we can operate the assets well, but also that we can grow faster than our peers, our copper endowment and portfolio, I think we will continue to, from our perspective, get share price recognition for it. So that's what the team is working on. And then if we, at some point in time, decide to do some particular capital market transactions, we will assess, right, what is the ideal way to fund the business. But at this point, I think the focus is making sure we continue to operate well and we accelerate the growth program. Operator: Our next question comes from Daniel Sasson from Itau BBA. Daniel Sasson: My first question is for Rogério. Rogério, you changed the way Vale thinks about its product portfolio, right, shifting from a goal of maximizing value for the company instead of maximizing iron content in the portfolio. But looking at your realized prices in 4Q, there was actually a decline versus 3Q with weaker quality premiums. Can you try to help us think about the dynamics of that in the last quarter and discuss how comfortable you are with the implementation of your current strategy, which also involves the mid-grade products and so on and so forth? And my second question to Shaun, maybe a follow-up to Leo's previous question. It didn't become clear to me if you have -- what are your alternatives to try and reduce, for instance, your cash costs, especially in the nickel business, right, which is where you likely have more opportunities to -- so as not to depend on high byproduct revenues, right, which prices you can't really control. So what would you say are your more urgent operational goals that are not related only to ramping up volumes that would obviously allow you to dilute fixed costs if you could get in more detail on what are your goals to reduce costs? And that obviously, coupled with a more rational capital allocation also in the nickel business would drive you to become free cash flow neutral even if byproduct revenues decline, right? Those would be my questions. Rogério Nogueira: Daniel, Rogério, I'll take the first question, and thank you for asking it. Indeed, our price realization for iron ore fines is slightly decreased, but primarily due to lower market premiums and mix optimization. But it's important to notice that it was not due to structural premium deterioration. This is a very important point here. There were 2 main drivers for this quarter-on-quarter change in price realization. First, the decline in premiums for IOCJ. We had about a decline of about $3.5 per ton. And also, we had a decline in premiums for BRBF of roughly $0.50. The second one was our sort of plan design, I would say, of another mid-grade product from Carajás, and we're trying to do it to optimize production, but also to maximize the use of our resources and test some additional specs in the market and see customer response. But having said that, I think we are always saying and I would like to reinforce that our revised commercial strategy aims primarily at optimizing contribution margin across the supply chain. We've been saying that it's not about optimizing price realization independently. It's looking at the whole supply chain and optimizing contribution margin. I think also I'd like to call the attention to the fact that the premiums of our flagship products, especially the main ones, remained very resilient despite low steelmakers margin globally. So in particular, if you look at IOCJ, it sustained premiums of around $13 per ton and BRBF about $2 per ton if you average all the indexes $62. So very resilient premiums for those products. And I guess more important to your question is that going forward, I think what we see is that this flexibility will be a real strength for Vale will be a real strength for us. So it may introduce some swings in price realization. I think this is something that you probably will observe. But we believe that it also will create optionality through the cycles. And with that, we believe we will be able to boost value through these cycles. So this is the view. It's always looking to total contribution across the supply chain, and that's why we're trying to drive a very flexible supply chain. Shaun Usmar: Yes. And Daniel, to your second question, just to give you a bit more color. I think the first thing is, as you say, we have to develop a track record of execution, not just on costs, but obviously, on volumes and asset integrity, maintenance, reliability and obviously, to do so safely. It's been 5 quarters you've seen the results relative to both market expectation. But I'll give you an example. Your question was specific to nickel. It's the first time, I think, since Vale acquired the business nearly 20 years ago that we actually -- we met budget. We obviously set stretched budgets. We are running this business not on backward-looking metrics, but we're continuing to build in low probability opportunities we see as we mature them into our rolling forecast and continuing to improve above and beyond what we can see. So specifically, Onça Puma last year brought on, on time, under budget, 13%. We achieved record production even last year for that asset with that second furnace. This year, we will be running at full entitlement and will, even in a lower cost environment, be generating cash. And [indiscernible] and her team have done a great job of both cost control, asset reliability and bringing that on. And we -- I have to say every single one of our assets contributed savings in that restructuring I mentioned, both in cost and CapEx. And to Gustavo's point earlier in his opening remarks, continue to find these opportunities, and that's what we're pushing. Voisey's Bay Long Harbour, we ramped up about 20% ahead of plan. That meant we had nearly a $200 million improvement in our EBITDA relative to our internal plans, not because of price. As you know, nickel price was weak, but because of the successful execution debottlenecking. And what happened in turn is the feed that we put through Long Harbour allowed us for the first time in its 11-year history to hit record production. Now with that asset now fully ramped up at Voisey's the challenges for us to continue to run that at capacity in the year ahead, which will -- while we continue to lower cost and dilute fixed costs. Sudbury, you remember, we were looking to maximize the throughput of our 6 mines through the Clarabelle Mill. It's the biggest throughput at 5 million tons we've had since 2016. We have to go, and we will go beyond towards 7 million in the coming years. And there's an intense focus. We've got broke out of where the dominant constraints are, what are the key value drivers in each of these different areas. There's initiatives that are going above and beyond, we'll perhaps talk about in an Investor Day later this year alongside our copper projects and others and just give you a bit more of a flavor. So the idea is beyond our current plans, we recognize that we have to be in the lower half of the cost curve, not relying on byproduct credits, and we're not there yet. And you'll recall Gustavo at Vale Day last year saying that we have made a commitment to get to cash flow breakeven in lower price environments by the end of this year, and there's a lot of initiatives to focus on us doing that. So hopefully, that gives you a bit of a focus, but I'd say things like that asset integrity, asset reliability and development rates in underground mines and improving productivities are a core focus. Operator: Our next question comes from Alex Hacking from Citi. Alexander Hacking: I had a couple of questions on nickel. Given your experience operating in Indonesia, how do you interpret the changes to the licenses there, firstly? And then secondly, do you see this as something that could be a structural change for the nickel market in terms of supply and price? Shaun Usmar: Alex, I think it's a question that everyone is asking. You've seen the price response in the last periods. We've seen very clear guidance and I think a realization with the Indonesian government that they have an ability here to address some of the significant oversupply. And there's also environmental and other aspects, I think they're focusing on. So I'd say going to the thematic that was, I think, raised in the last couple of questions, we're cautiously optimistic, but we recognize we're on the wrong end of the cost curve still on our journey. And candidly, from a competitive point of view, I don't want to rely on the kindness of strangers to make sure that this business is resilient. So I'm cautiously optimistic. You will see that you saw the write-downs that we took on nickel really is a focus on our disciplined capital allocation. This is focused on legacy I want to make sure that this business is run as lean and as efficient and as cost competitive as we can. And then indeed, if we continue to find, let's say, more rational participation and supply occurring in Indonesia and elsewhere, we'll be -- our shareholders will be the net beneficiaries of that. The focus is on what we can control. Operator: Our next question comes from Caio Ribeiro from Bank of America. Caio Ribeiro: So my first question is on Fabrica and Viga. I just wanted to see if you could provide some color on the latest developments with these operations, if you have yet a conclusion on what caused the sentiment overflow and whether you see this generating any broader impacts to your other operations? In other words, if you see the need to upgrade safety parameters to prevent this type of event at other operations? And also, what is the current status quo in terms of freezing of assets or fines deriving from this incident? And then secondly, clearly, the company has been making notable progress with derisking with the decharacterization of dams, reduction of emergency levels of dams as well. And this has been key to unlock restricted AUM, right? So I just wanted to see if you could share some color on how much AUM you perceive is still restricted from investing in Vale at this point? And what you see as the key triggers catalysts that you as a company can deliver over the next years to unlock this restricted AUM? Gustavo Duarte Pimenta: Caio, thanks for the question, Gustavo here. I'll cover the first one and then Marcelo will cover the second one. So on Fabrica, Viga, what we had there was overflow of water with sediments, mostly related with very heavy rainfalls that we faced during that particular period. We've been since then working to restore the operational conditions of the site. The impact has been limited. So we expect that in the next 2 to 3 weeks, most of the work will be done and we'll be ready to reestablish operations, certainly depending on the authorities for us to resume operations. We are taking a deeper look at our facilities to see what else can we do to make sure we become even more resilient given the changes that we are all facing in terms of climate change and so on. And we will incorporate those learnings for our existing facilities and others. I think it is important to highlight that none of our dams and geotechnical structures have faced any impact. And they -- in fact, they performed very well during this rainy season. We do monitor them 24/7 and the work that we've been doing over the years have demonstrated that they continue to be resilient and performing very well. Nonetheless, we will look back at what else can we do to make sure a similar event doesn't happen, and that's what the team is working on. But from a practical standpoint, the impact has been limited, and we are working as we speak to make sure we can put those facilities in conditions to resume operations. Marcelo Bacci: Caio, this is Marcelo speaking. About your second question, our estimate is that right after the accidents, we had about $5 trillion of assets under management between equity and fixed income that became restricted from investing in Vale. And since then and more recently, I would say, most of the recovery that we had was last year, apparently something like 30% of that or $1.5 trillion have been unlocked or unblocked from this restriction. I think the main events related to that is the improvement -- first, the improvement in the ESG ratings that some of these investors follow, and we've been consistently improving. But some of them also have their own criteria. So in parallel to working on delivering the KPIs that are important for the ESG ratings, we're also working directly with some of these investors in order to understand what we still have to do to come back to their portfolios. For instance, next month of May, we're going to have another roadshow in Scandinavia, which is an important part of those -- where those restrictions are to show our improvements and to have a direct interaction with those investors. So this is gradually coming. It's up to us to continue to deliver the results so that we can accelerate the process. Operator: Our next question comes from Christopher LaFemina from Jefferies. Christopher LaFemina: I apologize if you addressed this earlier, I had to dial in late. So my question is around the commercial strategy in iron ore. And I'm wondering a couple of different factors there. So first, obviously, with the emergence of CMRG, which is doing a lot of blending, does that impact the potential premiums that you might get on some of your blended ores because your blending strategy has been far ahead of your peers, and I'm wondering how what, CMRG is doing might impact that? And secondly, just in terms of your pricing, I mean, pricing against the benchmark historically, effectively against the Pilbara blend, which was 62% Fe content ore and now that's 61%. And I'm wondering if your discussions with your customers are in pricing relative to the benchmark, like where it is today versus where it's been historically? Or are you looking at bigger premiums just because the benchmark is lower quality? In other words, the Chinese that I would say historically you've gotten a 5% premium to the benchmark or whatever is 5% premium today, but the benchmark is lower quality ore, your premium should be bigger. Are you getting bigger premiums as a result of that? I'm not sure if that question was clear, but if it was, any help would be appreciated. Rogério Nogueira: Chris, Rogério, it was very clear. To your first point about CMRG and the blending strategy, more broadly, I think we've been discussing with CMRG always with the view of creating win-win opportunities. So it has to be something for us to operate on a differential basis that we create value for both of us. In regards to the blending strategy, CMRG has its own goals of having its own blending yards, but it hasn't, and we don't believe it will affect our blending strategy in China. And in particular, even if they have their own blending yards, I think you may think about the world as a single big blast furnace. So whatever comes in makes is what makes a difference, and it's not how it is blended. So the strategic thinking is about what kind of product, what kind of chemistry, what kind of size distribution we offer to this sort of big world blast furnace, okay, if you will. Your second question about the benchmark. It's -- what we do generally in our contracts is that we have a basket of indexes. So some of them will use Platt 62, some of them will use metal bulletin 62, metal bulletin 62 low alumina. So to a certain extent, some clients are actually looking to move from the 62 to 61, which will become a more liquid index in the market, and it's a reality. But it doesn't affect our price realization, if you will. I think if anything, it will change the price differential. Operator: Our next question comes from Marcio Farid from Goldman Sachs. Marcio Farid Filho: Maybe a follow-up to Rogério. Rogério, probably an important point there, what's happening in the market in terms of overall grade decline. And you mentioned that the 61% benchmark does not change our price realization. But I'm just wondering how does it change Vale's overall resources and ability -- I mean, if you think about cutoff grade being cut, you probably talk about potentially increasing life of mine, reducing replacement CapEx, to some extent, reducing OpEx as well. And that seems to be where the liquidity and where the demand for China is going to come from, right? So just trying to understand how does this kind of degrading trend we are seeing globally affects Vale's resources on the ground. That would be great. And if you can follow up in terms of CMRG discussions. So obviously hearing a lot about what's happening between CMRG and BHP at least on the news. But just wondering if that kind of hard conversation is -- it can eventually contaminate Vale as well. It's been very specific to this one case. And maybe an update on the Base Metals side. I think there was an expectation that some technical reports can pop up in early 2026. Just trying to understand how VBM is performing in terms of exploration program so we can better track the projects? Rogério Nogueira: Marcio, thanks for the question. On the -- good that you follow up on the price realization on 61. Indeed, I think to your point, when everybody is moving down to a lower grade to a 61 index, alumina, in most cases, the ratio of alumina silica might increase. And if anything, that actually offers us an opportunity to improve our product mix to better suit to this new reality. So it tends to be favorable to us. To your second question about how do we use this mix optimization and you're spot on because the idea here is one to increase our resource base or to better use our resource base. If we keep the cutoff grades too high, sometimes what we end up being waste is really good iron ore. So the idea here was really think about an integrated portfolio, one that actually looks into the market and also look into our resources and capabilities. And obviously, as we reduce the cutoff grades, as you just pointed out, it actually increases the ability for us not only to improve the resource base but to reduce CapEx, reduce OpEx, increase production. So this is an integrated view together with [indiscernible] and we're working very close together to optimize the supply chain in this regard. CMRG, I think to your third question, this is hard for us to comment on third-party negotiations. But I mean, from what we know, BHP's conversations with CMRG are still ongoing. They will have second rounds or another rounds of negotiations with other -- more intense negotiations actually with other suppliers, iron ore suppliers, including ourselves. But we'll see it in due time. Shaun Usmar: Yes. And Marcio, on your questions on the technical exploration side and those reports, you recall Vale Day, there's a huge amount of work that's been done to take a different approach with our restructuring on projects in a fundamental way. We talk about what that looks like at a high level. The technical studies, SK 1300 level standard studies, a couple of hundred page reports are in final draft form right now, which we're reviewing. And the idea would be for us, certainly before the end of the quarter to be publishing those on the VBM website to make those available. So we just went through and discussed some of this with our Board today, and we'll be finalizing that work and looking to make that available to investors and analysts. And also the MRMR and the exploration results, the extensions and the results that we're seeing, which we're very excited about will be unveiled, and we will be able to talk more about that at an upcoming Investor Day. So stay tuned. And the last thing to reemphasize, you remember, we -- last year, particularly in copper and the Carajás, the exploration potential is huge. We do about $170 million a year of exploration globally, and we reprioritized. We went from about 8 to 23 drills in Pará. And indeed, from 20,000, 30,000 meters to 600 last year, we're on track for the 100,000 this year. And we'll be looking to update the market more regularly on some of those results because I think they're very exciting. I think it's a lot of what Gustavo had referred to in terms of the upside and the growth potential that we're focusing on simultaneously. Operator: [Operator Instructions] Our next question comes from Rodolfo Angele from JPMorgan. Rodolfo De Angele: Interesting to see conference call Vale more biased towards Base Metals this time around. But I have a question on each of the 2 sides of the business, and I want to start with iron ore. And this is probably for you, Rogério. I think one question we got a lot from investors into this year is about the strength of iron ore pricing. I guess investors were more on the bear side. There is capacity coming in. Simandou is a reality already. But -- and we look at a few statistics, China importing record levels of iron ore despite the fact that data suggests that peak steel consumption or production is already behind us. So I don't know, I would like to hear from you what is your assessment? What is the state of affairs? What do you expect for 2026 in terms of iron ore business environment and whatever you can talk about prices. So this is my first question. My second is I'm going to get back to Base Metals. I'm not sure if I understood correctly, but there is some additional information to come up on the development plans soon. But I think investors are not yet pricing in the growth that Vale can deliver on iron ore. And ultimately, once we have a more detailed plan. Today, I think it's a very real ambition. But if we get like this is the -- how we're going to get there. It's 50 from this project with this CapEx intensity. So I think that will be a trigger to see everyone kind of starting to put more numbers and pricing that growth in Vale's copper growth story. So is it reasonable to expect that in the short term? And if not, if you could comment a little bit, at least on what should we expect in terms of CapEx intensity, at least on a relative basis compared to industry, if you cannot share numbers, just to give us an idea as well of potential returns. Rogério Nogueira: Rodolfo, Rogério here. I know that China is not easy to understand these days, but we see indication of good fundamentals, I mean, for both steel and also iron ore. And we do see that globally. China, as you know, infrastructure and manufacturing continue to provide positive support to steel demand despite the challenges that we see and we know in the property sector. I think also, as we have seen, direct and indirect steel exports that we believe are likely to remain at very high levels. This is at least our view. So based on this, I mean, what we anticipate is that crude steel production for 2026 will be at the same level as last year in China. And outside China, we see market fundamentals are very positive or positive, I should say, across most regions. Some recovery we see more broadly in most of the world regions. In terms of iron ore supply and demand, we expect it to remain balanced at about 1.650 billion tons. That's our view. And we -- as you pointed out, we expect China's iron ore imports to remain broadly stable. This is our view. One point that everybody is noticing is the inventories, the high level of inventories at Chinese ports, which are roughly at 170 million tons currently, closed the year at 160 million. We believe that when you look at this on an aggregated basis, consolidated basis with steel mill inventories, you'll see that there is an offset. Steel mill inventories have increased about 20 million tons. So overall, when we look at it on a consolidated basis, iron ore inventory remains about 35 days of consumption, which is if you look back, it's within the typical range for this time of the year. So when we put this all together, we see that steel and iron ore fundamentals, and they point to a healthy price level for 2026 despite the usual volatility that we see. So when we say similar to last year, we're acknowledging that there may be volatility throughout the year, okay? Specifically on Simandou, we -- as you asked, we believe Simandou will come to the market gradually. And as we have been talking and we emphasized during the Vale Day, the Simandou additional volumes will be offset by depletion in the industry. Shaun Usmar: Yes. Thanks. And then specifically to your question, look, firstly, I came to this job excited actually about exactly what you just said that I think I can't think of, I'd say, a better underrecognized copper growth profile and what we are seeing in this business. And I think there was the very idea that brought Gustavo and the team to sort of carve out VBM. I'd direct you to a few quick things. The first is, and I think you see it in these results, we have to deliver in the immediate term. So there's quarterly delivery that we've been focusing on and you see that in a number of occasions exceeding guidance. That's the earning at least some recognition of what is possible operationally. And then if you go back to the Valid Day material on the website, there was a huge focus on this. We actually overlaid on the slide as we restructured our approach to projects, particularly the copper growth side, we took projects where we've dramatically lower capital intensity. So for example, Bacaba, we just got the LI. We're well on track now in execution, which will bring online in the first half of 2028. That is nearly half the capital it was a year ago. The return has gone from mid-teens to over 50%. And it's more of a brownfields project in terms of risk. As you can appreciate, it's extremely attractive from a capital intensity point of view. Of course, particle flotation at Salobo, next one, nearly 30,000 tons of additional copper. That's the 2029 time frame. We're well advanced on that. We're looking at actually doing some early works now and that's nearly half the capital intensity, and you're talking over 50% rate of return, brownfield site project. Alemão is the next one. It's a brownfield site. We've changed the mining method from sublevel cave to sublevel stoping. The returns have gone from mid-teens to mid-20s plus. And that will be the -- we just November last year, submitted the first license for that. So we've got this mapped out. We've accelerated. We've changed the sequence. It compares extremely favorably. You'll see it on our website, the capital intensities. And to your point, the technical studies, the execution, and I don't think at this point, the IR team has released a date. But in the near term, we'd be looking to have an Investor Day to go through more of the detail with the team on the projects, the details, the operational improvements and the things that have been discussed on this call in terms of cost improvements in both nickel and copper. And the other one is exploration because I think it's extremely exciting and it's underappreciated. Operator: Our next question comes from Carlos De Alba from Morgan Stanley. Carlos de Alba: I want to go back now to capital allocation. Given the share price strong rally and where you are in the expanded net debt range, what is the view on returning excess cash to shareholders potentially more buybacks, more special dividends? How is the company thinking about it? Marcelo Bacci: Carlos, Marcelo speaking here. I think the current market conditions are favorable for cash flow generation. So in case we start to go in the direction of lower than the midpoint of our range in terms of expanded net debt, there is a chance that we have additional returns to shareholders. Last year, we favored the dividends because of the change that came on the taxation that was effective in the beginning of this year. For future allocations, we will see what is the situation at the moment. We tend to be more balanced, but it will depend on the relative valuation. But definitely, we will consider both dividends and buybacks. Operator: Our next question comes from Rafael Barcellos from Bradesco BBI. Rafael Barcellos: Congratulations for the results. Rogério, how do you -- how should we think about your mid-grade volume strategy this year? I mean, especially considering the increase in this type of product coming from Carajás. And what are you seeing in the freight market, I mean, which appears seasonally stronger this year. I mean forward curves are pointing higher. So I'm interested to understand. I understand that Vale is protected against the short-term volatility, but what could be the potential impact of the freight dynamics on the company and in the overall cost curve? And my second question regarding M&A initiatives. Gustavo, we've continued to see a very active M&A news flow across the sector. So how should we think about Vale's positioning in this environment? And most recently, I mean, we saw discussions involving Rio Tinto and Glencore. So if something were to materialize there, how could that affect Vale's partnership with Glencore in the Victor operation in Canada? And more broadly, how should we think about future partnerships in Canada? Rogério Nogueira: Rafael, thanks for the question. In terms of your question on mid-grade products from Carajás and the volume. I think as we mentioned, we are increasing recently, and we're expecting from 40 million to 50 million tons this year. But it is based on the market assumption of what the market wants is looking at what the market dynamics is currently. But again, the volume, the final volume will depend on the market. What we're trying to do, as we said in the beginning, is adjust our product offering according to the market. So if the market values more higher quality products, which actually yield higher productivity to the steel mills, we may shift our product portfolio. But again, it's all about maximizing total contribution, not necessarily volume, not necessarily price realization. On the freight market, the freight market, as you pointed out, is really going up for the future. But we have actually -- and I won't be able to give too much detail. We have revised our freight strategy this year with very positive results. And what I can tell you is that our exposure to the freight spot market today is very low. So the impact on us would be very limited. And I think on the positive side, it would increase our competitive position against other players. Gustavo Duarte Pimenta: Rafael, Gustavo here on your M&A question. Look, we continue to believe that we'll be able to capture more value by developing our unique endowment. This is a sort of competitive advantage for Vale vis-a-vis our peers. We have a tremendous endowment with the ability to bring projects online at below average cost of capital and capital intensity, as Shaun pointed out with some examples there. That applies also for iron ore. So we think from a value creation standpoint long term, developing our own endowment makes more sense, and that's where we're going to get more value. We are looking at alternatives and potential transactions all the time. But we have to appreciate we still trade at a discount to peers of about 20%. So for us, from a value accretion standpoint, it is certainly better to develop the endowment that we have. Now if we look at our story and the reason why I'm so optimistic about it is if we are able to deliver growth at very competitive capital intensity below market, but at the same time, return strong cash remuneration to shareholders. So I think this is highly unique within the sector these days. So we'll continue to be focused on that. If tomorrow, as we pointed out long term, if we are doing 360 million tons in iron ore, C1 below $20, all-in below $50 per ton, and we are doing 700 kilotons in copper. This is certainly a very valuable portfolio of assets, and that's what this team is going to pursue. Operator: This concludes today's presentation. You may now disconnect, and have a nice day.
Leonardo Karam: Good afternoon. Welcome to Usiminas conference call in which we will discuss the results for the fourth quarter and full 2025. I'm Leonardo Karam, IR Director at Usiminas. [Operator Instructions] This conference call is being recorded and simultaneously broadcast on the Usiminas YouTube channel. Please note that this conference call is intended exclusively for investors and market analysts. We kindly ask you to identify yourself so that your question can be addressed. We also request that any questions from journalists be directed to Usiminas Media Relations at the email, imprensa@usiminas.com. Before proceeding, we would like to clarify that any statements made during this conference call regarding the company's business outlook as well as projections and operational and financial targets regarding its growth potential are forward-looking statements based on the management's expectations regarding the future of Usiminas. These expectations are highly dependent on the performance of the steel industry, the economic situation of the country and the conditions of international markets and therefore, subject to change. Joining us are CEO, Marcelo Chara; the VP of Finance and IR, Diego Garcia; and Commercial Vice President, Miguel Homes. Initially, Marcelo will make some opening remarks, then Diego will present the results. After that, the questions submitted through the Q&A session will be answered. I will now turn the floor over to Marcelo. Marcelo, you have the floor. Marcelo Chara: Well, thank you, Leonardo. Ladies and gentlemen, a very good afternoon to all of you. It's a pleasure to be here with you to share the results of Q4 and the full year of 2025. 2025 was a challenging year for Usiminas and for all the steel Brazilian industry. And once again, the opportunity of growth and generating income and jobs was compromised due to unfair import of steel and these were manufactured products. In 2025, we reached an adjusted consolidated EBITDA of BRL 2 billion with a growth of 24% vis-a-vis 2024 and a margin of 8%. One of the main drivers to improve the result was the cost drop of the steel units totaling minus 5% of cost to sale per ton. This was more than offset the lower net revenue per ton that was 4%. In Minera��o, the highlights were a record volume of sales of iron ore totaling 9.6 million tons, a high of 14% vis-a-vis 2024 and quality discounts that allowed us to attain better results the first quarter of [ 2023 ]. In the steel unit, the company projects stable steel unit sales. And in the domestic market, connected to seasonality, we expect a recovery of net revenue per ton, driven mainly by a sales mix that is more noble and higher prices. On the other side, the cost per ton will increase, reflecting the most favorable mix. And with this, we project EBITDA margins above the last quarter. Now in the mining unit, the expectation is of lower sales volumes due to the seasonality of the rainy season and prioritizing better -- areas of better profit. The prospect of the economic scenario is moderate for 2026, sustained by a gradual growth of 1.8% of the GDP presented in the focus report. Within this context, the expectation of the steel Brazil industry is increased, but this growth will be totally absorbed by the expected growth of imports of 4%. If this is not -- if we don't have effective measures of commercial defense against unloyal competition, the import volumes in the steel chain have been investigated and confer the urgency to be implemented fast. The government has reacted as we can see in the recent antidumping rights and to elevate the tariffs by 9%. Now we manifest our recognition by the serious technical work by the Ministry of Industry and Commerce in the analysis of the commercial lawsuits. This is important to foster more competitive value, Usiminas is prepared to capture the opportunities of this new context, meeting the ever-growing demand of its customers. At the same time, as we maintain attention to the market in order to curtail the possibilities of not following this that are result of an over surplus of Chinese steel in the international markets, and this impacts the national industry. Our internal agenda for 2026 will be focused on reducing costs, efficiency in our industrial operations and strong financial discipline and strong environmental discipline. It will be important to ramp up our priority CapEx like the PCI plant, the Coke batteries repair and the new Gasometer. These projects will reassure the sustainable growth and the competitiveness of Usiminas at the long run. We would also like to thank all of our employees for their effort, their engagement as well as our suppliers, clients, shareholders and the community for the trust and for the sound relationship that we built throughout the year. And we are confident that 2026 will be a very good year. Thank you very much. Diego, you may proceed. Diego Garcia: Good afternoon to everyone. These are the highlights of the year. Our steel sales throughout the year was 4.4 million tons. It was the second greatest in the past 10 years, the growth of export and the volumes in the domestic market will remain stable. The Mining Unit presented production [ in ] a record sales. The adjusted EBITDA was BRL 2 billion, a strong growth of 46% in mining and 16% in steel unit. The free cash flow of BRL 1 billion reflect the EBITDA generation, working capital in BRL 838 million, partially offset by the CapEx of BRL 1.2 billion. The year ends with a net cash of BRL 444 million, the result of the flow of free cash flow and depreciation of the BRL vis-a-vis the [ doctor ]. Now we had BRL 1.4 billion in net debt. Now our next slide. Now the net revenue was BRL 6.2 billion, a growth of 6.5% vis-a-vis the past quarter, mainly because of the reduction in the steel unit we registered the lowest price per ton. Now this effect was partially offset by 4% increase in the mining unit and by higher prices, although there was a slight drop, this wasn't affected. The EBITDA was slightly before the past quarter. Now we had BRL 2.9 billion that was affected by the impairment of the past quarter. Now the fourth quarter ended with a profit of BRL 129 million. Now let's go to the next slide. In the steel unit, the annual volume and sales was robust and there was a growth in export. The sales volume with a quarterly basis dropped 2%. It was 3.3% in terms of drop in the domestic market, but aligned with Q4, showing us the seasonality, the net revenue reflects the drop in the net revenue per ton because of the import. We have a less favorable mix during Q4. EBITDA improved with the improvement of cost, although we were in an environment of unfavorable price, the deterioration of the net revenue per ton impacted the EBITDA by 26% when we compare it to the past quarter. The adjusted EBITDA was negatively impacted by a less favorable sales mix with products of lower margin. The gain of the CPV of steel maybe due to lower prices of raw material, partially offset this impact. In addition, during Q3, there was an extraordinary sales of fixed assets that wasn't repeated during the fourth quarter. In mining, last year, we ended with a record sales volume and production. As a result, the annual net revenue increased 27%. Although there were lower price, the net revenue per ton reflects lower discounts due to penalty and exchange rate due to the average exchange rate throughout the year, higher by 3% and the plates references dropped $7 per ton analyzing the profitability of the business. The EBITDA per ton dollar increased 2%, although there was negative pressure. Throughout the quarter, the sales volume presented a slight drop of 2%. Despite this, the total net revenue increased 4%. This reflected better prices in the quarter. And here, we had $4 in terms of the price of reference. When we see the revenue, EBITDA dollar increased $4 per ton aligned with the reference prices. Now our financial indicators. The operational -- net operational cash flow was BRL 1.1 billion of an EBITDA of BRL [ 470 ] million, a reduction of working capital of BRL 576 million. The working capital variation was because of a drop in accounts receivable and an increased accounts payable, BRL 192 million. The CapEx was BRL 372 million, and we reached BRL 1.2 billion in the line, aligned with the guidance between BRL 1.2 billion and BRL 1.4 billion. This way, the free cash flow of the quarter was BRL 744 million. Throughout the year, the free cash flow was BRL 989 million, mainly reflecting the EBITDA generation and working capital that we mentioned beforehand it was partially offset by the CapEx of BRL 1.2 billion. Now throughout the quarter, we went from a net debt of BRL 327 million to a free cash of BRL 444 million, reflecting the free cash flow of BRL 744 million that we already mentioned. The gross debt increased around BRL 6 million due to the appreciation of the dollar. Now throughout the year, there was a significant drop of BRL 1.4 billion in our net debt. This was due to the strong cash generation ending with 0.22x negative leverage. Usiminas ends the year with a sound debt profile with no extraordinary maturities until 2028. Leo? Leonardo Karam: Thank you, Diego. Now we go to the Q&A session. Marcelo, first question from Gabriel Barra from Citi and Marcio Farid from Goldman Sachs. They want to know about Compactos and Mining. Gabriel says with the changes in the share for MUSA and he wants to know if there is an update of the project Friable for MUSA. Marcelo Chara: And let's say there have been no changes. Yes, we do have a robust plan in the short, mid- and long-run strategy, and we continue making progress with our licensing program of Compactos. This year, we will have news, and we will see possible instrumentations. And regarding the Friables project, we are constantly reviewing our exploration strategy as well as mines or mining operations, and we created important efficiencies and synergies. And we do -- we believe that the prospects for the short and mid-run will be -- to be continuous in terms of friable material. Leonardo Karam: Thank you, Marcelo. Well, questions about antidumping. So what are we going to do? There are a number of questions regarding antidumping. I'm going to try to divide them in [indiscernible], the efficiency. Gabriel Barra from Citi, [ Guilherme B ] from XP with the approval of the antidumping, what should we expect for hot rolling mills that will be approved by the end of the year? And Guilherme basically asked the same thing. Will we have a definition regarding this request? Miguel Angel Camejo: As Marcelo stated, this definition was published yesterday for measures for hot rolling mills and galvanized. As we have reported antidumping actions from China. And finally, the soundness of these cases were confirmed by the definite measures that were published yesterday. We expect the same type of scenario with hot rolling mill and the hot rolling mill according to the preliminary publication. Now the time line would be July this year for a definite measure. We would also like to remind you that this is -- the deadline would be in December. Due to the importance of the measures and the high impact that these imports have in the steel industry in the Brazilian market, we feel reassured that this will be resolved by the middle of this year. Leonardo Karam: Thank you, Miguel. Our next question from [indiscernible]. Marcelo, in your view, dumpings are valued as of when? And Marcelo, [ Arazi ] wants you to give us details regarding the tariffs that were applied yesterday, what kind of consequences can we expect from here on? Marcelo Chara: Now the measure is valid as of the publication and the measure for cold rolling mill is -- now for the coils would be as of the day of the publication and also we expect it to be next week. The impact will be positive for the industry and the market. When we see the imports from China, these 2 products, they exceed 1.5 million tons during the past 12 months. And in this sense, we would have greater possibilities to sell to the local industry, and Usiminas will be prepared to cater part of this market. Leonardo Karam: Now any concern regarding ways of not complying with this measure. Well, we want to know how to evaluate the risk of triangulation of import volume because the measures were geared towards China. How do you see the effectiveness of this antidumping for galvanized products and cold rolling mill. Marcelo, can we see volume be redirected by Vietnam, how to see this triangulation risk? And he wants to know if these measures are sufficient to see sound margins in the sector once again. What do we need in order to have a profitable industry structurally? Miguel Angel Camejo: Well, the first step -- well, there -- what was published yesterday is important to correct the distortions created by this unfair competition. There are risk because we still have a structural proper because there are surplus in global steel because of the Chinese production. Production last year in China was above 130 million tons. So this created negative impacts in different markets. And obviously, as we presented here in Brazil, we were one of the markets that was most impacted by these imports. Now we have to continue observing. We're working together with government agencies because we don't want the risks to impact us during the upcoming months. When you analyze the antidumping measures for cold rolling mill at the worldwide level, you can apply today for -- there are 40 cases. Out of the 40, 12 are against China and the second, third country, with the greatest amount of cases is Vietnam and Korea. There is a risk. We have to continue monitoring. We are working together with the agency in order to avoid these future risks, and we trust that the government as of yesterday's definition can see the critical situation of the industry and the worldwide steel industry. Leonardo Karam: Thank you, Miguel. Yes, there are more add-ons here. Marcio Farid from Goldman Sachs, Gabriel Barra from Citi, Caio Ribeiro from Bank of America, Marcelo [indiscernible], BTG, [indiscernible] from JPMorgan and Ricardo Monegaglia Safra, everybody wants to know about the next steps. What is the main strategy after tariffs and antidumping? Is it volume or prices? Which effects can we expect throughout 2026 due to these measures? And if Usiminas will be more proactive in price transferring this year. I want to see if there is a different add-on here. And Ricardo wants to know with the combination of increase of 25 [indiscernible] antidumping, how can they affect the discussions in price? If there is an impact in the number of orders when you see these changes. Miguel, you have the floor. Miguel Angel Camejo: Many questions. Let's see if I can answer all of these questions here in my answer. By the -- let's start with the market. We expect a market in 2026 with the growth of consumption of flat steel of around 1%, highly aligned with the expectation of the GDP growth. If we see a similar market, '25, '26, we analyze the total volume of imports of flat steel in 2025 was around 4 million tons and around 60%, 65% comes from China. Therefore, we could conclude that we do have important space to resume our participation in domestic market in the consumption of flat steels in Brazil. Now within this scenario, we would have greater market share, potential increase in internal sales and better mix of product sales when we compare it to export. Now when we see the price, for instance, we see a strong pressure in terms of revenue because of the high imports and unfair competition, which affected our prices and profit. We have to become profit again to face the needs of technology and the face of investments that we have in CapEx plan. We can resume our profit if we have better prices and margins during the upcoming months. Leonardo Karam: Now Daniel Sensel-Schechner from JPMorgan and Ricardo Monegaglia from Safra. We know the great part of the volume of galvanized products goes to the automobile industry that is not exposed to export. Will you change your negotiations with the automobile industry in April? Do you believe that the contracts that will be signed in the upcoming months will be readjusted? Will they be affected by these antidumping measures? Miguel Angel Camejo: I would like to clarify around 60 of coated products are for the automobile industry. As you know, they follow yearly contracts. Part of these contracts are renewed in January. The other part are renewed in April. The contracts that were renewed in January have a cost reduction of 2%, 3%. And we already explained in other calls, the negotiations of the auto industries are not impacted by these imports. They're very little impacted by the imports because this is flat steel. So we don't expect any impact in the negotiations that will take place in the contracts that will be renewed in April. The expectation is to close these contracts at similar levels from January. The contracts of January represent 25% of our total revenue for our industry. Leonardo Karam: Thank you, Miguel. More about this subject. Ricardo Monegaglia wants to know how many measures to normalize the inventories in the industry for imports post tariffs? Miguel Angel Camejo: This is an important point. As a matter of fact, the strong increase of imports throughout the year elevated the inventories of the importers. Now the chain according to the last in the report, the inventories for the chain increased and today would be around 4 months. Our view is that the inventories for the importers are above 6 months. Now the regularization will take some time, will depend the dynamic of the consumption, but it's important to understand that great part of these inventories are characterized by commercial products with no added value. And in our focus during the past year is greater share in greater added value products, especially geared towards the industry. We could see a gradual resumption for more commercial products and obviously, with very little impacts for the industrial sectors or the auto industry. Leonardo Karam: Miguel, still the import costs, is there a space to request to the government increase of the tariff to 25 for more NCNs? Miguel Angel Camejo: Well, we are optimistic and we are positive the increase of 9 [ CMS ] for our sectors done by the government. The government is seeing different tools to mitigate the impacts of a loyal competition in all industry. I would not discard the use of these tools in the future to minimize the risks and the impacts, especially when we talk about triangulation or circumvention back from other origins. Leonardo Karam: Igor Guedes from Genial. We would like to have an idea how -- what about your cold rolling mill? How much does this account in your sales? Now cold rolling mills in the domestic market, yes, it accounts for what kind of share? Unknown Executive: Igor, our cold rolling mills would be around the cold rolling 1 million. Now of course, the import and the loss of share in local steel mills have reduced this volume. It is important to clarify that we have the capacity to increase the production of cold rolling in order to rectify this problem that we had due to unloyal competition. Leonardo Karam: Marcelo. Here, the focus would be more on the operation. Igor Guedes from Genial wants to know, do you expect these antidumping measures to improve the domestic demand at a point that you will reactivate the blast furnace that is closed? Would you turn on this disconnected blast furnace? Marcelo Chara: Igor, excellent question. I can make a comment here regarding the productive structure of our blast furnaces in Ipatinga. We invested BRL 2.7 billion in blast furnace 3. With this retrofit and all the ramp-up process, in addition to we are ending on the PCI powder coal injection that goes through the upper side of blast furnace 3, and we will be able to inject all the furnace systems. All of these measures have allowed us today to be able to replace one of the blast furnaces operating with blast furnace 3 that has over 3,000 cubic meters and [ 2,800 ] cubic meters. Today, the capacity is to have productions that are equivalent to the 3 blast furnaces. So yes, we can supply and increase our steel capacity. Yes, we do have capacity. We are regulating the production capacity according to market conditions, and we are prepared to use a virtual blast furnace 1 with the new performance that we achieved with the new blast furnace 3 that was developed. Leonardo Karam: Marcelo, now a question from Guilherme [indiscernible]. Regarding MUSA, if you could better quantify the drop of volumes for 2026 and the volumes expected for 2026. Marcelo Chara: Now the first quarter is highly associated to the seasonality of rainy season. This year, rains are intense and this affects logistic mines. And this is aligned and what we expect for the year is a full alignment according to iron -- or indicators we have developed, an operation system that is extremely flexible, which allows us to define routes of operation at marginal costs, which are properly identified in such a way if we see price conditions that favor of full sales, we will use this. And this is something that we will monitor throughout the year. We will monitor this evolution, and we will adapt our production to this market dynamic. Leonardo Karam: Thank you, Marcelo. Diego, regarding capital allocation, Daniel Sensel-Schechner from JPMorgan asked a question. You have net cash. What is your capital allocation from here on? Is there a space to improve the balance structure? Is there space for more investments? Diego Garcia: Thank you for your question. Now regarding capital allocation, we have already carried out a CapEx guidance of BRL 1.6 billion, which is significant. We have other CapEx that have been approved. Leonardo Karam: Marcelo, I don't know if you would like to give us information regarding Compactos, but there is not much more to mention. Marcelo Chara: As Diego just stated, now we ended the investment cycle connected to blast furnace and auxiliary circuits. Today, we have a major product that was approved, that was the Coke battery #4 of BRL 1.7 billion that will give us self-sufficiency in Coke during the upcoming 3 years. And at the end of this project together with the hot repair that we're performing a battery 3 that is working exceptionally with excellent impact in emissions reduction. Let's say, we have a clear measure of emissions, very low -- at a record low in the history of Usiminas, and I can convey that our focus on the environmental performance has gone hand-in-hand with priority management, and we have capitalized these investments to make our industrial -- environmental more robust. We have the PCI project, powder coal injection. We're ending it during the first semester, as I mentioned. We have the new Gasometer. This CapEx of BRL 1.6 billion is totally aligned to our strategy to improve cost competitiveness and environmental performance. And in terms of Compactos, I mentioned at the beginning, the intention is to continue with the environmental licensing and throughout 2026. And at the end, we will see how to give continuity. As I mentioned in the beginning, we have a clear view that MUSA is a strategic asset for us, and we can see how we can continue the operation in the long run. Leonardo Karam: Thank you, Marcelo. You answered the next question from Rafael Barcellos of Bradesco about the guidance and to talk about the CapEx of 2026, Diego, regarding cash flows, Guilherme [indiscernible], XP, Rafael Barcellos wants to know the free cash flow was strong during the quarter with the lender of accounts receivable and working capital help us. What can we expect from here on? Is there a space for improvement that comes from these lines? And Rafael says, how should we think about the working capital during 2026? Diego Garcia: I think that we reached the level of working capital that will be stable and in the future will be changed because of the effect of prices and volumes. But it is not reasonable to think a new year with the release of working capital like we saw in 2025. Leonardo Karam: Thank you, Diego. Marcelo, regarding the product structure, Carlos De Alba from Morgan Stanley wants to know due to the footprint of Turn in the Americas, does Usiminas want to invest in an electric furnace in Brazil like in Cubat�o? Marcelo Chara: Well, let's say. As I said -- well, the upstream was disconnected years ago, but there's a downstream that is exception now the hot rolling mills of Cubat�o is one of the most modern from the America, it has over 10 years of operation, but it is at a state of maintenance and the technological update. Well, this is an interesting asset to maximize and to meet the demand of all the domestic market in all segments, industrial oil and gas, well, an electric furnace would mean we have to justify this clearly in terms of volume growth. This will depend on market conditions and the evolution. According to the current situation with the strong impact of imports and the low consumption of steel in Brazil, this is still not in our radar in the short or mid-run. Yes. Well, this is a plant that has an interesting profile in its structure because it has an area of a steel mill -- has the steel area that is perfectly conserved, and it can be activated if it's convenient. But this is not something that we have in our radar in the short or mid-run. Leonardo Karam: Thank you, Marcelo. Miguel, Some questions regarding negotiations with the auto industry. How were the negotiations with the auto industry in January 2026? And what do you expect in April? And when will you review these contracts? Miguel Angel Camejo: Guilherme [indiscernible], as we mentioned, the auto contracts that were renovated in January had a 2%, 3% discount. I would like to remind you that these contracts account for 25% of the total sales to the auto industry. Now the contracts that are renewed in April that are under negotiation, the expectation is to close at similar levels to that of January, most of these contracts are signed on a yearly basis. Some of them are reviewed every 6 months. Leonardo Karam: Thank you, Miguel. Miguel, regarding prices, Guilherme [indiscernible] Goldman, Rafael Barcellos, Bradesco, how do you see the domestic performance of prices throughout the first quarter? And what do you expect in terms of the sales mix, if you can tell us how this will work between industry sector. Now Emerson says that the price of Q4 was affected by the mix change. Can we already see this in January or February or the expectation of normalization is for March and Rafael wants to better understand the magnitude of the average price. Miguel Angel Camejo: We increased prices for distribution sector in January by 5%. For industry, most of the contracts were renewed as of January following the trend of the price increase that comes from Q4. All these contracts are delayed in 3 months in the auto industry, as I mentioned, there is a discount of 2%, 3% for a very small part of these contracts that were renovated in January. Now regarding the mix, we expect our sales mix to normalize in the domestic market during Q4. Going back to a sales mix, which was historic in Usiminas that we can classify as 1/3 of sales for the auto industry, 1/3 for distribution and the other 1/3 for the industry. I think that this gives -- this is the color regarding the expectation of this first quarter. Now you spoke about normalization as of January or March. I think that most of the auto industries came back from the holiday vacations after the first fortnight of January. So after the first 15 days, we can see the normalization of the sales mix here. Leonardo Karam: Diego, now we have questions regarding costs, Diego. I'm going to try to bundle them. Guilherme from XP and Emerson Viera from Goldman Sachs want to know the following, can you give us more visibility regarding cost improvement visibility due to efficiency in order to capture this in the upcoming quarter? And how do you see the evolution of cost during Q1? And Emerson basically says, what can you say about space for continuous gain of efficiency in costs? Diego Garcia: Now regarding the next quarter, as Miguel mentioned, with the normalization of the sales mix, we will have -- we will increase cost because we are selling material of greater value. This will be more than offset by the revenue per ton. This is why we have a favorable outlook for the next quarter. Leonardo Karam: Now regarding efficiency gains, this is one of our continuous targets. I don't know, Marcelo, if you would like to say something. Marcelo Chara: I would -- as Diego mentioned, our main focus is the improvement of efficiency, especially in industrial processes throughout the semester. We already system -- the coal injection system for the blast furnace and progressively, we will replace an important part of coal consumption by coal. And this generates important efficiencies and cost reduction. Throughout 2026, we will continue consolidating these type of projects that allow us to improve our sales cost in a systematic fashion. We are more robust in terms of profitability. Leonardo Karam: With this, we also answered [indiscernible] question. That was price. Now Diego still on costs. Rafael Barcellos from Bradesco BBI and [indiscernible] just want to know how the recent increase of coal prices will affect cost. The drop of COGS that was stronger than we expected some inputs that went through the PML bought in the past at a lower cost, the coal price increase, how do you see the cost from here on? How long does this last? How long does the price transference last? Diego Garcia: For the next quarter, we do not see these effects. The effects of the increase of coal prices, we will feel this, especially during the second quarter. There are -- well, this will not have an effect during Q1 and probably during -- yes, during Q2. Leonardo Karam: Diego, still for you. A question from an individual [indiscernible], I don't know. I cannot -- the payout to shareholders, is there any forecast of payouts for shareholders? Diego Garcia: Last year, we had an important loss because of the impairment. And because of this, we did not -- for the time being, we are not thinking about paying dividends regarding last year again because accrued profit, but we will always assess the situation of the company. And one of our targets is to continue paying our shareholders end to end. Leonardo Karam: We have a question from Gabriel Barra from Citi. He wants to know the transition of the position of CFO. If there will be an important change in focus, could you talk about your priorities at the short run and the long run for this new position, Diego, we will finish with this. Diego Garcia: Thank you, Gabriel. The transition is okay. I found a financial team that is spectacular, and they are helping this transition to be swift, organized, and I would like to thank everyone. Now regarding focus, well, I believe due to the challenging environment of the industry, it is important to control -- to have control in cost and cost efficiency, and we need discipline in our CapEx as well, and we will be focused on this. Leonardo Karam: With this, we ended our Q&A session. We would like to thank everyone for your participation. And should you have any doubts, our IR team is at your disposal. Thank you very much, and have a good afternoon.
Sebastian Frericks: Good morning, ladies and gentlemen, and welcome to the three months '25/'26 analyst conference of Carl Zeiss Meditec. My name is Sebastian Frericks, I'm the Head of Investor Relations. Our CEO, Andreas Pecher; and our CFO, Justus Wehmer, will present the three months results and guide you through the financials and some prepared remarks. After the presentation, we look forward to the Q&A. I would like to hand over to Andreas. Please go ahead. Andreas Pecher: Thank you. Good morning, dear analysts and investors. Welcome to the three months '25/'26 analyst conference of Carl Zeiss Meditec AG. Maybe some of you know that I've been at Zeiss Executive Board Member since January 2022. Back then, in the very early part of that month, Meditec was valued above EUR 16 billion. Now it is valued at below EUR 2.5 billion. This is not acceptable for all of you and also not for Zeiss. Zeiss has taken the biggest loss of all above EUR 8 billion since then. And the new low point also is in the level of trust when we have to withdraw our full year guidance on January 22. The minimum I can do is to apologize, which I want to do personally and on behalf of the Management Board. I assume more important for you and also Zeiss as the main shareholder is that we reverse the trend and build up trust again by working on our business performance and meet what we said before over and over again. For that, we need to strongly focus on execution now. We will talk about how business conditions have evolved since our last update in December 2025 and what the key building blocks are for the remainder of the fiscal year. Justus will address these topics in more detail later in the presentation. And of course, following the presentation, we'll be happy to take your questions. But before that, Justus and I will walk you through the quarterly overview and financial results. So, let me start with an overview of our first quarter performance. Well, to cut it short, this was not a good quarter, and we're not happy with the results. We had a weak start to the year with both revenue and EBITA coming in below the prior year, driven primarily by currency headwinds and an unfavorable product mix with weaker sales of refractive treatment packs as well as intraocular lenses in China, which weighed on margins. Revenue for the quarter amounted to EUR 467 million, representing a decline of 4.8% year-over-year. On a constant currency basis, revenue declined by 2.1% year-over-year, driven primarily by movements in the U.S. dollar. When fully reflecting all currency headwinds, FX effects amounted to EUR 20 million. FX-adjusted revenue was relatively flat at minus 0.7%. And beyond the U.S. dollar, these currencies -- currency impacts were mainly related to the Chinese yuan. In this adjustment, we are also eliminating all currency effects related to the exports into the ZEISS Group global distribution network. The revenue decline was visible across both equipment and consumables. The quarter was impacted by a soft start into the fiscal year following an exceptionally strong equipment delivery baseline in September last year. And in China, we also saw revenue loss from bifocal intraocular lenses following the withdrawal from the current VBP tender as well as delayed sales of refractive treatment packs due to the later timing of the Chinese New Year holidays. Looking at the revenue mix, equipment accounted for 52%, consumables for 37% and services for 11% of total revenue in the quarter. Order intake reached EUR 471 million, down 9.7% year-over-year or down 6.9% on a currency-adjusted basis, which is mainly related to the strong year-end close in September 2025. Our order backlog increased to EUR 405 million at a slightly higher level compared to the end of last fiscal year. Now turning to profitability. EBITA came in at EUR 8 million, a 77% decline versus the prior year, resulting in an EBITA margin of 1.7% compared to 7.2% last year. The significant decline was mainly driven by negative FX effect and unfavorable product mix and negative operating leverage as our cost base remained largely stable while revenues declined. So, now I'd like to hand over to Justus, who will provide you with more background and will discuss the SBU figures in more detail. Justus Wehmer: Yes. Thank you, Andreas, and also a warm welcome to all of you from my side. So, as usual, I will briefly walk you through ophthalmology performance first and afterwards, microsurgery. So we had a weak start, driven mainly by refractive phasing and a loss of bifocal IOL sales in China. Let's start with the revenue. Reported revenue came in at EUR 357 million, which is down 5.1% year-on-year and foreign exchange adjusted basis, revenue declined by 2.4%. The performance was impacted by several factors, of course, currency headwinds, as already explained by Andreas, strong equipment sales at prior year-end, which created a much slower start in the following month and later phasing of refractive treatment pack sales due to the later occurrence of the Chinese New Year vacations. And ultimately, the loss of the bifocal IOL sales in China, where we have reported that we lost there the right to participate with one lens category in the tender. One item to highlight here is the potential bifocal IOL scrap risk associated to what I just explained and estimated at around EUR 8 million in total, which will fall in quarter 2. This will be treated as a nonrecurring impact, and it's worth noting that registration of the successor model is progressing well. The chance seems good to receive the license before the start of the next tender. Moving to EBITA margin. The EBITA margin declined to minus 0.4%, representing a 5.2 percentage-point decrease year-on-year. This was mainly driven by a 1.9 percentage points decline in gross margin, largely due to the currency effects and an unfavorable product mix. The OpEx ratio weighed on margin by additional 2.8 percentage points, although [ obsolete ] expenses remained stable as particularly the changes in APAC currencies cannot be locally hedged with most of our OpEx in euro. Finally, looking at the revenue split, ophthalmology accounts for 76% of total OPT revenue. And within ophthalmology, consumables represent 46%, equipment accounts for 45% and service contributes 9%. Turning then to microsurgery. Overall, we saw a margin decline, mainly driven again by currency headwinds and an unfavorable product mix. Revenue reached EUR 110 million, which is down 3.7% year-on-year. On a currency-adjusted basis, revenue declined by a more moderate 0.9%. The softer revenue performance despite a relatively modest comparison base is largely explained by exceptionally strong deliveries towards the prior fiscal year-end, which created a pull-forward effect. In addition, we saw an unfavorable mix with slower deliveries of neurosurgical microscopes following the strong year-end close in September '25, which not only impacted revenue phasing, but also weighed on profitability. The EBITA margin decreased to 8.7%, representing a 6.5 percentage-point decline year-on-year. This was mainly driven by a 5.5 percentage-point decline in gross margin, reflecting currency effects and unfavorable product mix and the amortization of capitalized R&D related to KINEVO. In addition, the OpEx ratio weighed on margin by around 1 percentage-point, while [ obsolete ] expenses remained stable. Looking at the revenue split, microsurgery accounts for 24% of total revenue. And within microsurgery, equipment represents the largest share at 79%, service contributes 15% and consumables account for 6%. Let me walk you through our regional development. Overall, EMEA remained stable, while we saw softer performance in the Americas and APAC. Starting with the Americas, the region accounts for 25% of group revenue. Revenue came in at EUR 117 million, down 13% year-over-year, with currency-adjusted revenue declining by 6%. This reflects a weaker investment climate, driven largely by heightened geopolitical volatility and a decline in key markets, including the U.S. Overall, demand momentum in the U.S. remains subdued during the period as a consequence of overall tariff-related price increases. Moving to EMEA. EMEA represents roughly 37% of group revenue and showed a largely stable performance. Revenue reached EUR 174 million, moderately below last year, while currency-adjusted revenue actually grew slightly. This resilience was supported by growth in selected markets, particularly in the Middle East. At the same time, core European markets, including Germany, Spain and the Nordics remained broadly sideways. Finally, Asia Pacific region, APAC represents 38% of revenue, with China contributing 18% in this quarter. Revenue amounted to EUR 178 million, down 3% year-over-year, with a currency-adjusted decline of 2%. Performance across the region was mixed. China remained stable, while India and Australia showed positive trends. This, however, was offset by weaker revenue in Japan and South Korea, which weighed on the overall regional result. Turning to the P&L. Margins came under pressure in the quarter, while operating expenses remained broadly stable. Gross profit declined to EUR 227 million, with the gross margin decreasing to 48.6% from 51.4% last year. This was mainly driven by currency headwinds, a lower contribution from neurosurgical microscopes, IOLs and refractive treatment packs as well as higher amortization of capitalized R&D expenses related to KINEVO. Looking at operating expenses. Total OpEx was flat year-over-year at EUR 226 million. However, as a percentage of sales, OpEx increased to 48.4%, reflecting a negative operating leverage. As a result, profitability was significantly impacted, both EBIT and EBITA declined sharply. Earnings per share decreased to minus EUR 0.06, driven by the sharp EBIT decline and negative financial results, primarily due to higher interest expenses. On an adjusted basis, adjusted earnings per share was EUR 0.03, excluding noncash valuation effects on contingent purchase price liabilities while exchange rates and hedging results were not adjusted. The next table provides a brief overview of the bridge from EBIT to EBITA and to adjusted EBITA. Regular amortizations on purchase price allocations amounted to EUR 7 million in Q1, including D.O.R.C. effect of EUR 6.5 million and smaller effects from former acquisitions. In terms of special items, the current quarter includes legal expenses in connection with the lawsuit related to former IanTECH in the U.S. On the contrary, the prior year benefited from a one-off gain from public grants received in China for our IOL production. Adjusted for special items, EBITA amounted to EUR 10.3 million, with a margin of 2.2%, significant decline compared to previous year. Next, we have a quick overview on the cash flow statement. We saw a clear improvement in operating cash generation. This improvement was mainly driven by a strong reduction in receivables, particularly from third parties as well as income tax refunds, which reflect the weaker operating result in the period. Cash flow from investing activities also improved primarily due to lower investments in property, plant and equipment compared with the prior year. Financing cash flow declined, mainly impacted by the reduction of liabilities to the ZEISS Group treasury. By end of Q1, net financial debt decreased to EUR 282 million at a lower level compared to a year ago. And now I'd like to hand it back to you, Andreas. Andreas Pecher: Thank you, Justus. So let's move to key topics and outlook. I will outline the main triggers behind the current guidance suspension and also share my recent impressions from a visit to China that happened last week. Then Justus will illustrate the key building blocks shaping our outlook for the remainder of the fiscal year. So let me briefly explain what has changed since December 2025 and why we decided to temporarily suspend guidance in January. Well, let me start with the bifocal IOL situation in China. As we communicated at the December '24/'25 analyst conference, full year conference, our bifocal IOL was withdrawn from the existing VBP tender. As a result, it cannot longer be sold to public hospitals under that framework. While the product license itself remained valid, there is still, of course, ambiguity around the VBP withdrawal, and we were still assessing whether limited sales to other markets for the private sector are feasible. At the same time, the treatment of existing inventories remain unclear. In a worst-case scenario, this could require a partial recall and scrapping of stock. We're now seeing only limited resale opportunities for bifocal IOLs more broadly as this product has been removed from the reimbursement scheme following the withdrawal of VBP qualification. So, since January, we have negotiated a partial recall with external distributors in Carl Zeiss China, which will result in an estimated earnings risk of around EUR 8 million for Carl Zeiss Meditec. Second, moving to VBP and competitive dynamics. Our assumption in December was that the second nationwide VBP tender would put some pressure on IOL pricing, but to a lesser extent than the first tender as we learned from other peers, which are subject to consumables VBP. Meanwhile, we've identified the competitive landscape has intensified more than expected. In multifocal categories, several Chinese competitors have successfully passed registration, increasing price competition. As a result, we now expect pricing pressure in premium IOLs to be tougher than previously assumed. Beyond IOLs, competition in equipment is also starting to heat up, supported by expanding local procurement policies. And finally, on equipment demand, we're currently seeing weaker demand in the U.S. and broader Americas market, particularly in the ophthalmology segment, this seems to extend beyond the impact of the strong September deliveries, causing a slower start into the new fiscal year. Based on this, internal sales forecasts have been adjusted to reflect a more cautious CapEx environment for the fiscal year. While putting all this together, regulatory uncertainty in China IOLs, higher competitive pressure and softer equipment demand, we concluded that temporarily suspending guidance was the most responsible step until visibility improves. We will update the market as soon as conditions stabilize and assumptions can be reliably quantified. We're currently working very hard in defining measures, and we'll update you as soon as possible, latest with the half year reporting as previously promised. But before I close and hand back to Justus for the outlook, let me talk briefly about China with a more long-term view. I just came back from, I would say, intensive visit in China last week. And I was meeting there, of course, government officials, for instance, the Shanghai Party Secretary, Chen Jining. He's one of the -- well, he is the highest ranking official in Shanghai. We also had the corporate size, Greater China headquarters campus construction launch ceremony. And of course, we did that alongside many of our customers, the local officials, and lastly, I met a number of our customers, particularly the Aier Group and its CEO, Mr. Li, and of course, our team. And let me be straight in assessing the long-term competitiveness of Zeiss in China. We currently are in a period of, let's call it, vulnerability, not having localized our manufacturing fast enough. The transfer of manufacturing for key consumables and equipment is happening as we speak, and we will be largely completing this over the next 2 years. We have all the support we need from our local team and from the local and regional officials, and I will personally look over this. We expect to be strongly competitive again across our portfolio with our state-of-the-art production facilities in Guangzhou and Suzhou. Having the strongest brand in ophthalmology in China, keep in mind, Zeiss is even more recognized from a brand point of view in China, as in Germany, very close relationships with our key customers and an excellent reputation in the Chinese market from consumers to set that on brand recognition to doctors, to the government. And this can also be demonstrated by the largest ever infrastructure investment corporate ZEISS has made in China today. That, of course, also benefits Carl Zeiss Meditec. Now back to you, Justus. Justus Wehmer: Thank you, Andreas. So let me now outline how we are thinking about the timing of new guidance and the main factors that will shape our outlook. At a high level, we continue to see several external headwinds, including trade barriers, regulatory changes, a softer consumer environment and currencies, which are putting pressure on this fiscal year. Right now, we don't foresee any alleviation of these headwinds in the near term. There are 3 groups of internal factors we are monitoring closely. First, swing factors, which could move performance either way in the near term. This includes the timing of the successor bifocal IOL registration and launch. We have already received, as we mentioned before, positive signals and currently expect to receive the license around March in time for the new volume-based purchasing tender. We are also awaiting the outcome of the VBP tender expected in April or May, which will have an important impact on our IOL business. And lastly, refractive procedure demand around the Chinese New Year period, which will provide a good indication on overall market sentiment. In the first quarter as well as extending into January, our refractive consumption data indicates continued stability, whereas the market was quite weak overall based on our data. We are satisfied about our relative outperformance, but currently cannot count on a growth outcome to offset other pressures in the business. Second, nonrecurring items. In Q2, we expect the scrapping of certain old bifocal IOL inventory. As just explained, we have agreed with Carl Zeiss China and external distributors to take back a certain quantity of intraocular lenses, which will cause a burden of around EUR 8 million to gross profit in the second quarter. We are developing our strategy and reprioritizing R&D projects, which will likely have an impact on IP and cost allocation. And in addition, we anticipate one-time reorganization-related expenses that will mainly affect the second half and beyond. As we have said in our release on January 22, more details on measures will be presented with our half year report. Third, key positive drivers. We expect continued momentum from the VISUMAX 800 and the associated SMILE pro rollout in China, further global traction for the KINEVO 900 S. So overall, while near-term volatility remains elevated, we see both risks and clear operational levers. Once these swing factors crystallize and the one-offs are better quantified, we will be in a much stronger position to provide reliable guidance. Timing-wise, no later than our half year results. And with this, I'd like to conclude our presentation for today, and now we look forward to your questions. Operator: Yes. Thank you so much for the presentation. We will now move on to our Q&A session. [Operator Instructions] And we have already received a question, Mr. Reinberg. Oliver Reinberg: Oliver Reinberg from Kepler Cheuvreux. Just 3 questions, if I may. And the first would be on China refractive. I mean, obviously, the kind of Chinese New Year season is starting soon. And given you have just been in China, can you just provide some kind of feedback, a, what you have seen in terms of stocking ahead of the event and also what kind of feedback you get in terms of the expectation for the season from your clients? Secondly, just on the counteraction you're going to take. I mean, obviously, you're going to execute the plan that was developed before. Can you just provide some kind of flavor to what extent you also consider to accelerate these kind of measures given the kind of current earnings pressure? And then thirdly, just on China and the political background. I mean, buy-local has been a theme for quite a while. Can you be a bit more specific in which equipment parts you specifically see this kind of pressure and whether there's also anything happening in the refractive space. I mean, obviously, there's so far no local competition to SMILE, but if there's any kind of push towards LASIK or anything here? Justus Wehmer: Thank you, Oliver. I can probably take the first 2 questions and Andreas... Andreas Pecher: I can probably take the second and take the third one. Justus Wehmer: Yes, exactly. So, China refractive, yes, you're absolutely right, Oliver. We are actually -- as we are sitting here entering into this Chinese New Year vacation period. And in a nutshell, I think the stocking into the distribution channel is right now tracking on a level that is, I'd say, within our expectations. It is comparable to last year's level, but the proof is then in the pudding. The proof is ultimately in the consumption during the vacation period. And I think only once we know that, we will really have a good indication whether our assumptions for this year's overall consumption are actually correct or maybe higher or outperformed or underperformed. On measures, I can tell you that we are in full steam, so to speak, in the assessment and the decision-making process on what needs to be done. But I have to ask for your patience. As you know, there we have to follow a governance protocol. And we also, frankly spoken, also don't want to share anything premature here in public and clearly also not to feed our competitors with information that might be interesting to them. And on the Chinese political pressure, I think... Andreas Pecher: Maybe I can add to the second one, Oliver. Thanks for those questions. Well, that was the main reason why I stepped in, right, that we don't want to lose the time here. And we talked about that in December already. First measures have been implemented, for instance, the commercial organization that's being rolled out now. And of course, the other items, we're working together as a team to make sure that we develop those plans as fast as we can. That's clear and implement what we can implement. And for other things, we, of course, need the governance. That's clear. So rest assured that this is one of my and the whole team's highest priorities. Now coming to your third question, well, let me first comment with sort of a general statement. What we observe is typically there is buy-local policies for areas where you have local competition coming up, of course, because it makes sense, right? Other things have to be imported. We observe that specifically in the diagnostic areas, and there is some risk in ophthalmic areas. The good thing is we have all this in our hand. We can localize. I mean we have large really good infrastructure in China. We have the right people. I just met them again last week that can do that, and we have the willingness to do that. And in addition, we also have the support from the local governance and officials. I spoke to them last week. They really want us to be successful in this market. So I would say we have everything in place to counter that and take on competition as it arises. Oliver Reinberg: And do you see any risk that this kind of political pressure is also moving toward private space of refractive? Andreas Pecher: I wouldn't say political pressure. I mean, you can call it political pressure. In the end, it is the will to localize manufacturing in parts R&D. And if you follow that, our impression is we have a very good position in that market. And by the way, that's something that I also see in other businesses of size. This is not just in medical. I mean we have that in our vision business as well. And what we see is, as long as we follow those rules, we have a very strong position in those markets. I mean vision is #1, for example, in China. And there is, of course, strong competition. So we have the means to do this and of course, work with the officials to make sure that we can do that. Operator: Thank you so much, Mr. Reinberg, for your questions. We move on to Mr. Jon Unwin. Jonathon Unwin: I actually just had a quick follow-up on Oliver's question on the equipment and the buy-local policies. You mentioned it was mainly in diagnostics, but also in other areas of ophthalmology. Is that all other areas of ophthalmology, so refractive, cataracts and microscopes or one more than the other? So just a quick follow-up there. I'm just interested how order intake has progressed in Q1 and Q2 for microsurgery. Obviously, we saw strong deliveries in the fourth quarter, but have orders progressed well so far year-to-date? And how do you feel about the ability to deliver those in the rest of the year? Andreas Pecher: Maybe I'll take the first question. Thank you for those questions, Jon. Well, it depends in terms of the competition. I would say, generally, it's probably the highest on the cataract side, right? Then microscopes, I would see that more on the lower end coming in. And then the third one is refractive. That's the way I see it. And the good thing is we have a strong position in China. Zeiss overall is more than 7,000 people working for us in China. We see what's going on in the market. We can react. Essentially, we have the control over that. We can localize things quickly. Of course, you all know medical has regulatory restrictions, that's clear, but we can do that, and we're willing to do that. and one after the other. And this is nothing new to Zeiss generally. In general, I mean, we've seen that ambition as well. Years ago, we reacted and we're #1 there. Justus Wehmer: Fine. Then your question on MCS order intake and outlook. I think, yes, the first quarter has been soft, but I just spoke yesterday with the management of that division, and they are totally confident that they will make their numbers and volumes. The funnels, the project funnels are full. The order entry comes in. I obviously can't disclose here data for the current quarter. But I think what I want to convey to you is that for MCS, as we had said in December, for this year, I think that we will clearly benefit from the global roll-in of the KINEVO 900 S and the PENTERO, good sales volumes that we have seen last year, end of last year, also going into this year. So therefore, I think overall, for MCS, we are currently pretty confidently looking into this year. Operator: Thank you so much Mr. Unwin for you questions. We now move on to Mr. Marchesin. Davide Marchesin: I hope you can hear me well now. I have 3 questions, 2 on refractive. The first one is about the rollout of VISUMAX 800. So last year was better than you initially expected in China. Can you just make a comment how Q1 has continued and where are you right now? Second one is also you said that in China, refractive was stable. Can you comment whether this stable is related to volume or value as SMILE pro implies some positive ASP effect? And the last one is you also said in your comments that the planned delivery of neurosurgical instruments was slower than expected. Is it something that you see is just temporary? Or do you see that it will spill over more towards the further quarters? Andreas Pecher: Maybe on the first one, just you saw the picture that we showed, the one with the right background. That's actually me and our team standing together with the management of Aier Group and unveiling one of the VISUMAX pro systems, the SMILE pro systems. Just as a highlight there, they are dearly waiting for that, and they were really, really happy to have us roll that out. But that to just sort of highlight and Justus will go more into the numbers. Justus Wehmer: Yes, Oliver (sic) [ Davide ], happy to share with you that we are going into this year and order entry is currently trending nicely. We are in a neighborhood of 50 VISUMAX 800 in our books for China, out of which already more than 30 have been shipped and installed. So that, I think, is a pretty solid number after the few months that we are in this new fiscal year. And then your second question, what I was referring to the stable was the procedure numbers. And just to also comment maybe on your underlying question, we still see a good pickup in SMILE pro treatments. And from that perspective, I also can confirm that by now, we do not see any further deterioration of margin in the market. So hopefully, that covers your question. And sorry, and you had one on MCS. Once again, I wouldn't derive out of Q1 any conclusions that would indicate softness or weakness for MCS for this fiscal year. As I said, the funnels are very solid. And we also know that this category in the hospitals, so neurosurgical procedures is a money-making procedure. And therefore, we clearly expect that there will be a robust market demand for this year. Operator: Thank you so much Mr. Marchesin. We have a question by the number with the last of digits of 219. Jack Reynolds-Clark: It's Jack Reynolds-Clark from RBC. I hope you can hear me. I had 3, please. So the first is on European core market weakness. Could you run through which subsegments specifically are impacted, i.e., was it refractive versus kind of cataracts versus D.O.R.C.? What do you think is driving the weakness? And do you think it's temporary or longer term? The next is on the U.S. So do you -- or does the ongoing weakness in the U.S. change how you view the attractiveness of the U.S. market for you from a bigger picture perspective in the longer term? And then my third question was on the CEO search. Could you update us on where you are with this and share any kind of developments around your thinking about what it is that you're looking for? Andreas Pecher: I'll take the third one. Justus Wehmer: Yes. Jack, it's Justus. So on the core market segments in Europe, actually, I don't know whether that was maybe mispronounced or misunderstood in my statements because actually, we are not so, how should I say, unhappy with Europe. As I said, we have some regions that still grow nicely and some regions, Germany amongst them, which have a more sidewards development in the first quarter. But that I would not yet take as indication of a softness of the business. So therefore, really nothing particular to point out here. I think if I look back on the 8 years that I'm now here with Meditec, Europe is always a mixed bag. You always have due to local politics and so on, you always have different investment behaviors across the board between South and North and East and West. But I think overall, we have always been able to, in total, then grow year-over-year in Europe. So therefore, really nothing that I would point out here, especially since you were asking about any particular business sectors of ours. The U.S., the weakness that you have commented on, of course, we are not happy with it. But first of all, we have installed in the U.S. a new head of our sales organization, a very industry-known veteran who has also worked in his history partially for some of the major U.S. competitors of ours. So, yes, it's an environment in which we have probably more hostile competitors than in other markets. But we -- I don't think that we should give up on it. And there is products in the pipeline, as you know, whether it's the hydrophobic trifocal lens, which we would expect by next year as well as the VISUMAX 800 flat cutting modality, unfortunately, only also next year. But I think the completion of our portfolio should actually in the next year give us some better opportunities or provide better opportunities for us to be in the U.S. in better shape. And on this third question, I think... Andreas Pecher: Maybe build on the question. Thanks, Jack, for those questions. Justus and I spent 3 weeks ago, we spent a good week in the U.S., of course, talking to customers as always, we always do that, but also to our team. And the new person heading our U.S. sales organization is not coming from the outside. He was at other companies before he came from another one of our markets and has a, yes, a proven track record of bringing a lot of value to those markets. That is, I would say, one of the first changes that came out of the new organization, the new commercial organization. So, as you see, we're in full swing of changing things, as I would say, to the better. On the CEO search, well, shortly said it's in full swing, right? I said before, I personally have a strong interest in keeping that short as my family. But, joke aside, we all have an interest, right, to make sure that we have the long-term person in there. So we are currently looking outside and have actually several candidates. And of course, I hope you understand that we cannot disclose anything more precise today, and we'll announce this as soon as possible. But it will be a person that, I would say, has a solid track record in the medical industry. Operator: Thank you so much for your question. We're moving on to Mr. David Adlington. David Adlington: Three, please. So, firstly, I just wondered, you indicated you put through some price increases in the U.S. to offset tariffs. I just wondered how much price you have put through and whether you're thinking about changing your strategy on price there. Secondly, on gross margins, obviously, quite a big impact from both foreign exchange and an increase in R&D amortization. It would be great to get your thoughts on how gross margins might evolve from here through the rest of the year. And then finally, with the VBP on multifocals coming through, I just wondered what you expected the price impacts to be? And any thoughts around where volumes might go? Justus Wehmer: David, I start, and Andreas, you just if you have anything that you want to highlight and I didn't cover on it. Price increases were, in total, probably in low single -- high single digit. It varies a little bit from category to category. But overall, you can say that cumulatively, it is a high single-digit number of price increase. And of course, that you have to compute it on our transfer prices and therefore, in the end, to offset for the tariff barrier, you basically have to then calculate it backwards from your speed price. And that is something like, as I say, high single digit. But you have to understand to build on that, David, that this hits in the U.S., the very important category of diagnostical products. And the diagnostical product, a, is anyways a very contested market. And secondly, you may say so, it's a market where in an environment like this, price increases, uncertainties on tariffs, some optometrists and ophthalmologists will simply delay their decisions. If you have a field analyzer, if you have an OCT or so, typically, it's something where you can also hold back for a while until you have more clarity on your investment decisions. And that, I think, is overall explaining the situation that we are in. So, hopefully, with a little bit more stability in the transatlantic relations and disappearing sentiment that there might be more movements happening, then we hope that the investment appetite will return. Gross margin, you were asking on, I think, what exactly we are anticipating for the remainder of the year. We clearly would see that the gross margins will recover with higher portions of consumables kicking in over the course of the year with the one caveat that I want to highlight and that leads to your third question on the VBP. Obviously, that also is a function of how aggressive pricing will be reduced in this second round tender. Frankly spoken, the only thing you can refer to is analogies from other consumables in the medical sector in the past. Typically -- again, typically, the second and third tenders were not as brutal in terms of the price impact. But now we have an unknown factor as outlined in our presentation. And also, please understand that I will not give you any detail on our expectations, what others do because as you can imagine, this is competitively sensitive information, and I don't want to have anybody speculating on how we would respond. Andreas Pecher: Yes. Nothing to add. And frankly, nothing I want to add to the last point here as well. Operator: Thank you so much for your question. We're moving on to Ms. Susannah Ludwig. You may speak now. Andreas Pecher: Susannah, if you speak, we cannot hear you yet. Susannah Ludwig: Can you guys hear me now? Andreas Pecher: Yes. Susannah Ludwig: I have 2, please. First, can you confirm if sort of long term, there will be any benefits to COGS from the shift to manufacturing in China and when you would expect to be sort of fully ramped on this shift to manufacturing in China? And then second, I wanted to follow up on what has changed from December to January when you pulled the guidance? So, first, on China, I guess, why had you originally believed that the price cuts would be softer in the VBP? I know you cite the Chinese companies passing sort of registration, but Eyebright had a trifocal approved since January 2025. So had you anticipated that they would be part of the tender? Or were you thinking there was a chance that they would not be? And then on the U.S., were December sales weaker than anticipated? And was that what led to the weaker internal forecast? Or was there something else? Justus Wehmer: Susannah, let me start with the last one. And in the week that we pulled the guidance, there was a pretty hefty discussion on Greenland. And within that discussion, there was at least a serious threat by the U.S. administration that there would be additional, on top of all other tariffs, additional 20% on products out of Germany going in the U.S. So that, of course, would have dramatic impact on our business. And as I said before, the U.S. is our second biggest market, and it's almost 90% device market. So therefore, that explains why this discussion at that moment in time was playing a significant role also for our ability to assess how the U.S. market may develop or not develop. On your question on our expectations for the tender, I think in a nutshell, one Chinese competitor in a tender in a category is already changing things, but we also have seen in the past that the Chinese authorities for good reasons, always try to distribute and don't want to be in a situation in which then suddenly one company is not able to fulfill the entire volumes that have been allocated. So with one player in the game, we were still reasonably confident that our strategy could fold out in a way that it would and therefore, was part of the guidance expectations that we published in December. However, learning then that at least a second player, Chinese player, will be participating with just recently approved lens that can, of course, once again change the volume allotments significantly. And that is one of the key reasons. And your first question was on the long-term benefits of -- Andreas? Andreas Pecher: I can start and you can chime in. There's 2 aspects when it comes to localization in China. The first one, and I think it's the more important one, an urgent one is to make sure that we have access to the market. That's why once those regulations come in, actually are anticipated, we can do that and essentially localize and make sure that we have access to that. The second one, of course, is a question about cost of goods. In general, there is a potential of doing that. And the question is always that we are taking is, are we taking step one means localization together with step two, and that's something that we have to assess essentially also in terms of cost and timing considerations. So, typically, there is a potential to be very clear. And sometimes we do that right away with step one. Sometimes we do that in a step afterwards by localizing also the supply chain. Susannah Ludwig: Great. That was very helpful. Can I just follow up in terms of the U.S.? Could you confirm, I guess, just how December performance looked versus October and November? Justus Wehmer: Susannah, sorry, I missed on that one. I think there is -- within the quarter, nothing in particular that I see. Probably October and November were weaker than December. That's the only pattern that I could share here with you. But I think -- I don't know whether this answers precisely your question, but that is what I... Operator: Thank you, Ms. Ludwig, for your questions. We're moving on to Mr. Graham Doyle. Graham Doyle: Yes. So this is a very complex system versus what we're used to. So it's -- and the UBS tech doesn't always allow me. So it's good you can hear me. Right. I've got 3 questions, please. So, firstly, I think when I was speaking to Sebastian earlier, he was talking about the UV biomaterial being a part of the issue in terms of the registration for the bifocal. And of your -- and I estimate of your sort of EUR 70-ish million revenue of IOLs in China, how much is not based on the UV biomaterial, just to get that? And secondly, just on D.O.R.C., could you just give us an update on how new instruments placements went in Q1? And then lastly, it's a sort of a bigger question. I know you don't often talk about the pipeline, but I think this would be a pretty good opportunity to do, which is, say, R&D as a percentage of sales has been well above the rest of the sector. And we obviously have seen some innovation, but it will be good to get a sense as to what really excites you. So rather than talking about the cost cutting, what excites you in the pipeline today that we might see in the next 1, 2, 3 years that can drive future growth for the group because you've got a great track record in R&D. So it would be good to get a sense as to what's in there. Justus Wehmer: Graham, may I -- just your second question, I missed that one because I was taking notes for the first, sorry. Graham Doyle: Sorry. The second question was just on D.O.R.C. in terms of new unit placements, how has that progressed in Q1? Justus Wehmer: Okay. So, on the UV biomaterial, we're actually in full swing of transitioning. I think it's right now probably more still in the neighborhood of 50%, but actually of the total business volume. But actually, with the one lens that we are expecting to hold the paperwork of the registration in our hands in a couple of weeks, we then actually would have, going forward, completed the transition. And then we have the portfolio on UVE. The D.O.R.C. placements, I think overall, just yesterday, had a discussion on it. We are still growing year-over-year nicely and in full swing of rolling out now also the D.O.R.C. portfolio into Asian markets. Last year, as you may remember, we were focusing first on U.S. and Europe, some European countries. Now Asia kicks in. And we actually also see in some of our key accounts that are loyal, refractive and partially cataract customers, also now high interest in the D.O.R.C. portfolio. So, overall, I think we are quite happy with the development. And I think on R&D, Andreas can talk. Andreas Pecher: I can say a couple of words on that. Well, thank you, first of all, for stating that we've been having a good track record on innovation. Of course, that's the core of the company, right? That's the core actually not just of Carl Zeiss Meditec, but Zeiss, an innovation-driven company. Let's do the following. That's -- how about we talk a bit more about that when we do the May -- latest in May when we do the half year results and show you a couple of the highlights. There's highlights in both the OPT and the MCS pipelines that I'm excited about. They actually go beyond that. That's -- we're always looking at short, midterm innovations, but we're also looking at the long-term innovations where we think we can go into even new markets. The one thing that I'm focusing on right now also is to make sure that we get a higher efficiency and effectiveness of our R&D. You've seen the R&D expenses going up in the last couple of years, which is good. It can be good if you get the right output. And that's one of the things that I'm focusing in my time also here and together, of course, then with the SBUs, I'm sure my successor is going to focus on. So what I want is return on R&D investment, and I want to increase that even more. That would be my statement. And sorry for not telling you any of the exciting products yet, but it's maybe better to also do that and see them. Operator: Thank you so much Mr. Doyle for your questions. We're now moving on to Mr. Falko Friedrichs. Falko Friedrichs: Three questions, please. And the first one, do you have an update on when exactly the VBP implementation for IOLs is expected to go live? My second question is on the downturn in Japan and South Korea. Can you add a bit more flavor on the specific market dynamics you've seen over there and what the expectation is for the rest of the year? And then third and last, can you share your high-level view on what we should keep in mind when modeling sales growth and margin dynamics for the second quarter? Justus Wehmer: Falko, update or your question on go-live of the VBP, again, it's -- there is no official statement at this point in time when the tender is published. And therefore, it's all speculation. I think last time between the tender publishing and then the actual roll-in, there were several months in between, and it started with single provinces applying it. And then until it was rolled out across China, I think it almost took 2 quarters. Assuming this year, this process is swifter, then maybe it's only 1 or 2 months before it becomes effective. But since we don't know the date, and I mean, what's reasonable to assume is, clearly, Chinese New Year is basically now. So it will be then most likely not within the next 2 weeks, then we are already almost crossing into March. And as we said, our team expects the tender being published anywhere March, maybe at the latest April. And then counting on that, probably a period until it's becoming fully effective of whatever, 4, 8 weeks, maybe 12, that would be our estimation at this point in time. Japan, South Korea, my perspective would be that with the focus that we are having on these markets, and I think we shared this in earlier calls and also some registrations, especially for products in Japan. Here, for example, the VISUMAX 800, just to mention one very important product. My expectation clearly is that over the course of the year for Japan, we should see some growth. And Korea, as you know, is already a strong market. There's always a little bit of fluctuation. But again, overall, for Korea, I would also not be too negative on our total outlook for the year. Andreas Pecher: Maybe on Japan, just keep in mind, we still have a fairly low market penetration in Japan, which I would see as an upside. Justus Wehmer: And I mean, high-level question on sales growth for the remainder of the year. Quite frankly, if we -- and now we are back to the rationale on cutting or revoking the guidance. At this point in time, I don't have the data points to give you a sales indication. The project funnels look decent. But if we have a big blast from the tender outcome that can be painful and can take away quite a bit of potential on the top line. And likewise, if the winter peak or the performance of the winter peak is, as we said before, one key indicator for the remainder of the year, also something where, I'd say, in 4 weeks, we can comment on that more comfortably. And therefore, I don't want to start speculation here and now. Falko Friedrichs: Justus, my last question was more referring to the second quarter now, the sales and margin dynamics. Justus Wehmer: In the second quarter, here, I would pretty much probably refer you to our typical seasonal patterns. And with the caveat that we, as we said, have potentially the scrapping issue, but that we would consider as a one-off. But typically, the second quarter is compared to the first quarter, a better one. And at the moment, I would also assume this will be the case in this fiscal year. Operator: Thank you very much, Mr. Friedrichs, for your question. We're having another question by Davide Marchesin. Hello? Can you hear us? We unfortunately cannot hear you. Maybe we can move on to another question while you're figuring out the microphone situation. We have another question by Jon Unwin again. Jonathon Unwin: I just had 2 follow-ups, both actually on equipment. The first one is on cataract equipment, so like phaco machines and biometers. Can you maybe just talk a little bit about the sort of regional trends that you're seeing across the U.S., Europe and China? Because I think there was a comment that the cataract equipment was a bit weak in Q1. And also, are you seeing any increased pressure from new competitor launches, specifically in phaco machines that we've seen recently? So that's my first question. And then my second question is on diagnostics. On my numbers in diagnostics for FY '25, it seemed like this business declined quite significantly, maybe even like low double digits. So is that correct? And do you see this sort of similar level of decline in FY '26? And maybe you can help us understand how much of the pressure there is general market weakness, a result of your own price increases and just general delays of the market? And have you got any intention to simplify the portfolio in diagnostics just to focus on say CLARUS and CIRRUS? Justus Wehmer: Jon, on cataract first, I think U.S., as we are or have fairly, frequently commented, we are certainly not where we are since we do not have this bundle capability. I think outside of U.S., Europe and China, I would see us trending pretty decently. So nothing that we observe in particular changing as impact by new machines being offered by competition. On diagnostics, yes, it's the most contested market. That's correct. And obviously, the price increase in the important U.S. market is not helpful. And -- but it's still early in the year. And there, we also have a bit of a seasonal pattern in this business. So therefore, I would still expect recoveries in the course of the year. We also have with the commercial organization, clearly more focus on this portfolio and the associated efforts in selling this portfolio. On the simplification on the portfolio, you probably understand that this is nothing that we're going to share certainly not on speculation or indicating on any specific products, that certainly nothing that we want to read about than in the public, yes. So I'll leave it there. Andreas, anything? Andreas Pecher: I mean it's an obvious question. That's something that obviously we always do. It's part of normal business to always look at your portfolio, where do you add and where you take out. That's -- yes, no specific comment on that one. Operator: Thank you so much for your questions. Mr. Davide Marchesin, do you have any possibility to unmute yourself because I sent you the invitation and I can see that you're unmuted, but we cannot hear you properly. Sebastian Frericks: If not, we can give feedback to the IR team as well, of course. Operator: Yes, exactly. Maybe it's better to place your questions to the IR after this meeting or you can put it into the chat box and I can read it out loud for you if it's too much trouble. Unfortunately, we cannot hear you. Oh, but I can see in the chat that you just placed your question there. I'll read it out loud. The U.S. was significantly down in the first quarter, minus 12.7% organic. You are the only one company reporting such weak results from the U.S. and all the others are reporting strong equipment investment cycle, example, Siemens and Philips. What are the specific issues you're facing there? Justus Wehmer: Thank you. I think I almost gave the answer already. The diagnostical portfolio in the U.S. is one where we typically see the highest sensitivity in terms of prices and price increases. And whereas if you are referring to companies like Siemens Healthineers and their portfolio, they are typically in categories similar to our KINEVO, for example, where reimbursement policies are more favorable and therefore, investment decisions are then made less dependent on price swings. So therefore, I think that, to me, is basically the key difference here that I would highlight. And maybe, again, if you look carefully on the last quarter of the previous fiscal year, there was a very, very strong August and September in the U.S. for devices, and that was always somewhat at the expense of Q1. Operator: There are 3 more questions by Mr. Marchesin. The second one is the IOL business is just EUR 80 million annual revenue or just slightly above 3% of the group revenues and should be a significant component of your weak performance. Justus Wehmer: I think there is a misunderstanding. The 80 million refers to the IOL volume in China. So that for clarification. So therefore, I'm not sure whether knowing this now, whether the question remains the same. But otherwise, frankly spoken, then maybe it's good to follow up with the IR team because it's a little bit difficult to communicate right now. Operator: All right. Thank you so much. I'm going to read out the last question. Is there the possibility of a buyout of your company by Carl Zeiss? Just to know if there is a technical possibility. Andreas Pecher: Maybe I'd comment on that one. Actually, that's something I wouldn't want to comment on to not feed any speculations or get into sort of insider information. Operator: Okay. Thank you so much. By now, we have not received any further questions. So, ladies and gentlemen, if there are some, please raise your hand and I will happily unmute you. As there are no further questions, I would say we come to the end of today's earnings call. And with this, I would hand over again to Mr. Frericks for some final remarks. Sebastian Frericks: Thanks, everybody, for joining, for asking questions in this call and the discussion. Please reach out to the IR team for anything that may have not gotten answered completely or maybe coming up in the next few days. We'll be around talking to sell side and buy side over the next few weeks quite a bit. So look forward to that and to hear you again on our next call at the very latest on May 12. Bye-bye. Andreas Pecher: Thank you. Bye-bye.
Coimbatore Venkatakrishnan: Good morning. Thank you for joining us today. So thank you. We have today the Barclays Full year 2025 results, our progress and our target update. Today, we will outline targets for the next 3 years to deliver an even better run more strongly performing and a higher returning Barclays. This builds on the improvements which we have delivered in the last 2 years of our plan and which we shared with you in February of 2024. But first, let us take stock of the progress so far, starting with our 2025 results. There will be an opportunity for those in the room to ask questions at the very end of our presentation. So turning now to Slide 4. Barclays achieved all financial targets and guidance in 2025. We generated a return on tangible equity of 11.3%. Our top line grew by 9% year-on-year to GBP 29.1 billion, and we achieved our NII guidance for the group and for Barclays U.K. Our cost/income ratio once again improved year-on-year to 61%. And the group loan loss rate of 52 basis points was comfortably within the 50 basis points to 60 basis points through the cycle guidance. We have also announced today GBP 3.7 billion of shareholder distributions for 2025. This is up from GBP 3 billion in 2024. This includes dividends of GBP 1.2 billion and share buybacks of GBP 2.5 billion, and that includes a GBP 1 billion tranche, which we announced today. And importantly, we remain well capitalized, ending the year at the top end of our 13% to 14% CET1 range after accounting for today's buyback. We are delivering these improvements as we said we would. In 2025, we simplified the bank further, achieving GBP 700 million of gross efficiency savings versus the GBP 500 million target, which we had for the year. We divested the remaining nonstrategic businesses, and we announced a long-term partnership for payment acceptance. Operational improvements across the group are creating a better Barclays, driving stronger financial performance. All our divisions generated double-digit RoTE in 2025, and this was an improvement on the prior year. In the Investment Bank, greater capital productivity and cost efficiency contributed to a 2.1 percentage point increase in RoTE to 10.6%. And the U.S. Consumer Bank RoTE increased 1.9 percentage points to 11%. This reflects additional scale and operational progress to improve the business mix to improve pricing and improve efficiency. Finally, we are continuing to rebalance the group towards the 3 highest returning U.K. businesses. We have now delivered GBP 20 billion of the GBP 30 billion RWA growth, which we targeted for the end of 2026, and this includes GBP 7 billion in 2025. So we see good momentum with 6 consecutive quarters of organic loan growth in Barclays U.K. and 5 such quarters in the U.K. Corporate Bank. Progress in each of these 3 areas is delivering structurally higher and more consistent group returns. It has also increased my confidence in and my expectations for the group. Stronger and more consistent returns mean that we are better equipped to serve our clients and that we have more capacity to invest in the business. All of this is providing a solid foundation to create more value for our shareholders in the next phase of our plan through to 2028 and beyond. We will return to this later. Our progress in the last 2 years reflects the consistently excellent work of our colleagues, over 90,000 of them. They implement our strategy every day and are core to our success. So I'm therefore pleased to announce today a grant of approximately GBP 500 of shares to the vast majority of our colleagues, essentially all full-time employees outside of managing directors. This is the second year of such a reward, and it is more than just a reward for past effort. We are aligning the actions of our colleagues with the ultimate outcome of their efforts, which is the change in our share price. And I believe this equity ownership is really important for all our colleagues. With that, over to you, Anna. Angela Cross: Thank you, Venkat, and good morning, everyone. Slide 6 summarizes the financial highlights for the fourth quarter and full year. Before going into the detail, I would remind you that a weaker U.S. dollar reduced our reported income, costs and impairments. Return on tangible equity increased from 10.5% to 11.3% year-on-year, in line with guidance. Pre-provision profit increased by 13% as income growth, coupled with efficiency actions supported 3% positive draws. Profit before tax increased 13% to GBP 9.1 billion and earnings per share by 22% to 43.8p. My focus, as ever, is on operational progress, which strengthened throughout the year. Income increased by 9% year-on-year to GBP 29.1 billion. We grew stable income streams by 9%, supported by 8% growth in retail and corporate businesses and 17% growth in financing within markets. The strength and predictability of this growth means we are upgrading our expected group income to circa GBP 31 billion in '26 versus circa GBP 30 billion previously. Elsewhere in the Investment Bank, intermediation revenues increased by 13% as we helped clients navigate a volatile environment whilst our IB fees were stable. Group net interest income increased for the fourth consecutive year and by 13% year-on-year to GBP 12.8 billion, reflecting 3 factors: First, stable deposits across the group supported further significant growth of structural hedge income, which I will discuss shortly. Second, lending grew across all divisions, and we exited the year with strong momentum. And third, operational progress in the U.S. Consumer Bank drove stronger NII and NIM. Turning to the structural hedge. As a reminder, the hedge is designed to reduce income volatility and manage interest rate risk. We had assumed that we reinvest 90% of maturing hedges, but we fully reinvested assets throughout '25. We also reinvested hedges at higher rates than planned. As a result, hedge income increased GBP 1.2 billion to GBP 5.9 billion, contributing 46% of group NII, excluding IB and head office. The increase that I -- in the average hedge duration that I called out last quarter from 3 to 3.5 years further supports the predictability of hedge income, which I will return to later. Now moving on to costs. We delivered GBP 700 million of gross efficiency savings in '25 and GBP 1.7 billion cumulatively towards the GBP 2 billion target by '26. These savings have contributed to 10% positive jaws since '23. The group cost-to-income ratio decreased again to 61%, in line with guidance despite several cost headwinds in the year. Total costs increased by GBP 1 billion to GBP 17.7 billion, with nearly half of this coming from the addition of Tesco Bank. And we chose to accelerate some discretionary investments, ending the year with structural cost actions around the top of the GBP 200 million to GBP 300 million guided range. The '25 group cost base also included some items that we do not expect to repeat. First, the GBP 235 million of finance provision in Q3 without which we would have ended the year at 60%. and second, circa GBP 50 million of one-off costs in Q4, including a VAT expense in Barclays U.K. Turning now to impairment. The full year impairment charge of GBP 2.3 billion equated to a loan loss rate of 52 basis points, in line with the through-the-cycle guidance of 50 to 60 basis points. The credit picture remains benign with low and stable consumer delinquencies and wholesale loan loss rates below the through-the-cycle range. The Q4 loan loss rate of 48 basis points fell versus Q3, reflecting lower single name charges in the Investment Bank. Calibration of our impairment models to better capture consumer behavior resulted in lower loan losses in Barclays U.K. throughout '25, including in Q4. With these now largely complete, you should expect the Barclays U.K. loan loss rate to be closer to 30 basis points from Q1. The U.S. Consumer Bank loan loss rate was higher in the quarter as expected, shown on the next slide. 30- and 90-day delinquencies were seasonally higher versus Q3 and broadly stable year-on-year, and U.S. consumer behavior remains resilient as we show on Slide 95 in the appendix. The Q4 impairment charge increased GBP 52 million quarter-on-quarter, reflecting higher balances. As a reminder, the Q1 loan loss rate tends to remain elevated following holiday-related spend in Q4. Turning now to U.K. lending. We have now deployed GBP 20 billion of business growth RWAs in the U.K., including GBP 13 billion of organic growth, and we exited '25 with strong momentum. Mortgage balances have grown for 6 quarters, and we delivered GBP 3.1 billion of net lending in Q4. Mortgage applications in '25 were higher than in any prior year, supported by Kensington and increased broker engagement following improvements to the platform in Q3. We also acquired 1.4 million new credit card customers in the year, up from 1.1 million in '24. As we show in our operational data pack on Slide 79, this included 300,000 new Tesco Bank customers. Supported by this, credit card balances grew to the highest level since 2017. Core business banking lending has grown for 4 consecutive quarters, and we expect overall balances to grow in half 2 as headwinds from the runoff portfolio diminish. U.K. Corporate Bank lending grew 18% year-on-year and market share increased 100 basis points in this period to 9.6%. In each case, we have further to go, supporting our plan to deploy GBP 30 billion of RWAs by '26 and onwards from there. Turning to Barclays U.K. in more detail. You can see financial highlights on Slide 15, but I will talk to Slide 16. RoTE was 23.8% in the quarter and 20.7% for the year. NII of GBP 2 billion increased 11% year-on-year and 3% quarter-on-quarter. On a full year basis, NII of GBP 7.7 billion was in line with guidance, and we expect an increase to between GBP 8.1 billion and GBP 8.3 billion in '26. The hedge is expected to drive around GBP 550 million of additional NII. As I'll cover in more detail later, this is a smaller allocation of the total hedge income growth versus '25 with more growth now allocated elsewhere in the group. We expect a circa GBP 100 million product margin impact in our mortgage book, driven by maturities of higher-margin loans written during the stamp duty holiday in early '21. This will be weighted to half 1. We also expect lending growth to continue throughout the year. As a planning matter, we expect this benefit to be offset by continued, but easing deposit margin compression. These effects will lower NII quarter-on-quarter in Q1 with stability and growth from Q2 and Q3. And on a year-on-year basis, we expect growth in each quarter of '26. Non-NII of GBP 247 million was broadly stable year-on-year with a full year just above GBP 1 billion. We expect a similar level in '26 with some seasonal variation. The one-off items I described earlier accounted for around half of the year-on-year increase in operating costs in Q4. These should not repeat in Q1 '26. Moving on to the Barclays U.K. balance sheet. Deposit balances increased GBP 3.1 billion versus Q3 and were broadly stable versus last year. Customers continue to seek higher-yielding products and time deposits, which both grew quarter-on-quarter. Lending grew for the sixth consecutive quarter and by 4% year-on-year, driven by mortgages and cards. Moving on to the U.K. Corporate Bank. RoTE was 19.1% in the quarter and 18.9% for the year. Q4 income grew by 18%, while costs grew by 8% as we accelerated discretionary investments. These investments support delivery of a high 40s cost/income ratio in '26 following a 4% improvement in '25 to 51%. Q4 NII growth of 22% reflected stronger volumes across both sides of the balance sheet. Lending grew 18% year-on-year, reflecting improvements in the lending process. Deposits grew by 7%, resulting in a 34% loan-to-deposit ratio, up 3 percentage points. Turning now to Private Bank and Wealth Management. RoTE was 26.3% for the year, on track for the greater than 25% target for '26. Q4 RoTE was impacted by higher costs from an acceleration of investments and a historic litigation charge. This was small in the context of the group, but reduced this division's Q4 RoTE meaningfully to 12.6%. Client assets and liabilities grew 9% year-on-year and assets under management grew 11%. More than half of this AUM growth came from net new assets under management of GBP 3.3 billion, including GBP 0.6 billion in Q4. This contributed to 4% quarter-on-quarter income growth, and we expect continued volume and income growth in '26. Turning now to the Investment Bank. As a reminder, our objective here is to generate higher structural returns by improving the productivity, mix and efficiency of the business. Risk-weighted assets have been stable for 4 years. Income to average RWAs has increased by 110 basis points since '23 to 6.6%. In the top right, more stable income from financing and the International Corporate Bank grew 14% and accounted for 42% of IB income, up from 32% in '22. Moving to the bottom left, Markets income has grown year-on-year for 7 consecutive quarters as we deepen client relationships and investment banking income has grown for 5 of the past 7 quarters. Together with 7 consecutive quarters of positive operating jaws, this has improved the financial performance of the division. The Investment Bank delivered a full year RoTE of 10.6% in '25, up 210 basis points. Q4 RoTE was seasonally low at 4%, up modestly year-on-year. Income grew 7%, which we show in more detail on Slide 25, and costs were flat. In U.S. dollars, markets income was up 17% year-on-year, delivering around 2/3 of the Investment Bank's income in the quarter. FICC and equities grew 14% and 21%, respectively. We saw particular strength in securitized products within FICC and prime and equity derivatives in equities. Financing income grew 20% year-on-year and for the sixth consecutive quarter, with prime balances up 30% year-on-year, including strong growth in Asia. In Investment Banking, income was broadly stable. The U.S. government shutdown weighed on ECM activity with the majority of Q4 IPOs pushed into half 1 '26. This was offset by a 7% increase in DCM fees and an 18% increase in advisory fees. The M&A pipeline is strong, and our share of announced fees and volumes due to complete in '26, has increased year-on-year. International Corporate Bank income was broadly stable, including 5% growth in transaction banking income. Turning now to the U.S. Consumer Bank. Operational progress has continued. Net receivables grew 5% quarter-on-quarter and 10% year-on-year, around half of which related to the addition of the General Motors balances at the end of Q3. Our partnership cards business has grown faster than the overall market in 16 of the last 20 quarters. NIM improved slightly versus Q3 to 11.6%, supported by the repricing that we undertook in '24 and portfolio mix. Retail deposits grew 5% quarter-on-quarter and 20% year-on-year, which improved the funding mix. And we continue to drive greater digital interactions, supporting a 41% cost/income ratio in the quarter. We expect this progress to continue, reflecting sustainable improvements in returns. Q4 RoTE of 15.8% was supported by a one-off benefit, which I'll come to shortly, adjusting for which RoTE was 12.5%. And the full year RoTE increased 190 basis points to 11%. In U.S. dollars, Q4 income grew by 28% year-on-year, whilst costs were up 4%. NII increased 19%, reflecting stronger volumes and margins. Following a review of customer behavior, we have updated our assumptions to reflect more transacting versus revolving balances and longer duration customer relationships. This has allowed us to more precisely allocate partner rewards, which has 2 accounting effects. First, a one-off benefit largely in non-NII of circa GBP 45 million in Q4. Second, an ongoing change in income mix, reducing non-NII by circa GBP 50 million from Q1, offset by a broadly equivalent increase in NII. Q1 NIM will be around 12.5% with total income of circa GBP 950 million. There are considerable inorganic changes in the business in '26. So to help with modeling, we have included some details in Slide 96 in the appendix. Following the sale of the AA portfolio in Q2, we expect NIM to rise to nearly 14% in half 2, supporting a circa 12% RoTE in '26 before the AA gain on sale. We ended the quarter with a CET1 ratio of 14.3%. This included 33 basis points of capital generation from profits. Given this strong capital position, we have announced a GBP 1 billion share buyback and a GBP 0.8 billion final dividend equivalent to 5.6p per share. Looking ahead, we continue to expect between GBP 19 billion and GBP 26 billion of regulatory RWA inflation. Within this, the circa GBP 16 billion effect of IRB migration in the U.S. Consumer Bank remains our best estimate. Around GBP 5 billion of that will now happen with the implementation of Basel 3.1 on 1 January '27 with the remainder anticipated that year. We expect a reduction in the group Pillar 2A requirement following each of these changes. We have been operating around the top of our 13% to 14% CET1 range, with the returns and distributions in the plan announced today based on that level. Post implementation, we will consider where we operate across the range. More broadly, in the U.K., we welcome the constructive tone in the recent FPC review of capital requirements and we'll continue to engage closely with the Bank of England. Turning now to the RWA walk. Investment Bank RWAs decreased due to seasonality and accounted for 55% of group RWAs at the end of the year. The reduction in Barclays U.K. reflected a securitization in Q4 to manage risk on the balance sheet. As usual, a word on our overall liquidity and funding. We have a strong and diverse funding base, including a 73% LDR and an NSFR of 135%. And we are highly liquid across currencies with an LCR of 170%. These measures reflect purposeful and prudent management of our balance sheet, delivering resilience and thus ensuring we have the capacity to support customers in a range of economic environments. TNAV per share increased 17p in the quarter and 52p year-on-year to 409p. Attributable profit added 9p and 43p per share, respectively. Movements in the cash flow hedge reserve added 5p per share in the quarter, and we expect this to largely unwind by the end of '26, adding around 9p to TNAV. To summarize, we are pleased with the group's performance in the second year of our 3-year plan, having achieved all our targets and guidance. We now expect group income of GBP 31 billion in '26, GBP 1 billion more than originally expected. And continued operational progress means we are more confident in delivering target RoTE greater than 12% in '26. Venkat will now outline the next 3 years of the plan before I take you through the '28 financial targets in more detail. Venkat, over to you. Coimbatore Venkatakrishnan: Thank you again, Anna, and welcome back. Barclays is now on a journey to sustainably higher financial returns. I think of this journey as taking place in 4 stages. First, from 2021 to '23, we stabilized the bank's financial profile, exercising capital discipline in the Investment Bank while starting to build out our areas of strength. Second, since the launch of our simpler, better, more balanced strategy in February '24, we've positioned the bank for income growth and for higher returns. We have simplified our processes to drive efficiency, and we exited nonstrategic businesses. We've invested in digital capabilities to create a better customer experience. And we've grown our highest returning U.K. businesses to create a more balanced Barclays with more stable returns. Today, we set out the third stage of this plan all the way to the fourth. In this third stage, we will build on the foundations we have created so far to increase returns for the bank and to make them resilient across a range of environments. Year-by-year, we are improving the profit signature of the bank. Stronger financial results create the capacity to invest to secure sustainably higher returns. This is the fourth stage, and it extends beyond 2028. Two years ago, we presented a vision anchored in measured ambition and disciplined delivery. I said then that we were building a potent set of businesses, which were strong in themselves and mutually reinforcing. Our vision was harnessed to our home U.K. market, where we aim to deepen our presence even as we engaged with the world from London. Our vision today is one of accelerating ambition, still anchored in disciplined delivery. We will forge segment-leading operationally efficient businesses that are primed to support growth, and we will drive structurally deeper client relationships by connecting these businesses. We have more capacity to invest. We build upon a strong track record of delivery. Our drive is greater and our commitment is unwavering. We will increase investments twofold to drive deep technological transformation and modernization of the bank. This includes embedding AI at scale across the group to deliver better products and services. And importantly, we will pursue our ambition while generating higher returns in each of the next 3 years. In 2028, we are targeting a return on tangible equity of greater than 14%, up from greater than 12% for '26. Stronger capital generation will enable greater than GBP 15 billion of distributions across the period of '26 to '28. And this provides capacity for additional investment and growth beyond the levels set out in the plan today. And as we have done, we will exert considerable discipline over any investment given the importance, which we place on shareholder distributions. In 2026, we expect the Investment Bank to represent a mid-50s percent of group RWAs. This is above the initial target, and it reflects the postponement of previously anticipated regulatory changes. We expect this proportion to fall to about 50% by 2028 as we continue to maintain broadly stable RWAs in the Investment Bank and deploy more capital in our consumer and corporate businesses. We will continue to be guided by 3 goals, and these are to make Barclays simpler, to run it in a better way and to make it more balanced. Our journey began by creating a simpler business structure organized and operating in a simpler way. It continued with the simplification of our processes and customer journeys to improve the quality of our service and to drive efficiency. In the next 3 years, we will be deploying digital capabilities and AI to further this progress. To harness these technologies successfully, we must standardize our data, we must modernize our approaches, and we must harmonize systems and processes. Delivering in this manner will not only enable greater productivity, it will improve our operational resilience, our reliability and security. And importantly, and I'll come back to this, it will create a fulfilling working environment for our colleagues. For some time now, technology has revolved around our businesses. Now our businesses are revolving around technology. Customer interactions in the U.S. Consumer Bank are almost entirely digital today. Elsewhere in the group, we've made significant progress to build easy-to-use customer-facing platforms, and we'll continue on that journey. By 2028, we will deliver a simpler but more sophisticated suite of products and AI-enabled services. So how are we doing this? Our transformation is built on 3 pillars: cloud computing, data platforms and AI adoption. To date, we have made the most progress in employing cloud computing built on scalable and robust infrastructure. We are one of the leading adopters in this sector with 89% of applications on the cloud versus 75% 2 years ago. And this platform provides greater stability and faster product deployment. We are also migrating core data onto a standardized platform. This helps us to provide personalized services for our customers and to implement models more rapidly. And by building on these modular foundations, we can accelerate the development, testing and deployment of code and models. So with cloud infrastructure and data platforms in place, we are now able to deploy AI at scale. Across the group, we have more than 250 AI tools and models in use. And by 2028, we expect more than half of our customer journeys in the U.S. Consumer Bank to be digitally personalized. Technology is creating a more stimulating working environment for our colleagues who are at the heart of these developments. And let me share some examples. In the past 2 years, we've held a number of AI hackathons, where employees prototype quick solutions to existing business problems. Every time I visit a hackathon, including one just 2 weeks ago, I'm overwhelmed by the seemingly limitless ambition and inventiveness of our colleagues. And their winning ideas translate into actual projects and actual products. This includes an AI chatbot that we recently launched for FX trading. We call it Box bot. And this tool delivers FX quotes 75% faster than the previous approach. It is driving better execution for our traders and swifter service for our clients. In the U.S. Consumer Bank, we are launching a conversational AI tool in our app. This accelerates customer query responses by 95% and enables more personalized service. We've also built the infrastructure and provided colleagues with tools to drive greater efficiency and productivity. In doing so, we enable them to perform in the economy of the future. The rollout of GitLab to 19,000 developers means we are now able to implement code 15% faster. And we are one of the largest users of Microsoft Copilot in the financial services industry with around 90% of our colleagues on the system. In 2025 alone, this saved our teams more than 1 million hours of work. Insofar, I've spoken about improvements in the way we engage with clients and how they engage with us. I want Barclays to be renowned for operational performance, excellent operational performance. And to me, operational performance and financial success are 2 sides of the same coin. With 3/4 of our colleagues engaged in operating the bank, simpler operations can improve efficiency materially. So let me just highlight 2 examples to bring this to life. In finance, Anna's area, we are simplifying our accounting platforms, moving from 11 to 3 subledgers within the trading book. And this will lead to fewer manual reconciliations, faster reporting and more efficient data analysis. On the risk side, close to my own heart, our wholesale credit risk systems remain overly manual. And so we are rebuilding the architecture and using AI to aggregate and analyze data and generate reports. This supports fast and accurate credit decisions. To summarize, the simpler Barclays is both well organized and well run for colleagues and customers alike. And at the beating heart of this is a standardized infrastructure supporting harmonized processes and enabling modern approaches to product development and delivery. And it's powered and curated by our talented and inventive colleagues. Moving to better. Having a simpler business means we can focus on delivering better service for our customers, and this results in improved returns for our shareholders. In this next stage, we are building a better bank by forging segment-leading businesses and deepening client relationships. To me, segment leadership is built on 2 pillars: best-in-class offerings and deep client relationships. And we begin from a strong position. We are the largest non-U.S. investment bank with deep expertise in fixed income and financing markets. We are a leading U.K. retail bank with an established and growing private bank and wealth management business. And our U.S. Consumer Bank is a highly sought-after partner for customers and corporate clients alike. The second pillar of segment leadership is combining the strengths of our products in each business and our capabilities across businesses. In doing so, we create deeper client relationships. And there is significant potential to increase connections between Barclays U.K. and the Private Bank and Wealth Management through our premier proposition. The acquisition of Best Egg in the U.S. allows us to bring market-leading digital lending capabilities to our credit card partners. And as the only U.K. bank -- U.K. investment bank, we bring a unique global reach and sophisticated capabilities to our U.K. corporate clients. By investing to strengthen these connections, we make each business individually stronger. And by forging connections across the group, we will unlock sources, new sources of fee growth beyond 2028. So let me share how I think about this, and I'll start with the Investment Bank. As I said, Barclays is the leading non-U.S. investment bank. We are U.K. domiciled, but we actually look more American than European with 50% to 60% of our revenues coming in the U.S. The Investment Bank has built a diverse and stable income mix. Two years ago, when I stood in front of you, I said that improving the investment bank was the hardest part of our plan. So what have we done and how have we done it? At that time, we had asked our business to do 4 things: First, to leverage further the traditional areas of strength. And for a long time, fixed income has been the calling card of Barclays. This is true in trading, financing, debt capital markets. And in markets, we identified 3 focused businesses where we plan to grow income by gaining share, European rates, equity derivatives and securitized products. We've made good progress, gaining share by about 150 basis points between 2023 and the first half of 2025. We have also leveraged our historical strength in fixed income financing to grow in prime. My second task was to drive greater capital productivity. The business has consistently increased return on RWAs. Now we will build on those successes. The third request was to increase fee share. The bankers who we hired in 2023 and 2024 have become more productive. Early results are good, but there is more to do. And so we will continue to invest and realize the full benefits of this investment over time. The final ask was to deepen relationships in the International Corporate Bank. And here, we've made strong progress rolling out what we call our treasury coverage model beyond the 1,500 top clients of the bank. And in the next 3 years, we will leverage strong transaction banking capabilities from the U.K. Corporate Bank and build on existing debt capital market strengths. We will be providing a more complete service to global corporates. And in doing so, we expect the International Corporate Bank to become a larger part of the Investment Bank by 2028. And this will remain an important source of fee growth beyond 2028, and I will discuss this later. Turning to Barclays U.K. Barclays aims to be the premier bank for all U.K. customers. We have a strong customer base, including around 1.1 million, what we call mass affluent customers in Barclays U.K. Our premier proposition provides exclusive rewards and priority service for this cohort, but only 50% of eligible customers have a premier account. This provides a material opportunity to increase engagement. Investment to improve our service has raised NPS scores among premier customers, and we plan to enhance our offering further by expanding the product range and rewards. We can also support this segment's investment needs more fully, and we will achieve this by strengthening connections between Barclays U.K. and Private Bank and Wealth Management. Within Barclays U.K., we have identified 400,000 customers who could benefit from financial advice. In 2025 alone, we onboarded 65,000 customers to Barclays Direct Investing, which is the new name for our digital self-investment platform. And in 2026, we will launch premier Wealth Management to provide planning and advice to premier customers. This will be human-led, but digitally enabled, fairly priced, transparently constructed and clearly disclosed. Turning now to the U.S. Consumer Bank. Our leading digital U.S. consumer bank is delivering strong growth and customer engagement. Our focus partnership business was among the top 4 fastest-growing credit card businesses in 16 of the last 20 quarters. And since 2023, we have achieved a 12% organic growth in receivables. By driving growth and customer engagement in this way, we are retaining existing card partners and attracting new ones. Last year, we renewed partnerships with Upromise, Carnival and Wyndham Hotels, and we successfully integrated General Motors. Operational progress in the U.S. Consumer Bank is also driving higher returns for Barclays. We will continue to use our digital deposit capabilities. In fact, the launch of a tiered savings product in 2024, has enabled 34% retail deposit growth, with the cost of this funding being about 50 basis points below the funding it replaced. And in doing so, we support the broader banking needs of our card customers. The acquisition of Best Egg in the second quarter of '26 will further expand the breadth of our digital capabilities. Around 90% of Best Egg's consumer loan originations come through digital channels, including online aggregators. And Best Egg's strong capabilities and enable flexible product design to suit a range of customer needs. We will leverage these capabilities to accelerate growth, including through closer integration with our card partners. So as you can see, the U.S. Consumer Bank is more than just a cards business. I strongly believe that happy and satisfied customers are the sine qua non of any enterprise. We aim to improve customer service by investing in it deeply, making it a point of ambition and pride. And as I said earlier, operational excellence and financial success are 2 sides of the same coin. I see them as the same. In Barclays U.K., last year, we launched a new platform to improve materially the speed of more applications for more than 26,000 mortgage brokers. Digital adoption in the U.S. Consumer Bank is already higher than in any of our divisions. And as I said, we are deploying AI tools to improve personalization further and ease of use. We're also making it easier for customers to come to Barclays, including in the Private Bank and Wealth Management division. Our digital platforms are a critical part of providing a superb experience to deepen customer engagement. This year, we will relaunch the Barclays app to deliver more personalized support through digital channels. Even as we emphasize digital engagement, we recognize that customers sometimes value the quality and depth of engaging with us in person, especially with complex issues and in important life moments. So we will look to enhance and expand our branch footprint. This will enable us to tailor our services to meet the changing preferences of our customers. And in the U.S. Consumer Bank, we are leveraging our capabilities across cards, deposits and loans to drive even greater customer engagement. The secret sauce in our investment bank is in our synergies, which we use to deepen client relationships. We are big enough to offer multiple sophisticated products to our clients, and we have the nimbleness and the cultural drive to customize delivery and create tailored solutions. We now rank top 5 with 62 of our top 100 markets clients. This is up from 30 in '21, 49 in '23, and we are on track of our target of 70 in 2026. Our leading fixed income and prime equity financing products are integrated on a single platform. Operating in this way provides a single view of risk, both for the client and for Barclays. And of our top 100 markets clients, 97 are also financing clients. So by continuing to leverage our integrated financing platform, we do 2 things. First, we build a stronger foundation of stable income, which supports returns in a range of environments. And second, we deepen relationships and drive greater engagement across the investment bank, including in intermediation. So over the next 3 years, we will bring together our investment banking and transaction banking strengths to accelerate growth in the International Corporate Bank. We are the top sterling clearing bank. We have a comprehensive suite of products and differentiated payment strength. By replicating some of these capabilities in the U.S., we have already driven a circa 140% growth in dollar deposits since 2023. And we plan to leverage this strength in other products through simple, but complete digital channels. In Europe, we will also extend the reach of our existing product suite from 9 to 15 countries to provide a more complete client coverage. We are also creating a better client experience to support this growth. So by the end of the first quarter of this year, all U.K. corporate clients will be enabled on an enhanced platform that we call iPortal. This combines 5 previously separate platforms for corporate banking into one. And in doing so, we make it easier for clients to access a broader range of products. Across the banking system, technology is not just affecting how we do business. It's also affecting what business we do. And nowhere is this likely to be greater than in new asset types and new payment methods. We are deeply engaged in understanding the role that Digital Assets will play in meeting the future needs of our clients. We are developing our own tokenized deposits to increase the speed and simplicity of transactions. And we are testing retail and wholesale use cases, including for corporate bond issuance and investment. We have been structurally improving the profit signature of Barclays, and we're doing it in two ways. First, by changing the mix of the group by growing our highest returning U.K. businesses. And I'm pleased with our progress, having grown these businesses from 30% of group RWAs to 34% in the last 2 years. We also now expect higher returns in Barclays UK. We will continue this progress, increasing lending by more than 5% annually while generating an RoTE greater than 20% across the three U.K. businesses. Second, we said we would strengthen returns in the lower returning divisions. The US Consumer Bank RoTE has increased from 4% in 2023 to 11% in 2025 in all the ways I described to you. And we expect this to build to mid-teens while absorbing regulatory RWA headwinds. And when I stood in front of you 2 years ago, I said we would increase returns in the Investment Bank by improving productivity on a stable RWA base. And I'm very pleased with the progress to date. IB RoTE is up from 7% to 11% in 2 years, but we have more work to do. With greater visibility 1 year out to the end of '26, we expect the Investment Bank to generate circa 12% RoTE this year. And by 2028, we expect this to rise to more than 13%. Let me be very clear. We remain ambitious for this business and for the returns it should be generating. And importantly, this should be done on a sustainable basis. More broadly, the ongoing change in the mix of RWAs across the group means that we are relying less on the IB to drive improvements in group RoTE. This is exactly as it should be. In summary, the better Barclays will continue to show higher returns, and it will also be built on segment-leading businesses, which offer the best-in-client service and experience. Our third goal is to create a more balanced Barclays. We will continue to maintain capital discipline in the Investment Bank while growing parts of the retail and corporate businesses. But being balanced, being more balanced also means growing new sources of fee income beyond 2028. Two years ago, I said that every global bank had to be strong at home. We've been a U.K.-centered bank for more than 3 centuries, and it remains a great place in which to do business and from which to do business. The economy is resilient. The legal and regulatory environment is both strong and trusted. And we remain committed to investing and growing in this our home market. Our investment will focus on diversifying sources of NII beyond deposit income, and we will increase U.K. lending in two main ways. First, we will leverage strong multi-brand offerings to reach new customers. For instance, the acquisition of Kensington in 2023 enabled us to provide mortgages to more complex borrowers. And the acquisition of Tesco Bank added significant scale in unsecured and open market capabilities in personal loans. Second, investment into the business is supporting growth by simplifying and improving customer journeys, as I discussed earlier. We are encouraged by progress in the UK Corporate Bank and expect momentum in core Business Banking lending to build in 2026. Importantly, we expect to grow U.K. lending by more than 5% annually in the next 3 years, above the growth in nominal GDP. And we will do this by continuing to grow in segments where we were underrepresented and by leveraging our expanded product range and capabilities. We will invest to support growth. In the next 3 years, we plan to more than double investment to support growth and efficiency compared to the previous 3 years. We will accelerate the adoption of digital technologies and AI across the group. And investments in the next 3 years will be substantially more weighted towards new sources of fee income growth beyond 2028. Through these investments, we will continue to develop best-in-class offerings, which is the first pillar of segment leadership. As I have said, we will also build connections across our business, and this is the second pillar of segment leadership. In the U.K., new capabilities will support customers across the wealth continuum. We will leverage U.K. transaction banking strength in the International Corporate Bank. And Best Egg will enable us to originate assets directly for investors in our leading U.S. asset-backed securities business in the Investment Bank. So as we move beyond 2028, we expect more of our growth to come from fee income versus net interest income. And by building more diverse sources of revenue this way, we support more resilient returns and we position ourselves better to navigate a range of environments. So changes in the operating environment globally present both risk and opportunities for large global banks like Barclays. And we look to manage this in three ways. First, by building strong customer businesses diversified by geography, customer, product and income type. Second, by deepening client relationships across products and where appropriate, across business segments. And third, through diligent management of economic, financial, operational and technological risks. AI, for example, is a transformative opportunity, which contains risks that need to be managed. And so to harness the technology successfully, we are standardizing our data, modernizing our infrastructure and harmonizing our business processes. By approaching risk and opportunities in this way, we aim to deliver consistently for our customers with strong operational performance. And this, in turn, will generate resilient financial performance in a range of environments for our shareholders. So to bring this all together, progress in the past 2 years provides a solid foundation for the next phase of our journey, and we are confident in the path to 2028. We're moving from a period of measured ambition to one of accelerating ambition. And now I'm going to pass it over to Anna to take you through the financial details of the plan. Anna? Angela Cross: Our confidence in the plan that Venkat has outlined reflects three factors. First, we plan on realistic assumptions that put delivery in our control. Second, the plan includes a significant increase in discretionary investment to support our future growth. And in doing so, we are intentionally prioritizing sustainably higher, longer-term returns over stronger shorter-term RoTE. And third, that delivery is grounded in existing momentum. For example, target income CAGR of more than 5% compares to 7% delivered since '23, as you can see on the top row. Planned U.K. lending of more than 5% is in line with the momentum we've seen in '25. And we expect Investment Banking income to RWAs to increase by more than 40 basis points to greater than 7%, having increased 110 basis points in the last 2 years. Our planning assumption is for a low single-digit IB income CAGR, '25 to '28 versus 9% achieved so far, and I'll come back to this in more detail. The low 50s target cost-income ratio in '28 represents more of a step change. But we are confident in delivering this, underpinned by circa GBP 2 billion of gross cost efficiency savings over the next 3 years. This compares to GBP 1.7 billion achieved in the last 2. And I will also come back to this topic in more detail later. Stable income streams in the retail and corporate businesses will materially drive income growth in RoTE in the next 3 years. We expect modest cost growth, supported by planned efficiency savings and normalization of the elevated cost base in '25. This combination will deliver positive cost jaws in every year of the plan, yielding a low 50s group cost/income ratio by '28. So what drives income from here? As I said, in the past two years the group has delivered a 7% income CAGR. This mainly reflected management actions, but the environment has also been favorable, reflected in upgraded 2026 income guidance of circa GBP 31 billion. As a planning matter to '28, we do not assume similar tailwinds in rates or in Investment Banking wallet growth. So we expect income CAGR to moderate to more than 5% in the next 3 years. Most growth comes from group NII, excluding the IB and Head Office, which has grown 8% annually since '23. This reflects the U.K. lending CAGR target of greater than 5% and the stability of our deposit franchises, which underpins the structural hedge, but it also reflects progress outside of the U.K. in USCB, where balanced growth and NIM expansion supported 11% year-on-year NII growth in '25. In '26, we expect group NII to increase at least to at least GBP 13.5 billion, up from GBP 12.8 billion in '25 and for Barclays UK NII to increase to between GBP 8.1 billion and GBP 8.3 billion. Relative to our previous plan, the Investment Bank contributes relatively less against the flat wallet assumption. Over time, we do expect the mix of our income growth to pivot more towards asset-based NII and fees versus deposit income. That's why we remain very focused on diversifying sources of NII beyond deposit income by continuing to grow lending. But for the next 3 years, the structural hedge alone will deliver 50% of planned income growth. We have already locked in GBP 6.4 billion of gross structural hedge income in '26, and GBP 17 billion over the next 3 years. We plan to fully reinvest maturing hedges as we did throughout '25, and to assume a reinvestment rate of around 3.5%. This is below the current 7-year swap rate of 3.9%, which has become the most relevant proxy given the hedge duration. The average yield of maturing hedges remains below this level in '26, '27 and '28 at circa 1.5%, 2.1% and 2.7%, respectively. This will result in continued structural hedge income growth, including circa GBP 1 billion in '26. The increase in the average hedge duration to 3.5 years during '25 will reduce the quantum of maturing hedges to circa GBP 35 billion per year, from around GBP 50 billion in recent years. This slows the pace of structural hedge income growth, but therefore, prolongs the expected positive effect until at least '29. Also note, the higher proportion of equity hedge and longer duration of product hedges outside of BUK means it will attract circa 55% of growth in '26 versus 75% in '25. This change in mix is equivalent to circa GBP 200 million less income in Barclays UK in '26, which instead will occur in other businesses, including the Investment Bank. Two years ago, we set out a plan to increase the Investment Bank returns by improving RWA productivity and modestly growing costs. Since then, income to average RWAs has increased by 110 basis points to 6.6%, driven by a 9% income CAGR against flat RWAs. In Global Markets, we increased RWA productivity by 60 basis points and grew RWAs to take advantage of the environment. And in Investment Banking, we increased productivity by 150 basis points and released RWAs. Further capital productivity remains central to the Investment Bank's journey to higher returns with a target of greater than 7% RWA productivity by 2028, having absorbed the impact of Basel 3.1. In part, this will come from a continued review of the loan book, which is around 60% complete. Of the GBP 2.1 billion increase in income since '23, 2/3s came from Global Markets where we have built capacity. Financing income grew by GBP 0.6 billion in a strong industry wallet, and we achieved the '26 target 1 year early. This is particularly important, given our focus on stable sources of revenue within the Investment Bank. In our three focus businesses in Markets, we grew share by 150 basis points between '23 and half 1 '25, and income grew by GBP 0.4 billion. In Investment Banking, we have meaningfully improved RWA productivity, which was our main objective. Progress towards our secondary objective to add scale through fee share has been slower, although Banking fees grew in a market 30% larger than we had planned. Our objective now is to consolidate these gains. We will further deepen our relationships with our top 100 clients and markets and our three focused businesses and financing. And we will continue to build banker productivity, including in ECM and M&A, which are capital-light. In financial terms, given a flat wallet assumption, our plan does not, therefore, include material benefits from wallet growth to 2028. We expect proportionately more growth from the ICB, as we leverage the Treasury coverage model and the transaction banking investments outlined by Venkat. This builds on the circa 140% growth in deposits achieved in 2 years. And as a result, we expect the International Corporate Bank to be a larger part of the IB, leading to more stable income overall. Moving on to costs on Slide 66. We delivered positive cost jaws in each of the past 3 years and expect positive jaws in each of the next 3 years. This is a result of the income growth we've just discussed and modest cost growth to 2028. So what underpins this cost pathway? First, we don't expect around GBP 0.3 billion of one-off costs in '25 to repeat, being Motor Finance and around GBP 50 million of unrelated one-offs in Q4. Second, we expect circa GBP 2 billion of gross efficiency savings by '28 split roughly evenly across the years. This includes around GBP 0.2 billion of reduced Tesco Bank costs. We will deliver this by modernizing processes and platforms to increase efficiency as Venkat outlined. These savings will more than offset the effects of inflation and business growth over the next 3 years. We expect annual investment costs to increase by around GBP 0.8 billion by '28, including circa GBP 0.6 billion from the acquisition of Best Egg in Q2 '26. This will result in modest overall cost growth and a high 50s cost/income ratio in '26 with broadly stable costs thereafter to '28, supporting a low 50s cost/income ratio. The Barclays UK cost profile is an important part of this overall shape, so let me briefly cover the dynamics here. Barclays UK has been on a transformational journey for several years, reducing the cost-income ratio from high 60s in 2021. Dual running of Tesco Bank added circa GBP 400 million to costs in '25, including GBP 100 million integration costs. Other costs increased by circa GBP 200 million, net of efficiency savings. This was due to increased investment as well as the GBP 50 million one-off items I mentioned earlier. In '26, we expect a modest reduction in costs versus '25 and a low 50s cost-income ratio as we continue to integrate Tesco Bank and invest in the business. By '28, we expect larger gross and net efficiency savings, in line with the group. And for Tesco Bank costs to fall by circa GBP 200 million. As a result, we expect Barclays UK cost to fall in each of the next 3 years, contributing to a mid-40s cost/income ratio in '28. Our investments to date, organic and inorganic are delivering revenue growth across the group. Investment in the financing platform from '23 to '25 has, for example, supported 60% growth in Prime balances. And our investment in the mortgage broker platform has supported more than GBP 14 billion of mortgage applications since its launch. We have also realized GBP 100 million of funding synergies on Tesco and significant margin benefits through Kensington as both acquisitions support U.K. lending growth. We plan to double annual organic investment by '27, focused on technology change and fee growth. In addition, we expect operational costs of Best Egg of circa GBP 0.3 billion in '26 and GBP 0.4 billion in '28. This highlights the increased intensity of investment at this stage to support stronger fee growth and returns beyond '28. Cost discipline remains a key focus of our plan and is the lever that we have most control of. During '26, we expect a high 50s group cost income ratio improving again from 61% in '25. This reflects strong progress in the U.K. businesses in particular. And looking ahead, we expect further improvements to deliver a low 50s percent group cost/income ratio by '28. Turning now to impairment. The group has operated around the through-the-cycle target loan loss range of 50 to 60 basis points for the past decade, and this guidance remains appropriate. It reflects two offsetting factors. First, in Barclays UK, lower arrears and high credit card repayment rates have contributed to our loan loss rate consistently below the through-the-cycle expectations. Strong mortgage affordability criteria and credit card quality supports structurally lower impairment in the U.K. market. As a result, we now expect a lower through-the-cycle loan loss rate in Barclays UK of circa 30 basis points versus 35 basis points previously. Second, we expect a circa 500 basis points through-the-cycle loan loss rate in USCB. This is up from circa 400 basis points previously due to the changing portfolio mix. It will be higher in '26, at circa 550 basis points, reflecting post-acquisition stage migration of the General Motors portfolio and retention of some non-performing American Airlines balances. Both effects will diminish in '27 and will be more than offset by higher NIM. During the past 2 years, we have structurally improved Barclays profit signature. The Investment Bank and USCB now deliver double-digit returns, and we plan to drive these higher whilst continuing to allocate additional capital to our highest returning U.K. businesses. By '28, we expect capital generation to exceed 230 basis points, an improvement of more than 30% over the next 3 years. We continue to exercise disciplined capital allocation. First, by holding a prudent level of regulatory capital. As you have seen, we've been operating around the top of the 13% to 14% target range ahead of the expected regulatory developments that I discussed earlier. Second, we will distribute greater than GBP 15 billion to shareholders by '28, subject to regulatory and Board approval. And third, we will maintain capacity for selective investments to support structurally higher returns beyond '28. Given the strength of capital generation, this capacity does exceed the level of investment set out in the plan today. As we have done, we will exert considerable discipline over any investment, given the importance we place on shareholder distributions. We expect a progressive increase in our total payout in 2026. We are also evolving the mix of distribution to reflect the growing consistency of capital generation and to recognize feedback from shareholders. In addition to the move to quarterly buybacks announced in Q3, we plan to increase the dividend to GBP 2 billion in '26, from GBP 1.2 billion in recent years. While we continue to prefer share buybacks, we will review the mix of distributions periodically to reflect the level of our returns and the preferences of our shareholders. Bringing this together on the next slide. Operational progress during the past 2 years means we are confident in achieving our '26 targets and guidance. But momentum across the group also underpins our confidence in delivering the '28 targets outlined today. We are focused as ever on driving greater efficiency and operating leverage, protecting returns in a range of environments. And we will drive structurally higher and more sustainable returns beyond '28 by investing to support more diverse sources of income and fee growth. Over to Venkat for final remarks. Coimbatore Venkatakrishnan: All right. Thank you, Anna. So 2 years on since our Investor Update in February 2024. As we've discussed, we remain on track to deliver our goals. We are moving from a period of measured ambition to one of accelerating ambition. We aim for sustainably stronger returns, greater shareholder distributions and operational excellence. The targets which we have shared today are underpinned by structural improvements to the profit signature of the bank, which we have made in the last 2 years. And our drive to become a simpler, better and more balanced bank. We plan to continue this progress in the coming 3 years. And of course, our journey does not end in 2028. Our ultimate aim is to secure structurally higher and more resilient returns beyond 2028. So now I'll pause for 15 minutes for a break before Anna and I open for Q&A. What shall I say, 10:40 U.K. 10:40 London, please be back in the room. There's refreshments outside, restrooms outside, and we'll be back. [Break] Coimbatore Venkatakrishnan: All right. Thank you. Welcome back. So we will go to questions in the room. Coimbatore Venkatakrishnan: [Operator Instructions]. So I'll begin with the person who raised his hand first and who taught me a lot of what I know about analyzing banks. Kian? Just for that, he gets preference. Kian Abouhossein: Two questions. The first question is on the capital return of over GBP 15 billion. If you could just put this in context of capacity to support investment and growth. How should we think about this capacity that you're outlining? It looks like there's quite a bit of buffer. So we would like to understand that. And then secondly, you're one of the few CEOs who actually discusses ledgers and middle office integration, which is not a -- it's a hot topic, but a lot of CEOs... Coimbatore Venkatakrishnan: I began as a programmer, so that probably helps. Kian Abouhossein: That's probably, you are, yes. And probably because he came from the same organization that I'm from, which is a big focus. But trying to understand a little bit the investment phase, which has stepped up in '26 significantly. And you're going from GBP 1.1 billion to GBP 2.3 billion of investments. And just what the focus is and how should we think about post '28 basically in that respect? Coimbatore Venkatakrishnan: Anna, do you want to start on the capital and then we can come back to the other one. Angela Cross: Yes, sure. Thanks, Kian. So one of the hallmarks of this plan is the level of capital generation. We've talked about that. And really, when we talk about an improving profit signature, that's really what we mean. It's this chart here that they've just brought up showing that sort of change to 230 basis points. And in the plan, what we've done is we've meaningfully increased the distribution to greater than GBP 15 billion, but we've also meaningfully, in fact, doubled the level of investment. But such as the level of capital generation within the plan, the level of generation actually surpasses both of those two increases. So what we've done here is we've deliberately created some capacity for us to be able to invest further if and only if we determine that is the right thing for us to do. And I'll just remind you of our very clear capital hierarchy here, specifically the importance of shareholder returns. So we're going to set a very, very high bar for any additional level of investment. And quite frankly, if we are unable to find such an investment, then the capital hierarchy will kick in, and we will distribute more than we have here in the plan, or alternatively, we will be investing more than we have here in the plan, and we would expect the momentum of the business in the outer years to be higher than we're presenting here. We have no inclination, no objective here to hold on to higher than required levels of capital. But what we're trying to do is create some capacity to underpin some of the meaningful opportunities for growth that we have, whilst meaningfully stepping up that level of distribution. Venkat? Coimbatore Venkatakrishnan: Yes. And I would say, I think if you look at our track record of investment, Anna spoke about the investment which we had made in our prime and financing business and both the quantum of investment and the payback. You saw the quantum of investment in even the mortgage broker application and the payback. We look to make investments where you would get the revenue realization fairly quickly. And you see that even of Kensington Mortgages and Tesco and God willing, Best Egg. So we are looking to do that. And we need to keep that capacity for that reason because opportunities will be there and needs will be there. I would say, Kian, on the second question about subledgers and the sort of the guts of the organization, it comes from both a philosophical place and from the actual reality of the business. The philosophical place is, as I said, for a long time in this industry, the businesses -- technology has revolved around the businesses. Now as you see not just in us, but across the industry, the depth and extent of technology-based services, products, and delivery, the businesses are revolving around technology. And what that means, especially if you're going to take advantage of the promise of new technologies like AI and cloud computing is that you've really got to, as I use the word, harmonize your processes and standardize your approaches. And especially when it comes to data platforms and to the way in which you construct and store your data, the way in which you do computing, the way in which you build models and the way in which you deliver. And if these things are not standard, you add huge complexity. And so we've got to unravel that complexity. And in large complex GSIFIs, that's a big task, and that's what we are trying to do. All right. Alvaro? Alvaro de Tejada: One of them is actually -- sorry, Alvaro Serrano from Morgan Stanley. One of them is kind of a follow-up to the second question maybe for you, Venkat. In one of the slides, you pointed out that 75% of the employees are in support functions, I think, yes, support functions. And obviously, one of the -- at least for me, the surprise of the plan is the cost element as you were referring to. During the plan, how is that number going to come down during the plan in 2028? And beyond that, how low do you think it can go because it's obviously one of the core pillars? And second, more -- maybe a more financial one on, again, maintaining the RWAs flat in the Investment Bank and one of the things coming out is ongoing RWA efficiencies. Is there anything -- maybe this one is for Anna, but is there anything you can point us to that is pretty mechanical around the way the business is done in Investment Banking, maybe less legacy LBO business, more sort of private credit capital-light businesses that we can gain conviction that mechanically the RWAs are going to be flat right now, pointing out to a proportion of contribution today versus 3 years out, something that will gain -- give us confidence that we can keep it flat. Coimbatore Venkatakrishnan: We're going to tag team on both these questions, Alvaro. So first of all, on the cost, just a definitional point. When we call support functions, there's a bit of a legal entity aspect of Barclays. This is what we call Barclays Execution Services. And this includes technology and operations, but it also includes compliance, risk, finance, HR and legal. And so it includes basically the non-revenue generating parts or direct revenue-generating parts of the business. So that's the first thing. The second thing, as I've said, and I'll have Anna chime in, we don't have an explicit target in terms of number of employees. What I've said is there will be productivity benefits from all these investments. We hope to harness this productivity benefit in improving the quality and delivery of services, whether that is to clients or whether that's internally, right? And there will be obviously a gross efficiency cost savings that we've outlined and investment in the group. But we are not outlining a particular people target. I think we are approaching this from something that creates efficiency in order to provide enablement. And then we'll see where we go. Anna? Angela Cross: Yes, sure. If I can just add to that. Our real focus from here on in is really on that technology efficiency. So the majority of cost out, if you like, the efficiency is going to be driven by change delivery, by platform modernization and the kinds of things that Venkat was talking about, about enabling products to market, if you like, much, much faster than we have done before. So that's where we see the sort of meaningful change, if you like, in the cost base. Shall I start on RWAs, or do you want to add? Coimbatore Venkatakrishnan: Yes, you do. But just one thing. It's no accident that the most digitally enabled part of the bank, which is the U.S. Consumer Bank, also has our lowest cost/income ratio, right? It's no accident. Go ahead. Angela Cross: Yes, sure. So on RWAs, I mean, this is not a new thing for the IB. They've been flat for 4 years. They were flat for 2 years before we started the last plan. And whilst we've made considerable progress, 110 basis points, we do think that there's more to go here. And I'd just call out -- so let me talk about a couple of whats. The first would be, if you remember when we did our Investment Banking deep dive, we talked about that review of the loan book being really good stewards of capital. We are 2/3 of the way through that review with 1/3 to go. And it might be helpful actually if we can bring up the slide that's got the relative revenues over RWAs, and you'll really see what's happening in Investment Banking. At the same time, so it's that bottom right-hand chart that I'm calling out there. So absolute levels of RWAs have been coming down in banking as we have reviewed that loan book. That's allowed us to be much more nimble in how we deploy RWAs across the Investment Bank and really deploying them at the moment, as you've seen, in markets just because the market opportunity has been there. The other thing I would call out is much of our growth that we're really leaning on from here on in, some of the things we talked about before, so M&A and ECM, but the International Corporate Bank is a really big part of this part of the plan. It's made tremendous progress in the last 2 years. And that again comes from the treasury coverage model that we talked about in our deep dive. We've increased our deposits by 140% here. And now we have the opportunity to really leverage that by deploying the technology that Venkat is talking about and really driving fee products from here. So we are confident in that trajectory. Venkat? Coimbatore Venkatakrishnan: Yes. I mean I'll just add to what Anna said. I mean structurally, it is the International Corporate Bank and Transaction Banking. It is the continued growth in our prime businesses, which revenue per unit RWA because of just the way the lending is structured is generally better. It is over a very long period of time, the way lending and banking has been changing from direct lending on individual credits to portfolio lending. But that's over a very long period of time. But it's the thing Anna said, it's corporate banking. It is an emphasis on fee businesses and also you know, at the right points of the cycle, intermediation. Yes, go ahead, please. Guy Stebbings: It's Guy Stebbings from BNP Paribas. The first question was on capital in terms of targets. You got the 13% to 14% target. I think you've talked sort of running at the top end of that range throughout this plan. And given this is the plan now to 2028, post Pillar 2A changes given the constructive tone from the regulator. I'm just wondering what do we need to see to sort of potentially move lower down in that range as sort of a formal way you're running from the business? Is it just getting that Pillar 2A change from the regulator? And presumably you've got pretty good visibility as to what you're expecting there. So if things do land as you expect, maybe you could help sort of frame that so we can think about what that means for capital return and RoTE targets. And then the second question was on the mortgage book in the U.K. You referred to the headwind in the first half of this year. Can I just check in terms of the definition of that headwind? Is that sort of a gross headwind? Because I'm mindful that with Kensington and the sort of flow of the book, you might be able to offset some of that as you have some higher LTV, higher-margin business coming through. So can you kind of frame the definition of that headwind? Angela Cross: Yes, sure, Guy. I'll take both of those. So on the first one, if you go back to the beginning of '25, what we said was that because we were carrying more Pillar 2 in advance of IRB implementation, you should expect us to operate at the top of the range or towards the top of the range. That's still what we're saying. It's no different to that. And I do expect there to be some Pillar 2 offset when we get through Basel 3.1 and IRB. I just don't know what they are right now. And what we are trying to do in every single part of this plan is put it in our control. We want our distribution plan to be underpinned by the things that we are doing and that it can't be put off course by the timing of regulatory change or the certainty of that change. So that's all we're saying here. So for us, in the short term, our planning assumption or actually throughout this plan, our planning assumption is that we will be at the top end of the range. And that's obviously -- you should reflect that in the way you think about our distributions, you should reflect that in the way that you calculate our RoTE. But once we get beyond that implementation and we have that clarity, we will, of course, review where we think we should be within that range. I mean we still think that the 13% to 14% range is the right range for Barclays. But at this point in time, we just don't have the regulatory clarity, and we want this plan in our control. So that's the reason for it. And on mortgages, I'm specifically talking about a gross impact, and it relates to the mortgages that were written at the very end of 2020 and beginning of 2021. So as you remember, as we were all coming out of COVID, there was that stamp duty holiday and the mortgage market was very substantial. Those mortgages were written at very wide spreads, like 160 basis points. That's quite meaningfully different from where we are now. So just as they refinance, you're going to see some relatively short-term pressure across the market as a whole. We think it will be gone by the end of half 1. And then beyond that, you're going to see the kind of progress that you've seen in our NII to date. But it is a gross impact. We're obviously enjoying very good levels of net lending, driven very much by Kensington and that broker platform. So it's a short-term hiatus, I would describe it as. Coimbatore Venkatakrishnan: If I may just underline one thing, whether it's capital or looking at our RoTE, there are potential tailwinds, right? We are planning prudently, but what Anna is referring to, whether it's the new capital rules and what relief we get, there are potential tailwinds. We are not banking. Sorry, go ahead. And I'll come back to the back in a minute. Benjamin Toms: Ben Toms from RBC. First one is on Private Bank and Wealth Management. What products are you currently missing from your premier banking proposition? And how easy is it for you to build those yourself? And then secondly, to continue on the U.K. loan book. U.K. retail banks continue to surprise to the upside on loan book growth relative to GDP. I think your guidance is for a 5% loan growth CAGR out to 2028. What's driving the growth in excess of GDP? And what's your outlook for volumes in the mortgage market for the next couple of years? Coimbatore Venkatakrishnan: Let me start on both. We've got a pretty big and complete product suite. There are a couple of gaps in the product suite that are missing, SIPPs, junior ISAs that are coming online. But if you put yourself at a higher level looking at it, starting at the self-directed end of the spectrum, what we've got is direct investment, what we used to call Smart Investor, which is your basically do-it-yourself investment buying stocks, bonds. Then you come to the next piece, which is planning and advice. And that is where we are doing some work, as I said, to create products, which we will talk to you about soon, which are clearly constructed, fairly priced, transparently built and cheaply distributed and -- sorry, efficiently distributed. And there, we are looking to grow in scale and we've got the basic product set. And then we've got our Private Bank, both domestically and internationally, was complete. So I would view it more as a scaling journey than as a completion of product capability. And that is our goal. And look, I think more broadly, the U.K. is a nation of savers. I think it needs to be more of a nation of investors. I think we're going to have a broader tailwind and support for this. I think it's an important role for banks to play, and you'll see us emphasize it. And then if I come to loan growth above GDP, let me begin and then Anna should fill in. We've said 5%, as you say, loan growth versus nominal GDP of 2%. Basically, there are parts of the business in corporate banking and business banking and even in parts of personal loans, where we were underrepresented in the last number of years. Tesco has given us the capability in personal loans, and you can see the increase. You're seeing the increase 18% growth in lending in the U.K. Corporate Bank. If you look at the U.K. Corporate Bank broadly, still loan to deposits is like 35%, 34%. So we have a lot to grow, right, versus what you might normally expect from somebody. Anna? Angela Cross: Yes. I mean, simply put, Ben, I think it's a combination of capability, increased capability. So we talked a lot about the mortgage platform. Actually, we're doing very similar things within the corporate banking environment, making it easier for that customer or client to engage with us and making that journey efficient, quick, giving them certainty, et cetera, that's making a really big difference. I think also the sort of broader product architecture that Venkat talked about, we see it in cards across multiple products. We obviously see it in our mortgage business. So we're just going to market with a much, much broader range and certainly, more of a step change than we've had sort of 2 or 3 years ago. What it isn't is price and what it isn't is risk. So you can imagine as CFO, I've got a very keen eye on those things. So if you think about our corporate lending, it's up by 18% year-on-year. We've got more than 1,000 new clients in 2 years. About half of those are driving some of that lending. But as I look at the risk profile, it's not changed since the beginning of the plan. And as I look at the portfolio margin, it's not changed since the beginning of the plan. So it's really technology, intention to lend and I would say, breadth of product. Coimbatore Venkatakrishnan: Go ahead, please. Tim Piechowski: Tim Piechowski with ACR. I think today in guidance, it's the first time you've pointed us to the 7-year swap rate from the 5-year swap rate on the hedge book. Could you talk about, is there a change in kind of the duration targeting there? And what gives you the confidence to make that change? You're looking at the deposit betas, et cetera? Angela Cross: Yes, sure. Thank you, Tim, for the question. So we actually extended the length of the hedge last year, taking it from roughly 3 years to 3.5 years, and that's why the 7-year swap rates becomes the most relevant rate. That really follows the observation of customer and client behavior because what we do is every single month, we are looking at how the deposit books perform across retail and corporate at a very, very granular level. And what we were observing was really that the customer and client lives were lengthening out, and we were getting more confidence around that. So it's purely a reflection of that change. Andrew Coombs: Andrew Coombs from Citi. So on the Investment Bank, If I look at your 2026 targets, previously, you had a greater than 12% return target. It's now circa 12%. A high 50s cost income is now circa 60%. I'm assuming the change is primarily due to FX, but perhaps you could firstly confirm that. And secondly, when I go back 2 years and think of the original plan, a lot of the revenue growth was assumed to come from market share gains, and you actually assumed a fairly flat wallet. Actually, what's materialized is a much better wallet than you expected, but flat market share. So perhaps you could also just talk to competitive dynamics and how that's played out versus what you thought 2 years ago and how that then fed through to your '28 assumptions as well? And then on the U.S. Consumer Bank, I just wanted to understand some of the moving parts because you talk about greater than 13% NIM for 2026 full year. But I think in your earlier commentary, you said 12.5% for Q1, 14% for the second half post the AA sale. So presumably it's the 14% you would argue we should be thinking about into the outer years. But then similarly, on the loan loss ratio charge, you're actually assuming that's coming down even as the exit NIM is higher. So perhaps you could just square the circle there. Angela Cross: Sure. Shall I start and then I'll hand to you on market shares, and then I'll take it back on. Okay. Thank you. So Andy, you are correct. The material moving part between the last plan and this plan is we previously planned on 1.27, we're now planning on 1.35, dollar rate. Now that has no impact on group capital, no impact on our ability to distribute. But in particular pockets of the bank, you see some concentrated effects. And the IB is one of those. You're going to see it in USCB as well. So that movement in FX is worth about 50 basis points. So all we're doing is we're just truing up our expectations. We're pleased with the progress that it's made so far. I'm not going to mark that plan to market every single passing quarter. It's just that as we're resetting targets, we felt like it was the appropriate thing to do. Venkat? Coimbatore Venkatakrishnan: Yes. And I think -- on the other side, what I would point to is, look, on the Investment Banking side, banking per se, as I said to you, we would like to see greater fee share. What you've seen so far is progress from the hires and the investments we've made, but -- and you've seen greater revenues, obviously, and excellent capital discipline. And as we make these investments, we hope to see the fee share. On markets, I would point you to the fact that in the 3 focus businesses, we've done what we said we would do, and we've done it a year early. And as well as the number of our top 5 clients among the top 100 clients for whom we are top 5, that has gone from 30 to 50 to 60. So there is structural progress being made in these elements. Angela Cross: Okay. Can we bring up the slide at the back of the deck, I think it's 95 or 96, please, on U.S. Consumer Bank, perhaps just to help this. There, 96, perfect. Thank you. So Andy, you're right. There's a lot going on in U.S. Consumer Bank in 2026, specifically being driven by the fact in Q2, we expect to exit the American Airlines partnership, and we'll also purchase Best Egg or complete the purchase of Best Egg in the same quarter. So firstly, that has a NIM impact. So I expect the NIM to go to around 12.5% in the first quarter. What's driving that? Well, it's just the accounting that I called out earlier. It's a movement between non-NII and NII. Then we've always said that because American Airlines was such a high-quality portfolio, the NIM on it is relatively low, but also the loan loss rate on it is relatively low. So taken together, it was a relatively low returning portfolio because it's super prime. So what happens when that leaves the portfolio is the NIM will go up further. And so you're right, in the second half of next year, I'm expecting, if you like, a clean run rate of NIM, which looks more like 14%. Now when I come to loan loss rates, that same impact is going to take us from 400 basis points to 500 basis points, but that will be more than offset by NIM. During '26, in isolation, what you're going to have is a couple of impairment effects. The first is, if you recall, when we buy something, we bring it all on at Stage 1. So it has to mature through Stage 2. So you get what we call stage migration. You're going to get that in the General Motors portfolio. So that's going to elevate impairments slightly. And then for a period of time, we're going to be holding on to some nonperforming loans from the AA portfolio that won't go with them on the sale. So those 2 things together are going to show a little bit of elevation during 2026. So that's why I'm guiding you to around 550 bps, but ongoing, 14% NIM and 500 bps loan loss rate. Coimbatore Venkatakrishnan: Nothing to add. Pui Mong: Sorry, I forgot that this was working. It's Perlie Mong from Bank of America. So thinking about the income guidance at the group level, so it's greater than 5% CAGR. And within that, obviously, Investment Bank is probably below and the Consumer Bank is above. And with the U.K. part also growing volumes greater than 5%. I'm just trying to think about what does it imply about margins. So in terms of product margin, that is, would you expect more of that growth -- income growth coming from the volume side? Or are we basically past the point where deposit margin is growing very substantially because of the hedge? And obviously, '26 will probably be a bit higher because of the more of the hedges coming through in '26. So in '27 and '28, how should we think about the margin piece? That's number one. And number two is that -- so it sounds like Investment Bank RWAs is going to stay relatively flat because you still expect that to come down to about 50% of the group by '28. So roughly speaking, it's not much more to the Investment Bank. And the cost guidance at a group level only modestly growing from now to '28. That suggests Investment Bank is not getting very much cost either. So I'm just trying to think about why you've decided to do that in the context that, obviously, the IB probably is one of the businesses that has performed above expectations in the last cycle. And increasingly, there are questions about with the U.S. peers investing more and putting more capital behind the IB, why would you choose not to do something? Coimbatore Venkatakrishnan: I'll let Anna take the first question, and she can start the second, and I might come in. Angela Cross: There we go, the plan. Thank you, Perlie. There's a lot in your question. Let me try and unpack it a bit. So how do we think about product margin in the U.K. is, I think, your question. So look, there's a bit more to go here. And you can see that from the -- can we go to the structural hedge slide, please? Thank you. Okay. So we are assuming that we are going to be reinvesting the structural hedge at 3.5%. The maturing yield over the next 3 years is materially below that. So 1.5%, 2.1%, 2.7%. So you're going to have a considerable hedge tailwind across at least this plan, probably beyond. And everything that we've done around the tenure of the hedge and extending it from 3% to 3.5% is only going to increase that momentum for longer. So that remains there as, if you like, an underpin for product margins. Then if you think about lending more and particularly within our credit card business, all of the volume that we've written over the last 2 years coming to maturity from its promotional balances, that will start to increase the interest-earning lending in the credit card book. So we expect those things to continue. Now what we're not doing here is planning for any expansion of product margin really, though, because what we've said implicitly is that the growth that we're seeing in lending and some of the margin pressure that we're seeing in the U.K. market pretty much broadly offset. That's our planning assumption. Now it may turn out differently to that, but we are not assuming that product margins either as a totality, if you like, Perlie, get either better or worse, if that makes sense. You just continue with that hedge grinding in the background, products is broadly awash. That's how we think about it or that's how we planned for it. In terms of the Investment Bank, look, what we're trying to do here is construct a plan that is carefully constructed, okay? We're trying to put as much of it within our control as possible. So we're planning on a flat wallet. We're not materially expecting any market share change in markets. We expect some in Investment Banking. The pressure here in the plan is coming more from Transaction Banking, but that's where we're directing our investment. But don't conflate careful planning and lack of ambition. Because what we will do, of course, if the opportunity presents itself, then we will monetize it as we have done to date. Venkat? Coimbatore Venkatakrishnan: I will emphasize that last point. I must say it's nice to be getting a question about why we shouldn't be bigger in the Investment Bank. But I think we've targeted -- we've been very clear to you over the last couple of years about where we are roughly targeting the IB as a percentage of the group. I think what you should expect us to do is exactly what Anna said, which is we're making a plan based on an assumption of a wallet. If there is opportunity, we've done it in the last number of years, which is we take advantage of it. Yes. Sorry, let's start, Chris. Chris Hallam: Chris Hallam from Goldman Sachs. Just a question on the Investment Bank to begin with. Are you able to give any color on perhaps how much leverage exposure is tied up in the Investment Bank? I know we talk about RWAs, but as we shift towards the growth you're seeing in the financing businesses, how relevant that metric is. And when you talk about flat market share in Global Markets, is that a conservative assumption or not given, I guess, the dereg story we're seeing building in the U.S. and also the ambitions one of your European peers has in FICC, specifically in the United States? And then the second question is more broadly on AI. I think or I assume behind the scenes going through all the planning, you've looked at a lot of the opportunity set in that area. It feels as though more generally, there's a narrative that the technologies are becoming more impactful, but perhaps the speed at which you can get them into the enterprise is taking longer than people had expected and maybe slightly at a higher -- slightly higher cost. Is that a fair narrative or one that you would agree with when you think about the work you've done behind the scenes on this topic? Coimbatore Venkatakrishnan: You want to go with the first one? Angela Cross: Yes, sure. So thanks, Chris, for the question. I mean we don't talk about return on leverage balance sheet a lot with this community, but you can imagine we're very focused on it in the background. And there are -- you're right, there are 2 big parts of the bank where leverage is deployed probably most extensively. One of them is obviously retail mortgages. The other one is financing within the Investment Bank. It's very high RoTE business because it's essentially secured lending, but it does consume leverage balance sheet. That's why we have the AT1 strategy that we have. And we're always thinking about what are those returns on the leverage balance sheet versus the cost of those AT1s. That's how we think about it in the background. We have deployed more leverage in the business over the last few years, but so have our U.S. peers. And our perception to date certainly is that they have not been leverage constrained in the way that they have addressed that. And despite that, we've grown the balances by 60%. So it's a business, of course, we're focused on the returns across many lenses, but we're happy with where it's going. Coimbatore Venkatakrishnan: Yes. I'd also say one of the things about the bank and the way we're building the bank is that we have lots of options and lots of opportunities. So just as you have 2 areas which consume leverage, you've also got the U.S. cards business, which helps you offset that because it's capital dense, relatively speaking. And what we are doing on the personal and unsecured side in the U.K., which is also relatively more capital dense. So I spoke on one of the slides about balancing product, income type mix, all these factors are coming in to create the portfolio which we have. Angela Cross: Yes, sure. I think back to you on AI. Coimbatore Venkatakrishnan: Back to me on AI. Yes. So you're right that I think what people are finding is that it's not just sort of enabling a particular type of model or a particular capability on everybody's computers and then get to work. So you have human adoption and then you have, more importantly, the ability to get it to work in the system. To get it to work in the system requires 2 things or 3 things. One is the basic infrastructure, then adding the capability and then the third, the willingness to reengineer your processes. That is what we are trying to convey in the slides we spoke about on technology. So the basic infrastructure is about both data and computing. Then on top of that, you build the model capability, which exists in some of the computing platforms, but which you might put on your own. And then the third is the commitment to reengineer processes, and you've got to really do it end-to-end. So whether it is that BARXBot, whether it is what we are trying to do in credit risk, whether it is what we are trying to do in U.S. cards in the U.S. Consumer Bank and customer service, you can't leave pieces of this undone, okay? And that's the deep organizational commitment. So we recognize it. That's what we are finding behind the scenes, as you said, but we're trying to pick the right projects that will have the biggest impact on the bank and see it through from beginning to end. Yes. Mike Holton: So another question on the income planning assumptions. Coimbatore Venkatakrishnan: Sorry, can you introduce yourself? Mike Holton: Sorry. Yes, Mike Holton from BNY Newton. There are some that you talked about that do seem relatively conservative. Now whether they will be or not, we'll see over the planning period. But to the extent that they are and revenues are better, income is better than you're planning, should we expect as investors for that to flow to the bottom line? So profits are better, RoTE is better? Or over the course of the plan, would you invest that away, maybe make additional accelerated investments in the business such that you still hit or maybe beat your plan by a little bit, but you improve the sustainability perhaps of the profitability, pull some investments forward. So beyond '28, you're set up even better. Angela Cross: Do you want me to start? Okay. So Mike, the first thing I would say is that our targets that we've given you have very deliberately got a greater than sign in front of them. So we're balancing a few things here. The first is that, as I've said a few times, we want to put this within our control, the delivery of the plan. That's really, really important to us and particularly the delivery of the distributions of the plan. So that's number one. Number two, we are balancing here the longer-term growth of the firm. So Venkat has talked a lot about the additional investments that we have and will continue to make. I mean between Venkat and I, it would be relatively easy for us to optimize the returns of the firm across a short-term horizon. That is not what this is about. We are really balancing here, investing more in the business, and that means that the RoTE in the shorter term are probably a bit lower than they would otherwise be. But we think it's really, really important to create a Barclays for 2 years' time when we're standing up maybe during the next phase of the plan, the third phase of the Trilogy, where we're talking about '28 and beyond. We want that momentum to continue. So that's why we've -- not so much on the income forecast, but when I was talking before about the capital capacity of the plan, that's exactly what I was driving at, our ability to flex our investment pathway if we feel that's the right thing to do. But every time we are doing that, we are considering what is the returns on that investment relative to either the business as it stands now. So is it going to enhance those returns further? Or how does it look like versus the returns of a buyback? So we're thinking about all of those things as we deploy that. Coimbatore Venkatakrishnan: Yes. I mean it's going to be -- we've presented a plan to you that is based on prudent financial planning in the way Anna has said, but we want to create a deep infrastructure for this bank, make it, as we said, returns in different environments, produce strong returns in every -- through different environments and sustainably higher returns in the long run, which is a combination of investment and shareholder return, right? Sorry, going to the back and then I'll come here. James Frederick Invine: It's James Invine from Rothschild & Co. Redburn. I've got 2, please. Anna, can you talk about your thoughts on kind of deposit volumes and spreads in Barclays U.K., please? So we saw a pickup in volumes after a few quarters of kind of flat to slightly down. And I think as well, your U.K. net interest income guidance kind of implicitly assumes quite a bit of deposit pressure. So is that migration? Is it product spread pressure? And then, Venkat, just back on the Investment Bank, I mean it sounds like you're very theoretically open to putting more investment in there. But what actually has to happen? So the revenue on risk-weighted assets has gone up. You're talking about a 13% plus RoTE. How much higher do those numbers have to go before you think you'll give this business another GBP 20 billion of risk-weighted assets or something? Angela Cross: Okay. So on U.K. deposits, you can see that the deposits are up quarter-on-quarter by around, I think, GBP 3 billion if we go to the slide. What we continue to see, though, James, is we do continue to see some competitive pressure in the U.K. and specifically that move towards fixed or time deposits. Now seasonally, I would expect some concentration of that in Q1, Q2 just because of the ISA season in the U.K. We always see that. And it feels like as a market, we're well primed to see that. But we are pleased with that deposit progress. What does that underpin? Well, I think just continued improvements in the business. I would say that we've deployed our multi-brands in deposits this year. We don't really talk about that. We talk about it a lot in assets, but we are going to market with a much more sophisticated product architecture in deposits because we are now deploying the Tesco brand here. So that's really helping us. But we are not assuming from here that there is any real easing in that deposit environment. It may happen, it may not. But as I say, we're trying not to make significant market assumptions. Venkat? Coimbatore Venkatakrishnan: Yes. So on the Investment Bank, first of all, investment comes in different ways. Investment comes in people, investment comes in technology, particularly in the markets business, and then investment can come in RWAs. What we've spoken about on the balancing side is basically Investment Bank RWAs as a percentage of the group, where we've set a target of around 50% seems right. We've also indicated flexibility around that number if there's a little opportunity, but 50% seems right. We have been investing heavily on technology and people. And we've spoken about it, whether it's bankers, whether it's trading capability and of course, electronic trading capability. We spoke a little earlier about the investments we've made in prime. So there's been and continues to be tremendous investment in technology and capability. Some of this or a lot of it is going towards things that are relatively capital-light and relatively high in fees. So we are prioritizing stable income. We are prioritizing corporate banking. And of course, electronic trading, which helps with our intermediation. And on the capital side, as I've said, there's a balancing act, and it's about 50% is where we would aim to target. And to get there right now, IB RWAs have to be relatively flat. Angela Cross: Venkat, on the left-hand side, you've got Chris, Jonathan and Amit who are being incredibly patient. So... Coimbatore Venkatakrishnan: All right. In that order, Chris. Christopher Cant: It's Chris Cant from Autonomous. If I could just ask one point of detail and then on the IB again. So your effective tax rate has been quite difficult to predict over the last couple of planning periods. If you could just fill that gap in our models, I think that would be appreciated by all. And then on the Investment Banking side of the equation in terms of stable market shares, I guess one obvious development that's probably coming down the tracks at you in the next 12 months is this regulatory change in the U.S. So are you seeing at the moment any change in the competitive environment? And do you make any allowance in the plan for a potential contraction in product margins as some of your U.S. competitors get more capital capacity, some of which is likely to be deployed into the IB? Angela Cross: Okay. I'll start with the tax rate. So Chris, I'm not going to give you a tax forecast. But I recognize that quarter-by-quarter tax can be a bit lumpy because it relates not only to the changing shape of the business, but also things that may have happened in the past. So I would encourage you to look at it over a sort of full year basis, maybe for the last couple of years and start from there. Always, if we've got significant tax impacts, we typically call them out for you. So start with that. Coimbatore Venkatakrishnan: And Chris, just to clarify, by regulatory change, do you mean capital regulations in the U.S.? Or do you mean individual banks that might be under regulatory structures now that might lift? Christopher Cant: More the former. Coimbatore Venkatakrishnan: The former. Right. Look, U.S. capital regulation is very likely diverging from what's there in the U.K. and what's there in Europe. We have operated this investment bank through multiple capital regimes in different locations, and we adapt. The question is then how do we adapt? I said earlier in our presentation that the secret sauce of our Investment Bank is the synergies, our strength in fixed income and structured financing and the nimbleness of our approach with our clients and deepening the way in which we engage with clients. So we'll see what comes out. We will see whether we are at a relative advantage or disadvantage in certain things. But the most important thing is to keep investing in the infrastructure, the people, the products so that -- and the client relationships so that we can manage it through different points in the market cycle, through different differences in capital regimes. This has always been a very competitive business, and we expect it to continue to be so. Jonathan and then Amit, yes. Jonathan Richard Pierce: It's Jonathan Pierce from Jefferies. If I can take it up a level, if that's okay, a couple of questions. I'm really trying to triangulate the capital generation targets on Slide 71 with the RoTE and the distribution expectations. I mean greater than 230 basis points on circa GBP 400 billion of RWA is obviously getting you to an attributable profit number of over GBP 9 billion. So putting to one side, that's quite a bit ahead of consensus, even if we assume 3% RWA growth, which if the Investment Bank is pretty flat, is quite a lot. That's only going to take us down to about GBP 8 billion of free capital generation, which is obviously huge in the context of the GBP 15 billion plus over the 3 years. So can I just firstly ask do you recognize those numbers? Are these distributions going to be really quite back-end loaded such that when you are stood here in 2 years' time, the next 3 years of distributions are going to be markedly above the greater than GBP 15 billion that you've talked about today. Secondly, connected, the RoTE on that 230 basis points plus, if we use consensus TNAV would be closer to 15%, maybe a little above 15%. I just wonder if you can talk to TNAV growth over the next few years. It would be great if you can reference consensus, but maybe some of the things that are harder for us to model like the own credit unwind, the pension surplus, maybe even the cash flow hedge reserve moves to a positive. How should we be thinking about TNAV 2 or 3 years forward, please, particularly versus consensus? Angela Cross: Thanks, Jonathan. I guess both of those are for me. So let me just start with capital. So I'm not going to comment on your math, Jonathan. Where I agree with you is that the organization is generating a lot of capital, and we expect that to continue. And so when we give you a distribution target of greater than GBP 15 billion, I would concentrate on 2 things within that slide. One is the greater than sign. And the second is this point that we are making that beyond the investment that we've got in the plan, so beyond the doubling of investment and beyond the level of distributions, there is an element of capital creation here that we are holding for additional investment if we think that is the right thing to do. Now if we don't, then we will, of course, return that to shareholders. That's what our capital hierarchy says. It says first, be well capitalized, then deliver it to shareholders, then invest it to meaningfully improve the returns of the group. So that capital hierarchy remains. We have no desire to hold on to excess levels of capital. So your thought process is as ours is. But as I say, I will leave the math to you. In terms of the sort of -- in terms of the RoTE point, we've given you a RoTE target, which is greater than. So again, I'm not going to comment on the math that you've given me. Last time I looked at it, TNAV was broadly -- our expectations of TNAV and consensus TNAV were broadly similar. I think the difference here is probably in the greater than sign simplistically put. Coimbatore Venkatakrishnan: Amit? Amit Goel: Maybe one [Technical Difficulty] again, just say, for example, looking at BUK profitability targets, so '28, greater than 20%, similar to '26, greater than 20% despite a mid-40s cost income versus the low 50s, further progression in terms of the income from the hedge. I mean I guess just wondering why isn't that number, say, greater than 25% or higher, you don't want to show a number like that. So just curious on that. That's the first question. The second, again, just on the IB, just on IB fees, again, this comes back to the market share point. So I understand the flat wallet assumption going into '28. But again, when I look at the trajectory, I think last time we were thinking that there had been investment in '23 and so forth, which should drive market share gains. We saw gains into '24. I think we went from about 3% to 3.3% -- sorry, into '25 or '24, but that's come back down now to around 3% again. So just wondering what's going to create the reacceleration back to the 3.5%, and what gives the conviction on that piece? Coimbatore Venkatakrishnan: Do you want to take BUK and then I'll come back to the IB. And that's Amit Goel, by the way, from Mediobanca. No, it's okay. Angela Cross: You did a good job with that. Coimbatore Venkatakrishnan: I know. I won't say anything. Angela Cross: So a couple of things just to call out, Amit, just to help you. Firstly, again, I'm going to lean on the greater than. The second thing is that although this is not true for the group, for BUK, it is true. We are expecting some impairment normalization within that business. So as we said, it's been running relatively low because we've been recalibrating these impairment models that are consistently overpredicting impairment in the U.K. So we've been running pretty low in BUK. We do expect that to normalize up to around 30 basis points. That's not true of the group. The group is running in totality where I expect it to be. So that's not flattering the group, but I think it is flattering BUK right now. So if you take that plus just lean on the greater than number, then that should hopefully explain. Venkat? Coimbatore Venkatakrishnan: Yes. So I'll begin with an answer on fees, similar to one I often give on markets. So when we have quarter-by-quarter or annual returns and results in markets, people will always ask, why are you better in this or why are you worse than that? Some of it has to do with where we are relatively -- where are our relative strengths and then how do the markets evolve to either give -- play to your relative strengths or not. And you've got to look at it over a long period of time. On Investment Banking fees, as I said, we made the investment in bankers. And debt capital markets is relatively strong. It's equity capital markets and M&A, where we need to do more catching up. And leveraged finance is obviously reasonably strong. So when you then look at that, some of it has to do with the pattern of deals in the last year versus the year before. They were larger, more lumpy deals. Sometimes if you're lucky to be in them, you're good. Otherwise, you're not. So '24 was a helpful year, '25, less helpful. But over the long run, we expect to get that market share simply by having the right bankers and the right product, and we look at this over a longer period. So I will give that kind of answer to you. Right. Anybody else? Going once. All right. Well, listen, thank you very much. Let me say that over the last couple of years, Anna and I have really appreciated the engagement from all of you and your organizations as we've been on this journey. We appreciate your candid feedback, supportive and encouraging. We welcome the opportunity to continue these conversations with you. Some of it will be on the road and one-on-ones. And I want to really thank all my colleagues who have helped put this together, Marina, starting with you and your team and the Investor Relations team. So please go easy on them. And then thank you. If you have a minute or 2, there are refreshments outside, and you can linger or you can run back to your computers. I'll leave that to you. Thank you. Angela Cross: Thank you.
Christopher Kusumowidagdo: Good afternoon, and welcome to XLSMART's Fourth Quarter 2025 Earnings Call. My name is Christopher, Head of Investor Relations, and I will be coordinating today's call. Our presentation and financial results were released this morning and are available on our Investor Relations website. Today's call will begin with prepared remarks from our management team, followed by a hybrid Q&A session. [Operator Instructions] As a reminder, the session is being recorded. I would like to introduce our speakers for today's call: Mr. Rajeev Sethi, Present Director and CEO; Mr. Antony Susilo, Director and Chief Financial Officer; Mr. David Oses, Director and Chief Commercial Officer for Consumer; Mr. Feiruz Ikhwan, Director and Chief Strategy and Home Business Officer. And with that, I will now hand over to Mr. Rajeev to begin with the management highlights. Rajeev Sethi: Thank you, Christopher, and good afternoon, everyone, and thank you for joining us. As you know, the company was formed in April of last year 2025. So this was the first year for XLSMART. And this quarter closes our first year post merger. And from our point of view, the message is very clear. Execution matters, and we are happy to state that we have delivered. If I speak about the merger, we have successfully completed the 2025 integration milestone. And most importantly, we've done this ahead of the plan. and it translates into operational efficiency, faster decision-making and a more disciplined cost base. Integration risk has materially reduced as we enter into the new year. Secondly, on synergies, we've achieved our 2025 synergy targets with OpEx synergies exceeding our initial expectations. This gives us confidence that margin expansion is structural improvement that will continue in 2026 also. The heavy lifting on cost has largely been done. The focus now shifts to sustaining discipline. Next, on growth quality. Revenue growth was supported by a fully consolidated subscriber base and more importantly, a strong ARPU uplift, which was around 26% post merger. This was driven by pricing simplification and better customer experience, choices which were deliberate and that prioritized value over volume. And as we said earlier, in this market, we'll want to play a responsible game and we'll encourage the market players to move into a situation, which helps restore health to this industry. And we are also seeing clearer evidence that customers are willing to pay for a more consistent high-quality service. Finally, on the network, network consolidation has strengthened our performance across key metrics. And this was complemented by our recent launch of 5G services in Jakarta, Surabaya, Bali and other cities. In summary, 2025 demonstrates disciplined execution across integration, cost, growth and network. We exit the year with a stronger foundation, reduced complexity and a clearer path to sustainable value creation going forward. If I move to the next slide, building on the highlights which I've just shared, I'll go a level deeper into how this merger is being executed and what has been delivered on ground. Starting with network. This is the most complex integration stream and also the one that matters most for long-term performance. We are on track to complete full network integration by first half of 2026. Progress so far has been encouraging with visible improvements in coverage, capacity and consistency. Importantly, we are managing this carefully, protecting service quality and minimizing operational risk and both of these remain nonnegotiable. On customer experience, we are seeing integration benefits are already being felt and enjoyed by the customers. We have improved download speeds by up to 83% across the combined base. This is a real meaningful improvement that supports better engagement and underpins the ARPU uplift that we are seeing post merger. On synergies, execution has been strong. In the first year, we have delivered approximately USD 250 million of gross synergies, driven by OpEx efficiencies, procurement scale and network rationalization. This confirms that the merger economics are playing out as expected and in some areas, better than what we had initially planned. Finally, on business continuity. Throughout the integration process, we have maintained service stability and sustained growth momentum. This disciplined approach has allowed us to transform the business without disrupting day-to-day operations. Overall, the message on this slide reinforces a simple point. Merger is being executed with control and discipline, delivering tangible gains today, while we are preparing a solid foundation for the next phase of integration and value creation. If I move to the next slide, which is talking about the integration progress. And as I mentioned earlier, on the overall execution, the integration milestones were completed ahead of plan. This pace reflects strong governance, clear accountability and tight coordination across multiple teams. More importantly, it reduces execution risk as we move into the next phase of integration. On network, consolidation has progressed materially. We've integrated approximately 34,500 sites by December last year, delivering visible improvements in network performance and customer experience. By the end of Q4 '25, around 70% of the sites have been consolidated. And as I said earlier, it puts us in a very strong position to finish most of the integration by H1 '26. From an organization perspective, the end state structure is now in place. We have harmonized processes and governance across the combined entity, creating clearer decision risk, decision rights, faster execution and better cost control. In total, around 120 processes have been streamlined and standardized. Finally, on the cost base, we have structurally streamlined our cost base, including vendor consolidation and site optimization. These actions underpin the OpEx synergies already delivered and support sustainable efficiency going forward rather than just short-term savings. To summarize, 2025 integration has been executed with speed and discipline. The foundation is now largely built. Risks are lower as we move forward, and the focus shifts towards optimization and value extraction in a way moving away from integration to driving more value. The last part, which I'm going to talk about is on the 5G rollout. As we said earlier, this merger gave us an opportunity to ready our network for 5G, and we are delivering on that promise. And we believe 5G is a key pillar of our growth and differentiation strategy. We want to be leaders in 5G, simply put. Our focus is not just on rolling out 5G faster, but on delivering a clear, consistent and commercially meaningful 5G experience. Today, we offer what we believe is the first true 5G experience in Indonesia. This is built on 3 core propositions. First, blanket city coverage. And this, I believe, is rare in many parts of the world. It's not only your home is covered or your workplace is covered, wherever you go in a city, you will find 5G. Secondly, an auto 5G experience where customers with 5G devices can seamlessly access speeds up to 250 Mbps without complexity. There is no special plan for availing 5G benefits. And thirdly, a dedicated 5G spectrum, which delivers more consistent speeds and better user quality, especially in high usage area. In terms of coverage, our 5G network is now live around 33 cities and continues to expand. Importantly, the experience is designed to be certified and consistent with capacity strengthened where demand is highest. This approach ensures that network investment is closely aligned with actual usage and monetization potential. Equally important is brand clarity, where we have positioned 5G clearly across our portfolio of 3 brands -- 4 brands, if I may say, XL Prepaid, the postpaid brand, Prioritas, AXIS and Smartfren. Each brand plays a distinct role, avoiding overlap while maximizing reach. In summary, our 5G strategy is deliberate and focused, combining disciplined rollout, consistent experience and clear brand positioning to support sustainable growth and long-term. I thought that was my last slide, but there's one more, which is on the network side, and I'm happy to give you an update on that. By end of last year, our total BTS count reached more than 225,000, which is a 36% increase year-on-year. This reflects the post-merger consolidation of our network and continued investment in capacity, particularly in 5G. As expected, legacy technologies continue to decline as we optimize the network towards more efficient and higher performance platforms. On 5G, we continue to expand our footprint in a disciplined and targeted manner. As I said earlier, we launched our services and we expanded further in January 2026. In addition to the expansion, we are also seeing external validation of our network quality. And I'm happy to announce that XLSMART was awarded the Ookla Speedtest Award our Fastest 5G Network in Indonesia, reinforcing our commitment to delivering a globally benchmarked high-performance connectivity. This reflects the progress we have made in network design, spectrum strategy and execution quality. Overall, our network strategy is delivering on 3 fronts: scale, performance and resilience, providing a strong foundation to support growth, accelerate 5G monetization and maintain customers trust going forward. I'll now hand over to our CFO, Pa Antony, to walk us through the financial results. Antony Susilo: Thank you, Pa Rajeev. Good afternoon, everyone. Let me now present you our key operating metrics, which reflect a clear shift toward quality growth. We know that this quality growth because of the price adjustment and also the broader industry recovery. So let's start with the subscribers. Our mobile subscriber base become 73 million in Q4 2025, representing an 8% quarter-on-quarter decline. This decline was an intentional outcome reflecting a tighter acquisition discipline as well as a sharper focus on monetization and high-quality users. Most importantly, on a year-on-year basis, the consolidated base remains up by 24%, reflecting the post-merger scale of the business. If we look at the ARPU, this is where the benefit of our strategy are most visible. Blended ARPU increased by 15% Q-on-Q to become INR 44,800 in quarter 4 2025. This mainly driven by the improvement across both in the prepaid as well as postpaid segments. And this reflects the pricing normalization, better customer mix and confirms that we are capturing more value for users. In erms of the usage data traffic, it continues to grow despite of the lower subscriber base. Traffic reached almost 4,000 petabytes in Q4 2025, an increase of 47% year-on-year and 2% quarter-on-quarter. This growth in consumption per customer reinforces the positive relationship between network quality, the engagement as well as the monetization. So overall, these trends demonstrate that our strategy is working well. Our subscriber numbers have normalized, becoming better customer quality, intensity and ARPU continue to improve. This positioning the business to be more sustainable and more profitable growth going forward basis. Now let me now present the financial performance for full year 2025, where it reflects the impact of the disciplined pricing, integration execution as well as a clear focus on value creation. We start with the revenue figures. The 2025 revenues increased by 23% year-on-year basis to become IDR 42.5 trillion driven primarily by the data as well as digital services. This growth reflects the benefit of price rationalization, ARPU uplift and also a larger consolidated base following to the merger. On a quarterly basis, the revenue grew by 4% quarter-on-quarter, demonstrating a continued momentum despite of the subscriber normalization. Moving on to the profit Normalized EBITDA for full year 2025 increased by 13% to become IDR 30.1 trillion, while reported EBITDA margins moderated at around 42%. This reflects deliberate acceleration of integration activities, which created a near-term cost pressure. On a normalized basis, EBITDA margin remained healthy at 47%, underscoring the underlying strength of the core business. At the bottom line, normalized PAT grew by 63% year-on-year to become IDR 3 trillion in full year 2025, supported by the stronger operating performance and improving operating leverage. Reported PAT continues to be impacted by integration-related costs as well as one-off items, which is temporary in nature and aligned with our transformation. Overall, our full year 2025, we demonstrated a strong financial outcome, the revenue growth supported by the pricing discipline, resilient in the profitability despite of the integration acceleration as well as integration as well as a significant stronger normalized bottom line. This position is good for us as we move into full year 2026 with a clearer earnings profile and increasing contribution from synergies. Next slide. The slides provide a quick reconciliation between our reported numbers and normalized EBITDA as well as PAT will help us to clarify the underlying performance of the business during the integration phase. On EBITDA basis, reported EBITDA full year '25 was IDR 17.8 trillion. This includes IDR 2.4 trillion of integration-related OpEx, mostly on the network costs and people costs. These are primarily associated with accelerated execution of merger initiatives. If we exclude this one-off integration costs, the normalized EBITDA stands at around IDR 20.1 trillion, reflecting the underlying strength of our core operations. At the bottom line, the reported PAT was impacted by integration OpEx and then accelerated depreciation and asset impairment. Adjusting for these 3 items, the normalized PAT for full year 2025 will be IDR 3.3 trillion. These adjustments are temporary and integration related, and they do not change the fundamental earnings capacity of the business as we move beyond the integration period to the next slide. Following the normalized EBITDA and PAT, this slide basically walks you about the operating cost base post the merger. Reported OpEx increased by 18% quarter-on-quarter in Q4 '25, largely reflecting the integration-related expenses and the expanded scale of operation after the merger. On a normalized basis, excluding the integration costs, OpEx increased by around 6% Q-on-Q, which is broadly in line with our business expansion. This indicates that the cost discipline remains intact and the majority of the increase is temporary and nonrecurring in nature. From a cost mix perspective, the main drivers for Q-on-Q increase coming from 3 factors, mainly: number one, higher labor costs related to the integration activities; second one, increased sales and marketing to support 5G launch and network expansion. And then the third one, higher infrastructure expenses due to more sites and network integration. These increases are structurally aligned with scale and integration rather than in efficiencies. Okay. So that's it from me. I shall now hand over back to Pa Rajeev, to provide the full year 2026 guidance and the proceeding parts. Thank you. Rajeev Sethi: Sure. Thank you, Pa Antony. And as we mentioned, I will talk a bit more about the 2026 outlook. Starting with revenue, we expect revenue growth to be broadly in line with the overall market, which we believe should be recovering from a bad first half of 2025. And as all of us know, there's been a strong recovery in the second half of the year, and we expect that recovery will continue, and we'll want to participate in that market growth. And this will reflect a very disciplined approach that will prioritize value and sustainable return over just volume-driven expansion. EBITDA growth is targeted at approximately 2x the revenue growth, supported by continued cost discipline, operating leverage and the ongoing realization of merger synergies. Capitalized CapEx for 2026 is projected to be around IDR 15 trillion. This may inch up higher depending on our ability to execute all the CapEx projects which we have. If we are able to do that, it may inch towards IDR 20 trillion. And this level of investment is focused on strengthening network quality, completing integration and supporting targeted 5G expansion, while maintaining financial discipline. On synergies, we are targeting a merger synergy of between USD 250 million to USD 300 million in 2026, driven by efficiencies in network operations and vendor procurement. Beyond 2026, we remain firmly on track to achieve our full synergy potential, which as stated earlier of between USD 300 million to USD 400 million annually once the integration is fully completed, which should happen by end of this year. So this was for me, and I conclude my summary hand it back to Chris. Christopher Kusumowidagdo: Thank you Pa Rajeev and Pa Antony for the presentation. Ladies and gentlemen, we will now proceed to the Q&A session. [Operator Instructions] The first question comes from Piyush Choudhary from HSBC. There are 4 questions. Actually just the first one. But the normalized EBITDA growth, which is only 1% Q-on-Q when the revenue is up 4% Q-on-Q. Second question is about the outlook for mobile ARPU and how are the trends in first Q 2026, so far? Question number three, what is the fixed broadband ARPU and in fixed broadband, what is the outlook for both subs and ARPU? And the fourth question, any update on the potential spectrum auction timing and pricing? For the first question, I would like to invite Pa Antony to provide some clarity on that. Antony Susilo: Okay. Thank you Piyush. On the first item regarding the normalized EBITDA, why the growth is only 1%, while the revenue is up by 4%. I think as explained by Pa Rajeev earlier that in Q4, we did a lot of campaign on the 5G, anticipating the 5G launch. So we are already entered 33 cities in Q4 2025. So because of that, then there is an additional cost increase from the sales marketing activities. So I think that will answer the number one. On the second question maybe Pa Oses. David Oses: So the outlook for mobile ARPU in 2026, if you take a look to the last couple of quarters, you can see that our ARPU has increased significantly. Where did the ARPU growth come from? Two areas. One is because our subscribers use more, so more gigabytes per subscriber. And number two, because our yield or price increased. So ARPU increases because people use more and because what they use, it's more expensive. If you have seen our yield in the last 2 quarters have grown double digit. So at almost 10%, right? So we have had a significant increase in the price per gigabyte or the revenue per gigabyte, very, very healthy. I would say that in quarter 1, you can expect more of the same. So our bet for good quality subscribers is there. So I guess that we will see ARPUs moving in the correct direction, up, with prices also moving in the correct direction and traffic coming as well. So I would say that we could expect ARPUs to keep moving in the same direction. Christopher Kusumowidagdo: Yes, David. For the FPD, I would like to invite Pa Feiruz to provide some color on the [ FPD ] Feiruz Ikhwan: Sure, Piyush. Thanks for the question. For ARPU, typically, we've not disclosed in terms of the fixed broadband ARPU. But I guess, let me allow to give you a bit of color in terms of the outlook, right, for the subs and ARPU. I think you have seen the market and industry have seen some moderation in the ARPU. But I think suffice to say that any decline in ARPU that we see are much more moderated compared to the res of the market. I think that clearly reflects also our discipline, right, in pricing and focusing on higher quality acquisitions. I think from the subscribers, there's a lot more demand, right? I think the broadband demand remains structurally strong, right? In Indonesia, we see a huge opportunity for growth, as data consumption increases, in particular, in the home. Having said that, I think we need to be responsible, right, in terms of capturing the growth and targeting the right segments by offering the right products and without, shall I say, destroying right, further value. Antony Susilo: Thank you, Pa Feiruz. Rajeev Sethi: Yes. On the last one, on the spectrum, Piyush, on the timing, we believe this should be completed and awarded by H1 of this year, the first half. Pricing, I would not want to speculate. We just hope that the pricing is rationale, which enables us to offer better services to the customers. Christopher Kusumowidagdo: I'll open the line for Piyush. Piyush Choudhary: Just 2 follow-ups. Firstly, which spectrum band are you using for 5G? And are you deploying or SA or NSA? And secondly, on your kind of subscriber base of 73 million, how much is the 5G device penetration at the moment? Rajeev Sethi: Yes. So currently, we are using NSA and the spectrum which we are using is [ 2,300 ]. And the device penetration, David, would you want to? David Oses: Yes, device penetration in the cities that we are launching in the cities, the 33 cities that we are already up and running. We can say that the device penetration is around 20% in the cities in our own customer base, could be close to that number as well. I would like to underline in any case that even though the device penetration today in those cities, of course, in more rural areas will be lower in the cities that we are launching, it's around 20%. But the most important is that the replacement of the devices, the new devices that are coming are in a bigger percentage, 5G devices. Christopher Kusumowidagdo: Next question from [ Sabrina ] from [ Prime Securitas ]. Three questions. First one, should we expect accelerated depreciation to continue only through first half 2026, in line with the completion of our integration? And it would be helpful if you could provide an indication of the magnitude. Question number two, noted a significant increase in salaries and allowance expenses, could you elaborate on the drivers? Is this related to costs associated with employee optimization? And should we expect this level to persist on normalized post first half of 2026 once integration is completed? Third question is, does your EBITDA guidance incorporates the potential costs related to this year's spectrum offsets? For all the 3 questions, I would like to invite Pa Antony to provide some color on that. Antony Susilo: Okay. So on the first question on the accelerated depreciation. I think we mentioned that our full integration will be completed by 2 years. So I understand that from Pa Rajeev presentation, as we mentioned, the MOCN network already happens like some 70% already. But then in terms of the accelerated depreciation, I think will not be witnessed by first half of 2026, it will still continue until end of 2026. But I believe the Q4 2026 hopefully, will be already showing a lower rate starting Q3, Q4 because the heavy one in the first half in mid, yes, correct, maybe Q3 also correct. But then Q4 will be tapering off to the last one. Yes. That's on the first one. The second one, in terms of the significant increase in salary and low expenses in Q4. Yes, it is mostly in the Q4, there is risk cost interest associated to the employee optimizations. Yes, there is some program that the management leads to the company that -- because we hear from the employees that some of the employees know that they want to make some -- they want the management to make some programs to offer them resignation program. So it is based on mutual scheme program. And then some of the employees took that program. Because of that, then we incur quite a number of operating expenses in terms of personal expenses. So these things only happened in December, this mature scheme program. Next year, I think it will be already -- will be very, very minimal, I would say. That we still see that there is some very things that we can optimize, but it will be minimal. The biggest chunk already happens in 2025 -- December 2025. So I think that's to answer number two. And number three, does your EBITDA guidance incorporate the potential cost spectrum? Today, this EBITDA guidance is before the spectrum auction. Because at this moment, we don't know how much is the spectrum piece that we will be opened by the -- or will be finalized by the government at this moment. So we -- this EBITDA guidance is still outside or exclude the spectrum auction. Christopher Kusumowidagdo: Now please open the line for [ Sabisa ] if you have any follow-up questions. Unknown Analyst: Maybe just one follow-up questions, but just not related to my questions earlier. I just want to know about the ARPU momentum because we track like in January, I think there has been no bonus quotas being offered in January. So are we seeing this trend to continue in February as well as March? Is this part of the pricing strategy to lift up the data yield going forward? Or as we know that the festive season is approaching soon, right? So are you guys planning to increase some bonus quota. And therefore, we should anticipate like there could be some pressure in the value for first Q? David Oses: Actually, no. So as you say, the closer the festive period, the better the moment to monetize. Let me put it this way. So independent of that specific seasonality, I think our strategy is clear, we want high value customers and our strategy is going to be to try to avoid as much as possible this previous or be at least very conscious of the price per kilowatt that we are charging. In that sense, again, you can see that in the last 2 quarters, we can -- we have been able to increase the revenue per gigabyte double-digit, 10%. So I think that shows very clearly that we are very serious on our strategy of repairing the market, number one, and going after the high-quality subscribers. So this is our strategy, and this is how we'll follow. Christopher Kusumowidagdo: Do you have a follow-up question? Unknown Analyst: No further question from me. Christopher Kusumowidagdo: Let's move on to the next question from in Safari from [indiscernible]. Now that XLSMART has exited its position in Mora, how will the company navigate its future focus? And second question, despite the year of a year, a dip in subscriber, will XLSMART continue to pursue its fixed mobile strategy? Or will you be focused primarily on your core mobile telco business. I would like to invite, Mr. Rajeev to provide some color. Rajeev Sethi: I think exiting Morato was decided premerger that the principal shareholders investments in the subsidiary companies will be monetized. It's part of that. But it doesn't fundamentally change our future, especially on the home broadband or SPP, as you call it. The focus on this continues. And as we said earlier, we would want to work with any partner who is in a position to provide us access to home passes. We are working with the biggest FLP providers in the market, fiber lease providers, and we'll continue to expand that part. The other part is whether FPB is an option for us or we'll go back to only mobile telco. I think all of us realize that more and more consumption eventually will happen inside the home. So it is super important for us as a mobile operator also to win the home market also. And that focus will continue. Towards that, we'll have both the strategies, which will be fiber at home and also FWA on 5G. And our 5G investment, as we spoke about, we are very proud about blanket 5G coverage in many cities, and we'll continue to roll that out. And all those cities will be using 5G, FWA to provide a very attractive alternative option for the customers to enjoy a fiber-like WiFi experience at home. So short answer is the focus will continue. In fact, it will be even more stronger as we move forward. Christopher Kusumowidagdo: Thanks, Pa Rajeev. Now I'd like to open the line for Mr. [indiscernible] ask follow-up questions, please, you have. Since no follow-up questions, I think we can move on to the next question. The next question is coming from [ Brian ] from [ UOBKN ]. How much more integration costs should we expect in 2026? Could you provide some color on when this cost will be booked? Also there is regarding accurate depreciation, impartment costs and sell costs, could you provide what page you'll see this group? I would like now to invite Mr. Antony to provide the color. Antony Susilo: Okay. The integration costs for 2026, we expect the amount will be less than what much less than 2025. If you look at the 2025 figure, it's IDR 2.4 trillion. But then I think I believe in the 2026, it would be less than IDR 1 trillion. That's on the integration costs. And then the question regarding the accelerated depreciation, I think on the external depreciation, I already mentioned a little bit, but if you want -- just to give another color on the amount. The amount will be more or less around IDR 5 trillion. So in the 2025, it's around IDR 4 trillion, IDR 4.7 million, I believe, and then going up to around IDr 5 trillion, slightly higher, okay? So I think that's the answer to the question. Christopher Kusumowidagdo: Thank you, Pa Antony. Brian, any follow-up questions? Unknown Analyst: No, thank you. Christopher Kusumowidagdo: We have the question coming from Arthur Pineda from Citi. There are 2 questions. First one is where do you see the market growth levels in 2026? And number two, can you help us identify the depreciation and amortization trend for 2026? What was the annual D&A being moved from the assets that will remove based on accelerated depreciation? There are 3 questions. The third one, where do you see mobile and broadband user base into first Q 2026, do you see this reporting to growth? Or do you still see some churn? I think we can start question 1, on the market growth level. I would like to invite David. David Oses: Well, actually, we don't usually give the guidance on how much the market can increase or not. That's why when we gave the guidance, we see in line with the market, right? And we don't give a specific number. Now if you ask me, I think we have -- I think we have the correct momentum to believe that the market can grow healthily this year unless, again, something strange happens, right? So I think we are in a correct momentum to have a good year. Again, I don't want to say this too much because if you asked me 2 years ago, in February, I will have said the same, and then if you don't have that, right? But again, I am not able to give you a number. That's why when we give the guidance, we say in line with the market. Christopher Kusumowidagdo: Thank you, David. Second question, maybe Pa Antony, can you give more color on the D&A? Antony Susilo: On the D&A for 2026, I think as I mentioned earlier, the D&A consist of accelerated depreciation as well as the additional of the -- because we are keep expanding, and we are expanding around 7,000 around 8,000 sites in 2026. So with that, what we call the actions, the movement. So we are expecting that the D&A for 2026 will increase maybe around 10%, 15% from 2025 figures. Yes, because accelerated depreciation still continue at IDR 5 trillion. And then the normal depreciation, of course, will -- because of the additional of new sites, then we have to start recognizing the depreciation. Christopher Kusumowidagdo: Okay. That's it. -- thank you, Antony. And the third question, where do you see on mobile and broadband users in 2026? I think David already give some color on that. But Pa Feiruz, do you want to take some colors on your broadband? Feiruz Ikhwan: Sure. I think typically, we don't provide guidance for the quarter. What we see is I think the market remains competitive. Having said that, we are very conscious and deliberate in trying to acquire quality subscribers, and that's the focus for value rather than just a short-term volume growth, right? Volume growth. Having said that, we've seen signs of stabilization, but it's still very early days. We still continue to improve and focus on getting the right customers as well as improving the value of our existing base. Christopher Kusumowidagdo: Thank you, Pa Feiruz. Arthur, do you have any follow-up questions for us? Arthur Pineda: Yes, please. Just a clarification with regard to the merger expenses being booked for 2026. You mentioned IDR 1 trillion earlier. Is that just for the OpEx side? And should we expect another IDR 5 trillion for the asset impairments? Is that how we should look at this? Antony Susilo: You're referring to the IDR 1 trillion integration cost here, Arthur. Is that correct? Arthur Pineda: Yes. Because in the earlier question, I think you responded with around IDR 1 trillion integration cost. Is that just for OpEx and should we assume an additional IDR 5 trillion for asset accelerated depreciation. Is that how we should look at it? Antony Susilo: Yes. So in 2026, yes, there will be a onetime cost again, which is integration costs, which is hopefully less than IDR 1 trillion. That one is related to network as well as to people. And then for the second one is the accelerated depreciation, is around IDR 5 trillion, which is noncash items. It's another onetime cost again that we have to incur this year. Christopher Kusumowidagdo: Now let's move on to the next question. Henry Tedja, from PT Mandiri Sekuritas. The first one, can we check about the integration cost outlook for this year, which I believe Pa Antony has already answered earlier. And second person regarding the effort to get the quality subscriber base, can we check better the subspace decline trend will start to stop or slowdown post 4Q 2025? Pa David to provide some color on the [indiscernible]. David Oses: Yes. So the subscriber base -- we usually, internally, we divide the subscribers in subscribers of less than 3 months, that have been with us less than 3 months and subscribers that have been with us more than 3 months. Those that have been with us long tenure, we call them high quality, right, usually a high ARPU, high quality. Most of the subscribers that you see that are disappearing are those that are less than 3 months. Who are those subscribers? Those subscribers are buying again and again, a SIM card, use and throw, use and throw. So probably, we were counting them more than once. So it's not one subscriber, maybe it was counting like 5. That's number one. Number 2 type, it's a very price-sensitive person who is willing to keep changing the SIM card because of a few gigabytes or a few rupia up and down. So again, our strategy was, okay, we are not going to entertain those subscribers. There are other operators where they can go and keep being entertained, but not us. So we will protect our network in order to provide the best customer experience for the good quality subscribers. We did -- we started cleaning back in quarter 3, quarter 4 and in quarter 1, I believe that we will still have some correction of these subscribers of this low-end, low-ARPU subscribers. So yes, in any case, again, our objective is to increase the amount of subscribers of good quality subscribers. That's our main topic rather than the overall or the total amounts that we have. So that's a little bit of strategy. So probably in quarter 1, you will see the total amount declining. But hopefully, internally, we will see the good quality subscribers keep increasing as we have seen in the last few months. Christopher Kusumowidagdo: Thanks, Pa David. Henry, do you have a follow-up question to us? Henry Tedja: Perhaps 2 questions -- 2 additional questions. First one, regarding the employee optimization costs. Would you mind to share the exact amount of the cost for this employee optimization. The second question, perhaps regarding the 5G. I mean like we are discussing about the 5G earlier in the presentation. And then in terms of how big we spend in terms of the marketing expenses and also investment as well for the 5G. So I'm just curious, what will be the factor impact for the SRS in terms of the productivity and ARPU for the subscribers in here? Rajeev Sethi: Yes. I think on the first one, you spoke about the for people cost because of the integration, separation of people. Given the sensitivity, it's people involved, we would not want to get into too much details there. But what we can confirm is most of the cost on account of card has been incurred in 2025. There will be a small marginal cost as we move towards 2026, possibly in the first half, and it will be much smaller than what we've incurred in last year. And I think there are a couple of other questions, which is about the 5G cost, especially on the marketing, communication, sales part. Yes, quarter 4 was higher because we were just launching 5G. And we had saved for that cost during the course of the year because we knew about the impending 5-year launch. On the overall sales and marketing costs, there would be some quarters in quarter in 2026, where we are spending more in some quarters less, depending on the rollout of 5G and the seasonality, as you would appreciate. What I would encourage all of you is to take a look at an average cost for 2026 on sales and marketing, which will be very similar to 2025. Obviously, the focus will shift more and more on 5G, especially in the cities where we are launching 5G. But the overall percentage will remain percentage to revenue will remain the same. In terms of the ARPU increase, I think David can add a bit more color on this. But as we said, we believe 5G should be for everyone, and that's what we are doing. So most of the ARPU increase, we believe, would be consumption-led because people will tend to consume more because of better 5G experience. And there are certain specific plans which we are launching on 5G, which will also help us generate more revenue. But David, in case you want to get into more details. David Oses: No. As Pa Rajeev mentioned, right, so our strategy of monetization is passive monetization in the sense that anyone with a 5G device access the 5G network in that way, their customer experience will be much better and hopefully, the usage. And as a consequence, the ARPU will be higher. That's one, plus we have specific products, very attractive products at higher prices, that will help us increase the ARPU. What we have seen in the very first month, 2 months that we have been already with the 5G specifically that. So we see that the 5G devices in 5G areas, their ARPU is significantly higher than other devices in other areas, be 5G devices in other areas or course for devices in other areas. So again, it's exciting for us to see that. And now it's more about implementing this properly and continue the expansion of the 5G in more areas. Christopher Kusumowidagdo: Let's move on to the next question from Aurellia from BNI. There are 2 questions. The first one on the sales and marketing expense. Given the ongoing 5G expansion, do you expect 2026 outlook to follow the 4Q trend? This one likely -- Unknown Executive: I already answered that. Christopher Kusumowidagdo: And then the second question is on ARPU, I think this one is already answered by Pa Feiruz. I think there is a question from Sachin. Unfortunately, he is not able to type, I would like now to unmute this line, Sachin from UBS. Can you please ask your question? Since Sachin is not responding, we will take your questions off-line after this call. Seems like that it, that's all the questions that we have for today's conference call. Thank you for participating. That concludes today's conference call, and thank you once again for everybody to participate. If you have any further questions, please reach out to investor relations. Stay safe and happy, and we look forward to speaking to you next quarter. Thank you.
Operator: Good morning, ladies and gentlemen. Welcome to Vale's Fourth Quarter 2025 Earnings Call. This conference is being recorded, and the replay will be available on our website at vale.com. The presentation is also available for download in English and Portuguese from our website. [Operator Instructions] We would like to advise that forward-looking statements may be provided in this presentation, including Vale's expectations about future events or results encompassing those matters listed in the respective presentation. We caution you that forward-looking statements are not guarantee of future performance and involve risks and uncertainties. To obtain information on factors that may lead results different from those forecast by Vale, please consult the reports Vale files with the U.S. Securities and Exchange Commission, SEC, the Brazilian Comissão de Valores Mobiliários, CVM, and in particular, the factors discussed under forward-looking statements and Risk Factors in Vale's annual report on Form 20-F. With us today are Mr. Gustavo Pimenta, CEO; Mr. Marcelo Bacci, Executive Vice President of Finance and Investor Relations; Mr.Rogério Nogueira, Executive Vice President, Commercial and Development; Mr. Carlos Medeiros, Executive Vice President of Operations; and Mr. Shaun Usmar, CEO of Vale Base Metals. Now I'll turn the conference over to Mr. Gustavo Pimenta. Sir, you may now begin. Gustavo Duarte Pimenta: Hello, everyone, and welcome to Vale Fourth Quarter 2025 Conference Call. Last year, we delivered outstanding results by exceeding all production guidances while maintaining a strong focus on cost performance and capital discipline, both in iron ore and Base Metals. Our flexible commercial strategy in iron ore and the successful ramp-up of key growth projects such as Capanema, Vargem Grande, Onça Puma furnace 2 and Voisey's Bay expansion were fundamental in driving value for 2025 and will continue to do so in the years to come. At Vale Day, we outlined our strategy and presented our ambition to create superior value for our shareholders, driven by a relentless focus on operational excellence and adding high-quality growth projects to our portfolio, particularly in copper and iron ore, leveraging our unique endowment. I am extremely confident that by executing on this long-term strategy, we will generate significant value for all of our stakeholders. With that, I would like to now turn to the highlights of our 2025 performance. As I mentioned earlier, we were able to make significant progress in 2025. On our core value safety, we achieved a 21% reduction in high potential incidents, reflecting the continued evolution on our safety culture and on our focus on building an accident-free work environment. On tailings dams, in August, we fulfilled the commitment made to society in 2020 by eliminating all dams classified at emergency level 3 by 2025. We also ended the year with a 77% reduction in structures at any emergency level compared to 2020, and we expect it to reach an 86% reduction by the end of 2026. These are meaningful milestones in our commitment to nonrepetition. We also continue to make solid progress on reparations efforts, reaching 81% execution of the Brumadinho agreement and disbursing BRL 73 billion under the Mariana agreement, ensuring fair and comprehensive reparation. Operationally, 2025 was simply an outstanding year. We exceeded production guidances across all businesses while continuing to sharpen our competitiveness, once again delivering meaningful and sustainable cost reductions. I will cover that in more detail in the next slides. In February, we launched the Novo Carajás program, a transformation initiative that will help us double the copper output while enabling accretive growth in the world's highest quality iron ore endowment. Finally, the combination of strong execution in a more favorable cycle allowed us to exceed initial market expectations in terms of shareholder remuneration with a double-digit dividend yield. We entered 2026 with great optimism and the same focus to deliver strong results. Now let's look in more detail at our businesses, starting in the next slide. Iron ore production reached 336 million tons in 2025, 3% higher year-on-year and the highest level since 2018. The growth was primarily driven by the start-up of low capital-intensive projects such as Capanema and Vargem Grande, combined with a very solid performance in Brucutu and S11D. Together, these assets enhance the flexibility of our operations and strengthen our product mix. In the second half of 2026, we will begin commissioning the Serra Sul plus 20 million tons project, which will further increase volumes from our most competitive asset in terms of quality and cost. Enhanced operational flexibility, combined with our active product portfolio management enabled us to maximize value creation in the iron ore business while continuing to meet the evolving needs of our customers. Vale Base Metals also delivered outstanding results in 2025, achieving double-digit production growth in both copper and nickel. In copper, production reached 382,000 tons in 2025, 10% higher year-on-year, supported by record output in Brazil and solid performance across our polymetallic assets in Canada. Nickel production also showed a strong growth of 11% year-on-year, driven by the ramp-up of the Voisey's Bay mine extension project and the commissioning of the second furnace at Onça Puma, reaching 177,000 tons. This strong performance at Vale Base Metals underscores the exceptional work of our team in unlocking value from our existing assets and positioning the company to deliver on its long-term growth ambitions, particularly in copper. In 2025, we delivered cost reductions across all 3 commodities. This year-on-year improvement reflects the success of our efficiency programs and greater operational stability, which continued to translate into lower unit costs. In iron ore, all-in costs reached $54 per ton, representing a $2 per ton year-on-year reduction despite a much lower contribution from pellet premiums. In copper and nickel, all-in costs declined by 77% and 27%, respectively, driven by higher byproduct prices and volumes. Looking ahead, we remain firmly committed to further strengthen our cost competitiveness across the portfolio. We are very confident in our ability to deliver our guidance once again in 2026, reinforcing Vale's position at the very low end of the global industry cost curve. Before passing on to Marcelo, let me briefly touch on capital allocation. Our capital allocation remains robust and disciplined, combining consistent organic growth with above-average shareholder remuneration. The new Carajás program continues to advance as planned. In January, we received the construction license for the Bacaba project and construction works started on schedule. The start-up is expected in the first half of 2028, with an annual copper production capacity of 50,000 tons. We also conduct a thorough review of our CapEx program in 2025. This resulted in an annual optimization of more than $500 million and allowed us to establish a new long-term CapEx guidance below $6 billion. Finally, in November, we announced a $2.8 billion in dividends and interest on capital. In 2025, Vale delivered a dividend yield of 16%, reflecting our confidence in the long-term prospects of our businesses. As I mentioned at the beginning of this presentation, our ambition is clear. We are committed to creating superior value within the sector, and I'm highly confident we will achieve that by consistently executing on our strategy. I will now pass the floor to Marcelo Bacci, who will walk you through our financial performance. I will return afterwards for closing remarks. Marcelo, please. Marcelo Bacci: Thanks, Gustavo, and good morning, everyone. As Gustavo highlighted in his opening remarks, 2025 was an outstanding year for Vale with strong performance and consistent execution across all 3 businesses. We delivered robust results and entered 2026 with great confidence and clear momentum. In the fourth quarter of 2025, our pro forma EBITDA reached $4.8 billion, representing an increase of 17% year-on-year and 10% quarter-on-quarter. As shown on the slide, this strong performance was primarily driven by an excellent quarter at Vale Base Metals, supported by favorable pricing conditions for copper and byproducts, while continuing to capture meaningful operational gains across our polymetallic operations in Canada. As a result, Vale Base Metals EBITDA more than doubled both year-on-year and sequentially, reaching $1.4 billion in the quarter, clearly demonstrating improved operating performance as well as the earnings power of this business. In iron ore, we also delivered strong results with EBITDA remaining at a solid $4 billion with higher sales volumes and improved realized prices compensating for the BRL appreciation in -- the quarter. Now let's turn to our cost performance. During the quarter, our C1 cash cost, excluding third-party purchases, increased by 13% year-on-year. This was primarily driven by the unfavorable BRL exchange rate and higher planned maintenance activities in the northern system with a clear focus on optimizing performance and ensuring long-term asset reliability. In addition, higher production volumes in the Southern and Southeastern systems contributed to higher overall average unit costs. However, this impact was more than offset by the positive contribution to EBITDA, reflecting the strong operating leverage of our portfolio. Importantly, this cost increase in Q4 was expected and fully in line with our 2025 guidance, which closed the year at $21.3 per ton, right at the midpoint of the guidance range. Looking ahead to 2026, we expect C1 cash costs to range between $20 and $21.5 per ton, representing a further year-on-year reduction supported by continued operational discipline and efficiency initiatives. The all-in cost also performed in line with full year guidance, reaching $54.3 per tonne in the fourth quarter and averaging $54.2 per ton in 2025. This annual performance reflects the downward trajectory in our C1 as well as gains from our long-term affreightment strategy. Turning now to Vale Base Metals. Once again, both copper and nickel delivered consistent reductions in all-in costs. In copper, all-in costs decreased by $2,000 per ton, moving into negative territory at minus $0.900 per ton, the lowest level in the history of the business. This outstanding performance was driven by strong byproduct revenues, supported by higher gold prices and increased gold production at Salobo, combined with solid operating performance in our Brazilian assets. In nickel, all-in costs declined 35% year-on-year, reaching $9,000 per ton. This significant improvement was mainly driven by higher byproduct revenues, particularly copper, as well as stronger performance at Voisey's Bay and Onça Puma, which helped dilute fixed costs. Looking ahead, we expect Vale Base Metals to continue delivering operational improvements throughout 2026, further reducing operating costs beyond the positive contribution from byproducts. In nickel, our focus remains firmly on achieving at least a cash breakeven position by the end of the year and we are clearly on track to deliver on this objective. Now let's move on to cash generation. Our recurring free cash flow generation reached approximately $1.7 billion in Q4, more than double versus a year ago. This improvement was driven by our strong EBITDA performance as well as cash inflows from exchange rate swap settlements, reflecting the appreciation of the Brazilian real. Our annual CapEx closed fully in line with the guidance we had announced, totaling $5.5 billion. Looking ahead to 2026, we remain firmly committed to disciplined and efficient capital allocation with expected CapEx in the range of $5.4 billion to $5.7 billion. We are confident that we can deliver all the growth initiatives discussed at Vale Day while keeping our operations at a very high standard with an annual CapEx below $6 billion in the long term, positioning Vale as one of the most accretive growth opportunities in the industry. Also in 2026, we already expect to see a significant reduction in cash outflows related to reparations and then decharacterization commitments as these programs advanced meaningfully over the last year. As a result, we anticipate a reduction of approximately $1.5 billion in cash disbursements compared to 2025. Finally, as Gustavo highlighted, we announced $2.8 billion in dividends and interest on capital. Of this amount, $1 billion were extraordinary dividends paid in January, while the remaining amount is scheduled for payment in March. As you can see on the next slide, our strong cash generation in the quarter led to a significant reduction in expanded net debt, which closed the period at $15.6 billion. Our target range remains unchanged at $10 billion to $20 billion with a clear objective of operating at the midpoint of this range. This level will continue to serve as our reference for additional shareholder remuneration. Before handing back to Gustavo, I would like to emphasize that the strong results we delivered in 2025 were made possible by clearly defined priorities and a company-wide focus on disciplined execution. Our value creation is anchored on a consistent, disciplined approach to capital allocation, which will continue to guide our decision going forward. With this foundation in place, we expect to continue advancing our growth strategy while consistently returning value to our shareholders. With that, I turn the call back to Gustavo for the key takeaways. Gustavo Duarte Pimenta: Thanks, Marcelo. I would like to highlight the key takeaways from today's call. First, safety remains at the center of everything we do, and our performance over the last years reinforces that we are on the right direction. Second, our culture and strategy are strong enablers of our ambition to consistently deliver superior value to our shareholders. Third, operational excellence continues to be a core pillar of our performance. We have delivered on all of our guidances in 2025 and we remain laser-focused on maintaining a solid operational performance in our businesses. At the same time, we are accelerating value-accretive growth opportunities such as the Novo Carajás program, offering a highly competitive and compelling value proposition. And finally, our disciplined approach to capital allocation remains unchanged, supporting our ability to deliver attractive shareholder returns. Before we open up the call for questions, I would like to reaffirm our confidence in the company and in its ability to unlock even greater value in 2026 and beyond. We experienced the strongest operational performance in Vale's history, allowing us to maximize value from our existing assets while positioning the company for accretive growth opportunities. All of that at a special moment for the industry, where mining becomes essential to everything we do from energy transition to AI, and we believe Vale can play a key role in that future. Now let's move on to the Q&A session. Thank you. Operator: [Operator Instructions] Our first question comes from Leonardo Correa from BTG Pactual. Leonardo Correa: So a couple of ones for me. First one, maybe for Shaun on the very solid results coming from DBM, right, Shaun. So we saw a very strong cost performance, and my question relates to that. If we look at the copper all-in numbers, they were negative, right, around $800 per ton. Nickel was $9,000 per ton in the quarter, which I can imagine is highly influenced by the very strong byproduct credits that you guys are realizing in several precious metals and also gold, right? So curious to see, apart from that byproduct credit scenario, which isn't helping, I mean, just curious to hear about some other, let's say, bottom-up initiatives. In terms of the guidance, right, I mean, on this topic, the guidance at Vale Day is about $1,000 to $1,500 in copper all-in costs. In nickel, it's around, let's say, $13,000 all-in cost. So you guys are materially below the guidance that you delivered a couple of weeks ago, right? So I just wanted to understand whether you see, let's say, some upside potential or better, some downside potential on the cost guidance you gave some weeks ago. That's my first question. The second one, and this is for Gustavo. Gustavo, I think the introduction was very clear on how strategic this is all becoming, especially your copper assets, which the market for many years has not really looked into, right? And has not really valued. At this point, the market is still ascribing basically the same multiple for iron ore and copper, we think, right, something around 5x EBITDA inside Vale. You see a series of copper plays in the world trading at around 10x EBITDA or even higher. Vale has a lot of potential. There's a lot of growth in-house, which you guys are working on. I just wanted to hear a bit more of this opportunity and how to unlock this value, right? Is it going to be -- at some point, we're going to discuss again the IPO of VBM? Or you think it's more about delivering being consistent and just giving more, let's say, visibility on these projects? Shaun Usmar: It's good to chat to you again, and thank you for the 2 questions there. I think the questions around cost and ongoing improvements and sustainability. I mean, your thesis is correct. And I think we've talked a lot about this in the last year or so. You remember when I started in this role, we initiated a lot of restructuring, taking out significant -- about 1/3 of our global overhead. As a sort of catalyst as we changed the operating model for the organization to one that was more sort of lean and decentralized. Our targets at the time you'll recall, were about $200 million on a cash basis, almost half split between costs and capital as we improved capital allocation. And as we went through the year, we found more and more opportunity as we then also focused on operating execution. So as you think about this, we ended up over $400 million, so double what we expected. There is an intense focus on -- you've seen we successfully ramped up multiple projects. So we've reduced fixed costs. We've diluted fixed costs by increasing volumes, and we continue to focus on keeping discipline in copper as well as nickel. So you'll see that in our Vale Day guidance. You will see this year as we go forward that there's an increasing focus on getting our tons and also continuing to drive the cost performance of the business. So that's our commitment and we'll continue to update it. And as for guidance numbers, obviously, it's early in the year. I'd say we're well on track. You can appreciate the volatility on everything from gold price to the various byproducts that we have. But yes, it's definitely a feature. And I think if it continues in the sort of price regime, there's obvious upside. Gustavo Duarte Pimenta: So I'll take the second question. Yes, look, I think the market starts to appreciate and see the value that our Base Metals business can bring to the table. If you remember a few years ago, we had a series of discussions around turnaround, and it's great to see the business performing operationally well. That was our first objective when we did the carve-out, and I'm very happy to see the strong performance from the business. Now I think we still have a lot of work to do in terms of showing we can deliver growth. There is enormous growth potential within the endowment that Vale has. So we are doing, as you saw, around 380 kilotons a year. We can certainly work to double it and that's the mandate for the team. And the more Shaun and the team looks into our portfolio of assets and the development projects, the more excited they get in terms of the opportunity. So I think now it's on us to show that we'll be able to advance those projects. We got the installation license for Bacaba. We filed a preliminary license for Alemão last year. So things are moving forward. And I think once we can demonstrate to the market that we can operate the assets well, but also that we can grow faster than our peers, our copper endowment and portfolio, I think we will continue to, from our perspective, get share price recognition for it. So that's what the team is working on. And then if we, at some point in time, decide to do some particular capital market transactions, we will assess, right, what is the ideal way to fund the business. But at this point, I think the focus is making sure we continue to operate well and we accelerate the growth program. Operator: Our next question comes from Daniel Sasson from Itau BBA. Daniel Sasson: My first question is for Rogério. Rogério, you changed the way Vale thinks about its product portfolio, right, shifting from a goal of maximizing value for the company instead of maximizing iron content in the portfolio. But looking at your realized prices in 4Q, there was actually a decline versus 3Q with weaker quality premiums. Can you try to help us think about the dynamics of that in the last quarter and discuss how comfortable you are with the implementation of your current strategy, which also involves the mid-grade products and so on and so forth? And my second question to Shaun, maybe a follow-up to Leo's previous question. It didn't become clear to me if you have -- what are your alternatives to try and reduce, for instance, your cash costs, especially in the nickel business, right, which is where you likely have more opportunities to -- so as not to depend on high byproduct revenues, right, which prices you can't really control. So what would you say are your more urgent operational goals that are not related only to ramping up volumes that would obviously allow you to dilute fixed costs if you could get in more detail on what are your goals to reduce costs? And that obviously, coupled with a more rational capital allocation also in the nickel business would drive you to become free cash flow neutral even if byproduct revenues decline, right? Those would be my questions. Rogério Nogueira: Daniel, Rogério, I'll take the first question, and thank you for asking it. Indeed, our price realization for iron ore fines is slightly decreased, but primarily due to lower market premiums and mix optimization. But it's important to notice that it was not due to structural premium deterioration. This is a very important point here. There were 2 main drivers for this quarter-on-quarter change in price realization. First, the decline in premiums for IOCJ. We had about a decline of about $3.5 per ton. And also, we had a decline in premiums for BRBF of roughly $0.50. The second one was our sort of plan design, I would say, of another mid-grade product from Carajás, and we're trying to do it to optimize production, but also to maximize the use of our resources and test some additional specs in the market and see customer response. But having said that, I think we are always saying and I would like to reinforce that our revised commercial strategy aims primarily at optimizing contribution margin across the supply chain. We've been saying that it's not about optimizing price realization independently. It's looking at the whole supply chain and optimizing contribution margin. I think also I'd like to call the attention to the fact that the premiums of our flagship products, especially the main ones, remained very resilient despite low steelmakers margin globally. So in particular, if you look at IOCJ, it sustained premiums of around $13 per ton and BRBF about $2 per ton if you average all the indexes $62. So very resilient premiums for those products. And I guess more important to your question is that going forward, I think what we see is that this flexibility will be a real strength for Vale will be a real strength for us. So it may introduce some swings in price realization. I think this is something that you probably will observe. But we believe that it also will create optionality through the cycles. And with that, we believe we will be able to boost value through these cycles. So this is the view. It's always looking to total contribution across the supply chain, and that's why we're trying to drive a very flexible supply chain. Shaun Usmar: Yes. And Daniel, to your second question, just to give you a bit more color. I think the first thing is, as you say, we have to develop a track record of execution, not just on costs, but obviously, on volumes and asset integrity, maintenance, reliability and obviously, to do so safely. It's been 5 quarters you've seen the results relative to both market expectation. But I'll give you an example. Your question was specific to nickel. It's the first time, I think, since Vale acquired the business nearly 20 years ago that we actually -- we met budget. We obviously set stretched budgets. We are running this business not on backward-looking metrics, but we're continuing to build in low probability opportunities we see as we mature them into our rolling forecast and continuing to improve above and beyond what we can see. So specifically, Onça Puma last year brought on, on time, under budget, 13%. We achieved record production even last year for that asset with that second furnace. This year, we will be running at full entitlement and will, even in a lower cost environment, be generating cash. And [indiscernible] and her team have done a great job of both cost control, asset reliability and bringing that on. And we -- I have to say every single one of our assets contributed savings in that restructuring I mentioned, both in cost and CapEx. And to Gustavo's point earlier in his opening remarks, continue to find these opportunities, and that's what we're pushing. Voisey's Bay Long Harbour, we ramped up about 20% ahead of plan. That meant we had nearly a $200 million improvement in our EBITDA relative to our internal plans, not because of price. As you know, nickel price was weak, but because of the successful execution debottlenecking. And what happened in turn is the feed that we put through Long Harbour allowed us for the first time in its 11-year history to hit record production. Now with that asset now fully ramped up at Voisey's the challenges for us to continue to run that at capacity in the year ahead, which will -- while we continue to lower cost and dilute fixed costs. Sudbury, you remember, we were looking to maximize the throughput of our 6 mines through the Clarabelle Mill. It's the biggest throughput at 5 million tons we've had since 2016. We have to go, and we will go beyond towards 7 million in the coming years. And there's an intense focus. We've got broke out of where the dominant constraints are, what are the key value drivers in each of these different areas. There's initiatives that are going above and beyond, we'll perhaps talk about in an Investor Day later this year alongside our copper projects and others and just give you a bit more of a flavor. So the idea is beyond our current plans, we recognize that we have to be in the lower half of the cost curve, not relying on byproduct credits, and we're not there yet. And you'll recall Gustavo at Vale Day last year saying that we have made a commitment to get to cash flow breakeven in lower price environments by the end of this year, and there's a lot of initiatives to focus on us doing that. So hopefully, that gives you a bit of a focus, but I'd say things like that asset integrity, asset reliability and development rates in underground mines and improving productivities are a core focus. Operator: Our next question comes from Alex Hacking from Citi. Alexander Hacking: I had a couple of questions on nickel. Given your experience operating in Indonesia, how do you interpret the changes to the licenses there, firstly? And then secondly, do you see this as something that could be a structural change for the nickel market in terms of supply and price? Shaun Usmar: Alex, I think it's a question that everyone is asking. You've seen the price response in the last periods. We've seen very clear guidance and I think a realization with the Indonesian government that they have an ability here to address some of the significant oversupply. And there's also environmental and other aspects, I think they're focusing on. So I'd say going to the thematic that was, I think, raised in the last couple of questions, we're cautiously optimistic, but we recognize we're on the wrong end of the cost curve still on our journey. And candidly, from a competitive point of view, I don't want to rely on the kindness of strangers to make sure that this business is resilient. So I'm cautiously optimistic. You will see that you saw the write-downs that we took on nickel really is a focus on our disciplined capital allocation. This is focused on legacy I want to make sure that this business is run as lean and as efficient and as cost competitive as we can. And then indeed, if we continue to find, let's say, more rational participation and supply occurring in Indonesia and elsewhere, we'll be -- our shareholders will be the net beneficiaries of that. The focus is on what we can control. Operator: Our next question comes from Caio Ribeiro from Bank of America. Caio Ribeiro: So my first question is on Fabrica and Viga. I just wanted to see if you could provide some color on the latest developments with these operations, if you have yet a conclusion on what caused the sentiment overflow and whether you see this generating any broader impacts to your other operations? In other words, if you see the need to upgrade safety parameters to prevent this type of event at other operations? And also, what is the current status quo in terms of freezing of assets or fines deriving from this incident? And then secondly, clearly, the company has been making notable progress with derisking with the decharacterization of dams, reduction of emergency levels of dams as well. And this has been key to unlock restricted AUM, right? So I just wanted to see if you could share some color on how much AUM you perceive is still restricted from investing in Vale at this point? And what you see as the key triggers catalysts that you as a company can deliver over the next years to unlock this restricted AUM? Gustavo Duarte Pimenta: Caio, thanks for the question, Gustavo here. I'll cover the first one and then Marcelo will cover the second one. So on Fabrica, Viga, what we had there was overflow of water with sediments, mostly related with very heavy rainfalls that we faced during that particular period. We've been since then working to restore the operational conditions of the site. The impact has been limited. So we expect that in the next 2 to 3 weeks, most of the work will be done and we'll be ready to reestablish operations, certainly depending on the authorities for us to resume operations. We are taking a deeper look at our facilities to see what else can we do to make sure we become even more resilient given the changes that we are all facing in terms of climate change and so on. And we will incorporate those learnings for our existing facilities and others. I think it is important to highlight that none of our dams and geotechnical structures have faced any impact. And they -- in fact, they performed very well during this rainy season. We do monitor them 24/7 and the work that we've been doing over the years have demonstrated that they continue to be resilient and performing very well. Nonetheless, we will look back at what else can we do to make sure a similar event doesn't happen, and that's what the team is working on. But from a practical standpoint, the impact has been limited, and we are working as we speak to make sure we can put those facilities in conditions to resume operations. Marcelo Bacci: Caio, this is Marcelo speaking. About your second question, our estimate is that right after the accidents, we had about $5 trillion of assets under management between equity and fixed income that became restricted from investing in Vale. And since then and more recently, I would say, most of the recovery that we had was last year, apparently something like 30% of that or $1.5 trillion have been unlocked or unblocked from this restriction. I think the main events related to that is the improvement -- first, the improvement in the ESG ratings that some of these investors follow, and we've been consistently improving. But some of them also have their own criteria. So in parallel to working on delivering the KPIs that are important for the ESG ratings, we're also working directly with some of these investors in order to understand what we still have to do to come back to their portfolios. For instance, next month of May, we're going to have another roadshow in Scandinavia, which is an important part of those -- where those restrictions are to show our improvements and to have a direct interaction with those investors. So this is gradually coming. It's up to us to continue to deliver the results so that we can accelerate the process. Operator: Our next question comes from Christopher LaFemina from Jefferies. Christopher LaFemina: I apologize if you addressed this earlier, I had to dial in late. So my question is around the commercial strategy in iron ore. And I'm wondering a couple of different factors there. So first, obviously, with the emergence of CMRG, which is doing a lot of blending, does that impact the potential premiums that you might get on some of your blended ores because your blending strategy has been far ahead of your peers, and I'm wondering how what, CMRG is doing might impact that? And secondly, just in terms of your pricing, I mean, pricing against the benchmark historically, effectively against the Pilbara blend, which was 62% Fe content ore and now that's 61%. And I'm wondering if your discussions with your customers are in pricing relative to the benchmark, like where it is today versus where it's been historically? Or are you looking at bigger premiums just because the benchmark is lower quality? In other words, the Chinese that I would say historically you've gotten a 5% premium to the benchmark or whatever is 5% premium today, but the benchmark is lower quality ore, your premium should be bigger. Are you getting bigger premiums as a result of that? I'm not sure if that question was clear, but if it was, any help would be appreciated. Rogério Nogueira: Chris, Rogério, it was very clear. To your first point about CMRG and the blending strategy, more broadly, I think we've been discussing with CMRG always with the view of creating win-win opportunities. So it has to be something for us to operate on a differential basis that we create value for both of us. In regards to the blending strategy, CMRG has its own goals of having its own blending yards, but it hasn't, and we don't believe it will affect our blending strategy in China. And in particular, even if they have their own blending yards, I think you may think about the world as a single big blast furnace. So whatever comes in makes is what makes a difference, and it's not how it is blended. So the strategic thinking is about what kind of product, what kind of chemistry, what kind of size distribution we offer to this sort of big world blast furnace, okay, if you will. Your second question about the benchmark. It's -- what we do generally in our contracts is that we have a basket of indexes. So some of them will use Platt 62, some of them will use metal bulletin 62, metal bulletin 62 low alumina. So to a certain extent, some clients are actually looking to move from the 62 to 61, which will become a more liquid index in the market, and it's a reality. But it doesn't affect our price realization, if you will. I think if anything, it will change the price differential. Operator: Our next question comes from Marcio Farid from Goldman Sachs. Marcio Farid Filho: Maybe a follow-up to Rogério. Rogério, probably an important point there, what's happening in the market in terms of overall grade decline. And you mentioned that the 61% benchmark does not change our price realization. But I'm just wondering how does it change Vale's overall resources and ability -- I mean, if you think about cutoff grade being cut, you probably talk about potentially increasing life of mine, reducing replacement CapEx, to some extent, reducing OpEx as well. And that seems to be where the liquidity and where the demand for China is going to come from, right? So just trying to understand how does this kind of degrading trend we are seeing globally affects Vale's resources on the ground. That would be great. And if you can follow up in terms of CMRG discussions. So obviously hearing a lot about what's happening between CMRG and BHP at least on the news. But just wondering if that kind of hard conversation is -- it can eventually contaminate Vale as well. It's been very specific to this one case. And maybe an update on the Base Metals side. I think there was an expectation that some technical reports can pop up in early 2026. Just trying to understand how VBM is performing in terms of exploration program so we can better track the projects? Rogério Nogueira: Marcio, thanks for the question. On the -- good that you follow up on the price realization on 61. Indeed, I think to your point, when everybody is moving down to a lower grade to a 61 index, alumina, in most cases, the ratio of alumina silica might increase. And if anything, that actually offers us an opportunity to improve our product mix to better suit to this new reality. So it tends to be favorable to us. To your second question about how do we use this mix optimization and you're spot on because the idea here is one to increase our resource base or to better use our resource base. If we keep the cutoff grades too high, sometimes what we end up being waste is really good iron ore. So the idea here was really think about an integrated portfolio, one that actually looks into the market and also look into our resources and capabilities. And obviously, as we reduce the cutoff grades, as you just pointed out, it actually increases the ability for us not only to improve the resource base but to reduce CapEx, reduce OpEx, increase production. So this is an integrated view together with [indiscernible] and we're working very close together to optimize the supply chain in this regard. CMRG, I think to your third question, this is hard for us to comment on third-party negotiations. But I mean, from what we know, BHP's conversations with CMRG are still ongoing. They will have second rounds or another rounds of negotiations with other -- more intense negotiations actually with other suppliers, iron ore suppliers, including ourselves. But we'll see it in due time. Shaun Usmar: Yes. And Marcio, on your questions on the technical exploration side and those reports, you recall Vale Day, there's a huge amount of work that's been done to take a different approach with our restructuring on projects in a fundamental way. We talk about what that looks like at a high level. The technical studies, SK 1300 level standard studies, a couple of hundred page reports are in final draft form right now, which we're reviewing. And the idea would be for us, certainly before the end of the quarter to be publishing those on the VBM website to make those available. So we just went through and discussed some of this with our Board today, and we'll be finalizing that work and looking to make that available to investors and analysts. And also the MRMR and the exploration results, the extensions and the results that we're seeing, which we're very excited about will be unveiled, and we will be able to talk more about that at an upcoming Investor Day. So stay tuned. And the last thing to reemphasize, you remember, we -- last year, particularly in copper and the Carajás, the exploration potential is huge. We do about $170 million a year of exploration globally, and we reprioritized. We went from about 8 to 23 drills in Pará. And indeed, from 20,000, 30,000 meters to 600 last year, we're on track for the 100,000 this year. And we'll be looking to update the market more regularly on some of those results because I think they're very exciting. I think it's a lot of what Gustavo had referred to in terms of the upside and the growth potential that we're focusing on simultaneously. Operator: [Operator Instructions] Our next question comes from Rodolfo Angele from JPMorgan. Rodolfo De Angele: Interesting to see conference call Vale more biased towards Base Metals this time around. But I have a question on each of the 2 sides of the business, and I want to start with iron ore. And this is probably for you, Rogério. I think one question we got a lot from investors into this year is about the strength of iron ore pricing. I guess investors were more on the bear side. There is capacity coming in. Simandou is a reality already. But -- and we look at a few statistics, China importing record levels of iron ore despite the fact that data suggests that peak steel consumption or production is already behind us. So I don't know, I would like to hear from you what is your assessment? What is the state of affairs? What do you expect for 2026 in terms of iron ore business environment and whatever you can talk about prices. So this is my first question. My second is I'm going to get back to Base Metals. I'm not sure if I understood correctly, but there is some additional information to come up on the development plans soon. But I think investors are not yet pricing in the growth that Vale can deliver on iron ore. And ultimately, once we have a more detailed plan. Today, I think it's a very real ambition. But if we get like this is the -- how we're going to get there. It's 50 from this project with this CapEx intensity. So I think that will be a trigger to see everyone kind of starting to put more numbers and pricing that growth in Vale's copper growth story. So is it reasonable to expect that in the short term? And if not, if you could comment a little bit, at least on what should we expect in terms of CapEx intensity, at least on a relative basis compared to industry, if you cannot share numbers, just to give us an idea as well of potential returns. Rogério Nogueira: Rodolfo, Rogério here. I know that China is not easy to understand these days, but we see indication of good fundamentals, I mean, for both steel and also iron ore. And we do see that globally. China, as you know, infrastructure and manufacturing continue to provide positive support to steel demand despite the challenges that we see and we know in the property sector. I think also, as we have seen, direct and indirect steel exports that we believe are likely to remain at very high levels. This is at least our view. So based on this, I mean, what we anticipate is that crude steel production for 2026 will be at the same level as last year in China. And outside China, we see market fundamentals are very positive or positive, I should say, across most regions. Some recovery we see more broadly in most of the world regions. In terms of iron ore supply and demand, we expect it to remain balanced at about 1.650 billion tons. That's our view. And we -- as you pointed out, we expect China's iron ore imports to remain broadly stable. This is our view. One point that everybody is noticing is the inventories, the high level of inventories at Chinese ports, which are roughly at 170 million tons currently, closed the year at 160 million. We believe that when you look at this on an aggregated basis, consolidated basis with steel mill inventories, you'll see that there is an offset. Steel mill inventories have increased about 20 million tons. So overall, when we look at it on a consolidated basis, iron ore inventory remains about 35 days of consumption, which is if you look back, it's within the typical range for this time of the year. So when we put this all together, we see that steel and iron ore fundamentals, and they point to a healthy price level for 2026 despite the usual volatility that we see. So when we say similar to last year, we're acknowledging that there may be volatility throughout the year, okay? Specifically on Simandou, we -- as you asked, we believe Simandou will come to the market gradually. And as we have been talking and we emphasized during the Vale Day, the Simandou additional volumes will be offset by depletion in the industry. Shaun Usmar: Yes. Thanks. And then specifically to your question, look, firstly, I came to this job excited actually about exactly what you just said that I think I can't think of, I'd say, a better underrecognized copper growth profile and what we are seeing in this business. And I think there was the very idea that brought Gustavo and the team to sort of carve out VBM. I'd direct you to a few quick things. The first is, and I think you see it in these results, we have to deliver in the immediate term. So there's quarterly delivery that we've been focusing on and you see that in a number of occasions exceeding guidance. That's the earning at least some recognition of what is possible operationally. And then if you go back to the Valid Day material on the website, there was a huge focus on this. We actually overlaid on the slide as we restructured our approach to projects, particularly the copper growth side, we took projects where we've dramatically lower capital intensity. So for example, Bacaba, we just got the LI. We're well on track now in execution, which will bring online in the first half of 2028. That is nearly half the capital it was a year ago. The return has gone from mid-teens to over 50%. And it's more of a brownfields project in terms of risk. As you can appreciate, it's extremely attractive from a capital intensity point of view. Of course, particle flotation at Salobo, next one, nearly 30,000 tons of additional copper. That's the 2029 time frame. We're well advanced on that. We're looking at actually doing some early works now and that's nearly half the capital intensity, and you're talking over 50% rate of return, brownfield site project. Alemão is the next one. It's a brownfield site. We've changed the mining method from sublevel cave to sublevel stoping. The returns have gone from mid-teens to mid-20s plus. And that will be the -- we just November last year, submitted the first license for that. So we've got this mapped out. We've accelerated. We've changed the sequence. It compares extremely favorably. You'll see it on our website, the capital intensities. And to your point, the technical studies, the execution, and I don't think at this point, the IR team has released a date. But in the near term, we'd be looking to have an Investor Day to go through more of the detail with the team on the projects, the details, the operational improvements and the things that have been discussed on this call in terms of cost improvements in both nickel and copper. And the other one is exploration because I think it's extremely exciting and it's underappreciated. Operator: Our next question comes from Carlos De Alba from Morgan Stanley. Carlos de Alba: I want to go back now to capital allocation. Given the share price strong rally and where you are in the expanded net debt range, what is the view on returning excess cash to shareholders potentially more buybacks, more special dividends? How is the company thinking about it? Marcelo Bacci: Carlos, Marcelo speaking here. I think the current market conditions are favorable for cash flow generation. So in case we start to go in the direction of lower than the midpoint of our range in terms of expanded net debt, there is a chance that we have additional returns to shareholders. Last year, we favored the dividends because of the change that came on the taxation that was effective in the beginning of this year. For future allocations, we will see what is the situation at the moment. We tend to be more balanced, but it will depend on the relative valuation. But definitely, we will consider both dividends and buybacks. Operator: Our next question comes from Rafael Barcellos from Bradesco BBI. Rafael Barcellos: Congratulations for the results. Rogério, how do you -- how should we think about your mid-grade volume strategy this year? I mean, especially considering the increase in this type of product coming from Carajás. And what are you seeing in the freight market, I mean, which appears seasonally stronger this year. I mean forward curves are pointing higher. So I'm interested to understand. I understand that Vale is protected against the short-term volatility, but what could be the potential impact of the freight dynamics on the company and in the overall cost curve? And my second question regarding M&A initiatives. Gustavo, we've continued to see a very active M&A news flow across the sector. So how should we think about Vale's positioning in this environment? And most recently, I mean, we saw discussions involving Rio Tinto and Glencore. So if something were to materialize there, how could that affect Vale's partnership with Glencore in the Victor operation in Canada? And more broadly, how should we think about future partnerships in Canada? Rogério Nogueira: Rafael, thanks for the question. In terms of your question on mid-grade products from Carajás and the volume. I think as we mentioned, we are increasing recently, and we're expecting from 40 million to 50 million tons this year. But it is based on the market assumption of what the market wants is looking at what the market dynamics is currently. But again, the volume, the final volume will depend on the market. What we're trying to do, as we said in the beginning, is adjust our product offering according to the market. So if the market values more higher quality products, which actually yield higher productivity to the steel mills, we may shift our product portfolio. But again, it's all about maximizing total contribution, not necessarily volume, not necessarily price realization. On the freight market, the freight market, as you pointed out, is really going up for the future. But we have actually -- and I won't be able to give too much detail. We have revised our freight strategy this year with very positive results. And what I can tell you is that our exposure to the freight spot market today is very low. So the impact on us would be very limited. And I think on the positive side, it would increase our competitive position against other players. Gustavo Duarte Pimenta: Rafael, Gustavo here on your M&A question. Look, we continue to believe that we'll be able to capture more value by developing our unique endowment. This is a sort of competitive advantage for Vale vis-a-vis our peers. We have a tremendous endowment with the ability to bring projects online at below average cost of capital and capital intensity, as Shaun pointed out with some examples there. That applies also for iron ore. So we think from a value creation standpoint long term, developing our own endowment makes more sense, and that's where we're going to get more value. We are looking at alternatives and potential transactions all the time. But we have to appreciate we still trade at a discount to peers of about 20%. So for us, from a value accretion standpoint, it is certainly better to develop the endowment that we have. Now if we look at our story and the reason why I'm so optimistic about it is if we are able to deliver growth at very competitive capital intensity below market, but at the same time, return strong cash remuneration to shareholders. So I think this is highly unique within the sector these days. So we'll continue to be focused on that. If tomorrow, as we pointed out long term, if we are doing 360 million tons in iron ore, C1 below $20, all-in below $50 per ton, and we are doing 700 kilotons in copper. This is certainly a very valuable portfolio of assets, and that's what this team is going to pursue. Operator: This concludes today's presentation. You may now disconnect, and have a nice day.
Leonardo Karam: Good afternoon. Welcome to Usiminas conference call in which we will discuss the results for the fourth quarter and full 2025. I'm Leonardo Karam, IR Director at Usiminas. [Operator Instructions] This conference call is being recorded and simultaneously broadcast on the Usiminas YouTube channel. Please note that this conference call is intended exclusively for investors and market analysts. We kindly ask you to identify yourself so that your question can be addressed. We also request that any questions from journalists be directed to Usiminas Media Relations at the email, imprensa@usiminas.com. Before proceeding, we would like to clarify that any statements made during this conference call regarding the company's business outlook as well as projections and operational and financial targets regarding its growth potential are forward-looking statements based on the management's expectations regarding the future of Usiminas. These expectations are highly dependent on the performance of the steel industry, the economic situation of the country and the conditions of international markets and therefore, subject to change. Joining us are CEO, Marcelo Chara; the VP of Finance and IR, Diego Garcia; and Commercial Vice President, Miguel Homes. Initially, Marcelo will make some opening remarks, then Diego will present the results. After that, the questions submitted through the Q&A session will be answered. I will now turn the floor over to Marcelo. Marcelo, you have the floor. Marcelo Chara: Well, thank you, Leonardo. Ladies and gentlemen, a very good afternoon to all of you. It's a pleasure to be here with you to share the results of Q4 and the full year of 2025. 2025 was a challenging year for Usiminas and for all the steel Brazilian industry. And once again, the opportunity of growth and generating income and jobs was compromised due to unfair import of steel and these were manufactured products. In 2025, we reached an adjusted consolidated EBITDA of BRL 2 billion with a growth of 24% vis-a-vis 2024 and a margin of 8%. One of the main drivers to improve the result was the cost drop of the steel units totaling minus 5% of cost to sale per ton. This was more than offset the lower net revenue per ton that was 4%. In Minera��o, the highlights were a record volume of sales of iron ore totaling 9.6 million tons, a high of 14% vis-a-vis 2024 and quality discounts that allowed us to attain better results the first quarter of [ 2023 ]. In the steel unit, the company projects stable steel unit sales. And in the domestic market, connected to seasonality, we expect a recovery of net revenue per ton, driven mainly by a sales mix that is more noble and higher prices. On the other side, the cost per ton will increase, reflecting the most favorable mix. And with this, we project EBITDA margins above the last quarter. Now in the mining unit, the expectation is of lower sales volumes due to the seasonality of the rainy season and prioritizing better -- areas of better profit. The prospect of the economic scenario is moderate for 2026, sustained by a gradual growth of 1.8% of the GDP presented in the focus report. Within this context, the expectation of the steel Brazil industry is increased, but this growth will be totally absorbed by the expected growth of imports of 4%. If this is not -- if we don't have effective measures of commercial defense against unloyal competition, the import volumes in the steel chain have been investigated and confer the urgency to be implemented fast. The government has reacted as we can see in the recent antidumping rights and to elevate the tariffs by 9%. Now we manifest our recognition by the serious technical work by the Ministry of Industry and Commerce in the analysis of the commercial lawsuits. This is important to foster more competitive value, Usiminas is prepared to capture the opportunities of this new context, meeting the ever-growing demand of its customers. At the same time, as we maintain attention to the market in order to curtail the possibilities of not following this that are result of an over surplus of Chinese steel in the international markets, and this impacts the national industry. Our internal agenda for 2026 will be focused on reducing costs, efficiency in our industrial operations and strong financial discipline and strong environmental discipline. It will be important to ramp up our priority CapEx like the PCI plant, the Coke batteries repair and the new Gasometer. These projects will reassure the sustainable growth and the competitiveness of Usiminas at the long run. We would also like to thank all of our employees for their effort, their engagement as well as our suppliers, clients, shareholders and the community for the trust and for the sound relationship that we built throughout the year. And we are confident that 2026 will be a very good year. Thank you very much. Diego, you may proceed. Diego Garcia: Good afternoon to everyone. These are the highlights of the year. Our steel sales throughout the year was 4.4 million tons. It was the second greatest in the past 10 years, the growth of export and the volumes in the domestic market will remain stable. The Mining Unit presented production [ in ] a record sales. The adjusted EBITDA was BRL 2 billion, a strong growth of 46% in mining and 16% in steel unit. The free cash flow of BRL 1 billion reflect the EBITDA generation, working capital in BRL 838 million, partially offset by the CapEx of BRL 1.2 billion. The year ends with a net cash of BRL 444 million, the result of the flow of free cash flow and depreciation of the BRL vis-a-vis the [ doctor ]. Now we had BRL 1.4 billion in net debt. Now our next slide. Now the net revenue was BRL 6.2 billion, a growth of 6.5% vis-a-vis the past quarter, mainly because of the reduction in the steel unit we registered the lowest price per ton. Now this effect was partially offset by 4% increase in the mining unit and by higher prices, although there was a slight drop, this wasn't affected. The EBITDA was slightly before the past quarter. Now we had BRL 2.9 billion that was affected by the impairment of the past quarter. Now the fourth quarter ended with a profit of BRL 129 million. Now let's go to the next slide. In the steel unit, the annual volume and sales was robust and there was a growth in export. The sales volume with a quarterly basis dropped 2%. It was 3.3% in terms of drop in the domestic market, but aligned with Q4, showing us the seasonality, the net revenue reflects the drop in the net revenue per ton because of the import. We have a less favorable mix during Q4. EBITDA improved with the improvement of cost, although we were in an environment of unfavorable price, the deterioration of the net revenue per ton impacted the EBITDA by 26% when we compare it to the past quarter. The adjusted EBITDA was negatively impacted by a less favorable sales mix with products of lower margin. The gain of the CPV of steel maybe due to lower prices of raw material, partially offset this impact. In addition, during Q3, there was an extraordinary sales of fixed assets that wasn't repeated during the fourth quarter. In mining, last year, we ended with a record sales volume and production. As a result, the annual net revenue increased 27%. Although there were lower price, the net revenue per ton reflects lower discounts due to penalty and exchange rate due to the average exchange rate throughout the year, higher by 3% and the plates references dropped $7 per ton analyzing the profitability of the business. The EBITDA per ton dollar increased 2%, although there was negative pressure. Throughout the quarter, the sales volume presented a slight drop of 2%. Despite this, the total net revenue increased 4%. This reflected better prices in the quarter. And here, we had $4 in terms of the price of reference. When we see the revenue, EBITDA dollar increased $4 per ton aligned with the reference prices. Now our financial indicators. The operational -- net operational cash flow was BRL 1.1 billion of an EBITDA of BRL [ 470 ] million, a reduction of working capital of BRL 576 million. The working capital variation was because of a drop in accounts receivable and an increased accounts payable, BRL 192 million. The CapEx was BRL 372 million, and we reached BRL 1.2 billion in the line, aligned with the guidance between BRL 1.2 billion and BRL 1.4 billion. This way, the free cash flow of the quarter was BRL 744 million. Throughout the year, the free cash flow was BRL 989 million, mainly reflecting the EBITDA generation and working capital that we mentioned beforehand it was partially offset by the CapEx of BRL 1.2 billion. Now throughout the quarter, we went from a net debt of BRL 327 million to a free cash of BRL 444 million, reflecting the free cash flow of BRL 744 million that we already mentioned. The gross debt increased around BRL 6 million due to the appreciation of the dollar. Now throughout the year, there was a significant drop of BRL 1.4 billion in our net debt. This was due to the strong cash generation ending with 0.22x negative leverage. Usiminas ends the year with a sound debt profile with no extraordinary maturities until 2028. Leo? Leonardo Karam: Thank you, Diego. Now we go to the Q&A session. Marcelo, first question from Gabriel Barra from Citi and Marcio Farid from Goldman Sachs. They want to know about Compactos and Mining. Gabriel says with the changes in the share for MUSA and he wants to know if there is an update of the project Friable for MUSA. Marcelo Chara: And let's say there have been no changes. Yes, we do have a robust plan in the short, mid- and long-run strategy, and we continue making progress with our licensing program of Compactos. This year, we will have news, and we will see possible instrumentations. And regarding the Friables project, we are constantly reviewing our exploration strategy as well as mines or mining operations, and we created important efficiencies and synergies. And we do -- we believe that the prospects for the short and mid-run will be -- to be continuous in terms of friable material. Leonardo Karam: Thank you, Marcelo. Well, questions about antidumping. So what are we going to do? There are a number of questions regarding antidumping. I'm going to try to divide them in [indiscernible], the efficiency. Gabriel Barra from Citi, [ Guilherme B ] from XP with the approval of the antidumping, what should we expect for hot rolling mills that will be approved by the end of the year? And Guilherme basically asked the same thing. Will we have a definition regarding this request? Miguel Angel Camejo: As Marcelo stated, this definition was published yesterday for measures for hot rolling mills and galvanized. As we have reported antidumping actions from China. And finally, the soundness of these cases were confirmed by the definite measures that were published yesterday. We expect the same type of scenario with hot rolling mill and the hot rolling mill according to the preliminary publication. Now the time line would be July this year for a definite measure. We would also like to remind you that this is -- the deadline would be in December. Due to the importance of the measures and the high impact that these imports have in the steel industry in the Brazilian market, we feel reassured that this will be resolved by the middle of this year. Leonardo Karam: Thank you, Miguel. Our next question from [indiscernible]. Marcelo, in your view, dumpings are valued as of when? And Marcelo, [ Arazi ] wants you to give us details regarding the tariffs that were applied yesterday, what kind of consequences can we expect from here on? Marcelo Chara: Now the measure is valid as of the publication and the measure for cold rolling mill is -- now for the coils would be as of the day of the publication and also we expect it to be next week. The impact will be positive for the industry and the market. When we see the imports from China, these 2 products, they exceed 1.5 million tons during the past 12 months. And in this sense, we would have greater possibilities to sell to the local industry, and Usiminas will be prepared to cater part of this market. Leonardo Karam: Now any concern regarding ways of not complying with this measure. Well, we want to know how to evaluate the risk of triangulation of import volume because the measures were geared towards China. How do you see the effectiveness of this antidumping for galvanized products and cold rolling mill. Marcelo, can we see volume be redirected by Vietnam, how to see this triangulation risk? And he wants to know if these measures are sufficient to see sound margins in the sector once again. What do we need in order to have a profitable industry structurally? Miguel Angel Camejo: Well, the first step -- well, there -- what was published yesterday is important to correct the distortions created by this unfair competition. There are risk because we still have a structural proper because there are surplus in global steel because of the Chinese production. Production last year in China was above 130 million tons. So this created negative impacts in different markets. And obviously, as we presented here in Brazil, we were one of the markets that was most impacted by these imports. Now we have to continue observing. We're working together with government agencies because we don't want the risks to impact us during the upcoming months. When you analyze the antidumping measures for cold rolling mill at the worldwide level, you can apply today for -- there are 40 cases. Out of the 40, 12 are against China and the second, third country, with the greatest amount of cases is Vietnam and Korea. There is a risk. We have to continue monitoring. We are working together with the agency in order to avoid these future risks, and we trust that the government as of yesterday's definition can see the critical situation of the industry and the worldwide steel industry. Leonardo Karam: Thank you, Miguel. Yes, there are more add-ons here. Marcio Farid from Goldman Sachs, Gabriel Barra from Citi, Caio Ribeiro from Bank of America, Marcelo [indiscernible], BTG, [indiscernible] from JPMorgan and Ricardo Monegaglia Safra, everybody wants to know about the next steps. What is the main strategy after tariffs and antidumping? Is it volume or prices? Which effects can we expect throughout 2026 due to these measures? And if Usiminas will be more proactive in price transferring this year. I want to see if there is a different add-on here. And Ricardo wants to know with the combination of increase of 25 [indiscernible] antidumping, how can they affect the discussions in price? If there is an impact in the number of orders when you see these changes. Miguel, you have the floor. Miguel Angel Camejo: Many questions. Let's see if I can answer all of these questions here in my answer. By the -- let's start with the market. We expect a market in 2026 with the growth of consumption of flat steel of around 1%, highly aligned with the expectation of the GDP growth. If we see a similar market, '25, '26, we analyze the total volume of imports of flat steel in 2025 was around 4 million tons and around 60%, 65% comes from China. Therefore, we could conclude that we do have important space to resume our participation in domestic market in the consumption of flat steels in Brazil. Now within this scenario, we would have greater market share, potential increase in internal sales and better mix of product sales when we compare it to export. Now when we see the price, for instance, we see a strong pressure in terms of revenue because of the high imports and unfair competition, which affected our prices and profit. We have to become profit again to face the needs of technology and the face of investments that we have in CapEx plan. We can resume our profit if we have better prices and margins during the upcoming months. Leonardo Karam: Now Daniel Sensel-Schechner from JPMorgan and Ricardo Monegaglia from Safra. We know the great part of the volume of galvanized products goes to the automobile industry that is not exposed to export. Will you change your negotiations with the automobile industry in April? Do you believe that the contracts that will be signed in the upcoming months will be readjusted? Will they be affected by these antidumping measures? Miguel Angel Camejo: I would like to clarify around 60 of coated products are for the automobile industry. As you know, they follow yearly contracts. Part of these contracts are renewed in January. The other part are renewed in April. The contracts that were renewed in January have a cost reduction of 2%, 3%. And we already explained in other calls, the negotiations of the auto industries are not impacted by these imports. They're very little impacted by the imports because this is flat steel. So we don't expect any impact in the negotiations that will take place in the contracts that will be renewed in April. The expectation is to close these contracts at similar levels from January. The contracts of January represent 25% of our total revenue for our industry. Leonardo Karam: Thank you, Miguel. More about this subject. Ricardo Monegaglia wants to know how many measures to normalize the inventories in the industry for imports post tariffs? Miguel Angel Camejo: This is an important point. As a matter of fact, the strong increase of imports throughout the year elevated the inventories of the importers. Now the chain according to the last in the report, the inventories for the chain increased and today would be around 4 months. Our view is that the inventories for the importers are above 6 months. Now the regularization will take some time, will depend the dynamic of the consumption, but it's important to understand that great part of these inventories are characterized by commercial products with no added value. And in our focus during the past year is greater share in greater added value products, especially geared towards the industry. We could see a gradual resumption for more commercial products and obviously, with very little impacts for the industrial sectors or the auto industry. Leonardo Karam: Miguel, still the import costs, is there a space to request to the government increase of the tariff to 25 for more NCNs? Miguel Angel Camejo: Well, we are optimistic and we are positive the increase of 9 [ CMS ] for our sectors done by the government. The government is seeing different tools to mitigate the impacts of a loyal competition in all industry. I would not discard the use of these tools in the future to minimize the risks and the impacts, especially when we talk about triangulation or circumvention back from other origins. Leonardo Karam: Igor Guedes from Genial. We would like to have an idea how -- what about your cold rolling mill? How much does this account in your sales? Now cold rolling mills in the domestic market, yes, it accounts for what kind of share? Unknown Executive: Igor, our cold rolling mills would be around the cold rolling 1 million. Now of course, the import and the loss of share in local steel mills have reduced this volume. It is important to clarify that we have the capacity to increase the production of cold rolling in order to rectify this problem that we had due to unloyal competition. Leonardo Karam: Marcelo. Here, the focus would be more on the operation. Igor Guedes from Genial wants to know, do you expect these antidumping measures to improve the domestic demand at a point that you will reactivate the blast furnace that is closed? Would you turn on this disconnected blast furnace? Marcelo Chara: Igor, excellent question. I can make a comment here regarding the productive structure of our blast furnaces in Ipatinga. We invested BRL 2.7 billion in blast furnace 3. With this retrofit and all the ramp-up process, in addition to we are ending on the PCI powder coal injection that goes through the upper side of blast furnace 3, and we will be able to inject all the furnace systems. All of these measures have allowed us today to be able to replace one of the blast furnaces operating with blast furnace 3 that has over 3,000 cubic meters and [ 2,800 ] cubic meters. Today, the capacity is to have productions that are equivalent to the 3 blast furnaces. So yes, we can supply and increase our steel capacity. Yes, we do have capacity. We are regulating the production capacity according to market conditions, and we are prepared to use a virtual blast furnace 1 with the new performance that we achieved with the new blast furnace 3 that was developed. Leonardo Karam: Marcelo, now a question from Guilherme [indiscernible]. Regarding MUSA, if you could better quantify the drop of volumes for 2026 and the volumes expected for 2026. Marcelo Chara: Now the first quarter is highly associated to the seasonality of rainy season. This year, rains are intense and this affects logistic mines. And this is aligned and what we expect for the year is a full alignment according to iron -- or indicators we have developed, an operation system that is extremely flexible, which allows us to define routes of operation at marginal costs, which are properly identified in such a way if we see price conditions that favor of full sales, we will use this. And this is something that we will monitor throughout the year. We will monitor this evolution, and we will adapt our production to this market dynamic. Leonardo Karam: Thank you, Marcelo. Diego, regarding capital allocation, Daniel Sensel-Schechner from JPMorgan asked a question. You have net cash. What is your capital allocation from here on? Is there a space to improve the balance structure? Is there space for more investments? Diego Garcia: Thank you for your question. Now regarding capital allocation, we have already carried out a CapEx guidance of BRL 1.6 billion, which is significant. We have other CapEx that have been approved. Leonardo Karam: Marcelo, I don't know if you would like to give us information regarding Compactos, but there is not much more to mention. Marcelo Chara: As Diego just stated, now we ended the investment cycle connected to blast furnace and auxiliary circuits. Today, we have a major product that was approved, that was the Coke battery #4 of BRL 1.7 billion that will give us self-sufficiency in Coke during the upcoming 3 years. And at the end of this project together with the hot repair that we're performing a battery 3 that is working exceptionally with excellent impact in emissions reduction. Let's say, we have a clear measure of emissions, very low -- at a record low in the history of Usiminas, and I can convey that our focus on the environmental performance has gone hand-in-hand with priority management, and we have capitalized these investments to make our industrial -- environmental more robust. We have the PCI project, powder coal injection. We're ending it during the first semester, as I mentioned. We have the new Gasometer. This CapEx of BRL 1.6 billion is totally aligned to our strategy to improve cost competitiveness and environmental performance. And in terms of Compactos, I mentioned at the beginning, the intention is to continue with the environmental licensing and throughout 2026. And at the end, we will see how to give continuity. As I mentioned in the beginning, we have a clear view that MUSA is a strategic asset for us, and we can see how we can continue the operation in the long run. Leonardo Karam: Thank you, Marcelo. You answered the next question from Rafael Barcellos of Bradesco about the guidance and to talk about the CapEx of 2026, Diego, regarding cash flows, Guilherme [indiscernible], XP, Rafael Barcellos wants to know the free cash flow was strong during the quarter with the lender of accounts receivable and working capital help us. What can we expect from here on? Is there a space for improvement that comes from these lines? And Rafael says, how should we think about the working capital during 2026? Diego Garcia: I think that we reached the level of working capital that will be stable and in the future will be changed because of the effect of prices and volumes. But it is not reasonable to think a new year with the release of working capital like we saw in 2025. Leonardo Karam: Thank you, Diego. Marcelo, regarding the product structure, Carlos De Alba from Morgan Stanley wants to know due to the footprint of Turn in the Americas, does Usiminas want to invest in an electric furnace in Brazil like in Cubat�o? Marcelo Chara: Well, let's say. As I said -- well, the upstream was disconnected years ago, but there's a downstream that is exception now the hot rolling mills of Cubat�o is one of the most modern from the America, it has over 10 years of operation, but it is at a state of maintenance and the technological update. Well, this is an interesting asset to maximize and to meet the demand of all the domestic market in all segments, industrial oil and gas, well, an electric furnace would mean we have to justify this clearly in terms of volume growth. This will depend on market conditions and the evolution. According to the current situation with the strong impact of imports and the low consumption of steel in Brazil, this is still not in our radar in the short or mid-run. Yes. Well, this is a plant that has an interesting profile in its structure because it has an area of a steel mill -- has the steel area that is perfectly conserved, and it can be activated if it's convenient. But this is not something that we have in our radar in the short or mid-run. Leonardo Karam: Thank you, Marcelo. Miguel, Some questions regarding negotiations with the auto industry. How were the negotiations with the auto industry in January 2026? And what do you expect in April? And when will you review these contracts? Miguel Angel Camejo: Guilherme [indiscernible], as we mentioned, the auto contracts that were renovated in January had a 2%, 3% discount. I would like to remind you that these contracts account for 25% of the total sales to the auto industry. Now the contracts that are renewed in April that are under negotiation, the expectation is to close at similar levels to that of January, most of these contracts are signed on a yearly basis. Some of them are reviewed every 6 months. Leonardo Karam: Thank you, Miguel. Miguel, regarding prices, Guilherme [indiscernible] Goldman, Rafael Barcellos, Bradesco, how do you see the domestic performance of prices throughout the first quarter? And what do you expect in terms of the sales mix, if you can tell us how this will work between industry sector. Now Emerson says that the price of Q4 was affected by the mix change. Can we already see this in January or February or the expectation of normalization is for March and Rafael wants to better understand the magnitude of the average price. Miguel Angel Camejo: We increased prices for distribution sector in January by 5%. For industry, most of the contracts were renewed as of January following the trend of the price increase that comes from Q4. All these contracts are delayed in 3 months in the auto industry, as I mentioned, there is a discount of 2%, 3% for a very small part of these contracts that were renovated in January. Now regarding the mix, we expect our sales mix to normalize in the domestic market during Q4. Going back to a sales mix, which was historic in Usiminas that we can classify as 1/3 of sales for the auto industry, 1/3 for distribution and the other 1/3 for the industry. I think that this gives -- this is the color regarding the expectation of this first quarter. Now you spoke about normalization as of January or March. I think that most of the auto industries came back from the holiday vacations after the first fortnight of January. So after the first 15 days, we can see the normalization of the sales mix here. Leonardo Karam: Diego, now we have questions regarding costs, Diego. I'm going to try to bundle them. Guilherme from XP and Emerson Viera from Goldman Sachs want to know the following, can you give us more visibility regarding cost improvement visibility due to efficiency in order to capture this in the upcoming quarter? And how do you see the evolution of cost during Q1? And Emerson basically says, what can you say about space for continuous gain of efficiency in costs? Diego Garcia: Now regarding the next quarter, as Miguel mentioned, with the normalization of the sales mix, we will have -- we will increase cost because we are selling material of greater value. This will be more than offset by the revenue per ton. This is why we have a favorable outlook for the next quarter. Leonardo Karam: Now regarding efficiency gains, this is one of our continuous targets. I don't know, Marcelo, if you would like to say something. Marcelo Chara: I would -- as Diego mentioned, our main focus is the improvement of efficiency, especially in industrial processes throughout the semester. We already system -- the coal injection system for the blast furnace and progressively, we will replace an important part of coal consumption by coal. And this generates important efficiencies and cost reduction. Throughout 2026, we will continue consolidating these type of projects that allow us to improve our sales cost in a systematic fashion. We are more robust in terms of profitability. Leonardo Karam: With this, we also answered [indiscernible] question. That was price. Now Diego still on costs. Rafael Barcellos from Bradesco BBI and [indiscernible] just want to know how the recent increase of coal prices will affect cost. The drop of COGS that was stronger than we expected some inputs that went through the PML bought in the past at a lower cost, the coal price increase, how do you see the cost from here on? How long does this last? How long does the price transference last? Diego Garcia: For the next quarter, we do not see these effects. The effects of the increase of coal prices, we will feel this, especially during the second quarter. There are -- well, this will not have an effect during Q1 and probably during -- yes, during Q2. Leonardo Karam: Diego, still for you. A question from an individual [indiscernible], I don't know. I cannot -- the payout to shareholders, is there any forecast of payouts for shareholders? Diego Garcia: Last year, we had an important loss because of the impairment. And because of this, we did not -- for the time being, we are not thinking about paying dividends regarding last year again because accrued profit, but we will always assess the situation of the company. And one of our targets is to continue paying our shareholders end to end. Leonardo Karam: We have a question from Gabriel Barra from Citi. He wants to know the transition of the position of CFO. If there will be an important change in focus, could you talk about your priorities at the short run and the long run for this new position, Diego, we will finish with this. Diego Garcia: Thank you, Gabriel. The transition is okay. I found a financial team that is spectacular, and they are helping this transition to be swift, organized, and I would like to thank everyone. Now regarding focus, well, I believe due to the challenging environment of the industry, it is important to control -- to have control in cost and cost efficiency, and we need discipline in our CapEx as well, and we will be focused on this. Leonardo Karam: With this, we ended our Q&A session. We would like to thank everyone for your participation. And should you have any doubts, our IR team is at your disposal. Thank you very much, and have a good afternoon.
Operator: Good morning, ladies and gentlemen, and welcome to the Definity Financial Corporation Fourth Quarter of 2025 Financial Results Conference Call and Webcast. [Operator Instructions] This call is being recorded on Friday, February 13, 2026. And I would now like to turn the conference over to Dennis Westfall, VP of Investor Relations. Please go ahead. Dennis Westfall: Thank you. Good morning, everyone. Thank you for joining us on the call today. A link to our live webcast and background information for the call is posted on our website at definity.com under the Investors tab. As a reminder, the slide presentation contains a disclaimer on forward-looking statements, which also applies to our discussion on the conference call. Joining me on the call today are Rowan Saunders, President and CEO; Philip Mather, our Chief Financial Officer; Fabian Richenberger, Chief Operating Officer; Paul MacDonald, EVP of Personal Insurance and Digital Channels; and Obaid Rahman, EVP of Commercial Insurance. We'll start with formal remarks from Rowan and Phil, followed by a Q&A session, during which Fabi, Paul and Obaid will be available to answer your questions. With that, I will ask Rowan to begin his remarks. Rowan Saunders: Thanks, and good morning, everyone. As Dennis mentioned, we are welcoming Obaid Rahman to our earnings call following his recent appointment as EVP of Commercial Insurance after several years as that division's Chief Underwriting Officer. Obaid's appointment comes as Fabi moves to the Chief Operating Officer role. His move to COO enables him to put a greater focus on the integration of the acquired business from Travelers. Before we discuss our financial results for the fourth quarter and full year 2025, let me start with the progress we have made in recent years and how it has positioned us for the next phase of growth. Including the premiums from the Travelers transaction, we've doubled the size of the business since our IPO to become a top 5 P&C insurer, modernized our platforms and built a scalable foundation that gives us confidence in our long-term trajectory. Definity is a growth company with strong momentum and a clear strategy. Our strong performance reflects disciplined underwriting and claims management, solid organic growth and the returns on our digital technology investments. As we pursue our updated goal of becoming a top 3 P&C insurer, we remain focused on disciplined execution, technology and analytics, broker partnerships and broad-based growth. We've built Definity with a goal to outperform the market through all stages of the pricing cycle. In areas like small commercial and personal lines, conditions remain strong, and we're achieving rates that stay ahead of loss trends. Where the market is most competitive, such as certain large commercial segments, we're staying disciplined, protecting our profitability and competing where margins are most attractive. What differentiates us is the structure we put in place, thoughtful portfolio construction, advanced analytics aided by AI that allow us to price risk with increased precision. a modern claims platform that drives better operational outcomes and higher customer satisfaction and a national broker network that gives us a stable growing source of distribution income. Overall, these capabilities give us confidence in our ability to outperform across market environments. Turning to our transformational acquisition on Slide 6. The acquired business brings approximately $1.5 billion in premiums, meaningfully increasing our scale and positioning as firmly within the top 5 Canadian P&C insurers. Scale matters more than ever. It enhances pricing sophistication, strengthens our relevance with brokers and supports sustained technology investment and AI expansion. The portfolio is an excellent strategic fit. The commercial book expands our capabilities in mid-market and specialty while the close to $1 billion in personal lines premiums will benefit from being moved on to our modern digital buying platform. This is also a high synergy opportunity. We are confident that we will deliver at least $100 million in annual cost synergies to be realized over the 3-year integration period. Finally, the acquisition accelerates our operating ROE expansion strategy. With Sonnet achieving breakeven, expenses moving towards our target level and our claims transformation well underway, the acquired Travelers portfolio is expected to add roughly 200 basis points of run rate operating ROE by the end of the integration period, supporting our path to a sustainable mid-teens target level. In 2025, the acquired portfolio operated near breakeven as a result of elevated expenses, which will temporarily affect our combined ratio as we integrate. We see a clear path to sustainably operating in the low 90s as integration benefits take hold and synergies earn through. Turning to Slide 7. We reported full year operating earnings per share of $3.53 an increase of nearly 33% over 2024. We again met or exceeded all financial targets in 2025 with top line growth of 8.8% adjusted for our exited line, an excellent full year combined ratio of 91.6% and an operating ROE of 12.2%. This operating performance, coupled with our private placements of common shares in the second quarter of 2025, supported a 16% increase in book value per share in the year. These results demonstrate the strength of our company and validate the investments we've made to build a more agile and scalable business. As illustrated on Slide 8, since completing our landmark IPO 4 years ago, we've delivered consistent underwriting profits, built a top 10 property and casualty insurance brokerage in Canada, grown book value per share by more than 63% and increased our quarterly dividends per share by 72%. Turning to the results from the fourth quarter on Slide 9. Strong underwriting income, together with meaningful contributions from our insurance broker platform and net investment income generated operating earnings per share of $0.99. Our fourth quarter combined ratio of 89.9% reflected the broad-based strength of the business with particularly strong results in personal property and commercial insurance. We enter 2026 with top and bottom-line momentum in all 3 lines of business, which provides an ideal starting position as we integrate our recently closed $3.3 billion acquisition and scale the organization. Turning to the industry outlook on Slide 10. We expect conditions in personal auto to remain firm as insurers aim to keep pace with the combined impact of loss cost trends, ongoing regulatory constraints in Alberta and uncertainty related to the extent and impact of potential U.S. tariffs. We also expect market conditions to remain firm in personal property over the next 12 months as the industry continues to remain diligent, taking underwriting and pricing actions required to fund weather loss events amid heightened climate risk. While we expect overall commercial lines market conditions to remain attractive, we are continuing to see more competition in the large account space. Overall, we expect industry growth in commercial lines to be in the low to mid-single digits over the next 12 months. Slide 11 highlights our key financial targets for 2026. We expect to exceed $6.5 billion in gross written premiums representing growth of at least 35% from 2025. This substantial increase is expected to be driven by the benefit of the acquired business from Travelers and continued organic growth in our underlying book. The strength of our underwriting capabilities is expected to support a sub-95% combined ratio target for 2026 despite integrating a business operating near breakeven. We maintain our operating ROE target for 2026 as we expect earned synergy realization to begin contributing more meaningfully in 2027 with full realization by the end of the 3-year integration period. Slide 12 illustrates the composition of our national broker platform. We've made great progress in the past few years to develop it into a vehicle to diversify and strengthen the earnings profile of the business with repeatable distribution income that complements our underwriting operations. We expect continued M&A activity and the organic growth momentum of the business to result in $2 billion of managed premiums by the end of 2027. We continued our growth trajectory with several additional acquisitions last year, which enabled us to exceed our 2025 operating income objective for this part of the business. In 2025, our national broker platform generated $94 million of operating income before finance costs and minority interest. We expect to increase this by approximately 20% in 2026 with a 60-40 split between distribution income and intercompany commission income. This platform continues to provide stable, high-quality earnings that strengthen the overall resilience and diversification profile of the company. And with that, I'll now turn the call over to our CFO, Phil Mather. Philip Mather: Thanks, Rowan. I'll begin on Slide 14 with Personal Auto. Gross written premiums increased 9.7% in the fourth quarter and 8.9% for the year adjusted for the Sonnet Alberta exit. This represents a step-up from 6% growth in the third quarter, consistent with our expectations and supported by our improved competitive positioning that strengthened unit growth. Personal Auto delivered a solid combined ratio of 95% in the fourth quarter, an improvement from 2024, driven by earned rate increases, improved Sonnet profitability and a lower expense ratio. For the full year, these same factors supported stronger results versus 2024, further aided by lower catastrophe losses. We expect a mid- to upper 90s combined ratio for personal auto in 2026 as we integrate the acquired book of business. Turning to Slide 15 and Personal Property. Gross written premiums grew 11.6% in the fourth quarter and 9% for the year, supported by higher average written premiums and an increase in unit growth as we completed our actions in high appeal regions midway through 2025 and introduced product enhancements in the second half of the year. The personal property combined ratio remained robust at 82.7% in the fourth quarter of 2025. For the full year, we reported an 88.5% combined ratio, an improvement of 7.8 points from 2024. While catastrophe losses were unusually elevated in 2024, the level this year was broadly in line with expectations. Looking ahead, we expect a low to mid-90s combined ratio in 2026 in year 1 of integration. Slide 16 provides details of our commercial business with premium growth of 6.9% in the fourth quarter and 8.6% for full year 2025, driven by strong retention and rate achievement and continued expansion in small businesses and specialty. Industry growth has moderated to the low to mid-single digits as loss trends normalize. We continue to expect the organic growth in our commercial book to grow at least twice the pace of the industry, supported by our strong broker partnerships, digital capabilities and ongoing specialty expansion. Commercial lines continue to benefit from our focus on underwriting discipline, delivering a strong combined ratio of 89.1% in the fourth quarter of 2025. For the full year, the combined ratio was also strong at 89.3%, essentially unchanged from 2024. Results reflected lower catastrophe losses and a reduced expense ratio, partly offset by an increase in the core accident year claims ratio. The changes in catastrophe losses and the core accident year ratio were impacted in part by our revised definition of a single claim catastrophe loss. Looking ahead, we expect a low to mid-90s combined ratio overall in 2026 as we continue to target operating the existing Definity Commercial book in the low 90s and begin integration of the acquired book of business. Putting this all together on Slide 17, we generated substantial operating net income of $120.7 million in the fourth quarter, reflecting strong underwriting income alongside meaningful contributions from our insurance broker platform and net investment income. Consolidated underwriting income increased by $14.5 million in the quarter and by more than $142 million for the full year, driven by robust performances in personal property and commercial insurance. Net investment income totaled $215.7 million for 2025, up nearly 9% from 2024. The increase was primarily due to higher interest income from the proceeds of our senior unsecured notes invested in short-term instruments as well as increased bond holdings. 2026, we expect net investment income to exceed $300 million, supported by the growth in assets added through the Travelers transaction. Overall, broker operating income increased by more than 24% in 2025, reflecting strong contributions from both acquisitions and solid underlying organic growth. As Rowan mentioned, we expect broker operating income to grow by approximately 20% in 2026 from the $94 million delivered in 2025 with a 60-40 mix between distribution income and intercompany commissions, reflective of an increased share of wallet as we integrate the acquired business. Lastly, you'll note the increase in our operating ROE, which ended near the top of our guidance range at 12.2%. This resulted from progress on all of our organic levers, including improved Sonnet profitability, the continued march down of our operating expense ratio and early progress on our claims transformation. We also benefited from about 1 point of better-than-expected cat losses. Conversely, the issuance of shares in Q2 to partly fund our Travelers transaction had a negative impact on operating ROE, which will not be fully reflected in this metric until mid-2026. Progress made in 2025 provides confidence in our ability to sustain a mid-teen result post integration once we realize the expected benefits from the Travelers transaction. Turning to Slide 18. We delivered a successful renewal of our reinsurance program for 2026, which meets the requirements of our much larger post-acquisition profile. This was supported by our strong performance track record with reinsurers, and we maintain robust access to reinsurance markets. As part of the pro forma structure, Definity's overall reinsurance coverage increased significantly due to the expanded scale of the combined company. Importantly, while catastrophe treaty retentions increased by $15 million or 20%, the rise was smaller relative to the expected growth in the overall business of more than 35%, resulting in a more efficient risk transfer profile. Slide 19 illustrates the continued strengthening of our financial position in 2025. The increase in our book value to north of $4 billion was primarily due to strong operating performance and the private placements of common shares in the second quarter, partially offset by our growing dividend distributions for the year. Clearly, our financial capacity ended the year in a robust position as we approach the closing of the Travelers transaction. Our current leverage ratio remains below 30% following the close of the transaction, and we are confident that this will reduce to our target level of 25% in the near term. Slide 20 outlines how we funded the $3.3 billion acquisition last month. As expected, a significant portion of the funding came from excess capital, our own in addition to the approximately $1.1 billion from the acquired business as well as $385 million of equity financing completed post announcement. Our $1 billion inaugural bond offering and a $375 million 2-year bank loan make up the debt financing required to fund the acquisition. I'm pleased to say that we have already repaid the excess capital term loan that bridged from the date of closing until we could access the $1.1 billion in excess capital. Turning to Slide 21. Our integration work is progressing well, ensuring we delivered a seamless day 1 experience for brokers, policyholders and employees. All transition services were fully operational from day 1 to ensure business continuity and employees came together under unified leadership supported by in-person town halls that reinforced our culture. We have already begun to move new business intake to Definity, an important step toward harmonizing our broker distributed products under a single brand. Looking ahead, we're on track to start the policy conversion process in Q2 2026. At the same time, we're executing well against our planned integration activities and maintain strong change management to support brokers, employees and business growth. Turning to Slide 22. Our integration planning provides a clear actionable pathway with at least $100 million of annual run rate synergies identified. These synergies are driven by 3 primary sources: technology platform consolidation as Travelers personal and commercial volumes migrate onto Definity's scalable buying platform; elimination of U.S. parent company service charges that fall away as the business transitions to Definity oversight and operations and operational efficiencies driven by elimination of duplicative and administrative activities and the benefits of scale. This began immediately post close, there will be a lag between when we complete the work and when the financial benefits are earned. As previously outlined, we expect approximately 2/3 of the integration efforts will be completed in the first 18 months, which should translate into about 1/3 of total synergies earned during that period. This timing reflects the dependency on fully transitioning the acquired business onto our operating platforms. Together, these synergy drivers represent 6 to 7 points of combined ratio reduction for the acquired business before factoring in future loss cost benefits. With that, I'll hand it back to Rowan for some final thoughts. Rowan Saunders: Thanks, Phil. With the acquisition phase now complete, we've strengthened our position in the Canadian P&C market and reinforced our role as a leading carrier in the broker channel. Our focus now shifts squarely to execution, integrating the acquired business effectively, advancing digital innovation and sustaining the strong performance that has defined our trajectory. Bringing these organizations together enhances our scale, broadens our personal, commercial and specialty capabilities and deepens our relationships across Canada. Travelers culture has been a natural fit, and we're excited to welcome our new teammates as we build a stronger, more formidable Definity. This moment represents a launch point. With a modern platform, a diversified business and a clear growth strategy, we are well positioned to accelerate our momentum and continue building a Canadian champion, one that delivers sustained value for our customers, our brokers and our shareholders. With that, I'll turn the call back over to Dennis to begin the Q&A session. Dennis Westfall: Thanks, Rowan. We are now ready to take questions. Operator: [Operator Instructions] And your first question comes from the line of Paul Holden from CIBC. Paul Holden: First question is regarding commercial insurance lines. And without a question, I think Definity has done an excellent job growing in commercial since IPO, 2x industry growth rate, plus with very good margins. I think the question people are starting to ask though is, okay, well, now the market is clearly -- market conditions are not as generous. So can you continue to grow at 2x the market with very strong margins, or you can continue to grow at 2x, but maybe sacrificing a little bit of margin? Rowan Saunders: Paul, I think that a couple of points I would kind of make before handing over to Obaid to kind of give you some more color. You make the point about the commercial market evolving, and I think we definitely see that as well. The big picture for us is don't forget 70% of our premium is in personal insurance, which is still a very firm marketplace. And then the 30% that is in commercial we feel about 15% of that is what is really exposed to this increasingly competitive large commercial segment. So overall, it's about 5-ish percent of the total portfolio. So I think that's an important point of context. The other point I would make is that this isn't new. Like we've been seeing a more competitive market for multiple quarters now, as you've seen us call that out in the past. And Definity continues to outperform each of those quarters, even this last quarter, posting a 7% organic growth. We have said broadly, we can grow at twice the rate of the industry. But when you think about low industry growth rates, our current growth rate is actually multiples more than that today. And I think the main issue for us is that there is some structural advantages, and we're structurally well positioned to continually growing ahead of the market with -- withholding our margins. So a lot of kind of confidence there. But why don't I pass it over to Obaid to kind of add some more color on how you're doing this. Obaid Rahman: Thank you, Rowan. And let me maybe just start with -- I'll just take a minute on our performance and then give a bit of context on the structural advantages, which Rowan just mentioned. 7% growth in Q4, 8.5% for the year at a sub-90 COR. We're delighted by this because it's clear outperformance to the marketplace. Our growth was very balanced. About half of it came from pricing, half of it was organic. We gained market share overall. When we look at our structural advantage, it comes from 2 areas. One is the complexion of our portfolio, which is heavily skewed towards the small and mid-market business. The second component is over the past number of years, we've made quite a few investments in technology and in our specialty capabilities. If we start with the first piece on the small and midsized business, here, what matters is speed, ease of doing business, service and technology is really the differentiator. We have Vyne Commercial. It's our digital platform. We believe it is the leading digital platform in this space in the market, and it continues to give us outsized growth. We're getting high single-digit growth in the small business space, both coming from pricing, and we're gaining meaningful market share. As we've mentioned in a few quarters, and we did in the opening remarks, the large account segment is competitive. We're staying disciplined there, protecting margin. This is about less than 15% of our portfolio. And finally, we get to the specialty part of the business where over the years, we've made quite a few investments in capabilities, in underwriting, in claims, in risk prevention. We've cultivated deep broker relationships in that space, and that continues to bear fruit. We're gaining market share. We've got a number of verticals which are running, growing. We had double-digit growth in the specialty business. When I put this all together, this is a structural advantage, which helps us manage through the cycle. And if I take a step back, when we look at the past 5 or 6 quarters, this is when the market did become a bit more competitive in certain segments. We've had high single-digit growth, and we've outperformed our peers by about 7 points. It's a meaningful and material outperformance and really does speak to the resilience that we built in our business to manage through the cycle. As we look forward, we think this growth momentum of ours is going to continue how we ended the year. We're going to be in the upper single-digit range. And the Travelers acquisition is bringing a host of new verticals and capabilities in the specialty space, things like ocean marine, technology, cyber, financial lines, a leading cross-border facility, just to name a few. And once we get these onboarded, they're going to open up a new frontier of growth. They're going to expand our addressable market and really excited about having that as we go through the transition. Paul Holden: Okay. That's a very good answer. I appreciate that. Second question is related to personal auto. So certainly versus my own expectations, the combined ratio was better than I would have expected in Q4, which did see some more, call it, normal type weather and certainly worse than Q4 of the year before, but yet your core accident claims ratio improved by a little over 100 basis points year-over-year. So maybe talk to me a little bit about that and maybe it's just as simple as pricing has been coming ahead of claims inflation. But if there's more to it to that, I would love to hear it. Rowan Saunders: I think that, Paul, that's a part of the business we've been very pleased with. And I think it's had -- it's obviously industry challenges over the last couple of years, and we continue to get better in that line of business. So what we think about the way we've exited the year, there's a number of drivers there. But don't forget, Sonnet is one piece that is now much better than it was over the last couple of years. And that drag has now disappeared as we said that it would be. And then the other part of this is that there has been significant rate taken and segmentation changes. And when you put that on the Vyne Personal Lines platform, that agility and frequency by which you can keep optimizing your portfolio, we think, is actually giving us a competitive advantage. And if you think about not just the core accident year, which certainly has improved, as you said, up 2 points year-on-year, but we're now also in a position where we're moving back into strong growth. So the growth in Q4 was really a step up from where it was in Q3 as we had kind of called it out. And that component of growth is now both unit count as well as ongoing kind of rates. So I think that's a pleasing line for us. Paul Holden: Okay. I want to ask one more, and that's going to be on the AI disruption topic and my own opinions on it. But I want to hear your opinions and how it may or may not be or how you're viewing the risk, particularly in the insurance brokerage space, which was impacted earlier this week by that theme. You've guided to 20% growth next year in brokerage. I assume that indicates you're going to be buying more. Your intent is to be buying more. So how do you get comfort or how are you thinking about continuing to deploy capital into insurance brokerage, even though there's this AI narrative that it's going to be disruptive to the business? Rowan Saunders: Yes. Thank you for that, Paul. I think as you pointed out, our distribution, the top 10 broker that position we have is working out very well for us, and you saw us growing operating earnings by 24% this year. That's both acquisitions that we brought in, but strong organic growth at high margins. So this is an attractive business. And I'll tell you that one of the things that I think is an advantage for our platform is the fact that it is linked to Definity. And if you step back and you think about the investments that we, as an organization, have made in AI, we've been deploying these tools for well over a decade. They're right across the business from influencing growth, loss ratio, user experience. We have great data, 25 years plus in the cloud, a specific partnership with Google. So the point I'm making is that over 70% of our people are now engaged using these tools, and these tools are across our business. That's the underwriting side. As you link to the distribution side, I think that's an advantage where we can take some of this track record, this knowledge and these capabilities into helping brokers adjust as well. And I think on the broker kind of narrative, brokers have been challenged many, many times over the decades, and they continue to stay relevant. They continue to get bigger. They continue to do -- to actually increase their valuations. And so we think overall, in commercial insurance, this is complex. These are big assets, and you need a lot of trust and advisory services to set those. In personal lines, this is really happening. There are AI tools already involved in helping customers in the discovery phase, in shopping, but many of those still need, feel and trust the need to link to a broker, well over 40% of those. So to me, it's more about an adoption. Can the brokers adapt? Can they invest? And like anything, just like when digital tools came into the channel, if you're making those investments, I think you'll stay relevant. If you're not, I think you would fall behind. So the takeaway to us is we're still very confident in that channel. We don't think this is the end of broker distribution by any means. But they are evolving. They'll need to make these amendments. And many of them, with certainly our support, we think we'll do that. I actually think this helps increase the pipeline, which is a good pipeline. And I think that's a nice opportunity for that channel. Operator: And your next question comes from the line of Bart Dziarski from RBC Capital Markets. Bart Dziarski: I wanted to ask around on Travelers. So I guess, related to that 2026, you gave guidance for $6.5 billion of premiums. What does that assume for the $1.5 billion book you inherited for Travelers in 2025? And then maybe more importantly, how should we think about the growth of that book in 2027? Rowan Saunders: Well, thanks very much for that, Bart. A couple of quick points here. Firstly, I think when you think about the context around that, I would say we are delighted that we actually closed the transaction on January 2. It was a very smooth procedure. And as we've said before, this is a game changer for Definity. A quick reminder here is very strategic. This places us in the top 5, which was our goal before, we now set our missions on top 3. It's added a lot of capability and product to our specialty and commercial lines and more scale. The personal lines firmly put us in #3. So we like that. The financial conditions certainly compelling. We've talked about the $100 million cost synergy and how we will ultimately get that portfolio to perform like Definity. Clearly, when you buy a business like this, you're buying it for the long term. 2026 is a transition year. So what we're really focused on here is the retention of the business, the conversion and getting it on to our platform, that platform changed. I think the high-level question you asked about what are those assumptions. So I look back and I say, okay, you've got -- we're adding about $1.5 billion of business from Travelers to Definity's business. That moves us up a minimum of 35% this year. So Definity will become significantly larger as we pull that on. As you would expect on that Travelers portfolio, there is going to be some dislocation on that. Now we look at that, and we feel very good that there isn't major dislocation. Most of it, we like. But naturally, there will be some dislocation. There will be some accounts, some segments that don't fit. So that will kind of contract a little bit, not materially. But the underlying business, the Definity business, we're really confident is going to continue to operate like it is today, upper single digits. You heard Obaid talk about that in commercial. Paul says the same thing for his personal lines business. And once we convert the business on, our expectation is that both portfolios, the Travelers portfolio and the Definity portfolio continues to operate like it is. If you think about where is Definity today, it's in the low 90s, and it's growing upper single digits. That's not going to happen year 1 with Travelers, as you would expect. But as we finish the conversion, our expectation is that both businesses will be performing in that range. Bart Dziarski: Awesome. That's very helpful. And then I guess sticking with Travelers on the specialty opportunity that this business brings. You mentioned a new total addressable market. Could you maybe help us size what that opportunity could be and then how fast you're looking to kind of address that opportunity? Rowan Saunders: Go ahead, Obaid. Obaid Rahman: Yes. No, thank you for the question. I mentioned some of the verticals upfront. And the way we look at this is that you get those new capabilities, it allows us to cross-sell to our existing customer base, so we can give them more product. It will allow us to increase product density with our broker partners. And the combination of that, so you get the new capabilities plus the fact that those enable you to get more growth on your existing capabilities because you can link them up together, we think it's going to give us momentum to continue with that minimum sort of 2x industry growth rate, upper single digit for a number of years going forward. Now when do they come -- when do we bring them online? As Rowan mentioned, this is a transition year. We're right now working to onboard these capabilities into our operating model, into our business platforms. And we think towards the end of the year, we'll start to get them fully rolled on to our platform. So towards the end of the year, going into '27, that's when we expect that they'll be functioning within our model. Rowan Saunders: Just a data point. As far as the addressable market is concerned, typically, we've been operating in a market we think is about $27 billion. This moves that market up to just over $34 billion now. So it is a meaningful upside opportunity that Obaid has mentioned. Operator: And your next question comes from the line of Jaeme Gloyn from National Bank Capital Markets. Jaeme Gloyn: First question, I just wanted to get a clarification on a comment that was made around the AI and how AI is already helping customers in personal lines. You talked about -- you gave a percentage. It was 40%, I believe, of customers using, I guess, like AI or digital quoting tools need to get on the phone and confirm what they've done. Is that what I interpreted you said or just clarify that. Rowan Saunders: No, I think what we're saying is that when people do use those tools, 40% of them still end up reverting back to asking for broker advice to complete the transaction. Jaeme Gloyn: Okay. Yes, that's kind of what I thought. Okay. Got you. And then following on that as well, Rowan, I believe you talked about AI helping broker distribution and Definity helping with that expansion, increasing the pipeline for Definity. Can you sort of talk through how you would see that pipeline to Definity increase as opposed to potentially elsewhere? Rowan Saunders: Yes, sure. I mean, Fabi, do you want to take that, which is what are you seeing in the pipeline? And why are people coming into the pipeline? Fabian Richenberger: Yes. Glad to do that, Rowan. Thank you, Jaeme, for your question. So maybe picking up on the question what AI will do to distribution. As Rowan mentioned, we've been a leading company, both on the digital side, now with AI as well. And what we've been doing over the last couple of years, we've been leveraging those capabilities into our own broker platform as well. So over the past 2 years, we've been leveraging AI and the benefits of that to our broker platform is that we are able to enhance lead generation and customer traction. We are able to strengthen service and customer engagement. We are able to provide customized advice to specific commercial segments. And then we also have a number of key operational benefits that come out of leveraging AI into our broker platform, to name a few. We are automating routine processes. We are enhancing data analysis and business intelligence. We are automating coverage analysis and coverage gap analysis. We are using that capability to help our brokers kind of mitigate risk at the customer base. So a whole host of value drivers that will allow us to drive more organic growth, will allow us to increase our EBITDA margin. And I think what's happening, as it does on the P&C side, scale is a very important differentiator going forward. We fully expect that the consolidation will be continuing to happening on the broker side as well because the top 10 brokers are controlling now over 50% of the marketplace in Canada and being able to make those investments into platforms, talent, data communities will be a differentiator. And I think that the smaller brokers will kind of want to join our broker platform because they'll benefit from additional insights, additional capability, additional growth opportunity. And unlike other platforms that are out there, we are encouraging the incoming brokers to retain a meaningful ownership opportunity. And we quite like that because of broker principles, key producers that have an ownership in the broker platform as well. They are very motivated. They keep being very entrepreneurial and it aligns the growth aspirations between ourselves and those key operators overall. So I think these are many kind of dimensions as to why we think that the consolidation will continue to happen. And what we have proven over the last 2 years is that the platform that we've created is attracting the target focus that we want to have in that broker platform. And with that in mind, I think we are as confident as we can be that we will be continuing to increase our operating income in that 20% range that we committed to you. Jaeme Gloyn: Okay. Great. Appreciate that color. And then still on the broker side but just thinking through the acquisition pipeline to drive the 20% growth. Have you seen any shifts in the M&A backdrop in the last couple of months, maybe a little bit longer than that, that could potentially accelerate that growth trajectory and the M&A pipeline? Fabian Richenberger: What typically happens is that those midsized brokers that they look at it from a 3-, 5-, 10-year horizon at this point of time that the multiples that are being offered for those brokers are still attractive. And if you are a midsized broker kind of managing $100 million, $200 million of business, you have a concern now about how you go through succession planning. 20 years ago, you needed $10 million or $20 million to fund succession planning. Today, you need $100 million, $120 million. So it's nearly impossible for those family-owned brokerages to do internal succession planning. So then it comes back to the platform that we've built in terms of us supporting the McDougall leadership team to be empowered, entrepreneurial, always with sound governance framework around it. But again, the attractiveness of our platform, that allows them to leverage different product capabilities, allows them to typically increase the organic growth after they've joined the broker platform benefiting from scale and market access benefits. And then as I mentioned, the invitation for those broker principals to leave equity in the platform, I think will continue to be very attractive to brokers that decides to partner with somebody else. Jaeme Gloyn: Okay. Got it. And then last one, just on the Travelers and just I want to make sure I'm interpreting some of the commentary correctly. 2025 Travelers premiums written looks pretty flat to their 2024, just kind of rough numbers could be some rounding. And then my interpretation from your comments is we should expect to see like Travelers premiums growth through this integration process in the first year pretty flat again for what will be included with Definity and then start to accelerate towards the end of the year. Is that the right way to be thinking about Travelers premium contribution to Definity? Philip Mather: Yes, Jaeme, that's a good interpretation. I think if you look at what happened with the premium base, it actually contracted slightly from 2024 levels came in just a little below $1.5 billion. Now that was driven by actions taken under prior ownership where they were looking at targeted rate and underwriting actions. There's a couple of portfolio exits in there. So that's actually a good factor in terms of that underlying profitability kind of focus. And as they were taking those actions, clearly, it was during a period of time where people were waiting to look to see the certainty of the close period. So I think what we expect going forward, there'll be a little bit of spill of some of those actions and efforts into the first half of 2026. So we'll probably see the Travelers contribution of that acquired book be on the flat or a little lower side. And then as we emerge through our conversion activities begin to get a hold of the business and have more influence in the activity, we'd see that start to move back. So when I segment it for '26, we still continue to see good upper single-digit growth on the existing book. We see the $6.5 billion more akin to a floor than a ceiling. And certainly, we've got good conviction that as we get that stewardship and alignment of the books, you'll see that emergence into a more aligned growth pattern towards the end of the year. Operator: And your next question comes from the line of Alex Scott from Barclays. Taylor Scott: I just wanted to go back to a few more housekeeping items. On net investment income, can you help us think about the portfolio now that you have it? And just how to think about the yield and how that may change versus your portfolio, how much assets now that you've got them on board? Can you help us think through all that? Philip Mather: Yes. No problem. I mean there are quite a lot of moving parts because, obviously, we were positioning the portfolio for the transaction, which closed on Jan 2. And you may have heard in the commentary that we were very proactive in terms of settling down the excess capital loans. We paid down that $1.1 billion of temporary debt financing, leveraging the acquired portfolio from Travelers at the start of February, which was several months faster than we anticipated. That obviously helps us on a net basis because we've taken away the cost of the debt, but you don't carry those excess assets. So if I step back today and say where are we today, we've got just north of $9 billion of invested assets. The blended book yield on that, it's heavily weighted towards fixed income. So the blended book yield is about 3.4% when you recognize bringing on that investment portfolio from Travelers balance sheet. Your fair value that to market yields on the date of acquisition. And then we've done some trading to the line the portfolios. So I think if you step back, big picture, about $9 billion now of assets under our investment strategy and management, about a 3.4% book yield on that today. Now where we end the year, it obviously depends on the yield environment, depends on cash flows in and out of the portfolio. But that's why we've got good conviction that we'll generate at least $300 million on it during the year. I think what you'll see at the start, Alex, is our weights will be more orientated to fixed income. We brought that portfolio over on that basis. We'll probably stay like that for the first couple of quarters just as we settle into the acquisition, focus on a little bit of the deleveraging aspect as you've already seen with those actions in February. Taylor Scott: That's really helpful. And then just on pruning the business as you're kind of going through that, what will the timing look like? Are you starting that more aggressive immediately? Or is that something you'll sort of get the book on and take your time with? I'm just trying to anticipate a little bit how you're planning on approaching it? And also maybe just a view on the market we're in right now and just how retention will react relative to if there is some price softening out there that kind of leaks in from the global pricing environment. Rowan Saunders: I think that the retention of the portfolio and the conversion is really not that impacted by your point about the market conditions because, again, Travelers is pretty close to 70% personal lines, I think it's 68%. And of the commercial business, it looks fairly similar to ours. They have a large small business area. They also have a large specialty area, which is, of course, what we like. So the segment that's really exposed to these more competitive large commercial accounts is similar to ours. It's not a big piece. So I think that the market conditions are less impactful. I think that the point that we're making, and Phil articulated is the business that's rolling on that has come from previous management of Travelers, as they've really taken some underwriting actions, that portfolio is slightly contracting. As we said, that's good because those are actions we likely would have taken ourselves once we acquired the business. So in fact, it's accelerating some loss ratio improvement. Mostly, there aren't any big portfolios that we really dislike or outside of our underwriting appetite. So we would like to keep most of it. That being said, just naturally, there will be some accounts, there will be some dislocation on pricing as we transfer the business from the Travelers platform to the Definity platform. And that will be some, let's call it, relatively modest retention rate declines in the first year. As that rolls on, we then very much expect this business to start performing just like Definity. We expect that the retention rates will be just as good as Definity's. We expect that the new business production of the total portfolio continues to be upper single digit. And we've got Definity now running in the low 90s combined ratios as we complete this 3-year conversion, we expect Travelers portfolio to mirror that. So that's the kind of way forward. So I wouldn't read too much into it. But I think the important point here is that we're inheriting a little less than $1.5 billion. That will shrink a little this year as expected, as you would expect in the first-year conversion. It gets offset by upper single-digit Definity portfolio growth this year, and then they start to look pretty similar in performance over the next couple of years. Operator: And your last question comes from the line of Tom MacKinnon from BMO Capital Markets. Tom MacKinnon: A question with respect to the exited lines. I guess that's the Sonnet Alberta stuff. Losses of $10 million in the quarter. This has been ongoing for some time. I think this is the highest we've seen in the last 4 quarters. What's happening there? Are we going to continue to see losses from that going forward? When does that business run off? And I have a follow-up. Philip Mather: Yes. Thanks, Tom. Yes, you're right. Exited lines in the quarter, you saw a loss there of $10 million. That was driven by specific actions we took to strengthen the reserve position. I'd say, specifically in relation to bodily injury amounts. And really, what we did there was we took the decision to reinforce that level of prudence as we exit the year, and we now have a book that's fully transitioned into runoff. So there is no future earned premium coming through that book. There's no ongoing new exposure. So really, our intent there was to leave 2025 with a very robust balance sheet position against that exited business, really to try and mitigate the risk of any future adverse development coming there from. And I would say we're very confident in the closing position that we now exit really to put that behind us, I think, is the attitude that we took in closing the book and looking forward to the reforms that should come into the problems in '27. Tom MacKinnon: What about on the Travelers book that you're bringing in? Is there a decision to move any of that into exited lines? Philip Mather: No. So they have an active broker distributed business similar to the one that we have. It's not oversized either. I think the level of concentration in Alberta is pretty close to what we have today, and they're continuing to operate in that environment. So no. Now we're looking at -- obviously, we're picking up the whole legacy of the business. There might be historical business that they wrote, which we would consider to be more exited lines in nature. But we'll be looking at the opening balance sheet. We're going through that work right now. And I'd say similar to the Sonnet position, we'll be looking to make sure we're comforted on any back book there. But no, in connection with Alberta auto, they continue to move forward. Tom MacKinnon: And if you make a decision to bump up reserves on the Travelers book, does that -- will that be reflected in PYD in the first quarter? Or is that sort of reflected into the purchase acquisition mix? Philip Mather: Yes. So I think what we'll do is, obviously, we go through a fulsome review. We're at that now. We'll finish that process off for the Q1 reporting. I think just in that regard, from what we've seen so far, we're very happy with the balance sheet that's coming across. So we feel pretty good about the decisions they've taken. They certainly seem from early days to have been very prudent in their approach. And so we feel good about that opening position. As we report the reporting going forward in our MD&As, we will be reflecting that consistent pattern that we do today on our existing book of business. So as prior year development rolls through, that will get reported into current results. So we'll reset the balance sheet to our degree of prudence and satisfaction as part of that. And then from there on in, you'll see the prior year development roll through in our kind of operating reporting going forward. Tom MacKinnon: All right. So no change in your kind of guide for prior year development going forward then? Philip Mather: No, I don't think so. I think our view would be we'll be bringing them similar with the underwriting and pricing, we'll be bringing them to our reserve kind of practices and management and monitoring. So at this stage, we've had this historic 1- to 2-point range. I think our goal is to bring them consistent with that -- the practices that underpin that reserving approach. Operator: That ends our question-and-answer session. I will now hand the call back to Dennis Westfall for any closing remarks. Dennis Westfall: Thank you, and thanks to everyone for participating today. The webcast will be archived on our website for 1 year. The telephone replay will be available at 2:00 p.m. today until February 20, and a transcript will be made available on our website. Please note that our first quarter results for 2026 will be released on May 7. That concludes our conference call for today. Thank you and have a great one. Operator: This concludes today's call. Thank you for participating. You may all disconnect.
Operator: Welcome to the Eutelsat Half Year 2025-2026 Results Presentation. [Operator Instructions] Now I will hand the conference over to the speaker, Jean-François Fallacher, Chief Executive Officer; and Sébastien Rouge, Chief Financial Officer. Please go ahead. Jean-François Fallacher: Hello. Good morning, everyone, and thank you for joining us today. I am Jean-François Fallacher, CEO of Eutelsat. And I am joined on this call by Sébastien Rouge, our new CFO. So before getting into the details, a quick recap of the highlights of the first semester, which has been truly pivotal for Eutelsat. In terms of performance, first half operating verticals were almost stable. Within this, LEO revenues were up nearly 60%, reflecting the ongoing strong commercial dynamic and driving rise in revenues in all 3 connectivity verticals. The adjusted EBITDA margin is just over 52%. It's reflecting the impact of sanction-related loss of video revenues as well as the effect of the product mix with LEO revenues that are still during their ramp-up stage. As a result of the first half year performance, we are able to confirm our full year financial objectives. We made great strides in our refinancing plan with the successful completion of our EUR 1.5 billion capital raise in December, leading to credit rating upgrades from Moody's and Fitch. Subsequently, we have recently announced that we obtained almost EUR 1 billion in expert credit agency financing. We have also secured operational continuity for the OneWeb constellation with the procurement of a total of 440 new LEO satellites with technology enhancements. Finally, the disposal of our passive ground segment asset has been halted. While disappointing, this has no impact on Eutelsat's ability to finance its strategic development plan. And I will come back to this later. Now let's have a quick look at the key financial data. Total revenues for the first half stood at EUR 592 million, stable on a like-for-like basis and down 2.4% reported. Revenues on the 4 operating verticals stood at EUR 574 million. They were down 0.6% on a like-for-like basis, excluding a EUR 20 million negative currency impact. As stated above, LEO revenues grew almost 60% to EUR 111 million and adjusted EBITDA was equating to a margin of 52.1% on a like-for-like basis. That means excluding currency and hedging effect, the EBITDA margin declined by 3.4 points. CapEx was at EUR 291.5 million, but clearly should not be extrapolated for the year as a whole. We will come back to this. Let's now have a look at our H1 performance in more depth. Noting please that all commentary from now on will be on a like-for-like basis, [indiscernible] at a constant currency rate. Let's have a look at our revenues by vertical. I remind they stood in total at EUR 592 million for the last semester. So revenues of the 4 operating verticals excluding other revenues amounted to EUR 574 million. Video is representing 46% of the revenues, EUR 266 million, down 12%. And I am pleased now to note that all the connectivity verticals delivered growth this semester. Fixed connectivity, representing 23% of our revenue was up 17%. Government Services representing 17% of the revenues was up 8% and mobility, representing 13% of the revenues, up 8.5%. Our other revenues amounted to EUR 18 million. This is reflecting the revenue recognition from IRIS2 project. As you know, we are involved in the consortium system development -- in the consortium system development prime. And these other revenues are also including EUR 8 million positive impact from hedging operations. Let's now zoom in the Video business unit -- in the Video segment. First half year revenues were down by 12.3% to EUR 260 million. They are reflecting the impact of further sanctions imposed on Russia. This is amounting to circa EUR 16 million for the full year '25-'26 as a whole, which came on top of the underlying trend in this mature business. Second quarter revenues stood at EUR 133 million, down by 14.1% year-on-year, but broadly stable quarter-on-quarter, as you can see there. And on the commercial front, we had good news. We announced several renewals with quite long-standing partners at very key orbital positions, notably beIN, the media company, for distribution of DTH services across the MENA regions. This is reaffirming the strategic value of our 7/8-degree West video neighborhood. And in Europe, we were very pleased to announce the renewal of the deal with Polsat. We renewed a multiyear multi-transponder contract at a very flagship HOTBIRD Video neighborhood. Let's now take a closer look at the connectivity. Our total connectivity revenues for the first half stood at EUR 307 million, up by 11.8%. Within this mix, GEO revenues stood at EUR 196.8 million, which is a decline of 4.5%. And as you can see, obviously, this decline was more than offset by the strong ongoing momentum in GEO revenues, which rose 60% up to EUR 110.5 million. And second quarter revenues stood by EUR 157.9 million, up by 15% year-on-year and by 5.8% quarter-on-quarter. LEO revenues up 50% at 56.4%, while GEO revenues were stable, as you can see there at EUR 101.5 million. Let's now zoom in each vertical in more detail. I will start with the fixed connectivity vertical. The first half fixed connectivity revenues, they stood at EUR 132 million, up by 17.2% year-on-year. This is clearly reflecting the continued growth on LEO-enabled connectivity solution. As well, we have a one-off impact, and this is resulting for the upfront recognition of revenues relating to a capacity contract with a GEO customer for an amount of circa EUR 7 million. The second quarter revenues stood at EUR 70 million, up EUR 18.3 million year-on-year. On the commercial front, Eutelsat reinforced its presence in Africa with a distribution agreement with MSTelcom in Angola for LEO services for businesses located in hard-to-reach regions as well as new multi-million, multi-year agreement with Paratus for services across Southern Africa. Let's now have a look at the Government Services segment. Revenue stood at EUR 99 million, up 7.7% year-on-year. They are reflecting again here the growth of LEO-enabled solutions, notably with a number of services delivered in Ukraine as well as increased demand from other governments. Second quarter revenue stood at EUR 46 million, down by 2.2% year-on-year. This is mainly reflecting the softer revenues coming from the U.S. as well as lower terminal sales in Q2 than Q1. Key highlights of the past semester, including the successful partnership with Airtel to support the Indian Army's relief operation with LEO connectivity. And we had also some activities in flood impacting Sri Lanka. Elsewhere, Eutelsat obtained approval for the first military-grade manpack terminal with our OneWeb network. This is a terminal for the armed forces developed in partnership with Intellian Technologies. It's now -- this terminal is now available to government and defense customers that will need a portable, resilient connectivity solutions. Now let's have a look at the mobility segment. Revenues stood there at EUR 77 million, up 8.5% year-on-year, reflecting the activation of contracts with aero mobility customers. We now have almost 600 certified antennas installation on planes, out of backlog of over 1,500 aircraft compared to what we had last year, 100 certified antennas and a backlog of 1,000 antenna. So you see the great evolution of our backlog and a number of antennas, which are actually active on planes. This impact is even more visible on the second quarter, where revenue stood at EUR 42 million, up to 34% year-on-year and 21% quarter-on-quarter. On the commercial front, we are happy also to pinpoint the multi-year deal we've inked with CMA CGM Group on maritime. This is a deal we closed with Marlink to integrate OneWeb into the connectivity solutions of CMA CGM global maritime fleet. Elsewhere, Eutelsat's OneWeb LEO network will provide passenger WiFi services on railways. We have signed a deal with Transgabon in partnership with Airtel Gabon. This is also reinforcing the Eutelsat Airtel partnership. And this is the start of business we are going to do in rail connectivity across Africa. Let's now if you wish to have a look at the backlog. The backlog stood at EUR 3.4 billion on end of December '25 versus EUR 3.7 billion earlier. This backlog of EUR 3.4 billion is equivalent to 2.7x the 2024-'25 revenues. And for you to know, connectivity represents 59% of the total backlog versus 56% a year ago. This evolution is reflecting the rapidly increasing weight of LEO business in the mix. And as a reminder, these LEO business contracts tend to be shorter. Moreover, only the success of the take-or-pay contracts, the LEO take-or-pay contracts are -- while what we call pay-as-you-go contracts are not reflected in the backlog at all. As a result, while it remains a useful indicator, the evolution of the backlog is a bit less correlated -- is now less correlated with future revenue trends than it used to be in the past. Let's now turn to the financial performance, and I will pass the floor to Sébastien. Sébastien Rouge: Thank you, Jean-François. Good morning, everybody. Revenues were covered in detail. So let's now jump to group profitability. Adjusted EBITDA stood at EUR 308 million for the half year ended on the 31st of December compared to EUR 335 million a year earlier, so down by 8%. On a like-for-like basis, it's down 6.1%. Operating costs stood at EUR 283 million, up EUR 12 million and well contained in spite of the large growth of the LEO business. They reflected mostly an increase in the -- related cost of goods sold. The adjusted EBITDA margin stood at 52.1% reported versus 55.2% a year earlier, so down 3.1 points. It is a consequence of the impact of sanction-related losses on Video revenue as well as the effect of product mix within LEO revenues during the ramp-up stage. If we look now at the rest of the P&L, the net result was a loss of EUR 236 million, largely reduced from the loss of EUR 873 million a year earlier. This reflected limited other operating losses at EUR 69.6 million as compared to EUR 691 million last year. As a reminder, in the first half of '24-'25, we included goodwill and satellite impairments totaling EUR 650 million. You can note we have also lower D&A at EUR 357 million versus EUR 434 million last year, reflecting notably the end of the amortization of certain intangible assets. As well, we have the positive effect from the securing of operational continuity of the LEO constellation, and that follows the procurement of the additional 340 satellites. Finally, we have a favorable currency impact in D&A. Net financial cost of EUR 95 million versus EUR 99 million last year, notably reflecting lower interest following the full repayment of the 2025 bond. And finally, corporate tax of EUR 21 million versus EUR 7.6 million last year. That's an effective tax rate of 10%. If we move now to our CapEx plan. Gross CapEx amounted to EUR 292 million as compared to EUR 175 million a year earlier. This reflects the timing of key milestones in LEO investment programs. I will remind, it should not be extrapolated for the full year since most of the investment will be deployed in the second half. Nevertheless, because of the phasing of LEO programs as well as an increased vigilance on our GEO spend, CapEx for the full year is now expected around EUR 900 million, while we announced EUR 1 billion to EUR 1.1 billion previously. Going forward, CapEx will remain focused on LEO activities in line with the group's strategic vision, primarily for the OneWeb follow-on program. GEO CapEx will be limited to ensuring service continuity. In this context, the group has canceled the procurement of the so-called Flexsat Americas following a review of its business case, resulting in future CapEx savings over EUR 100 million. Now in terms of financing structure of Eutelsat. The most important thing, on December 31, '25, net debt stood at EUR 1.3 billion, down EUR 1.3 billion as well versus the end of June '25. That is clearly reflecting the net proceeds from the capital increase. As a result, the net debt to adjusted EBITDA ratio stood at 2x as compared to 3.9x at the end of June '25. It will not stay at this level up to the end of the year because of the phasing of CapEx, which is skewed to the second half. The average cost of debt after hedging stood at 4.2%. It was 4.8% in the first half of last year. Weighted average maturity of the group's debt is 2.3 years as compared to 3 years at the end of December '24. We enjoy a great level of liquidity with undrawn credit lines and cash, which stood in total around EUR 2.1 billion. On this good note, now back to Jean-François to comment the outlook and next steps. Jean-François Fallacher: Thank you, Sébastien. On the first half of 2025-'26, clearly, it's been a crucial semester for Eutelsat, most notably with the successful execution of the foundation of the refinancing plan with the success of the EUR 1.5 billion capital raise, that was clearly fully supported by our core shareholders and followed by credit rating upgrades from Moody's, up two notches to Ba3; and Fitch up three notches to BB with stable outlook. Subsequently, as announced, earlier on this, we have secured almost EUR 1 billion Export Credit Agency financing. And our intention is clearly to build on these strongly improved financial fundamentals to undertake the refinancing of our bonds in order to complete the strategic refinancing plan. In parallel, now I'm going to the next slide. We are taking steps. We have taken steps -- important steps to secure the operational continuity of our LEO constellation. We've procured 341 web satellites on top of the previous order of 100 bringing the total number of new satellites to 440. The availability of these satellites will assure full operational continuity for customers of the constellation that will be progressively replacing early batches of satellites that were coming to an end of life. And moreover, we are having the possibility of taking on board hosted payloads on some of these satellites, opening the possibility for Eutelsat OneWeb to a new type of business development. Furthermore, we diversified our options for access to space. We have signed a multi-launch agreement for the future launch of LEO satellites starting in 2027 with France launcher MaiaSpace. Before wrapping up, a quick word on the recent announcement on the transaction to dispose of the passive ground segment. At the end of January, we announced that this transaction will not proceed as all the condition precedents have not been satisfied. In that case, the condition precedent was the approval of the French state. While disappointing the noncompletion of the transaction does not affect our ability to fund the capital expenditure related to our strategic growth trajectory following the refinancing measures that we have undertaken since this announcement. It has no effect on our financial objectives for the current year with the exception of the net debt to EBITDA, which is now expected to stand at around 2.7x at the end of the year versus the 2.5x previously announced this project would have gone through. On the other hand, the effect on the EBITDA margin is positive to the tune up to roughly 5 points as clearly, we will not be paying the leases of circa EUR 75 million, EUR 80 million per annum that was planned to be paid to the acquirer. Let's now turn to our financial objectives. The first half performance was in line with expectations, enabling us to confirm our full year '25-'26 objectives. I'm reminding them now. Combined revenues of the 4 operating verticals in line with the levels of '24-'25 with LEO revenues growing by 50% year-on-year, and adjusted EBITDA margin expected slightly below the level of full year of '24-'25. Gross capital expenditure in full year '25-'26 initially expected in a range of EUR 1 billion to EUR 1.1 billion, now expected to around EUR 900 million. Following the capital increases in December '25 and taking into account the nondisposal of the Ground segment, net debt to EBITDA is estimated at circa 2.7 multiple by end of the year '25-'26, reflecting clearly a robust and self-funded financing structure. Looking further out, Eutelsat demonstrates, I believe, some of the most attractive growth and profitable prospects in the sector with revenues expected in a range between EUR 1.5 billion and EUR 1.7 billion in the end of the full year '28-'29, supported by the strong momentum of LEO revenues, which are significantly outperforming the market. Our operating leverage is expecting to drive to a mid- to high single-digit percentage points of improvement in the EBITDA margin, resulting in a margin of around 65% by '28-'29. In the long term, post full year '28-'29, the B2B connectivity market is expected to pursue its growth, clearly with a double-digit rate driven by the LEO market expansion. So a few words to sum up. First half revenues once again confirmed the significant momentum in LEO revenues. Our financial situation is significantly reinforced following the capital raise of EUR 1.5 billion and the attention of the EUR 1 billion ECF funding and the operational continuity of OneWeb constellation well assured with the procurement of further 440 LEO satellites. So now with both financing secured and operational continuity assured, we can look forward with confidence as we focus on our growth strategy based on the development of our LEO business. I'm thanking you very much for your attention, and we are now ready to take your questions. Operator: [Operator Instructions] The next question comes from Aleksander Peterc from Bernstein. Aleksander Peterc: I just have a first a couple on connectivity. Do you expect government to bounce back? We had a bit of a weaker-than-expected revenue in the reported quarter. So I was wondering if this is just due to one-off installation effects and so on. And conversely, on aviation, do you see the strong traction there continuing given your strong backlog numbers and installed planes numbers that you disclosed in the report? So should we be a bit more bold in our estimates for this vertical going forward? And then secondly, on your debt, do you plan a bond issuance soon? The bond issuance conditions your access to the ECA financing? Is that a near-term event? And once you complete that and you have access to the ECA EUR 1 billion, do you think you have a credible path to investment grade in the medium term? Joanna Darlington: Alex, it's Joa on the line. So I'll take your first question, and then I'll pass the other questions on to the others. So you're right, there's a slight slowdown in Q2 on government services. I think that the first thing to remember is that in Q4 of last year and Q1 of this year, there was quite a high level of equipment sales in the mix, and this obviously reflects the very strong momentum that we saw in government services throughout financial or calendar year 2025. The fact is that, that mix has been slightly different in the second quarter. But I think I would say 2 things. The first thing is that the -- it's absolutely a good signal to have terminal sales in the mix because obviously, you need to install the terminals so that you can then get the service revenues going. And the other thing I would say is these are long-term businesses. So I wouldn't extrapolate a trend based on the performance of one quarter to another. I think on your second question, I mean, yes, obviously, we have been making very strong progress on aviation. You can see that the number of installations has gone up as has the backlog of planes. As a reminder, all of these customers are serviced by our distributors, not directly by us. So this means that the distributors who are Intelsat, Gogo, I mean, obviously, they're Panasonic, they're getting momentum in terms of selling the OneWeb service. So yes, it's a positive sign. We knew that once the kind of we got to a certain critical level of global coverage, then it would unblock the pipeline for Aero, and this is what you're beginning to see. I mean how you adjust your forecast is up to you. I would highlight that for the year as a whole, we are not changing our revenue forecast for the group. And I think your third question about the bond issuance, maybe Sébastien wants to take that. Sébastien Rouge: Look, I think you're right. The last step of the full refinancing of the group after the capital increase, renegotiation with the banks and the setup of the ECA loan is actually to issue some bonds to make sure that we refinance some of the maturities that come in the next years. The only thing we can say is that it's clearly on the radar, and we're in preparation mode. Whenever we are ready, we'll announce that to the market. As far as investment grade is concerned, I had the first interaction with our rating agencies. Before we anchor ourselves completely in investment grade, I think there are a few steps that have to be followed, in particular, phasing and the way IRIS2 will be financed. I think we first have to answer to this question before we entertain a complete clarity vis-a-vis the rating agencies. Aleksander Peterc: Can I just have a very quick follow-up? You have one expensive bond at 9.75%. Would that be a candidate for an early redemption? Sébastien Rouge: Yes, we are looking at this one in particular with -- in the foreseeable future, yes. Operator: The next question comes from Roshan Ranjit from Deutsche Bank. Roshan Ranjit: I have 3 questions, please and I guess, perhaps related to the first one around government. Interesting that you have canceled the Flexsat Americas satellite. I was just wondering what the kind of reasoning behind that is. If I remember correctly, that satellite was clearly directed over the Americas for activity and government business. So are you perhaps seeing less of a U.S. kind of demand? Clearly, you are seeing strong pickup in Europe. But is there a bit of a softening, as you say, the U.S. side, please? And just added to that, if you could give us -- remind us of the mix of U.S. DoD revenues within your government vertical, that would be helpful. The second question is on video. And clearly, the headwinds from the Russian sanctions still impact it. But if I adjust for that on my calculations, I think high single digit, perhaps very low kind of double-digit underlying decline in video. Your previous message was kind of a mid-single-digit decline. So should we think the new normal is kind of high single digit for the video business? And lastly, could you just give us a quick update on IRIS2? I understand that we're supposed to be getting a kind of this rendezvous point in the coming weeks to kind of finalize the numbers and get the ultimate go ahead. Is that still the case? Jean-François Fallacher: Maybe I will take -- thank you for your questions. On the Flexsat Americas, I mean, the decision is not linked to the U.S. or to the continent itself, the U.S. continent itself. Now the decision we have taken is linked to the fact that we didn't see a viable business case or at least the return was going much further down the years, 2030s with the Flexsat Americas, simply linked to the fact that we see more LEO constellations coming, and we thought, basically, we would not have a flying business case anymore if I may say so. And that was the main reason why we decided to cancel now on an amicable basis this -- the construction of this GEO satellite. So this is obviously going to avoid a lot of CapEx to us in the very short term for a business case that was more and more shaky. So that's the main reason of this decision. Maybe I will take the question on the IRIS2, and I will let Joanna tell you a few words about -- on the video and how we see the evolution of our video business. Keep in mind always that on the video business, of course, we can talk about trends, but we have long-term big contracts with a number of different parties. So every year is a bit different. So it's a bit difficult to talk about trends, but I will let Joanna say more on that. On IRIS2, where are we? So we are, as you know, one of the key, let's say, players in the consortium, SpaceRISE consortium together with SES and Hispasat that have won this concession from Europe. We've been working the full year 2025, calendar year 2025 with actually suppliers and the supply chain in order to solidify the constellation we want to build. We are now entering a so-called -- on level 1 with European Commission. And this semester will be key because this is the moment where we will actually finalize our commitments. I'm talking about the SpaceRISE consortium towards Europe to actually build this constellation, this European constellation further. So we are having a very important semester now in this project. So stay tuned. Maybe Joanna, a few words on the video. Joanna Darlington: Yes. So I think -- thanks, Jean-François. So on video, not really a lot more to say. You're right that this year, obviously, is affected by Russia. And I mean, technically, if you remove Russia and recalculate, yes, it gives you a decline, which is a bit higher than mid-single digits. But as you know, because you've been covering the sector for a long time, it can be quite lumpy based on renewals. So again, I wouldn't necessarily extrapolate that into a long-term trend. I think we can probably say that what we've been seeing in the last year or so is a bit higher than mid-single digit underlying. But -- so your other question, I think, was the mix of U.S. DoD within government. It's now less than 50%, and we expect it to continue to decline as we build up with other governments and obviously, notably the framework agreement with the French DoD, but not only. Operator: The next question comes from Ben Rickett from New Street Research. Ben Rickett: I had 2 questions, please. Firstly, in the context of your Flexsat Americas cancellation, I'm just wondering how you think about the long-term viability of your GEO constellation. Do you think you will ever launch a GEO satellite again? And related to that, what level of GEO CapEx should we be expecting going forward? And then second question, it seems increasingly likely that Germany is going to build its own LEO constellation for their military. I don't know how much interaction you've had with the German government, but I'd be interested in your perspective in why Germany is doing this rather than using the IRIS2 constellation. Are there technical limitations with IRIS2? Or are there other factors? Jean-François Fallacher: Thanks very much for your 2 questions. On the GEO satellites in your question, will we ever build new GEO satellites in the future? So first of all, we have one project, one GEO satellite project still live, new GEO satellite with -- together in partnership with Thaicom, so which is a satellite that will fly over Asia. It's a connectivity satellite. So this one, we are feeling very confident, and we are really happy to keep it. We see the business plan still extremely valid over that region. Let's remind that when we look at our fleet of 34 GEO satellites, we have a big number of video GEO satellites. So these satellites have a long life duration. I believe in the future, we will have to invest in new GEO satellites for video because we have a number of regions where actually video is still -- the video business is still going very well. I was just saying, we are proud to have re-signed an important contract with Polsat, which is 1 of our 2 large customers in Poland. So there are a number of geographies where actually video is holding very well. I'm not even quoting Africa, where we have Canal+, MultiChoice as big customers. MENA, where you have seen we have renewed the contract with beIN. Our 7, 8 West position is a very strong one over MENA. So some of these satellites will, at some point, come to an end of life, but that will be post 2035, more in the '35 -- 2035-2040 region. So probably in a few years, we will need to look at the evolution of our GEO satellites, take decisions. Not much I can say now because, I mean, these GEO satellites can be also moved from one place to another place. So all of this is basically going to be looked at carefully. In the very short term, I mean, in the foreseeable short term, there is no such project, but for sure, in the future, there will be additional investments in GEO satellite. That's the first question. The second question about the public announcements of Germany. So just to put back these things in their context, first of all, there are announcements. We are taking them, obviously, very seriously. There are announcements from the German Bundeswehr, so the German MoD wishing to build its own military-grade LEO constellation. Obviously, we are in touch with Germany at multiple level. The reading and the reason why this project came to see the light, I think, it should be more asked to the Germans. We have obviously our ideas. One of them could be that they were expecting a very late arrival of IRIS2. And believe me, we are working very hard to have IRIS2 coming and becoming live in 2030 as was initially explained. So that's the only thing that I want to say. I take the opportunity that you are all here to say that what I'm advocating, we had a press conference this morning, and it's not the first time I'm saying it. Basically, personally, I believe that this is one of the pitfalls or one of the traps that Europe could have, is to fragment and that each country. And we understand that Europe is 27 countries, with 20 sovereign countries -- 27 sovereign countries, and there is always the temptation to build your own national object. But looking at the size and the complexity of building a LEO constellation, I remind, OneWeb, $7 billion invested since the beginning of the project in 2015, 7 years before OneWeb became really operational, and we could start to sell services over this constellation. So I believe, for Europe, that would be a trap, that would be a pity that Europe would fragment and that some of the countries would build their own constellation. I mean nonetheless, obviously, we are respecting the sovereignty of Germany and whatever decision they will take, but we are clearly advocating and trying to convince the Germans not to go that way. Operator: [Operator Instructions] The next question comes from Stéphane Beyazian from ODDO BHF. Stéphane Beyazian: Just a follow-up on the discussion about Germany, and perhaps I could add Italy as well. I mean if these 2 countries were to decide to build their own constellation, I would suspect that this probably changes your guidance for revenues coming from IRIS2 and possibly the return on investment. So yes, I was just wondering to what extent these 2 countries are important in the calculations that have been made about future revenues coming from IRIS2. And second question, I was just wondering if -- obviously, without revealing anything that could be confidential. But is there any major or big contract tender that is ongoing and which is public? I was thinking about the SNCF, which I think is looking for a provider of connectivity. Any update there? I mean any other major contracts that could be coming up and that is publicly known? Jean-François Fallacher: So just on your first question, it's much too early to answer to this question, obviously, but just -- I mean, because, again, I'm insisting, I mean, these are announcements. There is nothing concrete at this stage. Takes very long time to build a constellation. Let's never forget that this constellation, whether it's ours, whether it's IRIS2, are worldwide constellations. Low orbit satellites are flying by construction all over the earth, meaning that the economic model of this constellation cannot be standing on just one region. The economic model of OneWeb, the economic model of this constellation are worldwide. Just a few numbers, they are facts. The French -- the turnover of Eutelsat in France, France represents 7% of our turnover. Full Europe represents 27%, out of my memory, of the total turnover of the group. So I mean, of course, I mean, Germany is an important country, no discussion. Italy is at the same -- I mean, evenly a very important country in Europe, no discussions. But again, I mean, the revenue expectations and the business case we are having post 2030 linked to IRIS2 are also based clearly on international revenues in many other countries than just European countries. I remind that, as we speak, OneWeb is opened and we can sell in 180 countries across the world, not to name maritime, not to name planes, aero. So again, too early to make any statements about that. And we are working extremely hard and very focused on the Eutelsat side on making IRIS2 a success. Your last question, SNCF. Yes, obviously, we are in discussions with SNCF. Much too early to say. I mean SNCF is still in the process of, let's say, preparing their RFP. They have announced it. I believe there will be an RFP somewhere this year on basically the equipment of the French trains. Allow me also to give you an update on our NEXUS contract. We had a bit of, let's say, late start of the revenues in this contract simply because, as you have probably seen, France was having difficulties to finalize the budget for the country. The good news is that this has been now finalized 2 weeks ago. So that will also allow the French MoD to really take actions now. We've been working very closely with them since the announce of this frame contract since summer last year. We have things in the pipe, and hopefully, we'll be able to make some announcements in the second semester that has already engaged because now that the French Army has a budget, I mean, they will be capable of taking some actions and taking -- sorry, and signing purchase orders basically, which is what we expect now. Stéphane Beyazian: And I have a third question. Do you think it's possible? Joanna Darlington: Yes. Stéphane Beyazian: My third question is do you see any area for possible diversification? I'm thinking about earth observation or data analytics. And I would stretch the question to something that is probably a little bit different and more CapEx intensive. There's been a lot of talks also about computing in space. Anything, any color you could provide on that? Jean-François Fallacher: Thank you for your question. It's an excellent question. The first -- so we are not going to go into space observation. This is too far from our current business, although, I mean, it's -- actually, I understand why you think about that. There are 2 things we could quote now: one -- the first one because this is very concrete and this is very material. This is hosted payloads. In the satellites we have purchased to Airbus, 340 satellites, we have actually built an option on these satellites to embark what we call hosted payloads. So this is some, let's say, physical space we have on these satellites. Well, for those of you in the call, which are not familiar, I mean, the size of this OneWeb satellites are the size of, let's say, a big refrigerator or a big washing machine, something like that. We have actually some space that allows us to take an additional payload. So -- and what we would provide to these payload is basically electricity coming from our solar panels and batteries and a little bit of connectivity so that we could have people indeed doing earth observation or some kind of monitoring or whatever payload, scientific payload, military payloads. We can plug them in the space, in our satellite and take them with us in space and fly them with us. So these are -- this is really a new business in which we believe because this is win-win. This is, for us, the possibility to open a new stream of business. And this is for parties, which are having projects to put in space some specific missions and could not do it because it's very expensive to build a platform, to build a satellite. It's very expensive to launch a satellite. It's very expensive to maintain a satellite, to operate a satellite fleet. So that's a win-win. It's a new business line that we have opened with these 340 satellites that we are now marketing, selling to a number of space and new space actors across the globe. And I hope, without revealing anything, that we can have some announcements in the first semester. That's the first thing. The second thing, although it's very early to say, I mean, obviously, the deal with EQT that has been halted has been actually showing -- I mean, putting an eye on the ground assets of Eutelsat. These assets used to be seen as technical assets and operational assets in the past. Through the deal, we have prepared with EQT -- I mean, it became very clear that this asset could be a bit sweated. So we could derive some business from these assets. So clearly, now that the deal has been halted, these assets are still ours, obviously. We have started some kind of carve-out. So we are going to look, obviously, at the possibility to monetize a bit more these assets. So this is, I would say, the second direction. I want to pinpoint on what additional businesses could we -- aside our core business, could we start to launch basically. So -- and we have other projects in the cupboards, but I want to stay there for now because these projects are much too -- at a much too early phase. But we are seeing actually innovation and business development as also a key potential direction for the future. Stéphane Beyazian: And what about the orbital data centers? Anything on that? Or that's part of what you don't want to comment too much today? Jean-François Fallacher: No, we -- I mean, we've obviously seen and read like everyone the starting projects on this area. I mean, at this stage, we have no such projects at Eutelsat. Operator: There are no more questions at this time, so I hand the conference back to the speakers to conclude the call. Jean-François Fallacher: So thank you very much for your questions. Again, first half results confirming the momentum in LEO revenue. Our financial situation significantly reinforced capital raise of EUR 1.5 billion, ECA of EUR 1 billion. More to come as you understood today on the bond side, operational continuity of the constellation on the way with the order of 440 satellites. So now financing secured, operation continuity assured. We are looking forward to the future with confidence and we are focusing on our growth strategy based on the development of the OneWeb LEO constellation. Thank you very much, ladies and gentlemen. Operator: This concludes the call. You may now disconnect.
Christopher Kusumowidagdo: Good afternoon, and welcome to XLSMART's Fourth Quarter 2025 Earnings Call. My name is Christopher, Head of Investor Relations, and I will be coordinating today's call. Our presentation and financial results were released this morning and are available on our Investor Relations website. Today's call will begin with prepared remarks from our management team, followed by a hybrid Q&A session. [Operator Instructions] As a reminder, the session is being recorded. I would like to introduce our speakers for today's call: Mr. Rajeev Sethi, Present Director and CEO; Mr. Antony Susilo, Director and Chief Financial Officer; Mr. David Oses, Director and Chief Commercial Officer for Consumer; Mr. Feiruz Ikhwan, Director and Chief Strategy and Home Business Officer. And with that, I will now hand over to Mr. Rajeev to begin with the management highlights. Rajeev Sethi: Thank you, Christopher, and good afternoon, everyone, and thank you for joining us. As you know, the company was formed in April of last year 2025. So this was the first year for XLSMART. And this quarter closes our first year post merger. And from our point of view, the message is very clear. Execution matters, and we are happy to state that we have delivered. If I speak about the merger, we have successfully completed the 2025 integration milestone. And most importantly, we've done this ahead of the plan. and it translates into operational efficiency, faster decision-making and a more disciplined cost base. Integration risk has materially reduced as we enter into the new year. Secondly, on synergies, we've achieved our 2025 synergy targets with OpEx synergies exceeding our initial expectations. This gives us confidence that margin expansion is structural improvement that will continue in 2026 also. The heavy lifting on cost has largely been done. The focus now shifts to sustaining discipline. Next, on growth quality. Revenue growth was supported by a fully consolidated subscriber base and more importantly, a strong ARPU uplift, which was around 26% post merger. This was driven by pricing simplification and better customer experience, choices which were deliberate and that prioritized value over volume. And as we said earlier, in this market, we'll want to play a responsible game and we'll encourage the market players to move into a situation, which helps restore health to this industry. And we are also seeing clearer evidence that customers are willing to pay for a more consistent high-quality service. Finally, on the network, network consolidation has strengthened our performance across key metrics. And this was complemented by our recent launch of 5G services in Jakarta, Surabaya, Bali and other cities. In summary, 2025 demonstrates disciplined execution across integration, cost, growth and network. We exit the year with a stronger foundation, reduced complexity and a clearer path to sustainable value creation going forward. If I move to the next slide, building on the highlights which I've just shared, I'll go a level deeper into how this merger is being executed and what has been delivered on ground. Starting with network. This is the most complex integration stream and also the one that matters most for long-term performance. We are on track to complete full network integration by first half of 2026. Progress so far has been encouraging with visible improvements in coverage, capacity and consistency. Importantly, we are managing this carefully, protecting service quality and minimizing operational risk and both of these remain nonnegotiable. On customer experience, we are seeing integration benefits are already being felt and enjoyed by the customers. We have improved download speeds by up to 83% across the combined base. This is a real meaningful improvement that supports better engagement and underpins the ARPU uplift that we are seeing post merger. On synergies, execution has been strong. In the first year, we have delivered approximately USD 250 million of gross synergies, driven by OpEx efficiencies, procurement scale and network rationalization. This confirms that the merger economics are playing out as expected and in some areas, better than what we had initially planned. Finally, on business continuity. Throughout the integration process, we have maintained service stability and sustained growth momentum. This disciplined approach has allowed us to transform the business without disrupting day-to-day operations. Overall, the message on this slide reinforces a simple point. Merger is being executed with control and discipline, delivering tangible gains today, while we are preparing a solid foundation for the next phase of integration and value creation. If I move to the next slide, which is talking about the integration progress. And as I mentioned earlier, on the overall execution, the integration milestones were completed ahead of plan. This pace reflects strong governance, clear accountability and tight coordination across multiple teams. More importantly, it reduces execution risk as we move into the next phase of integration. On network, consolidation has progressed materially. We've integrated approximately 34,500 sites by December last year, delivering visible improvements in network performance and customer experience. By the end of Q4 '25, around 70% of the sites have been consolidated. And as I said earlier, it puts us in a very strong position to finish most of the integration by H1 '26. From an organization perspective, the end state structure is now in place. We have harmonized processes and governance across the combined entity, creating clearer decision risk, decision rights, faster execution and better cost control. In total, around 120 processes have been streamlined and standardized. Finally, on the cost base, we have structurally streamlined our cost base, including vendor consolidation and site optimization. These actions underpin the OpEx synergies already delivered and support sustainable efficiency going forward rather than just short-term savings. To summarize, 2025 integration has been executed with speed and discipline. The foundation is now largely built. Risks are lower as we move forward, and the focus shifts towards optimization and value extraction in a way moving away from integration to driving more value. The last part, which I'm going to talk about is on the 5G rollout. As we said earlier, this merger gave us an opportunity to ready our network for 5G, and we are delivering on that promise. And we believe 5G is a key pillar of our growth and differentiation strategy. We want to be leaders in 5G, simply put. Our focus is not just on rolling out 5G faster, but on delivering a clear, consistent and commercially meaningful 5G experience. Today, we offer what we believe is the first true 5G experience in Indonesia. This is built on 3 core propositions. First, blanket city coverage. And this, I believe, is rare in many parts of the world. It's not only your home is covered or your workplace is covered, wherever you go in a city, you will find 5G. Secondly, an auto 5G experience where customers with 5G devices can seamlessly access speeds up to 250 Mbps without complexity. There is no special plan for availing 5G benefits. And thirdly, a dedicated 5G spectrum, which delivers more consistent speeds and better user quality, especially in high usage area. In terms of coverage, our 5G network is now live around 33 cities and continues to expand. Importantly, the experience is designed to be certified and consistent with capacity strengthened where demand is highest. This approach ensures that network investment is closely aligned with actual usage and monetization potential. Equally important is brand clarity, where we have positioned 5G clearly across our portfolio of 3 brands -- 4 brands, if I may say, XL Prepaid, the postpaid brand, Prioritas, AXIS and Smartfren. Each brand plays a distinct role, avoiding overlap while maximizing reach. In summary, our 5G strategy is deliberate and focused, combining disciplined rollout, consistent experience and clear brand positioning to support sustainable growth and long-term. I thought that was my last slide, but there's one more, which is on the network side, and I'm happy to give you an update on that. By end of last year, our total BTS count reached more than 225,000, which is a 36% increase year-on-year. This reflects the post-merger consolidation of our network and continued investment in capacity, particularly in 5G. As expected, legacy technologies continue to decline as we optimize the network towards more efficient and higher performance platforms. On 5G, we continue to expand our footprint in a disciplined and targeted manner. As I said earlier, we launched our services and we expanded further in January 2026. In addition to the expansion, we are also seeing external validation of our network quality. And I'm happy to announce that XLSMART was awarded the Ookla Speedtest Award our Fastest 5G Network in Indonesia, reinforcing our commitment to delivering a globally benchmarked high-performance connectivity. This reflects the progress we have made in network design, spectrum strategy and execution quality. Overall, our network strategy is delivering on 3 fronts: scale, performance and resilience, providing a strong foundation to support growth, accelerate 5G monetization and maintain customers trust going forward. I'll now hand over to our CFO, Pa Antony, to walk us through the financial results. Antony Susilo: Thank you, Pa Rajeev. Good afternoon, everyone. Let me now present you our key operating metrics, which reflect a clear shift toward quality growth. We know that this quality growth because of the price adjustment and also the broader industry recovery. So let's start with the subscribers. Our mobile subscriber base become 73 million in Q4 2025, representing an 8% quarter-on-quarter decline. This decline was an intentional outcome reflecting a tighter acquisition discipline as well as a sharper focus on monetization and high-quality users. Most importantly, on a year-on-year basis, the consolidated base remains up by 24%, reflecting the post-merger scale of the business. If we look at the ARPU, this is where the benefit of our strategy are most visible. Blended ARPU increased by 15% Q-on-Q to become INR 44,800 in quarter 4 2025. This mainly driven by the improvement across both in the prepaid as well as postpaid segments. And this reflects the pricing normalization, better customer mix and confirms that we are capturing more value for users. In erms of the usage data traffic, it continues to grow despite of the lower subscriber base. Traffic reached almost 4,000 petabytes in Q4 2025, an increase of 47% year-on-year and 2% quarter-on-quarter. This growth in consumption per customer reinforces the positive relationship between network quality, the engagement as well as the monetization. So overall, these trends demonstrate that our strategy is working well. Our subscriber numbers have normalized, becoming better customer quality, intensity and ARPU continue to improve. This positioning the business to be more sustainable and more profitable growth going forward basis. Now let me now present the financial performance for full year 2025, where it reflects the impact of the disciplined pricing, integration execution as well as a clear focus on value creation. We start with the revenue figures. The 2025 revenues increased by 23% year-on-year basis to become IDR 42.5 trillion driven primarily by the data as well as digital services. This growth reflects the benefit of price rationalization, ARPU uplift and also a larger consolidated base following to the merger. On a quarterly basis, the revenue grew by 4% quarter-on-quarter, demonstrating a continued momentum despite of the subscriber normalization. Moving on to the profit Normalized EBITDA for full year 2025 increased by 13% to become IDR 30.1 trillion, while reported EBITDA margins moderated at around 42%. This reflects deliberate acceleration of integration activities, which created a near-term cost pressure. On a normalized basis, EBITDA margin remained healthy at 47%, underscoring the underlying strength of the core business. At the bottom line, normalized PAT grew by 63% year-on-year to become IDR 3 trillion in full year 2025, supported by the stronger operating performance and improving operating leverage. Reported PAT continues to be impacted by integration-related costs as well as one-off items, which is temporary in nature and aligned with our transformation. Overall, our full year 2025, we demonstrated a strong financial outcome, the revenue growth supported by the pricing discipline, resilient in the profitability despite of the integration acceleration as well as integration as well as a significant stronger normalized bottom line. This position is good for us as we move into full year 2026 with a clearer earnings profile and increasing contribution from synergies. Next slide. The slides provide a quick reconciliation between our reported numbers and normalized EBITDA as well as PAT will help us to clarify the underlying performance of the business during the integration phase. On EBITDA basis, reported EBITDA full year '25 was IDR 17.8 trillion. This includes IDR 2.4 trillion of integration-related OpEx, mostly on the network costs and people costs. These are primarily associated with accelerated execution of merger initiatives. If we exclude this one-off integration costs, the normalized EBITDA stands at around IDR 20.1 trillion, reflecting the underlying strength of our core operations. At the bottom line, the reported PAT was impacted by integration OpEx and then accelerated depreciation and asset impairment. Adjusting for these 3 items, the normalized PAT for full year 2025 will be IDR 3.3 trillion. These adjustments are temporary and integration related, and they do not change the fundamental earnings capacity of the business as we move beyond the integration period to the next slide. Following the normalized EBITDA and PAT, this slide basically walks you about the operating cost base post the merger. Reported OpEx increased by 18% quarter-on-quarter in Q4 '25, largely reflecting the integration-related expenses and the expanded scale of operation after the merger. On a normalized basis, excluding the integration costs, OpEx increased by around 6% Q-on-Q, which is broadly in line with our business expansion. This indicates that the cost discipline remains intact and the majority of the increase is temporary and nonrecurring in nature. From a cost mix perspective, the main drivers for Q-on-Q increase coming from 3 factors, mainly: number one, higher labor costs related to the integration activities; second one, increased sales and marketing to support 5G launch and network expansion. And then the third one, higher infrastructure expenses due to more sites and network integration. These increases are structurally aligned with scale and integration rather than in efficiencies. Okay. So that's it from me. I shall now hand over back to Pa Rajeev, to provide the full year 2026 guidance and the proceeding parts. Thank you. Rajeev Sethi: Sure. Thank you, Pa Antony. And as we mentioned, I will talk a bit more about the 2026 outlook. Starting with revenue, we expect revenue growth to be broadly in line with the overall market, which we believe should be recovering from a bad first half of 2025. And as all of us know, there's been a strong recovery in the second half of the year, and we expect that recovery will continue, and we'll want to participate in that market growth. And this will reflect a very disciplined approach that will prioritize value and sustainable return over just volume-driven expansion. EBITDA growth is targeted at approximately 2x the revenue growth, supported by continued cost discipline, operating leverage and the ongoing realization of merger synergies. Capitalized CapEx for 2026 is projected to be around IDR 15 trillion. This may inch up higher depending on our ability to execute all the CapEx projects which we have. If we are able to do that, it may inch towards IDR 20 trillion. And this level of investment is focused on strengthening network quality, completing integration and supporting targeted 5G expansion, while maintaining financial discipline. On synergies, we are targeting a merger synergy of between USD 250 million to USD 300 million in 2026, driven by efficiencies in network operations and vendor procurement. Beyond 2026, we remain firmly on track to achieve our full synergy potential, which as stated earlier of between USD 300 million to USD 400 million annually once the integration is fully completed, which should happen by end of this year. So this was for me, and I conclude my summary hand it back to Chris. Christopher Kusumowidagdo: Thank you Pa Rajeev and Pa Antony for the presentation. Ladies and gentlemen, we will now proceed to the Q&A session. [Operator Instructions] The first question comes from Piyush Choudhary from HSBC. There are 4 questions. Actually just the first one. But the normalized EBITDA growth, which is only 1% Q-on-Q when the revenue is up 4% Q-on-Q. Second question is about the outlook for mobile ARPU and how are the trends in first Q 2026, so far? Question number three, what is the fixed broadband ARPU and in fixed broadband, what is the outlook for both subs and ARPU? And the fourth question, any update on the potential spectrum auction timing and pricing? For the first question, I would like to invite Pa Antony to provide some clarity on that. Antony Susilo: Okay. Thank you Piyush. On the first item regarding the normalized EBITDA, why the growth is only 1%, while the revenue is up by 4%. I think as explained by Pa Rajeev earlier that in Q4, we did a lot of campaign on the 5G, anticipating the 5G launch. So we are already entered 33 cities in Q4 2025. So because of that, then there is an additional cost increase from the sales marketing activities. So I think that will answer the number one. On the second question maybe Pa Oses. David Oses: So the outlook for mobile ARPU in 2026, if you take a look to the last couple of quarters, you can see that our ARPU has increased significantly. Where did the ARPU growth come from? Two areas. One is because our subscribers use more, so more gigabytes per subscriber. And number two, because our yield or price increased. So ARPU increases because people use more and because what they use, it's more expensive. If you have seen our yield in the last 2 quarters have grown double digit. So at almost 10%, right? So we have had a significant increase in the price per gigabyte or the revenue per gigabyte, very, very healthy. I would say that in quarter 1, you can expect more of the same. So our bet for good quality subscribers is there. So I guess that we will see ARPUs moving in the correct direction, up, with prices also moving in the correct direction and traffic coming as well. So I would say that we could expect ARPUs to keep moving in the same direction. Christopher Kusumowidagdo: Yes, David. For the FPD, I would like to invite Pa Feiruz to provide some color on the [ FPD ] Feiruz Ikhwan: Sure, Piyush. Thanks for the question. For ARPU, typically, we've not disclosed in terms of the fixed broadband ARPU. But I guess, let me allow to give you a bit of color in terms of the outlook, right, for the subs and ARPU. I think you have seen the market and industry have seen some moderation in the ARPU. But I think suffice to say that any decline in ARPU that we see are much more moderated compared to the res of the market. I think that clearly reflects also our discipline, right, in pricing and focusing on higher quality acquisitions. I think from the subscribers, there's a lot more demand, right? I think the broadband demand remains structurally strong, right? In Indonesia, we see a huge opportunity for growth, as data consumption increases, in particular, in the home. Having said that, I think we need to be responsible, right, in terms of capturing the growth and targeting the right segments by offering the right products and without, shall I say, destroying right, further value. Antony Susilo: Thank you, Pa Feiruz. Rajeev Sethi: Yes. On the last one, on the spectrum, Piyush, on the timing, we believe this should be completed and awarded by H1 of this year, the first half. Pricing, I would not want to speculate. We just hope that the pricing is rationale, which enables us to offer better services to the customers. Christopher Kusumowidagdo: I'll open the line for Piyush. Piyush Choudhary: Just 2 follow-ups. Firstly, which spectrum band are you using for 5G? And are you deploying or SA or NSA? And secondly, on your kind of subscriber base of 73 million, how much is the 5G device penetration at the moment? Rajeev Sethi: Yes. So currently, we are using NSA and the spectrum which we are using is [ 2,300 ]. And the device penetration, David, would you want to? David Oses: Yes, device penetration in the cities that we are launching in the cities, the 33 cities that we are already up and running. We can say that the device penetration is around 20% in the cities in our own customer base, could be close to that number as well. I would like to underline in any case that even though the device penetration today in those cities, of course, in more rural areas will be lower in the cities that we are launching, it's around 20%. But the most important is that the replacement of the devices, the new devices that are coming are in a bigger percentage, 5G devices. Christopher Kusumowidagdo: Next question from [ Sabrina ] from [ Prime Securitas ]. Three questions. First one, should we expect accelerated depreciation to continue only through first half 2026, in line with the completion of our integration? And it would be helpful if you could provide an indication of the magnitude. Question number two, noted a significant increase in salaries and allowance expenses, could you elaborate on the drivers? Is this related to costs associated with employee optimization? And should we expect this level to persist on normalized post first half of 2026 once integration is completed? Third question is, does your EBITDA guidance incorporates the potential costs related to this year's spectrum offsets? For all the 3 questions, I would like to invite Pa Antony to provide some color on that. Antony Susilo: Okay. So on the first question on the accelerated depreciation. I think we mentioned that our full integration will be completed by 2 years. So I understand that from Pa Rajeev presentation, as we mentioned, the MOCN network already happens like some 70% already. But then in terms of the accelerated depreciation, I think will not be witnessed by first half of 2026, it will still continue until end of 2026. But I believe the Q4 2026 hopefully, will be already showing a lower rate starting Q3, Q4 because the heavy one in the first half in mid, yes, correct, maybe Q3 also correct. But then Q4 will be tapering off to the last one. Yes. That's on the first one. The second one, in terms of the significant increase in salary and low expenses in Q4. Yes, it is mostly in the Q4, there is risk cost interest associated to the employee optimizations. Yes, there is some program that the management leads to the company that -- because we hear from the employees that some of the employees know that they want to make some -- they want the management to make some programs to offer them resignation program. So it is based on mutual scheme program. And then some of the employees took that program. Because of that, then we incur quite a number of operating expenses in terms of personal expenses. So these things only happened in December, this mature scheme program. Next year, I think it will be already -- will be very, very minimal, I would say. That we still see that there is some very things that we can optimize, but it will be minimal. The biggest chunk already happens in 2025 -- December 2025. So I think that's to answer number two. And number three, does your EBITDA guidance incorporate the potential cost spectrum? Today, this EBITDA guidance is before the spectrum auction. Because at this moment, we don't know how much is the spectrum piece that we will be opened by the -- or will be finalized by the government at this moment. So we -- this EBITDA guidance is still outside or exclude the spectrum auction. Christopher Kusumowidagdo: Now please open the line for [ Sabisa ] if you have any follow-up questions. Unknown Analyst: Maybe just one follow-up questions, but just not related to my questions earlier. I just want to know about the ARPU momentum because we track like in January, I think there has been no bonus quotas being offered in January. So are we seeing this trend to continue in February as well as March? Is this part of the pricing strategy to lift up the data yield going forward? Or as we know that the festive season is approaching soon, right? So are you guys planning to increase some bonus quota. And therefore, we should anticipate like there could be some pressure in the value for first Q? David Oses: Actually, no. So as you say, the closer the festive period, the better the moment to monetize. Let me put it this way. So independent of that specific seasonality, I think our strategy is clear, we want high value customers and our strategy is going to be to try to avoid as much as possible this previous or be at least very conscious of the price per kilowatt that we are charging. In that sense, again, you can see that in the last 2 quarters, we can -- we have been able to increase the revenue per gigabyte double-digit, 10%. So I think that shows very clearly that we are very serious on our strategy of repairing the market, number one, and going after the high-quality subscribers. So this is our strategy, and this is how we'll follow. Christopher Kusumowidagdo: Do you have a follow-up question? Unknown Analyst: No further question from me. Christopher Kusumowidagdo: Let's move on to the next question from in Safari from [indiscernible]. Now that XLSMART has exited its position in Mora, how will the company navigate its future focus? And second question, despite the year of a year, a dip in subscriber, will XLSMART continue to pursue its fixed mobile strategy? Or will you be focused primarily on your core mobile telco business. I would like to invite, Mr. Rajeev to provide some color. Rajeev Sethi: I think exiting Morato was decided premerger that the principal shareholders investments in the subsidiary companies will be monetized. It's part of that. But it doesn't fundamentally change our future, especially on the home broadband or SPP, as you call it. The focus on this continues. And as we said earlier, we would want to work with any partner who is in a position to provide us access to home passes. We are working with the biggest FLP providers in the market, fiber lease providers, and we'll continue to expand that part. The other part is whether FPB is an option for us or we'll go back to only mobile telco. I think all of us realize that more and more consumption eventually will happen inside the home. So it is super important for us as a mobile operator also to win the home market also. And that focus will continue. Towards that, we'll have both the strategies, which will be fiber at home and also FWA on 5G. And our 5G investment, as we spoke about, we are very proud about blanket 5G coverage in many cities, and we'll continue to roll that out. And all those cities will be using 5G, FWA to provide a very attractive alternative option for the customers to enjoy a fiber-like WiFi experience at home. So short answer is the focus will continue. In fact, it will be even more stronger as we move forward. Christopher Kusumowidagdo: Thanks, Pa Rajeev. Now I'd like to open the line for Mr. [indiscernible] ask follow-up questions, please, you have. Since no follow-up questions, I think we can move on to the next question. The next question is coming from [ Brian ] from [ UOBKN ]. How much more integration costs should we expect in 2026? Could you provide some color on when this cost will be booked? Also there is regarding accurate depreciation, impartment costs and sell costs, could you provide what page you'll see this group? I would like now to invite Mr. Antony to provide the color. Antony Susilo: Okay. The integration costs for 2026, we expect the amount will be less than what much less than 2025. If you look at the 2025 figure, it's IDR 2.4 trillion. But then I think I believe in the 2026, it would be less than IDR 1 trillion. That's on the integration costs. And then the question regarding the accelerated depreciation, I think on the external depreciation, I already mentioned a little bit, but if you want -- just to give another color on the amount. The amount will be more or less around IDR 5 trillion. So in the 2025, it's around IDR 4 trillion, IDR 4.7 million, I believe, and then going up to around IDr 5 trillion, slightly higher, okay? So I think that's the answer to the question. Christopher Kusumowidagdo: Thank you, Pa Antony. Brian, any follow-up questions? Unknown Analyst: No, thank you. Christopher Kusumowidagdo: We have the question coming from Arthur Pineda from Citi. There are 2 questions. First one is where do you see the market growth levels in 2026? And number two, can you help us identify the depreciation and amortization trend for 2026? What was the annual D&A being moved from the assets that will remove based on accelerated depreciation? There are 3 questions. The third one, where do you see mobile and broadband user base into first Q 2026, do you see this reporting to growth? Or do you still see some churn? I think we can start question 1, on the market growth level. I would like to invite David. David Oses: Well, actually, we don't usually give the guidance on how much the market can increase or not. That's why when we gave the guidance, we see in line with the market, right? And we don't give a specific number. Now if you ask me, I think we have -- I think we have the correct momentum to believe that the market can grow healthily this year unless, again, something strange happens, right? So I think we are in a correct momentum to have a good year. Again, I don't want to say this too much because if you asked me 2 years ago, in February, I will have said the same, and then if you don't have that, right? But again, I am not able to give you a number. That's why when we give the guidance, we say in line with the market. Christopher Kusumowidagdo: Thank you, David. Second question, maybe Pa Antony, can you give more color on the D&A? Antony Susilo: On the D&A for 2026, I think as I mentioned earlier, the D&A consist of accelerated depreciation as well as the additional of the -- because we are keep expanding, and we are expanding around 7,000 around 8,000 sites in 2026. So with that, what we call the actions, the movement. So we are expecting that the D&A for 2026 will increase maybe around 10%, 15% from 2025 figures. Yes, because accelerated depreciation still continue at IDR 5 trillion. And then the normal depreciation, of course, will -- because of the additional of new sites, then we have to start recognizing the depreciation. Christopher Kusumowidagdo: Okay. That's it. -- thank you, Antony. And the third question, where do you see on mobile and broadband users in 2026? I think David already give some color on that. But Pa Feiruz, do you want to take some colors on your broadband? Feiruz Ikhwan: Sure. I think typically, we don't provide guidance for the quarter. What we see is I think the market remains competitive. Having said that, we are very conscious and deliberate in trying to acquire quality subscribers, and that's the focus for value rather than just a short-term volume growth, right? Volume growth. Having said that, we've seen signs of stabilization, but it's still very early days. We still continue to improve and focus on getting the right customers as well as improving the value of our existing base. Christopher Kusumowidagdo: Thank you, Pa Feiruz. Arthur, do you have any follow-up questions for us? Arthur Pineda: Yes, please. Just a clarification with regard to the merger expenses being booked for 2026. You mentioned IDR 1 trillion earlier. Is that just for the OpEx side? And should we expect another IDR 5 trillion for the asset impairments? Is that how we should look at this? Antony Susilo: You're referring to the IDR 1 trillion integration cost here, Arthur. Is that correct? Arthur Pineda: Yes. Because in the earlier question, I think you responded with around IDR 1 trillion integration cost. Is that just for OpEx and should we assume an additional IDR 5 trillion for asset accelerated depreciation. Is that how we should look at it? Antony Susilo: Yes. So in 2026, yes, there will be a onetime cost again, which is integration costs, which is hopefully less than IDR 1 trillion. That one is related to network as well as to people. And then for the second one is the accelerated depreciation, is around IDR 5 trillion, which is noncash items. It's another onetime cost again that we have to incur this year. Christopher Kusumowidagdo: Now let's move on to the next question. Henry Tedja, from PT Mandiri Sekuritas. The first one, can we check about the integration cost outlook for this year, which I believe Pa Antony has already answered earlier. And second person regarding the effort to get the quality subscriber base, can we check better the subspace decline trend will start to stop or slowdown post 4Q 2025? Pa David to provide some color on the [indiscernible]. David Oses: Yes. So the subscriber base -- we usually, internally, we divide the subscribers in subscribers of less than 3 months, that have been with us less than 3 months and subscribers that have been with us more than 3 months. Those that have been with us long tenure, we call them high quality, right, usually a high ARPU, high quality. Most of the subscribers that you see that are disappearing are those that are less than 3 months. Who are those subscribers? Those subscribers are buying again and again, a SIM card, use and throw, use and throw. So probably, we were counting them more than once. So it's not one subscriber, maybe it was counting like 5. That's number one. Number 2 type, it's a very price-sensitive person who is willing to keep changing the SIM card because of a few gigabytes or a few rupia up and down. So again, our strategy was, okay, we are not going to entertain those subscribers. There are other operators where they can go and keep being entertained, but not us. So we will protect our network in order to provide the best customer experience for the good quality subscribers. We did -- we started cleaning back in quarter 3, quarter 4 and in quarter 1, I believe that we will still have some correction of these subscribers of this low-end, low-ARPU subscribers. So yes, in any case, again, our objective is to increase the amount of subscribers of good quality subscribers. That's our main topic rather than the overall or the total amounts that we have. So that's a little bit of strategy. So probably in quarter 1, you will see the total amount declining. But hopefully, internally, we will see the good quality subscribers keep increasing as we have seen in the last few months. Christopher Kusumowidagdo: Thanks, Pa David. Henry, do you have a follow-up question to us? Henry Tedja: Perhaps 2 questions -- 2 additional questions. First one, regarding the employee optimization costs. Would you mind to share the exact amount of the cost for this employee optimization. The second question, perhaps regarding the 5G. I mean like we are discussing about the 5G earlier in the presentation. And then in terms of how big we spend in terms of the marketing expenses and also investment as well for the 5G. So I'm just curious, what will be the factor impact for the SRS in terms of the productivity and ARPU for the subscribers in here? Rajeev Sethi: Yes. I think on the first one, you spoke about the for people cost because of the integration, separation of people. Given the sensitivity, it's people involved, we would not want to get into too much details there. But what we can confirm is most of the cost on account of card has been incurred in 2025. There will be a small marginal cost as we move towards 2026, possibly in the first half, and it will be much smaller than what we've incurred in last year. And I think there are a couple of other questions, which is about the 5G cost, especially on the marketing, communication, sales part. Yes, quarter 4 was higher because we were just launching 5G. And we had saved for that cost during the course of the year because we knew about the impending 5-year launch. On the overall sales and marketing costs, there would be some quarters in quarter in 2026, where we are spending more in some quarters less, depending on the rollout of 5G and the seasonality, as you would appreciate. What I would encourage all of you is to take a look at an average cost for 2026 on sales and marketing, which will be very similar to 2025. Obviously, the focus will shift more and more on 5G, especially in the cities where we are launching 5G. But the overall percentage will remain percentage to revenue will remain the same. In terms of the ARPU increase, I think David can add a bit more color on this. But as we said, we believe 5G should be for everyone, and that's what we are doing. So most of the ARPU increase, we believe, would be consumption-led because people will tend to consume more because of better 5G experience. And there are certain specific plans which we are launching on 5G, which will also help us generate more revenue. But David, in case you want to get into more details. David Oses: No. As Pa Rajeev mentioned, right, so our strategy of monetization is passive monetization in the sense that anyone with a 5G device access the 5G network in that way, their customer experience will be much better and hopefully, the usage. And as a consequence, the ARPU will be higher. That's one, plus we have specific products, very attractive products at higher prices, that will help us increase the ARPU. What we have seen in the very first month, 2 months that we have been already with the 5G specifically that. So we see that the 5G devices in 5G areas, their ARPU is significantly higher than other devices in other areas, be 5G devices in other areas or course for devices in other areas. So again, it's exciting for us to see that. And now it's more about implementing this properly and continue the expansion of the 5G in more areas. Christopher Kusumowidagdo: Let's move on to the next question from Aurellia from BNI. There are 2 questions. The first one on the sales and marketing expense. Given the ongoing 5G expansion, do you expect 2026 outlook to follow the 4Q trend? This one likely -- Unknown Executive: I already answered that. Christopher Kusumowidagdo: And then the second question is on ARPU, I think this one is already answered by Pa Feiruz. I think there is a question from Sachin. Unfortunately, he is not able to type, I would like now to unmute this line, Sachin from UBS. Can you please ask your question? Since Sachin is not responding, we will take your questions off-line after this call. Seems like that it, that's all the questions that we have for today's conference call. Thank you for participating. That concludes today's conference call, and thank you once again for everybody to participate. If you have any further questions, please reach out to investor relations. Stay safe and happy, and we look forward to speaking to you next quarter. Thank you.
Operator: Good day, ladies and gentlemen. Welcome to the SmartCentres REIT Q4 2025 Conference Call. I would like to introduce Mr. Peter Slan. Please go ahead. Peter Slan: Good afternoon, and welcome to SmartCentres' Fourth Quarter and Full Year 2025 Results Call. I'm Peter Slan, Chief Financial Officer, and I'm joined on today's call by Mitch Goldhar, Executive Chair and CEO, and by Rudy Gobin, our Executive Vice President, Portfolio Management and Investments. We will begin today's call with comments from Mitch. Rudy will then provide some operational highlights, and I will review our financial results. We will then be pleased to take your questions. Just before I turn the call over to Mitch, I want -- I would also like to refer you specifically to the cautionary language about forward-looking information, which can be found at the front of our MD&A. This also applies to comments that any of the speakers make today. Mitch, over to you. Mitchell Goldhar: Thank you, Peter. Good afternoon, and welcome, everyone. Our comments this afternoon will be succinct to allow more time for your questions. SmartCentres continued its strong performance in Q4, closing out 2025 strong, same property NOI growth, high occupancy levels, competitive rental lifts, higher FFO, developments on schedule while maintaining a conservative balance sheet. At the property level, performance across all sectors throughout the country, retail, industrial, residential, storage and office are all experiencing healthy short- and long-term growth with high tenant retention. And in the area of retail specifically, very healthy growth. Among other things, this is translating into upgrading and expansion of our existing retail sites with stronger covenants as well as the development and build-out of newly acquired retail sites across the country. And while the business continues to grow organically and through new income-producing developments, we will continue to carefully manage our debt and debt-related metrics. In that regard, we have improved our financial flexibility with over $1 billion in liquidity, 90% of debt being fixed rate and for the first time, attaining an unencumbered asset pool of $10 billion, which Peter will speak to in a moment. But before that, let me turn it over to Rudy for some more operational highlights. Rudy? Rudy Gobin: Thanks, Mitch, and good afternoon, everyone. The fourth quarter was once again a standout and delivered on the momentum of the prior quarters. Tenant demand for space remained strong, delivering high-quality income across the portfolio, maintaining a leading 98.6% occupancy at year-end, unchanged from the prior quarter. Same-property NOI continued its strong momentum with 3.7% growth for the year and 5.6%, excluding anchors, and well within the range we outlined at the beginning of the year. We extended 88% of the 5.3 million square feet of space maturing during the year with rental spreads of 8.4% excluding anchors and 6.3% all-in. Cash collections remained strong at near 99% in the quarter. Strong retail demand for our high-traffic centers have allowed us to expand into complementary uses with medical, daycare, entertainment, racket and sports facilities. Our premium outlets continue to excel in driving traffic with improving tenant sales and a resulting percentage rents, which we convert to base rent at maturities. At Toronto Premium Outlets, the increasing demand for space has developed into an expansion opportunity of 85,000 to 90,000 square feet, with top end tenants already signing leases. This expansion will be accompanied by a new parking deck, and all of this is already underway with the construction start expected this summer. As you know, after the year-end, Toys filed for credit protection, but prior to that, the REIT had already terminated its 6 leases and taking control of the space based on the advanced lease negotiations to backfill with grocers and TJX banners. We expect to re-lease at least half of these locations very soon and at higher rents. On ESG, we continue advancing several initiatives across the organization as part of our multiyear plan, including materiality assessments, decarbonization planning, physical preparedness and response to the climate change, cyber security improvements and enhancing our disclosures. Overall, the business remains strong. Rents continue to grow on the foundation of an improving retail environment, greater cash flow stability, improving covenants and an expanding footprint. We expect the portfolio to continue this momentum throughout 2026. Thank you, and I will now turn it over to Peter. Peter Slan: Thank you, Rudy. As you have seen in our release, same-property NOI growth remained solid, increasing 2.9% for the quarter or 5.1% excluding anchor tenants, mainly due to lease up and renewal activities, partially offset by the impact of an expected credit loss provision, primarily associated with one retail tenant. Excluding the credit provision, same-property NOI grew at 4.5% in the fourth quarter. The change in FFO this quarter was primarily due to NOI growth and the fair value adjustments on our total return swap. During Q4, we also closed on 7 townhomes in our Vaughan Northwest project. This has resulted in a cumulative margin of approximately 23% for the project to date, bringing Phase 1 of the project to virtual completion with 118 of the 120 homes now closed. We again maintained our distributions during the quarter at an annualized rate of $1.85 per unit. The payout ratio to AFFO continues to show improvements at 89.2% for the full year ended December 31, 2025. Adjusted debt to adjusted EBITDA was 9.7x in Q4, up slightly from last quarter. The weighted average term to maturity of our debt, including debt on equity accounted investments, is 3.4 years, a significant improvement from 2.9 years at Q3, largely as a result of debentures we issued during the quarter and the maturities that were refinanced. As in previous quarters, we have updated our MD&A disclosure, focusing on those development projects that are currently under construction. As you can see on Page 18, there were 8 projects under construction at the end of Q4 unchanged from the prior quarter. And with that, we would be pleased to take your questions. So operator, can we have the first question on the line, please? Operator: Mario Saric from Scotiabank. Mario Saric: Just maybe to start on the capital recycling/allocation side. Mitch last quarter you talked about some potential dispositions of some vacant buildings. Could you just give us an update in terms of what your dispositions targets are like in 2026 and the timing thereof? Mitchell Goldhar: Mario, we have something going on one of the -- I think maybe exactly how it was framed last time, but there were a couple of sales that were still not done that we were anticipating. One of them is -- seems very much alive. The other one -- I think the other one it's actually a vacancy that we thought we had sold, but it fell through that we're now negotiating a lease on. So that's in terms of sort of the 2 that were outstanding from last call. And then in general, the market conditions seem to be improving for capital recycling, for dispositions. So we are hoping to see some dispositions of -- first and foremost, potentially some non-IPP, some land which we are currently starting to focus on. Mario Saric: And Mitch, what would you attribute the improved kind of sentiment in terms of the buyer pool? Mitchell Goldhar: Probably, I think it's partly to do with there's -- I mean not that the world is so great, but it does feel like there's a little more visibility or a sense of visibility whereas, a year ago, there was a lot more uncertainty. People were actually sort of nervous a year ago. I don't -- I think that there's a little bit more confidence. So I think it's a big one. I guess, construction prices are softening, little bit more motivation in the sub-trade marketplace so for certain types of construction. I think that's helping. And I'm not saying it's red hot or anything. But I think in terms of people making some moves and opening their wallets a bit, it does feel like they're -- it's better than it was. Mario Saric: Got it. Okay. And speaking of construction costs, I may have missed it, but in terms of the expected expansion, the Toronto Premium Outlets. Can you share with us any kind of range in terms of the cost and types of returns that you think you can achieve? Mitchell Goldhar: I'll not going to really jump in there, too, but the returns are quite solid in excess of -- we anticipate in excess of 8%. And probably we're still -- you know what, we're still negotiating on the construction. So I'd rather not speak to the cost, our contractors could be listening in. We are in negotiations right now. But it looks like a pretty healthy 8-plus percent return. Mario Saric: My last question on the operational side. You have industry-leading occupancy every time we think it can't go up any higher, it does. When you look at '26, what is your projection in terms of at least maintaining the occupancy like we've seen a couple of tenants face a bit of pressure, a colleague of yours highlighted, a couple of beer stores, for example, that were given back. So I'm not sure what your exposure there would be, but how do you see the occupancy both kind of in place and committed evolving as '26. Mitchell Goldhar: Well, of course, you had to say couldn't get any higher. And then, of course, we have the rest. So -- but this is something that's actually, frankly, the least what's the right way to say it. We were not surprised by the Toys"R"Us situation. As you know, we already dealt with a couple of them before they declared. So if you ex them out, I think you're looking at very, very very strong occupancy levels. And we have a lot of interest in the Toys spaces at better rents and better covenants and better draw and long-term leases et cetera, et cetera. But I'll let Rudy further illuminate on that. Rudy Gobin: Mitch said it well. The only thing I'd add is we terminated those leases before the filing, so we have control of the space because we had parties we were talking to grocers, TJX banners requesting those spaces, they're perfect sizes for food for the likes of TJX banner. So we have control of all the spaces, and we are exchanging paper on 4 of the 6 of them already, which is fantastic. So we -- excluding that, we are expecting another strong occupancy year. Operator: The next question is from Giuliano Thornhill from National Bank Financial. Giuliano Thornhill: Just kind of one question on deleveraging. I missed the tail end of the question actually that was asked earlier. Just with your kind of payout ratio at the mid-90s, like net debt at the high 9. Has the REIT given thought to more aggressively selling some of the noncore IPP and if not, why? Mitchell Goldhar: Well, first of all, I don't think we really have any noncore IPP. So -- and it takes an enormous effort to create the shopping centers, most of these shopping centers or some of the other forms to create in the first place. And we put a lot of thought -- upfront thought into developing them. Most of them, as you probably know, we developed probably 85% to 90% of the portfolio. We developed it. So at the end of the day, we do all the upfront strategic thinking. And so we don't really have -- we didn't buy varieties of forms of retail and/or whatever we can get our hands on to arbitrage IPP for debt and so on and so forth. So we don't have sort of fringe assets that are undesirable. So we don't -- and it's tough to move the needle, even if we did want to part with IPP. I mean, it would be tough to move the needle in terms of cap rates and giving up that income. It's very, very good income and we collect 99% or over 99% of our IPP. So we forge on, with our IPP. We do have a lot of potential PUD for disposition. So we can afford "to sell PUD" and that would be our first -- that's our overwhelming preference in terms of capital raise and capital recycling. It really does move the needle. The market just hasn't been there. It seems like there is a bit of a market there now. I don't want to overstate it. We're going to test it, but that's where we're going to focus on. Giuliano Thornhill: Yes. And I guess I was going to my follow-up here more so where are you kind of starting to see the land values bottom or possibly increase, at all, in your portfolios? Mitchell Goldhar: Yes. I mean, wherever we have retail land, if we haven't developed it, we could sell that. But we're obviously not going to sell that. But the mid-rise, the lower rise, mid-rise residential, there's a feeling that there's some potential. There are seniors housing seems to have life in terms of potential dispositions. We're getting approached. We have excellent sites for both mid-rise, high rise for that matter, and seniors homes. So yes, there is a market for storage, but we're in the storage business. So we're not really sort of inclined to dispose that. So those are the main categories that we think there's a little bit of life. Giuliano Thornhill: And so how large is that opportunity the seniors and kind of low to mid-rise within your portfolio? Is it 20%, 30% or less than that? Mitchell Goldhar: I mean I'll come back to the -- I'm not sure if you meant what percentage or what we have, I mean -- but no, we're -- I'm talking about we could sell -- I mean, we have somewhere in the 60 -- plus or minus 60 million, 70 million square feet of permitted density across the portfolio on our owned properties. So what I was referring to was selling some of that some of that density carving those out. Giuliano Thornhill: I'm just trying to get to like a number that is reasonably realizable in the next couple of years for those 2 uses is kind of where I was going with the question. Mitchell Goldhar: Yes, in the next couple of years, and that's a lot easier than saying the next year, but the next couple of years, I mean, we could see -- I mean, we'd like to sell $200 million to $300 million worth of that over the next couple of years. And more if there's a market for it. Operator: The next question is from Lorne Kalmar from Desjardins. Lorne Kalmar: Just 2 quick ones for me, and I'm really sorry if I missed it. I was just wondering, did you guys mention a same-property NOI outlook for 2026? Peter Slan: As you know, we had a 7%. And if you excluded Toys from this mess we would be in a similar range for 2026. Toys is going to put a little damper on things at the beginning of the year. So we might be a little bit lighter than we were last year because of that. But we're expecting something in that range, ex the Toys. So -- and we -- and because we have good backfill for the Toys, which won't take occupancy right away because we'll execute some of these leases very soon. But by the time they take possession, it's probably into Q2. So you won't see it until you get closer to the end of the year where it catches up. Lorne Kalmar: And then I was just wondering, any updates in relation to building out new stores for Walmart. I know you guys just opened the one in, I think it was in Oakville or just west of the GTA here. I was just wondering if there are any updates on that front. Mitchell Goldhar: First of all, I guess, the new retail program here is really picking up, in general. So I would say that is something worth noting. We are anticipating quite a bit of growth over the next, let's just say, 5 years in the areas of -- I mean, grocery, Loblaws, Sobeys, potentially Metro, Costco, TJX. Those are large space users. And of course, we do have a long-standing relationship with Walmart. And so we anticipate that we will be also seeing some growth in the new Walmart category as well. Lorne Kalmar: As of now, I guess, so nothing really to report on this as it relates to Walmart. Mitchell Goldhar: Well, I think at this moment, we will leave it at that. We hope we'll be able to expound on that. But I guess, there's a lot going on in general across the board, in all of the areas that I just mentioned, not just garden variety kind of growth in the new retail, new sites category of growth. So we will start to shed more light on the details of that. But I guess, in the meantime, I would think of it as it's quite robust. Lorne Kalmar: Okay. Just maybe going back to you mentioned the new sites for growth. Obviously, Premium Outlets. Any other retail developments in the immediate future for you? Mitchell Goldhar: Yes. Yes, quite a few. I would -- sort of what I mean -- what I'm saying is we're anticipating quite a few new acquisitions of new sites across the country. Operator: The next question is from Dean Wilkinson from CIBC World Markets. Dean Wilkinson: Mitch, you get a lot of questions about what you're going to sell. I'd like to talk a little bit about more what you're going to keep. When you look out, call it, 5-plus years. Do you think that there is going to be a shift in the mix between retail, self-storage and multifamily and some of the other verticals? And secondarily to that, do you think any one of those verticals could hit a size where they're potentially able to just stand on their own. Mitchell Goldhar: Well, listen, based -- just on the retail and what's going on because what we're doing now is going to come out of the ground in the next 2, 3, 4, 5, 6, 7, 8, 9, 10 years, okay? And it's been -- it's nothing driven per se by us. It's actually being driven by the consumer. And the ones who have the closest relationship with the consumer are the retailers like I was naming like Loblaws and like Costco, Walmart, et cetera. And they're saying through their interest in new locations is that there's going to be -- there's a huge investment, a huge commitment, a huge belief in physical retail shopping. And you put a lot of those different retailers and ones that I haven't named that aren't as large space users together and you've got a shopping center in a country that's seen very little physical retail construction in the last 12, 13 years, but a lot of population growth. So I mean, in the eyes of these retailers, there's a lot of catch-up. So we're one of the go-tos. We're one of the go-tos for that. So we're super busy buying new sites and processing approvals for the development of new shopping centers across the country. And that's going to kick in, really kick in like start to kick in action and really kick in the year after and the year after and the year after, really kick in. Those are quick. Those take us anywhere from -- take a year basically to go from commencement of construction, to lease commencement, to rent commencement. So those are really going to affect things over the next 5 years plus, plus and drive growth here. As far as storage seems like storage is -- I think the honeymoon is over, but I think everyone's sober about it, which is good. I don't think anybody is doing anything irrational. So I see that continuing and holding value. We were doing very well with storage. They do go on their own. We don't always put them in shopping centers, but we do stick them into our shopping centers where it makes sense. And the res is still very desirable as a use, but very skinny in terms of returns. I mean multi-res and condos basically don't exist. So we'll be standing by and waiting for the planners to line up again to start to recommence that program. Dean Wilkinson: So just think of that as ancillary and opportunistic, but it wouldn't be something that becomes a little more core. Mitchell Goldhar: Yes, I would say we wanted it to become more core. It will be more core ultimately because we do have a lot of permissions, but that's in a sense 5 to 10 years from now, it will start to become more and more core. But yes, correct. Our next 5 years, as it looks now, is going to be retail, be a nice little augmentation with the storage and some opportunistic, to use your word, I think it's right word for some mid-rise, low-rise residential where we can kick it, where we can knock it out at surface parking, wood construction and very low, no offsites, very little on sites accretive. We will do some of that, but it won't be core. Operator: The next question is from Gaurav Mathur from Green Street. Gaurav Mathur: Just one quick question on the renewal statistics. When you're looking at the renewal summary, we are noticing a few metrics moving down a bit year-on-year when you look at renewal rate both including the anchors or excluding the anchors as well as tenant renewal rate. Could you provide some color on why that's happening, just given the underlying strength in the retail strip center sector. Peter Slan: Gaurav, it's Peter. I wouldn't read too much into that. The biggest single driver is just the timing of when we have lease expirations during any given quarter. So that can move around a little bit. But as Mitch and Rudy both noted earlier, we continue to see very robust demand for space in our centers and -- but it does ebb and flow from quarter-to-quarter depending on the term of each lease. Rudy Gobin: If you look at the near 90% extension, that is consistent with the last few years as well. Operator: [Operator Instructions] The next question is from Sam Damiani from TD Securities. Sam Damiani: Just on the Toys"R"Us, how much of the 6 sites were paying rent for the full quarter in Q4? And how much rent do you expect to receive in Q1. Rudy Gobin: Sam, it's Rudy. I don't have that in front of me, but some of them are co-management partners. So we have some of them paying rent and some of them weren't paying rent in that quarter or part rent in nature. So I think we disclosed a higher provision in the quarter to reflect that nonpayment of rent. So that's what that was. And then early in the year, we had so much good interest from these other retailers I mentioned that we took advantage of terminating those leases in advance of the filing that Toys did. So it's to minimize the impact on the REIT. Sam Damiani: Okay. And then just on the 6 sites now vacant, that alone and nothing else happening, what would that do to your occupancy rate in Q1 versus Q4? Rudy Gobin: Yes. Well, again, there's the in-place occupancy and there's the occupancy, including executed deals. So half of those, like I mentioned, is going to be -- expected to be released before the end of the quarter. So it leaves another $0.3 billion. So the 98.6% may be 98.3% on an apples-to-apples basis. Sam Damiani: And just -- I noticed there was an acquisition of some land in Bolton. Is that for retail? Is that adjacent to the existing SmartCentres shopping center there? Mitchell Goldhar: Yes. It is for retail. We will announce the details of that at some point soon. But it is, I would say, part of everything that I was describing earlier about the retail growth program. So we do have interest from strong retailers. And we anticipate starting construction there sometime, hopefully, this year. Sam Damiani: And then in total, with all the push on retail development, you've obviously leased a lot of space last year for new build retail. Like how much -- I guess, you got TPO, potentially the site in Bolton, how much square footage do you think commences construction in 2026 on the retail site. Mitchell Goldhar: Maybe this year starting 200,000 to 300,000 but it's going to climb a lot after that. That just -- it takes a little bit of time to get all the permits and whatnot to go. But in terms of technically, in this calendar year, yes, maybe 200,000 to 300,000. Sam Damiani: And I did miss the part of the call at the start regarding TPO, I think I heard an 8-plus percent guesstimate on the yield that's looking at the cost, including the parkade. Mitchell Goldhar: Yes. Yes. The whole expansion, including the additional parking. Yes. 8-plus percent, yes. Sam Damiani: And rents would commence -- I didn't hear that if it was said 2028 is a reasonable visible timeline or? Mitchell Goldhar: Yes. We're hoping we can maybe pull it off in late '27. But yes, by 2028. Operator: We have one more question, Pammi Bir from RBC Capital Markets. Pammi Bir: Just coming back to leverage. Most of your peers have really worked to drive debt-to-EBITDA levels down lower. And investors certainly seem supportive of that. I'm just curious, what do you see as the right level for the business? And where does reducing leverage fit in terms of the priorities? Mitchell Goldhar: Yes, everything is a priority. So it's a question of balancing. I mean, the market likes growth, too. Market likes long average lease terms. Market likes strong covenants. Market likes refreshing of existing shopping centers. So we, of course, balance that because we also very much value our credit rating. So we look at all of these things. We have a lot of demand for new space. The good news is that the demand for new space is mostly single-story retail with that great parking, which means that within a year or so of commencement of construction, we're usually collecting rent. So to the extent, like always, that we -- everybody's debt-to-EBITDA rise and fall with various activities we're in an enviable position to be able to basically balance both. But this is not a one-trick pony. We are minded to grow and strengthen our network and strengthen our portfolio and our earnings. And of course, we're not going to commit any fall as it relates to important important metrics. Pammi Bir: Okay. Maybe one follow-up, and I don't know if you can answer this one, but in terms of the agreements with Penguin, the release indicated that the voting top right has expired. But I just wanted to clarify, is that part of the discussions in the new 5-year agreements. And then the second part of that is, do you expect to have the new agreements in place or at least announced by the end of the month? Mitchell Goldhar: Well, actually, everything expired at the end of last year. And we extended the parts of it that we were able to extend and one of them that we are not able to extend is the voting top-up, that needs unitholder approval. So that has expired and has not -- can't have been extended. So -- but the negotiations for a new contract are going on, going very well. And in terms of what form and whatnot that takes, that will be released, I guess, when it's absolutely finalized. But we're getting near the end and it's looking positive. Operator: Thank you. There are no further questions in the queue. Mitchell Goldhar: Thank you. Thank you for participating in our Q4 call. Of course, as always, please feel free to reach out to any of us if you have any further questions. Have a great rest of your day. Operator: Ladies and gentlemen, this concludes the SmartCentres REIT's Q4 2025 Conference Call. Thank you for your participation. And have a nice day.
Juha Rouhiainen: Good afternoon, good morning, everyone. This is Juha from Metso's Investor Relations, and I want to welcome you all to this conference call where we discuss our fourth quarter '25 and full year results, which were published earlier this morning. Results will be presented by our President and CEO, Sami Takaluoma; and CFO, Pasi Kyckling. And after the presentation, we'll have normally Q&A. And please note that we have reserved 1 hour for this call. And also a reminder of the forward-looking statements that will be used in this presentation. With these words, we are ready to start, and I'll hand over to Sami. Please go ahead. Sami Takaluoma: Thank you, Juha, and good afternoon also from my behalf. Happy to talk through the highlights of the last quarter of the 2025. We saw the market activity to be very much in line with our expectations that also resulted then for our orders to grow on a healthy way. including also then at the end of the year, being able to finalize the 2 larger orders from the Minerals capital side. Sales growth was good, and that also drove then the increase in our adjusted EBITA euros. And worthwhile mentioning here in this page definitely is the strong cash generation that the businesses did in the Q4. Looking from the figures point of view, orders received EUR 1.5 billion for the quarter, growth by 2% compared to the comparison and worthwhile also here mentioning that the currencies did have an impact, so organic growth higher. And sales was EUR 1.4 billion growth from the period, 11% and exactly same growth percent for our adjusted EBITA euros. And from the relative EBITA perspective, same delivery as year before, so EUR 16.1 million. Earnings per share was EUR 0.14 improvement from the year before. And then as mentioned, the cash was strong compared to the comparison period. Looking at our segments. Aggregates have been performing throughout the year. And in the last quarter, strong orders and performance was recorded. Orders received growth was to EUR 307 million from the EUR 294 million. This is double-digit growth in the constant currencies. Growth was driven mainly by the European market, which has been showing the pickup throughout the whole year already. Equipment orders growth was 7% and the aftermarket was 1%. Sales side, also growth, so EUR 330 million for the period. Year before, it was EUR 290 million. Equipment growth in the sales was significant, and the aftermarket was reflecting the previous period, so that declined by 3%. Aftermarket share now from the sales perspective is 30% compared to the 35% a year before. And then the adjusted EBITA for the Aggregates segment, EUR 53 million growth from the EUR 46 million year before, and the margin also improved from 16.0% to 16.2%. Strong sales growth was supported both adjusted EBITA and the profitability development. On the Minerals side, orders, EUR 1.194 billion growth from the year before, and that's reflecting 5% growth in the constant currencies. Aftermarket orders grew by 5%. And if taken the currency into account, that was a strong single-digit growth in the aftermarket for the quarter. And as mentioned and as published, there was 2 major equipment orders, copper smelter and also then the gold processing plant. ales for the period, EUR 1.13 billion million, and that was also growth from the previous period. Aftermarket in this was flat and the equipment had a very good period, finishing the projects and creating also from our perspective, the capacity for the new orders and deliveries. Aftermarket share of the sales, 57% for the period. Adjusted EBITA EUR 190 million growth from the EUR 173 million year before and margin point of view, same 17.1% as year before. Adjusted EBITA was driven by the higher sales and equipment heavy mix kept margin still flat for the comparison period year before. And looking then the dividend part as the year is in that point. So the Board proposes an increase in the dividend paid by Metso. Proposed dividend is now 69% of the EPS from the continuing operations calculation standard way as we have been doing that in the past year. So 2 payments, one in May and one in October. Total payout will be with this proposal, EUR 331 million. Then I'll let Pasi to walk through the numbers a little bit more into detail. Pasi Kyckling: Thank you, Sami, and good day, everyone, also on my behalf. Let's start with our profit and loss statement, where the Q4 sales increased 11% to EUR 1.443 billion, and this was driven by successful progression of several mineral equipment projects as well as good equipment delivery in our Aggregates segment during Q4. Equipment share was exceptionally high in the revenue mix and represented 49% of turnover, while aftermarket was 51%. On a full year basis, we increased the sales by 4% to EUR 5.24 billion. And then there aftermarket represented 54% and equipment 46% of sales. Adjusted EBITDA was up EUR 22 million in the quarter to EUR 232 million, and the margin was flat at 16.1%. On a full year basis, our EBITDA margin was 15.8%. In Q4, the equipment business profitability was at good level, both in Aggregates and Minerals supported by high volumes, whereas aftermarket profitability was at normal level. In Q4, we also recorded EUR 27 million of adjustment items and the makeup is basically 3 main components. First, we accounted provisions related to our Minerals restructuring that was announced earlier in 2025. Then we incurred Haggblom divestment-related losses during the quarter. And additionally, we had costs regarding one legacy project that we have still in our pipeline and which we are looking to complete during the year 2026. Additionally, in the discontinued operations, where we presented our Ferrous business, we accounted the final losses from that divestiture. And it's worth noting that early 2026, both the Ferrous divestment as well as the Haggblom divestment have been completed. Income tax rate for the quarter -- for the year was 24%, quite normal for our profit mix. In Q4, the tax rate was low at 21% due to the country result mix that we had during this quarter. EPS from continued operations was EUR 0.14, which is EUR 0.01 up from comparison period. Let's then look at our financial position and balance sheet where the overall position remains very healthy. Net debt end of the period was 1.1 billion and net debt-to-EBITDA KPI at 1.2x, well below our 1.5x target. And the evidence of the healthy situation is that Moody's in December changed our outlook from stable to positive while maintaining the Baa2 long-term credit rating that we have. Let me then close my part by a brief look at our cash flow and cash flow, like Sami already said, was certainly one of the highlights of our quarter. During Q4, we delivered strong cash flow from operations of EUR 365 million, and this was supported by working capital release of EUR 130 million during the quarter. Looking at the full year 2025, we delivered EUR 974 million cash flow from operations. And if I think this from the free cash flow basis, deducting CapEx and acquisitions from the operating cash flow and comparing that to revenue, we delivered 13% free cash flow margin, which is something we are happy with. With that, I would like to hand over back to Sami to talk about our strategy execution and outlook. Sami Takaluoma: Thank you, Pasi. From the strategy point of view, we go Beyond strategy was launched in the Q4 and happy to report that the execution has started well. And one good indication is also that we measure our own employee satisfaction. And one question there is about the strategy, and we did see very high engagement level overall and also very high improvement in the strategy question, meaning that we have a full energized organization to deliver. And certain things are already moving according to the strategy. From the acquisition point of view, it happened after the Q4 closing of MRA Automation, it's Multiskilled Resources Australia company. This was a very good addition to the strategy road map that we have built. Company is a leading provider of automation and software solution for the ports and terminals worldwide. And now proudly the employees are Metsonites, and we are working for the synergies and growth through this acquisition. And then as mentioned, the divestment side, making the portfolio ready for the future. So we have completed the Ferrous business divestment and also the Loading and Hauling business, meaning Haggblom. Investment side, one thing to report here is that we are building a new rubber products plant in China to be a relevant player for this very fastly growing business inside China. And then also good to report the new sustainability targets that we got in the very early days of the year approved by the SBTi. And they are good ambitious targets and the most ambitious ones in the industry. So we continue in that sense as well as promised in our strategy. Then looking at the market outlook, we are expecting that the market activity in both Minerals and Aggregates will remain at the current level for the next 2 quarters. Reminder that tariff-related turbulences could potentially affect the global economic growth and especially the certainty level of that one and can have an impact on the market activity. And in our previously published outlook, the expectation was that it also remains at the same level. So we are expecting to see similar kind of activity from the market as we did see for the Q4. Juha Rouhiainen: Thank you, Sami. Thank you, Pasi, for the presentation. And operator, we can now open lines for questions and answers. Operator: [Operator Instructions] The next question comes from Chitrita Sinha from JPMorgan. The next question comes from Christian Hinderaker from Goldman Sachs. Christian Hinderaker: I want to start with the Minerals OE development. I appreciate those the 2 big orders in the books for the quarter, which is nice to see. But if we strip those out, I get to EUR 220 million of OE in terms of order intake. That's down 22% Q-on-Q and 30% year-on-year. And I got to go back quite some quarters to get to at that low level. I'm just curious what's behind that? Is there a specific commodity weakness? Is it a timing effect as maybe you've alluded to on Page 7 of the release. It seems a little bit at odds with the strong commodity price unlock in permitting process and broader confidence in the turn you've had in recent months. I'll start there. Sami Takaluoma: Thank you. Relevant question, and there is no real link for the commodity prices as such throughout the 2025 when it comes to the Minerals capital side. So we have been receiving a good amount of small replacement orders and smaller projects as well. And this is -- no change in that. They do fluctuate based on the month and also the quarter in question had the lower amount of these ones coming in. But there is no real change in the actual demand of that and looking at the pipeline and also looking at the start of the year, they are having the normal volume, but there were less of these in the Q4, as you also pointed out. Pasi Kyckling: And Christian, just complementing when we look more in detail where the delta comes from, it comes from the sort of medium-sized orders in our order intake, the sort of base business, smaller orders that is at a very normal level. But in the sort of medium size of orders, we see this decline that you pointed out. Christian Hinderaker: Maybe turning to the working capital dynamic. I think customer advances have been about 10% of revenue, at least in the first 3 quarters. How do we think that working capital item evolves? You've seen a step-up in large orders. Do you require a larger level of advanced payments on those large orders versus the midsized ones? Pasi Kyckling: Thanks for that one. And indeed, on those 2 large orders that we have announced, we have also, during the quarter, received the prepayments and the prepayment size is sort of similar to other orders. So it's not larger than in other orders. And yes, it has a positive impact of some tens of millions in our fourth quarter cash flow, but not more than that. Christian Hinderaker: And then maybe just finally, in the service business again within Minerals, were there any revenue gaps in the year as a whole, either as a result of customers moving to carry maintenance, say, in the nickel market or perhaps due to site-specific issues? We know there's been a lot of productivity challenges. So I just wonder if there's any gaps during the year. Sami Takaluoma: Nothing significant that would have affected Metso service numbers as such. Of course, these are never good ones when there has been a lot of challenges in certain customers, but we have not had that kind of stake of service business that would have been creating any real impact for our situation. Pasi Kyckling: The 2 main incidents at customer side, [indiscernible], those are there, but they are nothing new. They have been there already for some time. Operator: The next question comes from Edward Hussey from UBS. Edward Hussey: So just the first one, the drop-through of 17% in the Minerals business, which given only equipment revenues grew, it imply that this is the drop-through on equipment revenues. Is this the sort of normalized drop-through we should think about going forward? Or maybe put it another way, is 17% roughly what the equipment gross margins are? Pasi Kyckling: Yes. Maybe I can take that, Edward. Thanks. And when we look at the numbers, we see the higher revenue impacting positively the capital margins. And if you think about our margins in Minerals capital overall at drop-through level, they are higher than 17%. So sales margins are greater than that. Edward Hussey: Okay. That's helpful. And then just maybe just one further question. Just on the -- within the release, you talk about mining FIDs being slow. I mean, is the implication that the pipeline remains very strong? And is there any sense that these FIDs might accelerate into 2026? Sami Takaluoma: Yes. We have seen already the change like coming to the end of the '25 that there is more activity remains high, but there's more closer to the final kind of situation in the negotiation and also from the customer side readiness to start to move and place the orders. And we see no change in this when looking now Q1 and then the rest of the '26 at this moment. Operator: The next question comes from Chitrita Sinha from JPMorgan. Chitrita Sinha: Sir, can you hear me? Sami Takaluoma: Yes, we can. Chitrita Sinha: I have 2, please. Maybe if I could just follow up on the Minerals margin. I mean here, clearly, the equipment mix was negative in the quarter. But I mean, going forward, how should we think about the path towards your 20% margin target should mix continue to be a negative? Pasi Kyckling: Yes. I mean thanks for the question, and great that you got also through the line. We have, obviously, in our strategy to target to grow this share of aftermarket. And I think you can appreciate based on the numbers and looking at the history that we were extremely successful in Q4 in terms of recognizing revenue from those OE projects, which resulted to unusual profit mix. What I take as encouragement is that despite that mix, we were able to deliver okay numbers in Minerals, and that's a proof point that the system works. But of course, going forward, we are not looking to have, over time, this kind of mix, but rather higher share of aftermarket in line with strategy and then with that also, turning towards the 20% Minerals margin by 2028. Chitrita Sinha: Very clear. And then maybe if I could just ask on the Aggregates margin. I mean here, the margin improved quite nicely in the quarter, and you were saying that you were bringing back temporary workers, I think, back into Q2. Do you think you'll need more people capacity if demand continues to be strong in H1? How should we think about this? Sami Takaluoma: I think that is a very positive problem if that comes because that means that the main markets are active and the orders are coming in. And definitely, we have capability for that, and that's not going to be a challenge for us in that sense. Right now, we are in a good situation. We have a good capacity in the factories, and the work is happening, and people are working for the current level of business. But as I said, we, of course, have all the readiness for also increasing the product production. Pasi Kyckling: If you look at what happened in Aggregates during 2025, a lot of equipment was delivered from inventory. So the finished goods inventory during the year went quite a bit down in Aggregates, which was, of course, a positive news. But then the consequence is that to deliver, for example, the same amount of equipment in 2026, we need to manufacture significantly more, which is positive. We need our people to do that. And the teams are now back in work since the spring time. Operator: The next question comes from Klas Bergelind from Citi. Klas Bergelind: Sami and Pasi, Klas from Citi. So first, I want to come back to large orders versus underlying. I think you said before, Sami, that we can't have both larger orders and underlying orders improving at the same time. One of the reasons why underlying orders were solid from mid-'24 was because of a relatively slow decision making on the larger side. Now we see the large orders coming through in a big way, but small- and medium-sized are down year-over-year. So should we then assume that the current level of underlying of some EUR 200 million, around EUR 800 million annualized is the right level right now and then add new larger orders on top? I was just interested in your thoughts on the dynamic there. Sami Takaluoma: Klas, I don't fully recall that what quote you are referring to because these two are not really fully aligned in that sense that, let's say, underlying small-, medium-sized projects, they live their own life and they have their own drivers. And then these larger ones, they have different dynamics and approval process and so on. So they are not connected in that sense. And what I was now in this call saying is that there is a fluctuation. It's not constant month-by-month when it comes to these smaller ones, which are very important for us. And in Q4, we had 2 months with a lower amount. That's not so much to do with the large orders coming in it. It was more about those 2 months had less orders coming in and already reflected at the beginning of the year seems to have a normal level, if I call something normal. Klas Bergelind: Got it. We had the discussion in November when we met. But yes, all good. Then my second question, coming back to the mix in Minerals. If I add back the warranty cost of EUR 5 million from last year, the margin in Minerals is down from 16.5% to 16.1%. And during the CMD, I think the message was that mix shouldn't be an issue for you to get to at least 20% margin. So obviously, as you said, Pasi, it's a pretty extreme quarter. But when you look at other peers, particularly upstream, think about Sandvik here; they have very strong equipment deliveries, no mix issue. So two questions on this topic. Do you expect the equipment margin to improve already in next couple of quarters? And when do you look to see your modernization orders with higher margin sort of going through the backlog and then boosting the mix? Just to understand the dynamic, when this mix can sort of start to improve? Pasi Kyckling: Maybe, Klas -- and thanks for that. Starting from the upgrades and modernizations, which are aftermarket business for us, so there, the dynamic changed during 2025 when we started to receive those orders and have a good amount of those in the pipeline to be delivered now during 2026. And the expectation is that we continue to see some of those orders coming in during '26, and that is based on -- simply based on the customer fleet that is out there and from a timing point of view, requires those activities. Then when it comes to the drop-through, my take on Q4 is that it's encouragement that the capital business is healthy and can deliver. And like I already said, and you also reported or said as part of your question, it's not the normal mix. And we should not expect that we have this kind of a mix on a rolling basis going forward. We will continue to see the steady growth in our aftermarket business, and then that will be complemented by healthy capital business. Klas Bergelind: Okay. My final question is on free cash flow. You're now at an all-in free cash margin, not operating, but all-in free cash margin around 12% for the year. So I just want to assume the underlying working capital ex the prepayments, receivables are up 2 percentage points to sales. Inventories are down by around the same amount. But payables and other liabilities are going up and creating -- it looks like they're creating a boost. I'm trying to understand if this is sustainable, i.e. better payment terms with your suppliers and what's going on, they're looking at other liabilities? I appreciate that, that was a very low level last year. But just to understand the dynamic on working capital, Pasi, would be very, very good. Pasi Kyckling: Yes. Thank you. And if I quickly talk through all the three or four main components, starting from the prepayments, which we already discussed here. So yes, the prepayments from those 2 larger orders had an impact on our fourth quarter cash flow, and the impact was some tens of millions. So of course, significant, but I mean that's not sort of on its own behind the strong cash flow that we created. And on those projects, we continue to operate so that we run them on a cash positive basis throughout the project execution. Then if you look at inventories, that has been a focus area for us for some time. Now when you look at Q4 inventory numbers, I just want to highlight that the MCP business back to continuing operations has impact on inventories as well. We talk about some EUR 50 million worth of inventory. And if you do the comparison, for example, to the balance sheet, end of 2024, so that is just something to be noted. When it comes to payables, you are indeed right that we have gained some traction there. I wouldn't think that this is one-off activity. It's rather thanks to the work that our procurement people are doing to work with our suppliers and bring the payment times up in the discussions, agreements that we have with our supplier partners. And then finally, receivables, I mean nothing extraordinary, ordinary there. Continues to be a focus area to sort of make sure that our customers pay on time and in line with the terms that we have agreed with them. No material issues there to report, which is, of course, a good position to be. Operator: The next question comes from Antti Kansanen from SEB. Antti Kansanen: It's Antti from SEB. A couple of questions from me as well. And coming back to the Minerals sales mix discussion, I mean if we look at kind of the equipment orders in Minerals in the past couple of years, have been EUR 1.5 billion, EUR 1.6 billion, and that's the level of sales that you also delivered in '21. And the service book-to-bill is obviously better. So I just wanted to maybe understand better, how do you expect that equipment backlog to convert into sales during this year '26? Is the backlog longer, shorter than what it has been? And is there still kind of a contribution from early orders that could drive that top line into growth in latter parts of this year on equipment specifically in Minerals? Pasi Kyckling: Thanks, Antti, for that. And from -- if we start from the backlog number point of view, the backlog in equipment is in substance the same as it was when we started year 2025 where the backlog improvement is coming from -- is from our aftermarket business, which is good because now we have significantly more, so it's starting point '26 compared to the starting point we had for 2025. Then if we think about the projects that in Minerals capital side that we will recognize during 2026, it's, of course, first to sort of bread and butter business, the small ones, which turn as they come. And then I mean, none of the bigger projects that we announced in late 2024 are fully complete. Yes, we have started to recognize the revenue, but they will contribute to '26 still. In some cases, it will go up to 2027. And if we think then about the new ones, I mean the smelter project and then the modern [indiscernible] gold plant, so there, the revenue recognition will start potentially something H1 this year, but then towards end of the year when we get the underlying works with our teams, with suppliers, with customer moving. So that's a little bit the dynamics. And I think it's quite typical with these larger ones that it takes 6, 8, 10 quarters to deliver those. They are big projects. And when we do POC accounting on them, this is the outcome from a revenue point of view. Antti Kansanen: And I guess you're seeing fairly stable outlook for, let's say, the smaller ones. So the ones that you would book this year and would still contribute in a meaningful manner on revenues, so one would assume that the sales mix improves actually year-over-year, driven by kind of service growth and flattish equipment. Or is that a bit of a stretch? Sami Takaluoma: That's good thinking, Antti. As stated, so we see good amount in our pipeline of those small and medium-sized ones. And 2025 showed that we are winning also a lot of those opportunities. Antti Kansanen: Okay. And then the second one was on the Aggregate side. And I mean, it's a good order growth end of '25, I guess, positive indication now that we are heading into the summer season. Do you want to talk anything about how you're seeing kind of the European demand trending early this year? I mean you talked about that kind of there's a sentiment improvement throughout '25, but maybe not much happening on the utilization rates or the work situation for your end customers. So are you seeing kind of an improvement on that front? And are you seeing kind of volume pickup that would, let's say, compensate or more than compensate on the increased cost base that you have on the European production setup? Sami Takaluoma: Yes, from the European market first, so yes, 2025 was already the year of the pickup. And it came from, let's say, Eastern European countries, if I put it this way. At the same time, we also had low hours coming to the machines located in other countries. So kind of like not creating the aftermarket potential. But from the new equipment point of view, there was a clear pickup and we see that the pickup is to stay. So there is a continuous request for quotes and also then winning the orders from the European countries. Pasi Kyckling: If you look at the distributor inventories, that continues to be an encouraging data for us. The decline started spring 2025 and continues to be at sort of a level where we expect it to be supportive for our business in the short-term outlook. Antti Kansanen: Is it too early to comment anything on the potential summer season or the bigger Central European regions that have been historically big markets for you, the Germany and the France, countries like that? Sami Takaluoma: Yes. I think that Germany, which was somehow may be impacting also the pickup of the Europe last year, the Germany stimulus package, which maybe have not creating so much of business coming from the actual Germany yet, so that is a little bit positive upside potential that when that governmental money actually is flowing down for the provinces and for the actual infrastructure projects. So that could be creating that normal seasonality in that sense, but no real signs of that yet. Operator: The next question comes from Vlad Sergievskii from Barclays. Vladimir Sergievskiy: I'll start with commodity mix, please. Could you talk about the difference in demand levels between gold customers and industrial metal customers? Is there a notable difference in urgency to take investment decisions for those group of customers? Also, could you provide an update of what your exposure to gold customers was in 2025 and whether it could grow in 2026? Sami Takaluoma: Vlad, good to hear you. Yes, the gold customers have had much faster decision-making process than the so-called traditional commodity metal customers. And of course, it has been driven by the very high record high prices of the gold and not waiting to get orders in and also the execution of the delivery projects moving forward. So that has been one area that we did see already '25 and seems to continue at the moment. Vladimir Sergievskiy: Excellent. Sami, if I can ask you about one specific project as well. It's the Reko Diq project, which obviously, you won some nice orders previously. What's the security situation over there right now? Because as you probably have seen, Barrick has put this project under review, given the security concerns, I think, it was last week. Would you give us some idea of what your backlog exposed to this project? And what's your view actually from a Metso perspective on what's going on? Sami Takaluoma: So let's start for the very important one, which is the security of the people, and that has been on a very high security level from the beginning, and that was also something that we worked on together with Barrick to ensure that their people and our people have the maximum security all the time. So there has been no real issues that -- or incidents or anything like that. And then from the perspective of Barrick making the moves, we have, of course, taken a lot of these things into account between the contract between Barrick and Metso. And in that sense, there is no real issues for Metso at this point. Backlog situation, I don't remember the numbers myself. Pasi Kyckling: So if we start from the orders that we have reported, so second half of 2024, we recorded roughly EUR 150 million worth of recorded orders. And certainly, back to earlier discussion that we have here, some of those have been delivered or are in delivery as we speak. But I guess we will not go to sort of exactly there, how much has been delivered and how much is still in the backlog. But as a starting point, from H2 '24, we have that EUR 150 million-ish order intake from Reko Diq. Vladimir Sergievskiy: Excellent. And just to clarify, you continue to work on this project as normal? There is no like schedule adjustments or anything like that? Sami Takaluoma: As per today, we act normally together with Barrick. Operator: The next question comes from [ Alex Jones ] from BofA. Unknown Analyst: Just one following up on the question earlier about Aggregates demand in Europe. Could you expand a little bit what you're seeing in other regions of the world and whether you've seen any changes in any of those into 2026? Sami Takaluoma: Let's start by three baskets we normally talk about, so U.S., Europe and then the rest of the world. And maybe this time, I can start from the rest of the world. And there we have seen quite a good activity level last few months. Obviously, this third basket is the smallest of these three. But nevertheless, we are happy that our truly global exposure also for the Aggregate business is yielding results. So we have a good growth numbers coming from many countries in that basket. And Europe, we discussed. And then U.S., which normalized quite well during 2025 to the normal levels, so there, we have also this positive signal to our direction, what Pasi was saying that we do see that the distributor inventories have been developing positively from our perspective, that distributors have been able to move the machines to the customers, and that gives a good normal situation for us for the beginning of 2026 situation. Operator: The next question comes from Andreas Koski from BNP Paribas. Andreas Koski: First, if I can come back to the order intake in Minerals, it's been a lot of discussions about large orders versus small and midsized orders. And in Q4, as you pointed out, you have had 2 large orders. And on top of that, you had the Almalyk order as well. I understand that the pipeline remains strong, but to repeat this kind of order level, EUR 1.1 billion, EUR 1.2 billion in the Minerals segment, do you think that we need to see large orders coming through also in the coming quarters? Or is it possible that we could expect a bounce in the small- and mid-sized orders? Sami Takaluoma: Yes. Thanks, Andreas. As said, we do see that the activity for the small- and mid-sized stays in a good level. And then it's about the timing, timing question that when they actually come as a PO. But for your question, so obviously, it helps when we get the larger ones. And as our market outlook statement also says, we expect to remain on the same level as in the Q4 when we did see that these larger ones started to come, and we do know that we are having discussions with the customers with the so-called final stage. So the expectation is about the same that we had during the Q4 that expecting the larger ones to come Q1, H1. So there is nothing at the moment saying that, that wouldn't happen. And to get those quarterly order intake numbers together, it is the mix of the larger ones, the mid ones, and then good strongly single-digit development in the aftermarket. Andreas Koski: Understood. Very clear. And then secondly, on Aggregates, maybe a bit short term. But in Q4, you had very strong deliveries. Usually, we see somewhat stronger deliveries in Q1 than in Q4. Is that what we sort of should expect also going into 2026? Sami Takaluoma: Yes, I think you spot it nicely, that one. So we did have a good amount of deliveries in the Q4, and that is making us to think that then the normal situation, as you were referring that stronger in Q1 than Q4, maybe it's not the case in this quarter now. So it's going to be good delivery, but not maybe stronger than Q4. Andreas Koski: Yes. Understood. And then lastly, if I look at the P&L, the admin cost line increased a lot. Is that more or less only related to the one-offs or capacity adjustment charges that you took in the quarter? Or is it something else? Pasi Kyckling: Yes. Thank you, Andreas. It's primarily those items impacting there. We have also some other variations, typical year-end stuff, but nothing material there. The bigger change is those one-off type items. Operator: The next question comes from William Mackie from Kepler Cheuvreux. William Mackie: A couple, please. First of all, with regard to the Americas or North America, could you comment a little on any impact potentially from your customers on Section 232 and how the situation sits between your Canadian operations and sell-in into the U.S.A.? And then on a regional basis, the question is more around Minerals. When I look at the regional sales, I know there's a lot of FX effects in there. But South America seems to have come down a little and North America flat. I wonder if you'd comment on how the order versus revenue development has been in the Americas, South and North, and what your outlook is, particularly in South America? Pasi Kyckling: Yes. Maybe, William, I'll start from the Section 232. So when it comes to Minerals, this has been in place since it was introduced. I don't remember the exact month, but during the autumn -- August 2025 or if I was wrong, apologies for that, but that time frame anyway. And our approach, like with other tariffs, has been that we price this into our customer deliveries. And then, that has been successful. It looks that this is the approach the industry has also taken. Then when it comes to Aggregate, the situation is a bit different. So you may, William, remember that this steel and aluminum derivatives discussion has been ongoing for some time. And when it comes to crushers and screens, the primary aggregate equipment, they are still excluded from Section 232. And there was speculation that this would change already late last year. We haven't seen that. And let's see if they continue to be excluded for good or if there is a change in this regard. Sami Takaluoma: And then for your second question, of course, we can maybe comment about the FX. But that's, of course, living its own life. But when it comes to the Americas, both North and South, so for obvious reasons, they are the 2 largest regions that we do business in. And looking at the pipeline, so that is strong in both. So we are truly a global company, and so it's especially the Minerals business. But obviously, we have quite a lot of current opportunities in both of these continents. And that then has the impact for the FX later on or not, it depends on how the world is at that moment. Pasi Kyckling: And then William, when it comes to currencies. So I think we have seen throughout 2025 sort of appreciation of euro against most currencies that are relevant for us, and that impact is then similar in the orders and revenue. So that shouldn't -- the FX, of course, impacts the sort of total levels, pushing euro level slightly down, but the impact is similar to orders and revenue. William Mackie: A short follow-up, if I might. With regard to your strategy execution, great cash inflow, strengthened balance sheet recognized by the agencies. You clearly have more flexibility on capital allocation. You've made a couple of disposals. Are there more? But more importantly, what is the environment like for M&A additions? And what should we expect with regard to your acquisition-based strategy this year? Sami Takaluoma: Yes. Thank you for that question. As we stated in the Capital Market Day, this is a growth strategy. And we know that by focusing, we are able to grow organically. But in the growth part of the success of the strategy is also the inorganic part. And we are having quite a good amount of interesting targets, if we put it this way. How is the environment? Environment is quite normal in many sentences. Obviously, we are looking for those kind of targets that are clearly supporting our strategy and filling in either the technology gaps that we have or creating us synergies to really accelerate our growth initiatives. So we are active in that front as well, as you saw that we just closed one in Australia. Pasi Kyckling: And then when it comes to the other side of the portfolio, divestitures. So the Ferrous, Heat Transfer business and [ Loading, Hauling ] just completed. We don't have anything else ongoing in that side. So looking for growth for now. Operator: The next question comes from Edward Hussey from UBS. Edward Hussey: One more question for me. I just wanted to ask about -- so I mean, clearly, a strong Minerals equipment sales growth in the quarter. I'm just trying to sort of work out how this is going to translate to aftermarket in the coming quarters. I mean do you mind just to give me a sense of what the usual lag is between equipment installation and when it comes to an aftermarket? And also sort of what kind of level of aftermarket sort of take up can we expect? I mean what's the sort of aftermarket intensity on these sort of large projects that you're installing? Sami Takaluoma: Thank you very much. That is always good when we get the new installed base out there in operation. The business that starts immediately is the consumables business and then also the expert services in the field. When it comes to the spare part business, that typically takes a few years before there starts to be significant amount of that type of business coming out of the newly installed base. But all in all, it starts immediately with the consumables side. And then the big kind of like upgrade potentials typically then come some equipment at the year 5 and most of them at the year 10. So this is like a long-term game in that sense to create a large installed base for the future aftermarket growth. Operator: There are no more questions at this time. So I hand the conference back to the speakers for any closing comments. Juha Rouhiainen: All right. Thanks very much for your participation and for questions and discussions. We conclude this conference call here. We will be back on April 22 for first quarter results. And before that, we are looking ahead for quite an active conference and road showing season. So looking forward to see many of you in the next coming weeks face to face. But this concludes this call. Thanks again, and goodbye. Sami Takaluoma: Thank you. Pasi Kyckling: Thank you.
Odd-Geir Lyngstad: Good morning, and welcome to Elkem's Fourth Quarter Results Presentation. My name is Odd-Geir Lyngstad, and I'm responsible for Investor Relations in Elkem. Today's presentation has been extended because Elkem has reached a significant milestone to sell the majority of its Silicones division to Bluestar. But before we present the details of that transaction, we will take you through the fourth quarter results. As usual, we will go through the highlights for the quarter and give you an update on the markets and the first quarter outlook. CEO, Helge Aasen, will take us through the first part of this presentation before CFO, Morten Viga, will present Elkem's fourth quarter results in more detail. We will open for Q&A after the presentation of the sales of the Silicones division. So with that, I give the word to CEO, Helge Aasen. Helge Aasen: Yes. Thank you, Odd-Geir, and good morning, and welcome, everyone. So as already indicated by Odd-Geir, we have the pleasure of announcing that we've entered into a sales agreement with China National Bluestar, our majority shareholder for a sale of most of the Silicones division. This transaction will be settled through a redemption of all of Bluestar's shares in Elkem. And as already mentioned, we will come back to the details later in the presentation about this transaction. The result for the quarter was relatively strong given the current market conditions. And I think we can say that as most of our competitors in Europe have temporarily or permanently curtailed production, while we have, throughout the quarter, maintained close to full capacity utilization. The EBITDA for the fourth quarter ended up at NOK 890 million, which gave an EBITDA margin of 12% for the group. And if you exclude Silicones, which is reclassified as assets held for sale and which will now be sold, the operating income was NOK 4 billion with an EBITDA of NOK 485 million, which is then also representing a margin of 12%. We have been able to partly mitigate low demand and declining sales prices with cost improvements, both on raw material costs and other operational costs. And that is, of course, still ongoing. In the quarter, Silicon Products was impacted by lower sales prices. However, we do see higher ferrosilicon prices in the EU due to the safeguard measures restricting imports of ferroalloys into the EU. Carbon Solutions had lower sales in the fourth quarter due to continued idling of steel and ferroalloy capacity, which we have seen across many main operating regions. In the quarter, Silicones delivered further profitability improvements, which is primarily due to higher sales prices towards the end of the year in Asia Pacific and generally strong performance on cost improvements. The share redemption in connection with the sales of the Silicones division will impact Elkem's equity. And due to that, the Board has proposed not to distribute a dividend for 2025. So before we go on to present the market update and results, I'd like to say a few words about ESG. At the end of last year, it was unfortunately marked by a tragic accident at one of our plants in France. On the 22nd of December, an explosion occurred at an R&D facility in our Silicones facility in Sanfo, just outside Lyon. We had 4 colleagues injured and sadly, 2 of them later passed away from the injuries that were sustained. Internal and external investigations are still not finally concluded. But of course, regardless of that, I can only say that this is a very tragic setback in our efforts on safety work. And obviously, such an event right now overshadow other achievements within our ESG work. But we continue to get good ratings on ESG assessments in general as is illustrated on this slide. And moving on to trade barriers. This continues to impact markets and is also having an impact on Elkem, both directly and indirectly. EU's safeguard measures that came into effect in November last year, unfortunately, exempted Norway and Iceland. So we are outside of the EU safeguard measures. I think that's been broadly covered in the media. However, we have received country-specific quotas, which puts us in a rather beneficial position compared with most other countries. Those quotas are approximately 70% to 75% of historic sales. And this has been combined with the pricing benchmark of EUR 2,400 as a reference when you calculate the tariffs for sales, which exceed the quotas. So far, ferrosilicon prices are up about 20% since this was implemented. And if these measures are effective, we will -- we expect to see further price increases. Then moving on to the U.S., countervailing duties have been imposed on silicon, silicon metal, imported from several countries, including Norway. And the preliminary CVD rate is close to 17%. In addition, there are also antidumping duties announced, which is close to 4%. So that brings the total tariffs now that was 5%. Then we have the Trump tariff, 15%. And then we put this on top of that, we are now up to around 40% on silicon metal exported from Norway to the U.S. So the basis for the CVD duty is based on CO2 compensation and the allocation of CO2 quotas, which Norwegian companies receive under the EU carbon scheme. Of course, our position is that EU's policies on CO2 quotas and CO2 compensation do not constitute countervailable subsidies, harming the U.S. domestic industry as there is no CO2 tax in the U.S. So the case is expected to be finally decided in June this year. And so far, I think we can say that we've been fairly successful in navigating and adapting to unpredictable trade dynamics, while we are leveraging a global business model and strong -- with strong cost and market positions. Here, we have included a summary of Elkem's performance over the past years and how that compared to our communicated financial targets. So if we look at the 3 last years, we have seen deteriorating market conditions due to lower economic activity, global overcapacity and a very, I would say, big reshaping of global trade. So despite these challenging conditions, Elkem has met the financial targets over the cycle, very much due to our diversified business model and strong operational execution. And of course, we have continuous cost focus. So since 2020, we have delivered a compound annual growth of 5%, which is in line with our target. And the EBITDA margin during the same period was 16%, which is also within our target range. And if you exclude Silicones from these numbers, the performance is even better with a compound growth in operating income of 6% while the EBITDA margin was 21%, exceeding the target range. Then we move on to the market update and the outlook. So let's have a look at some of the key markets and market trends and indications -- indicators, I mean, automotive is an important sector for Elkem, driving demand for many of our products as silicon is essential in electronics, in batteries and in aluminum, lightweight components. Markets, particularly in Europe, have declined and the outlook remains weak. Soft demand combined with import pressure from China. A new minimum price mechanism in the EU on imported Chinese electrical vehicles could offer some protection; remains to be seen. In the U.S., the outlook for 2026 is also relatively soft due to the pressure on affordability and an overall weak demand for EVs. Construction is another key market for Elkem, for Elkem silicon-based products, which go into high-performance concrete, building materials and other infrastructure. It seems that Europe is seeing a gradual recovery in the sector, but the performance is varying significantly across countries and different segments. The U.S. industry is also relatively soft, but data centers, power infrastructure and institutional projects are showing growth. The PMI number is normally a good indicator for the economic sentiment and global PMIs show a mixed but stable picture. Manufacturing remains soft, but the downturn seems to be easing now. The U.S. stays in mild expansion, supported by improving output, though underlying demand and export orders remain soft. Europe is a mixed picture with the German economy continuing to contract, keeping the broader Eurozone picture rather subdued. If we look at the specific markets for Elkem and start with the silicon. As illustrated on the graph, the silicon reference prices remained on a low level during the quarter. Year-to-date figures for November 2025 show that exports from China to Europe increased significantly compared with last year. And this, combined with, I say, generally weak demand have put quite significant pressure on prices in the EU. In the U.S., silicon prices increased slightly in the fourth quarter, but also here, the demand is relatively low. Prices are, however, expected to rise in 2026 due to tariffs, antidumping duties and a tightening domestic supply. In China, silicon prices are affected by challenging market conditions. Power prices are increasing and sales prices for silicon remain on a low level. A little bit positive is that production curtailments are expected from several producers. Moving on to ferrosilicon. As you know, we have many of the same underlying drivers as the silicon metal. The overall picture for Elkem is also here marked by weak demand. But as mentioned earlier, we've seen an increase in reference prices by around 20% following the implementation of the safeguard measures in the EU. And in addition, the EU has announced a tightening on the safeguard measures for steel. The annual tariff-free import quotas will be reduced. And the out of quota duty will be doubled to 50%. So as these measures will take effect, it is expected that steel production in the EU will increase. I think Outokumpu reported a similar picture yesterday. This could also have a positive impact on the demand for ferroalloys and electrode materials supplied by our Carbon division. In the U.S., ferrosilicon prices were marginally down in the fourth quarter due to weaker demand. And in China, ferrosilicon prices remain on a low level despite further production cuts to address overcapacity. Then the market for carbon products, obviously much smaller than the market for silicon and ferrosilicon, and there are no available reference prices here. Demand for carbon products differ by region, influenced by steel primarily, which again drives consumption of ferroalloys and aluminum is also an important driver. This was -- yes, global steel production actually declined by 3% in the fourth quarter compared to the year before, primarily driven by lower activity in China, where production actually decreased by 9%. In Europe, the production increased by 4%, while North America remained stable. So this means that the steel and ferroalloy markets continue to be challenging and affecting Carbon Solutions. The effects are partly mitigated by our specialized product offering in carbon and a diverse geographic presence, which gives us a natural hedge and creates quite a stable situation, which you have seen on historical financial figures. Then lastly, Silicones. Anti-involution measures are underway in a number of sectors in China, also in silicones, so addressing overcapacity. The DMC price in China rose by about 23% from around RMB 11,000 per tonne by the end of the third quarter, up to RMB 13,600 by the end of the fourth quarter, primarily driven by various anti-involution measures, curbing over production and then leading to an increasing in sales prices. The demand still within China remains on a weak level, particularly due to the construction sector. In the EU and the U.S., demand for commodity silicones was low in the quarter, mainly impacted by shifting tariff policies. So moving on to the outlook for the first quarter. As mentioned, trade regulations and protective measures are likely to continue to affect Elkem's markets and contributing to ongoing uncertainty. However, I think Elkem is well positioned due to our geographic presence and strong market and cost positions. Silicon products still facing subdued demand. We are temporarily reducing capacity in Norway to -- mainly to manage inventory levels. And the EBITDA effect of that is expected to be somewhat negative, but with a very positive cash flow effect. Carbon Solutions is expecting a slight improvement in sales volumes. But again, due to already mentioned the situation in steel, et cetera, the overall demand remains on a relatively weak level. Silicones prices in China have increased due to the reduced supply, while the fundamental demand situation remains on a lower level than what we've seen historically. The division will, of course, benefit from higher sales prices anticipating that yes, that these actions will be maintained on production reduction. So I think with this, I'll give the word to Morten to take you through the financials for the fourth quarter, and then we'll come back to the transaction afterwards. Morten Viga: Thank you very much, Helge, and good morning, everybody. It's certainly a pleasure to go through the results for the fourth quarter in more detail. Our operating income for the quarter was NOK 7.3 billion, which was down 14% compared to the fourth quarter last year. And we saw a reduction in all 3 divisions, and this is mainly explained by lower sales prices. Elkem's EBITDA for the fourth quarter was NOK 890 million, and this was 24% lower than the fourth quarter last year, but slightly higher than in the previous 2 quarters. The reported group EBITDA margin was 12%, which is somewhat below our long-term target of 15% to 20%. However, it's clearly important to bear in mind that sales prices in key markets, particularly in silicon and ferrosilicon have been at or close to all-time low levels. And as such, we believe that Elkem's EBITDA is clearly supported and held up by good operational performance and strong underlying cost positions. There were no particular one-offs affecting the EBITDA in this quarter. As usual, we have provided an overview of some of the main financial numbers and ratios on this slide. I will certainly not go into detail on all of them, but it is important to note that the Silicones division has been reclassified as discontinued operations and assets held for sale. And as you know, now we are announcing this transaction. But Silicones has been a part of Elkem's structure during the quarter, and the division is affecting Elkem's key financial numbers. And for that reason, we will mainly focus on the financial numbers for the group, including Silicones. In the table to the right, you can see comparable figures, however, for Elkem with and without Silicones. Including Silicones, the group EBITDA was NOK 890 million, and the realized effects from the currency hedging program was minus NOK 21 million reported in segment other. Other items amounted to minus NOK 68 million, and the main items were gains on power and currency derivatives of plus NOK 64 million and restructuring expenses of minus NOK 20 million and other items of minus NOK 111 million, mainly consisting of dismantling and environmental expenses. Net finance expenses were minus NOK 192 million. The main items were net interest expenses of minus NOK 130 million and currency losses of minus NOK 48 million. We have been able to reduce the interest expenses from minus NOK 187 million in the same period in '24. Income tax was positive with NOK 6 million due to tax deductions and changes in the tax losses carried forward. So let's then take a look at the divisions, and we start with Silicon Products. The silicon and ferrosilicon market clearly remain difficult with low sales prices, and this is also affecting the division's result in the fourth quarter. Total operating income amounted to NOK 3.2 billion for the quarter, which was a reduction of 14% from NOK 3.8 billion in the fourth quarter of '24. The reduction was largely due to lower sales prices, particularly for silicon and ferrosilicon. The EBITDA amounted to NOK 294 million, which was a significant reduction of 53% from the fourth quarter last year. And the reduction is also here primarily driven by lower sales prices, but this is then partly balanced by lower raw material costs and higher sales volumes. The specialty segments, particularly foundry alloys and materials maintained strong performance also this quarter due to Elkem's very strong market positions. Sales volume was 8% higher compared to the fourth quarter last year, and we had a higher sales volumes across all product lines. The Carbon Solutions division has presented extraordinary good results over a long period and continue to deliver good margins. However, this quarter was impacted by lower sales volumes. The operating income came in at NOK 735 million, which was down 20% from the fourth quarter last year. EBITDA amounted to NOK 174 million, which is a reduction of 38% from the corresponding quarter in '24. But the reduction in operating income and EBITDA can be explained by decline in sales volumes. We have also seen a reduction in sales prices, but this has been partly offset by extraordinary cost improvements. Sales volume was down 11% compared to fourth quarter last year. The Silicones division, where the majority now is being sold to Bluestar has delivered improved results in the fourth quarter, mainly due to cost improvements. Total operating income was NOK 3.6 billion. That's down 14% from the fourth quarter of last year. And the decline is primarily due to lower commodity sales prices during the quarter. EBITDA, on the other hand, improved by 6% from the corresponding quarter last year, and it reached almost NOK 400 million. The decline in sales prices and sales volumes was more than offset by good cost reductions and lower raw material costs. Sales volumes was down 3% compared to the fourth quarter last year, and this is mainly due to lower commodity sales across the geographical regions. Let's now have a look at some of Elkem's key financial ratios. The earnings per share, EPS, was negative with NOK 0.21 per share in the fourth quarter, and that brings the EPS year-to-date to minus NOK 1.05 for the year. We are, of course, not satisfied with this, but clearly, the EPS has been negatively impacted by net losses from the Silicones division, which we are now selling. If we exclude Silicones from the '25 numbers, Elkem's EPS for the full year would have been plus NOK 0.61 per share. The balance sheet remains very solid and total equity amounted to NOK 24 billion by the end of '25, and that equals an equity ratio of 51%. By the end of the fourth quarter, Elkem had a net interest-bearing debt of NOK 11.9 billion, and this gives a debt leverage ratio of 3.5x based on last 12 months EBITDA. The sale of the Silicones division will impact Elkem's equity and debt, and we will revert to that later. The equity will be reduced by share redemption and the net debt will also be reduced from NOK 11.9 billion to NOK 9.8 billion as Bluestar will take over NOK 2.1 billion of the debt. This will then increase Elkem's leverage based on pro forma numbers. But the plan will be or is to raise additional equity and conduct a refinancing of the main bank facilities after closing of the Silicones transaction. As I said, we will get back to more details on this under the presentation of the Silicones transaction. As mentioned in the previous quarters, Elkem's focus has been on cash generation and disciplined capital spending in response to the very challenging market conditions that we are experiencing now. And we have delivered on our promises. In the fourth quarter, the cash flow from operation was plus NOK 829 million, a clear improvement compared to previous quarters. And this is explained by lower CapEx and positive working capital changes. In the fourth quarter, total investments were down to NOK 674 million. Reinvestments were down to NOK 530 million, which amounted to 75% of depreciation for the quarter. And for the full year, reinvestments amounted to NOK 1.5 billion, which equals 58% of depreciation. Strategic investments were moderate, NOK 145 million in the fourth quarter, taking the total number to NOK 328 million for the full year. So let me wrap up this presentation by summarizing the main headlines and takeaway. First of all, trade regulations and protective measures are likely to continue affecting Elkem's markets. Elkem is, however, very well positioned due to strong market and cost positions and a diverse business model. Silicon Products is still facing weak demand, but the division is benefiting from cost improvements and higher ferrosilicon prices after the implemented EU safeguard measures. Carbon Solutions benefits from good cost positions and a geographically diverse customer base. And clearly, the division is excellently positioned when there is a market recovery. Our Silicones business delivered further profitability improvements in the fourth quarter and is well positioned if current price levels are maintained. As I said, the Board has proposed not to distribute dividend for 2025, and this is due to the share redemption in connection with Elkem's sale of the Silicones division. So then I think that summarizes the Q4 presentation, and then I hand the word back to Odd-Geir. Thank you. Odd-Geir Lyngstad: Okay. That concludes the presentation of the fourth quarter results. So thanks to Helge and Morten for taking us through the results and the presentation. We will now go on to present the divestment of the Silicones division and CEO, Helge Aasen and Morten Viga will then take us through the rationale for the transaction, the structure and the approval process for the contemplated divestment. And we will then open for Q&A after this part of the presentation. So with that, I'll give the word back to you, Helge. Helge Aasen: Thank you. Yes, it's been a quite a long process. It's now about a year since we announced the strategic review to sell the Silicones division. And we are very satisfied to present to you today a transaction that we think will benefit all our stakeholders. So before going into the details of the transaction, I'd like to put this into a historic perspective. I mean transformational changes are not new to Elkem. In the company's long history dating back to 1904, continuous portfolio optimization has been part of the course. And in order to adapt to new market environments, seize growth opportunities, consolidate the market or gain more financial room to maneuver, we have on this slide illustrated some of the major transactions that have shaped this company over the years and made it to what it is today. The current chapter that we are about to close started in 2011 with Bluestar's acquisition of Elkem from Orkla. During Bluestar's ownership, Elkem has had a strong development in product diversification and not at least in revenue growth. I mean we have quadrupled the revenue in that period. We've strengthened our market positions. We have emerged as a more cost-effective company and -- than we were, back in 2011. And we've also invested significantly in expanding and upgrading our facilities. Just in Norway alone, we have invested more than NOK 10 billion over the last 10 years, which makes us the European silicon major. And we play a critical role in strategic value chains. It's been a very exciting journey. I've been part of it myself personally. Taking over Bluestar's global silicones business headquartered in France. We took the first part in 2015 and then the silicones business in China in connection with the IPO in 2018. And obviously, that's a particular highlight when Bluestar relisted Elkem on the Oslo Stock Exchange in 2018 after the Orkla takeover, where Elkem was delisted in 2005. And we had actually been listed since 1913, when Orkla delisted the company. So we have a long history here in Oslo on the stock exchange. And significant achievements have been made, and we are proud of that. Today, Elkem is a fully integrated silicon-based manufacturer, all the way from quartz mining to high-end downstream applications in silicones. The company has global positions and each of the 3 divisions are major players within their respective industries and markets. Silicon Products being a global producer and provider of silicon, ferrosilicon and a number of specialty products derived from those -- from the starting point. Carbon Solutions is a leading producer of electrode paste and specialty products for the metallurgical industry. And Silicones, which will now be sold to Bluestar is also a fully integrated silicones manufacturer with focus on specialties and strong global positions. So combined, our divisions have leading cost and market positions delivering and have delivered strong results over the cycle, with a geographically resilient and diverse business model. And I think we should also underline that Elkem is a supplier of critical materials to the green and digital transitions with a strong focus on sustainability. And of course, these efforts will continue regardless of the transaction being announced today. So with such a successful development, I guess the obvious question is why do we undergo such a significant transformation now. And I would say, first of all, it is related to growth potential, and the fact that the current structure and financial capacity of Elkem is not adequate to support the growth opportunities that we see for Elkem's business portfolio going forward. We have #1 positions in carbon materials, in silicon, in foundry alloys, microsilica. And a sale of the Silicones division will now ensure a better capital allocation in order to accelerate organic growth and also enable us to pursue attractive M&A opportunities within these business areas. It will also leave Elkem with more resources for innovation and improve the prospects to strengthen our financial profile through reduced volatility and lower capital intensity. In short, we believe that this transaction will put us in a significantly stronger position to develop these 2 divisions. The fact that Bluestar will take full ownership of Silicones through this transaction, we also think will significantly improve the future opportunities for the Silicones division. It will enable access to a significant investment capacity that would not have been possible in the Elkem structure. In addition, Silicones will benefit from deep strategic synergies within a global chemicals major with improved ability to innovate across the whole value chain. Silicones will also be in a better position to adapt to local market dynamics and accelerate growth in specialty products and in key global markets. So in short, we are confident that this agreement with Bluestar delivers the most favorable outcome for Elkem's employees, shareholders and other stakeholders, while we position ourselves with the remaining metals and materials division and the Silicones division for future growth. This is an overview of the transaction structure and the timeline. So Elkem will sell the majority of the Silicones division to Bluestar. The sale includes all Silicones' assets, excluding Yongdeng, it's a silicon metal plant in China; Ruossillon which is an upstream silox plant in France; and India, a small downstream facility in silicones. The transaction will be settled through the redemption of all of Bluestar's 338 million shares in Elkem. There will be no cash payments by Elkem nor Bluestar. The minority investors, which today have 47.1% of the shares will then assume 100% control of the listed company, Elkem ASA. And through the contemplated transaction, Elkem and Bluestar will solve important long-term strategic goals regarding development and ownership. The transaction is conditional upon shareholders' approval at an Extraordinary General Meeting, waivers and approvals from lenders and other customary approvals. We have obtained pre-commitment from Folketrygdfondet, Must Invest, AS, DNB Asset Management, Nordea Investment Management and Perestroika to vote in favor of the transaction. These investors have also underwritten NOK 1.5 billion equity capital raise. Elkem will call for an EGM today. The EGM is expected to take place on the 9th of March, and we will seek lenders' approval of the transaction before the EGM. After a 6-week formal creditor process, the closing is then expected to take place by the end of April. We are planning to arrange a capital markets update after the summer to present our plans and strategy for the company going forward. Where are we now? Is this -- are you taking over now? Or is it -- this is my last slide. I think, yes, this slide summarizes the outcome of the contemplated transaction. So upon completion, Bluestar will be the owner of all Silicones' assets, except the units that will be retained by Elkem. And since 2018, Silicones' share of EBITDA has been 32%, while the share of EBIT has been negative. The divisions that will constitute Elkem going forward have since 2018 represented 68% of EBITDA of more than 100% of EBIT by offsetting the losses from Silicones. The performance since 2018 demonstrates the potential to strengthen Elkem's financial profile going forward through improved earnings. Yes. I think, Morten, you can take the rest. Let's share the burden of this very nice presentation. Morten Viga: Share the pleasure I would say. Certainly, it's a magnificent day in the history of Elkem. So I'm very happy to continue. So the settlement of the transaction will be made through redemption of all Bluestar's share in Elkem ASA. The decision is subject to 2/3 vote by minority shareholders at the upcoming AGM on the 9th of March. And the minority shareholders will then effectively exchange the 47.1% they hold in the sold Silicones assets with Bluestar's 52.9% in the remaining Elkem. Bluestar will not hold any shares or have any formal roles in Elkem after completion of this transaction. And a new Board of Directors will be elected in connection with the closing of the contemplated transaction. So what is new Elkem all about? Well, after the transaction, Elkem will consist of Silicon Products and Carbon Solutions. And this will certainly then result in a much more focused pure-play metals and materials company. The Silicon Products division has 12 main production sites and has all around the world and has delivered an average EBITDA margin of 22% from 2018 to 2025. Carbon Solutions also has a global business model with 6 main production sites, which have delivered an average EBITDA margin of 27% over the same period. So Elkem will remain a global player with plants all over the world and clearly with #1 positions within these 2 business areas and with very strong and resilient value chains. We will certainly continue to focus on innovation and customer support with strong R&D centers as an embedded part of our value chain. And we believe that this will be even more important going forward due to increased focus on supply chains and the secure supply of critical materials. We also have very strong positions in terms of renewable energy and energy efficiency. And we also believe that this will be a strong competitive advantage going forward. In this transaction, we will keep 3 of the Silicones' plants, which will not be sold to Bluestar. The Roussillon upstream Silicones' plant in France will be a prolonged -- will serve as a prolonged part of the upstream silicon metal value chain. And as such, it will secure demand from -- for our production in Norway. For India, which is a very small business and for Yongdeng, which is a silicon smelter in China, but belonging to the Silicones division, we will explore other alternatives, and we will get back to that in due time. This slide contains a profile of the new structure's historical financial performance. I will certainly not go into detail on all these numbers. But you will see that the historical performance has been volatile as the markets have been volatile, but we have delivered profitability, which is clearly above the average profitability of Elkem Group in the same history. Since Elkem was IPO-ed back in 2018, the remaining business that we will keep has represented 55% of the group revenue, but it has also represented 67% of the EBITDA. And as a matter of fact, it has represented more than 100% of the historical group EBIT. So we believe that it is a very good part of the portfolio that we are bringing further. And that means that we will have a stronger and more profitable Elkem going forward, and we will certainly also focus a lot on cash flow generation based on very good underlying market and cost positions. As mentioned previously in our presentation, we believe that Elkem's positioning will be significantly improved after the transaction. Going forward, the operational and business focus will be on our #1 positions in Silicon Products and Carbon Solutions. And these divisions have demonstrated a very strong ability to deliver solid profitability throughout the cycle with an EBITDA approaching 20% since 2018 and with a strong cash flow generation. So where do we stand today? We, certainly, Elkem's remaining divisions, we have gone through a cyclical trough in terms of turnover, yet we have still delivered profitability and good cash flow throughout 2025. And we clearly believe that with the completion of this transaction, we are very well positioned to deliver increased turnover, higher earnings over time. From 2018 to 2025, Silicon Products and Carbon Solutions together have delivered on an average an EBITDA of around NOK 4 billion throughout the cycle, which is significantly higher than the 2025 numbers. Compared to 2025, we expect a gradually improving market in 2026. And over time, we expect that we should at least be back in line with historical earnings at a minimum. Based on the current outlook, we anticipate an underlying top line growth of more than 10% in 2026 compared to 2025. This is driven by a better mix and higher volumes. Our relative competitiveness versus competitors in our main markets is stronger than ever before, and we are confident that we will gain market shares with good profitability. Higher prices should certainly provide the company with strong operating leverage and also based on today's cost base. Historically, rising revenues have led to increased margins, which is natural given higher volumes and prices. In addition, we have a long track record, and we will continue with that of achieving significant cost improvements in our core business model. And we plan to return to the market with specific cost-cutting measures over the coming quarters as we will streamline the new organization. One of the important factors in the transaction is that we will also significantly reduce our capital intensity through the sale of Silicones, which has clearly been the most capital-intensive part of our portfolio. We expect for the new portfolio around NOK 1 billion in ongoing annual investments, and that is clearly significantly below the average level during the last 5 years. And this also should enable a higher return on capital employed going forward than the historical numbers. In line with our strategy of being a well-capitalized company throughout the cycle, we have also decided to raise new equity from solid investors upon completion of the transaction. We're very happy to see the good support from current shareholders, and we believe that our new financial process has a -- would give a stronger resilience than the historical Elkem. So even though the markets remain, for the time being, challenging and uncertain, we believe that we are in an excellent position to deliver profitable operations, good cash flow even under quite challenging conditions. And over time, as illustrated, we are also comfortable that we have a position that can deliver results at least in line with our historical performance. I should be humble about timing. Normalization, full normalization will probably take some time and our markets will keep fluctuating. But as the markets will settle, we are very well positioned to deliver strong revenues and profitability. And as I said, we will certainly focus on maintaining a strong and efficient balance sheet over time. And we will also, in the future, get back to delivering attractive dividends to the shareholders when the time is right. Finally, I think it's also worth mentioning that the transaction and the streamlining of Elkem in the coming years will enable profitable expansion and growth. And once the transaction is completed, as we said, we will also then after the summer vacation, get back with a capital markets update, elaborating more on our future financial targets and strategic priorities. As we said, the sale of the Silicones division is settled by share redemption with no cash payments. We're planning also, as said, an equity issuance following the closes of the contemplated transaction to ensure a robust and efficient balance sheet. And a number of key current investors have already fully underwritten a NOK 1.5 billion equity capital increase. And with this capital increase, the new pro forma leverage will be 3.6x based on the last 12 months EBITDA. The equity capital raise is subject to certain terms and conditions to be completed following the closes of the contemplated transaction. But what's important from the company's perspective is that there is no uncertainty related to the equity raise and to the financial position of the company going forward. We believe this will be a very strong structure. And certainly, our target is to maintain a strong credit position and a flexible balance sheet, qualifying for investment grade. The transaction is conditional upon approval from certain Elkem lenders and the waiver and approval process is now being initiated. After transaction closing, we plan then to conduct a full refinancing of main credit and loan facilities, and we will get back with more information on that in due time. So then a few words about the approval process from the minority shareholders. The contemplated transaction is conditional upon the approval by Elkem's General Meeting. We will then call for an Extraordinary General Meeting today to be held on the 9th of March to approve the contemplated transaction and the redemption of Bluestar's shares in Elkem. Bluestar will not vote on the agenda items relating to approval of the contemplated transaction as they are part of the transaction. But Folketrygdfondet, Must Invest, DNB Asset Management, Nordea Investment Management and Perestroika have pre-committed to vote in favor of the share purchase agreement, and that is representing approximately 30% of the eligible voting capital for this matter. And as I also said, these investors have collectively underwritten NOK 1.5 billion in new equity capital, subject to market terms. The Board of Directors in Elkem will certainly also ensure to take into consideration of the minority shareholders in relation to the equity capital raise. With respect to the share redemption, Bluestar is entitled to vote and has undertaken to vote in favor. Hence, shareholders holding 67% of the share capital eligible to vote on that item have undertaken to vote in favor of the share redemption at the EGM. And subject to being approved by -- or subject to approval by the EGM and other closing conditions, where there are really no major ones, the contemplated transaction is expected to close late April or early March this year -- May. Thank you, Helge. Elkem's management and the independent Board have thoroughly assessed available options in a long time before entering into these -- or into exclusive negotiations with Bluestar, and we clearly believe that this is the best option, and it's a very good solution. To safeguard the interests of the minority investors in Elkem, the Independent Board has also obtained a fairness opinion from DNB Carnegie, which has concluded that the contemplated transaction is fair from a financial point of view when considering the valuation from the perspective of the Independent Board and its shareholders. So to summarize, we certainly believe that this transaction will be beneficial to all stakeholders, and it will position Elkem as a focused pure-play #1 metals and materials company. This will certainly allow us to pursue tailored strategies aligned with our division's unique strengths and market positions. Elkem, post the transaction, will hold leading positions within operations, technology, market, product technology, et cetera. We will continue to have attractive positions in all relevant geographies. And we clearly also see potential value-accretive M&A opportunities when the timing is right. As a supplier of critical materials to the green and digital transformation, we have developed strong customer relations based on very capable in-house R&D resources, and we will continue to strengthen that going forward and make sure that it's sustainable, both from a financial and an environmental point of view. As I said, Elkem's target is clearly to maintain a robust financial profile over the cycle with a very strong focus on solid cash conversion. And we believe that this will, over time, provide the necessary flexibility for growth and development of the company. So I guess that concludes our presentation, and then I'm happy to leave the word back to Odd-Geir again, who will facilitate the Q&A session. Thank you very much. Odd-Geir Lyngstad: Thank you for that, Morten. We will then open up for Q&A. We have received some questions on the webcast and including some on e-mail. But since there are a few people present here today, I would like to take the opportunity to see if there are any questions from the audience. And the best solution is probably if you just say the question and then I'll repeat for the webcast. So please feel free. If there are no questions from the audience, we'll take a few of the questions that are on the webcast. And the first question is related to the Roussillon and the part of the Silicones' assets that are not part of the transaction. And questions are if -- what is the EBITDA for the Silicones part that are not part of the transaction where obviously, the Roussillon plant is the main item. What was that in '25? And I mean, the part of EBITDA that we are not selling to Bluestar? Helge Aasen: I don't think we have -- this has been an integrated part of the Silicones operations in France. Obviously, we have looked at what is going to look like going forward, but I don't think we have a specific number on 2025 EBITDA for this part. Morten Viga: No, you're absolutely right. This has been an integrated part of the Silicones business in France. So we don't have a precise number on that. We believe that we will have a -- how should I call it, a neutral to positive profitability going forward. Helge Aasen: I should add that this -- to keep that asset obviously gives us a very stable outlet for silicon metal and value uplift on silicon metal into the European market. It's also very important for Bluestar to have a stable source of silox for their downstream operations. And we have entered into a long-term agreement that I think will be very beneficial for both parties. Odd-Geir Lyngstad: And then we have a question related to debt and EBITDA and where do we see the net debt to EBITDA for the remaining Elkem after the NOK 1.5 billion equity raise? Morten Viga: Well, then we will be at a net interest-bearing debt of approximately NOK 8.3 billion. And as I said, we will be at approximately 3.6x EBITDA on a leverage. There will probably be an additional equity raise, which can change or lower that also somewhat. Our target is clearly to generate cash flow going forward, which enable a further deleverage of that number. Odd-Geir Lyngstad: While we are into kind of equity raise, there is also a question about the agreed equity price issue or the conditions of the equity offering, if you're able to provide any further details on that? Morten Viga: More details on that will be provided later. I think the important issue today is that we have underwritten NOK 1.5 billion in new equity, very happy with the support from major shareholders, which clearly see this as a very good and attractive investment. And then we will provide more details on the structure and terms later in the process. Odd-Geir Lyngstad: We have also received a question on the price exchange between Elkem and Bluestar and therefore, the implied EV of the sold assets. Morten Viga: Yes, that's a good question. I think we have provided all the relevant information. And of course, there are many ways to regard this. From our perspective, what's important is that we clearly believe that this is very attractive as seen from the minority interest and from the company's perspective. I think that has also been confirmed by opinions made by ABG and by DNB Carnegie. And as I also said, the important thing is that we now have secured a very, very good business structure for the future of Elkem and also a very good ownership structure. Odd-Geir Lyngstad: Very good. Given the fact that we are seeking to enable the capital allocation to accelerate growth in Carbon Solutions and Silicon Products, are there any concrete opportunities that you are assessing? Helge Aasen: Definitely, we have been looking at that for a long time. And I think that's a very good topic for the Capital Markets update that we will come back to in a few months. So let's get past this next milestones with the EGM and the closing of the deal. And then I think that will be a very, very interesting topic to discuss. Odd-Geir Lyngstad: And also the last question goes more into kind of the future and the prospects for '26. We have guided on improved margins and results for '26. And the question is if you can elaborate a little bit on what is market related and what is cost efficiency related when it comes to that improvement. Helge Aasen: I don't think we should go into those details on that now. But obviously, we are now reducing Elkem's organization and simplifying the business model. And it's a very good opportunity to streamline organization. So we have already been working on that for a while. So there we'll definitely be taking measures to reduce cost through efficiency improvement. And then regarding the market, I think we're positive on the outlook. I think Q1, I mean, we have said there's still a lot of uncertainty. We don't guide beyond Q1. I think Q1, you can expect that to be in line with Q4, and then we are positive going forward. Odd-Geir Lyngstad: Thank you very much. I don't have any further questions, and there doesn't seem to be any from the audience. So that concludes our presentations here today. So thank you very much for attending, and thank you to Helge, Morten for taking us through the 2 presentations. Helge Aasen: Thank you. Odd-Geir Lyngstad: Thank you. Morten Viga: Thank you.
Baard Haugen: Good morning, and welcome to Hydro's Fourth Quarter 2025 Presentation and Q&A. We will shortly begin with a presentation by President and CEO, Eivind Kallevik, followed by a financial update from CFO, Trond Olaf Christophersen. At the end, we will finish with a Q&A session. Please note that if you have questions you would like to ask in the Q&A, you can do so at any time by typing them in the box on your screen. When we get to the Q&A, I will then ask your questions on your behalf to Ivan and Trond. And with that, I turn the word over to you, Ivan. Eivind Kallevik: Thank you, Erik, and good morning, and welcome from me as well. As always, I will start with safety. Our top priority is to ensure the health and well-being of our employees. Now the positive development that we've seen over time continued into the fourth quarter. In fact, total recordable injuries and high-risk incidents are lower compared to last quarter, which was also a record low for Hydro. It is also worth mentioning that when looking at 2025 as a whole, we also had no fatalities or no life-changing injuries. On the other hand, we do know that this situation can change quickly. So to sustain these low numbers, that requires continuous attention and strong commitment from all employees across all our locations. And by ensuring a safe work environment, we can maintain a stable operation, which in turn enable us to deliver on our strategic ambitions. Now let's continue with the highlights of the quarter. EBITDA came in at roughly NOK 5.6 billion, with free cash flow of NOK 4.6 billion, yielding an adjusted RoaCE for the year at 10.2%. And that is above our target of 10% over the cycle. In short, the fourth quarter saw strong metal prices, high upstream production volumes and very healthy cash generation. Looking closer at the highlights listed here. First of all, alumina production are above nameplate capacity for the fourth quarter and the smelter production was also up 2.5%. On the Energy side, we can report an increased power production of some 13.6% year-over-year. We are continuously working to secure more long-term power contracts, and we are pleased to report 2 new long-term power contracts as well as the power plant investment in Norway during the quarter. Due to increased volatility driven by the global uncertainty, we have also made several difficult but also necessary restructuring decisions in the recent months during Q4. We've completed the strategic workforce reduction as planned, and we also proposed the closure of 5 European extrusion plants. And finally, the Board of Directors decided to propose a dividend of NOK 3 per share, and this is 60% of adjusted net income above the minimum threshold of 50% as decided by our distribution policy. Now we've made good progress on the strategy this quarter with several key milestones achieved. On the upstream side, both Bauxite & Alumina and Aluminum Metal have delivered good production numbers. In B&A, the Alunorte refinery experienced improved flow through the plant and high equipment availability, resulting in production above nameplate capacity. In addition, we also saw one of the highest commercial sales volumes ever in Bauxite & Alumina in the fourth quarter. As a result, in the 2025, B&A delivered its second best EBITDA ever. In Aluminum Metal, our smelter system also delivered stable performance and primary aluminum production increased some 2.5% year-over-year in the fourth quarter. As previously communicated, the Norwegian capacity that was curtailed back in 2022 is now being ramped up, and we expect to increase production by some 50,000 to 60,000 tonnes during 2026 and then comparing to '25. We expect to reach the production speed during the summer of '26. Now moving to power sourcing. For our Norwegian smelters, one of our key priorities is to secure long-term and competitive renewable power to support competitiveness as well as our low carbon position. In Q4, we have made good progress in this regard, signing 2 power purchase agreements with Hafslund, one in November and one in December. Putting these agreements together cover the period between 2031 and 2040 with a total volume of 5.25 terawatt hours. The contracts are in the price area NO3, covering the Sundal and Hojangar assets that we have. In addition to working actively on third-party sourcing, we are continuing to invest in our own hydropower system. And in Q4, we took the final investment decision on the Illvatn pumped storage power plant. And this is Hydro's biggest investment in the Norwegian hydropower system since 2004, with a gross investment of NOK 2.5 billion and net investment after tax of some NOK 1.2 billion. The Illvatn pumped storage plant will also contribute with increased power production, reservoir capacity as well as installed power capacity from our facilities in Fortun. And then lastly, cost control. One of the things we talked a lot about in 2025 was uncertainty and the need to take proactive measures. So in Q3, we announced the strategic workforce reduction for white-collar employees on a global scale. This program concluded in fourth quarter with around 850 white-collar employees having either left or will leave the company within the first half of 2026. The FTE reduction, together with reduced spending on consultants and travel, will yield savings of roughly NOK 1 billion per year starting now in 2026. Likewise, just before our Investor Day late in November, we did announce the proposed closure of 5 European extrusion plants. We have now confirmed the closure of 2 of the plants, Bedwas and Cheltenham in the U.K., and the process around the remaining 3 plants is still ongoing. As we all know, Extrusions has faced market headwinds also during 2025, which has negatively impacted their results. On the other side, the Extrusion organization has worked hard on cost control and mitigating actions, which enabled them to deliver a good and positive cash flow from the business area in 2025. Now turning to Bauxite & Alumina. In the fourth quarter, oversupply in the alumina market put a continued downward pressure on PAX. And according to CRU, 2025 ended with a small surplus of around 700,000 tonnes. This is expected to narrow somewhat to about 500,000 tonnes in 2026 in the roughly 145 million global market for alumina. As a result, the market remains sensitive to any production disruptions or delays in ramp-up of new facilities. During the quarter, new refineries in Indonesia continued to ramp up production, while alumina prices in China declined. This pushed the PAX index down to $306 per tonne at the quarter end from $321 in the third quarter. In China, bauxite import prices remained stable at around $70 per tonne on a CIF basis. Import volumes, on the other hand, increased by some 10% year-on-year, to 43.5 million tonnes imports from Guinea, increasing with 20%, while shipments from Australia declined by some 9%. Then moving on to LME. Now looking at the global primary aluminum balance in 2025, external sources estimated a global deficit of primary aluminum at around 0.3 million tonnes. The 3-month aluminum price increased throughout the fourth quarter of 2025, starting the quarter at $2,688 per tonne and ending at $2,995 per metric ton. This rally was likely supported by a weaker dollar, news of a potential shutdown of the Mozal smelter in Mozambique and a broadly bullish sentiment across base and precious metals. The U.S. Midwest premium continued to surge in the fourth quarter, moving from around $1,675 per tonne at the start of the quarter to just above $2,000 by quarter end. And this increase reflects the market fully pricing in the 50% import duty under the Section 232 tariffs, highlighting both the underlying structural aluminum deficit in the U.S. as well as the continued need to attract metal into the domestic market. In Europe, duty paid standard ingot premiums ended the fourth quarter at $335 per tonne, up from $223 per tonne at the end of the third quarter. This is due to the tightening supply situation that we have and certainly some CBAM front-loading also going into 2026. As in previous quarters, Hydro's primary concern remains the risk of a broader global economic slowdown driven by tariffs and trade tensions, which could weaken demand and put pressure on the current price levels that we see today. Now moving downstream. We see Extrusion demand ended in 2025 with a modest increase in Europe and a modest decrease in North America compared to the last year. In Europe, Extrusion demand is estimated to have been flat in the fourth quarter of 2025 compared to the same quarter last year but increasing 3% compared to the third quarter. Demand from building and construction and industrial segments have stabilized at historically low levels with some improvements in order bookings. Automotive demand has been negatively impacted by lower European light vehicle production but has been partly offset by increased production of electric vehicles. And CRU estimates that the European demand for extruded products will increase 1% in the first quarter of 2026 compared to the same quarter last year. Overall, Extrusion demand is estimated to have increased by 1% in 2025 compared to '24, with current estimates for '26 as compared to 2025 coming in at 3%. In North America, Extrusion demand is estimated to have been flat in the fourth quarter of '25 compared to the same quarter last year, but it did decrease 8% compared to the third quarter, which is partly driven by seasonality. Extrusion demand has continued to be very weak in the commercial transport segment, driven by lower trailer builds. Automotive demand in the U.S. has also been weak. Demand within building and construction has been positive as well as within certain industrial segments. At the same time, Extrusion demand across segments is being subdued due to higher product prices resulting from tariffs and duties on aluminum in the U.S. CRU estimates that North American demand for extruded products will decrease some 1% in the first quarter of 2026 compared to the same quarter last year. Overall, Extrusion demand is estimated to have decreased by 2% in 2025 compared to 2024, but there is an expectation of a growth of 1% in 2026 compared to '25. And let me then give the word to Trond Olaf for the financial update. Trond Christophersen: Thank you, Ivan, and good morning, and welcome from me as well. We'll start my part with the financial highlights for the quarter. Comparing year-over-year, revenues fell by around 14% to NOK 47 billion for Q4, driven by lower alumina prices. For Q4, we have an adjusted EBITDA of NOK 5.6 billion and a reported EBITDA of almost NOK 2 billion, meaning that we have adjusting items of around NOK 3.6 billion. The main adjusting item is unrealized derivative loss, mainly on LME-related contracts of NOK 2.3 billion. We also have rationalization charges and closure costs of NOK 1.3 billion, mainly related to the restructuring of Extrusion Europe. There were also smaller positive adjusting items from FX and divestments. The adjusted EBIT for Q4 was NOK 2.9 billion, with a reported EBIT of negative NOK 1.5 billion. In addition to the EBITDA adjusting items, there were NOK 700 million in adjusting items impacting EBIT related to impairments. The difference between the adjusted and the reported EBIT was therefore negative NOK 4.3 billion. Net financial expense for Q4 was around negative NOK 600 million. Interest and other financial income was NOK 430 million, offset by interest and finance expense of NOK 470 million and foreign exchange losses of NOK 575 million, mainly reflecting a weaker BRL versus U.S. dollar. The income tax expense was NOK 57 million in Q4, impacted by negative earnings before tax, offset by higher power surtax. Overall, this results in an adjusted net income of NOK 1.7 billion with reported net income of negative NOK 2.2 billion. The total adjusting items to net income was NOK 3.8 billion, which is the sum of the EBIT adjusting items plus a net foreign exchange loss of NOK 575 million and an income tax effect of negative NOK 1 billion. Adjusted net income is down from NOK 2.6 billion in the same quarter last year and down from NOK 1.9 billion in Q3. Consequently, adjusted EPS was NOK 0.7 per share. When looking at results Q4 versus Q3, adjusted EBITDA decreased by NOK 400 million from NOK 6 billion to NOK 5.6 billion. The main driver was lower Extrusion results -- realized results. Realized all-in aluminum prices contributed positively by NOK 800 million, and alumina price contributed negatively by NOK 300 million, for a net effect of around positive NOK 500 million. Upstream volumes contributed positively by NOK 300 million, driven by alumina production above nameplate capacity and high commercial alumina trading volumes. Lower raw material costs in Bauxite & Alumina and lower alumina costs in Aluminum Metal contributed positively by NOK 400 million. Extrusions and recycling margins and volumes had a negative impact of around NOK 1 billion, driven by seasonally lower volumes and lower margins in extrusion. In Energy, higher production and prices were partly offset by lower gains on price area differences, with a net positive impact of around NOK 300 million for the quarter. Fixed costs were around NOK 400 million, higher compared to the Q3, mainly in Aluminum Metal and Extrusions and mainly driven by seasonal effects. Currency effects positively impacted results by around NOK 100 million. The final negative effect of NOK 500 million is mainly related to other and eliminations. The eliminations this quarter amounted to approximately NOK 300 million on the profits on the increased volume in B&A. And this concludes the adjusted EBITDA development from NOK 6 billion in Q3 to NOK 5.6 billion in Q4. When looking at the full year EBITDA development from 2024 to 2025, adjusted EBITDA increased by NOK 2.6 billion, from NOK 26.3 billion to NOK 28.9 billion. The main drivers were higher aluminum price and normalizing eliminations, offset by stronger NOK versus U.S. dollar. Realized all-in aluminum and alumina price contributed positively with around NOK 2.3 billion, where higher aluminum price was partly offset by lower alumina price. Upstream volume development had a net positive impact of NOK 500 million, with higher sales volumes in both B&A and Aluminum Metal. Raw material costs improved with NOK 500 million. B&A saw an improvement of NOK 1.1 billion, where the fuel switch savings were partly offset by higher costs for other raw materials. Raw material costs in aluminum metal increased by NOK 600 million on higher alumina costs. The downstream segments contributed to -- continued to face headwinds in 2025, leading to a total negative effect of around NOK 400 million. Extrusions experienced headwinds of around NOK 700 million from reduced volumes and margins, while the recycling results in Metal Markets improved by NOK 300 million. Furthermore, we saw a net positive impact of NOK 800 million due to higher energy prices, production and gain on price area differences compared to 2024. Fixed costs increased in 2025 with an impact of NOK 800 million, where increased fixed cost upstream, mainly related to inflation and salary adjustments, were partly offset by reduced fixed cost in Extrusions. We also saw a negative NOK 2.7 billion in currency effects, mainly driven by the stronger NOK versus U.S. dollar. The final contribution of NOK 2.4 billion was driven by NOK 2.6 billion in realization of previously eliminated internal margins. And this was partly offset by NOK 200 million in net other effects. Then moving on to debt. And when looking at the debt development through the quarter, net debt decreased by NOK 3.9 billion since Q3. Based on the starting point of NOK 13.6 billion in net debt in Q3, we had a positive contribution in adjusted EBITDA of NOK 5.6 billion. During Q4, we saw a net operating capital release of NOK 1.4 billion, mainly driven by a release in net accounts receivable and accounts payable, partly offset by increased inventories and receivables related to CO2 compensation. Under other operating cash flow, we had a positive NOK 1.6 billion impact, mainly driven by dividend contributions from equity accounted investments and adjustment for noncash effective bonus accruals, partly offset by interest payments. On the investment side, we had a net cash effective investments of NOK 4 billion, reflecting the typical high maintenance investment activity level at the end of the year. As a result, we had positive free cash flow of NOK 4.6 billion in Q4. We also had negative other effects of NOK 700 million, and this was mainly driven by negative FX effects on debt and new leases. As we move on to the adjustment related to adjusted net debt, hedging collateral has increased by NOK 600 million since the end of Q3. Furthermore, during Q4, the net positive pension position increased by NOK 300 million. And finally, we had an increase of NOK 700 million in other liabilities during Q4, mainly explained by increased provisions related to restructuring in Extrusion Europe. And with those effects taken into account, we end up with an adjusted net debt position at the end of Q4 of NOK 18.2 billion. Moving then to the business areas and starting with Bauxite & Alumina. Adjusted EBITDA for Bauxite & Alumina decreased from NOK 5 billion in Q4 '24 to NOK 1.4 billion in Q4 '25. This was mainly driven by lower alumina prices and negative currency effects caused by a weaker U.S. dollar against the Norwegian kroner. This was partly offset by higher sales volumes and strong trading results in B&A. Compared to Q3 '25, the adjusted EBITDA increased from NOK 1.3 billion to NOK 1.4 billion in Q4 '25, mainly driven by higher sales volumes and strong commercial results. Production volumes ended the quarter above nameplate capacity following high equipment availability and improved refinery flow. Alumina realized prices declined during the quarter but remained above market prices indications, supported by intra-group pricing mechanisms. Raw material costs were lower compared with the Q3, driven by lower caustic soda and coal prices, and fixed costs remained roughly stable. Moving then to the Q1 outlook. For Q1, we expect fixed and raw material costs to remain stable. Production volumes are expected to decline seasonally, reflecting fewer operating days in Q1 and scheduled maintenance activities. Realized alumina prices are anticipated to continue correcting in line with market trends, while trading results are expected to return to more normalized lower levels. Moving then to Aluminum Metal. Adjusted EBITDA increased from NOK 1.9 billion in Q4 '24 to NOK 3.7 billion this quarter. The main drivers year-on-year were higher all-in metal prices and reduced alumina costs, partly offset by negative currency effects. Compared to Q3 '25, adjusted EBITDA for aluminum metal, increased from NOK 2.7 billion, and this was driven by higher all-in metal prices and lower alumina costs, partly offset by seasonally higher fixed costs. The alumina cost reduction of approximately NOK 200 million drove raw material cost savings above our Q3 guidance of a flat impact. The guided seasonal increase in fixed costs ended slightly above our guidance of around NOK 220 million. And this brings me over to the Q1 outlook. For Q1, AM has booked 70% of the primary production at USD 2,803 per tonne. This includes the effect of our strategic hedging program. We have also booked 40% of the premiums affecting Q1 at USD 478 per tonne. We expect the realized premium to end up in the range of USD 380 to USD 430 per tonne. On the cost side, raw material expenses are expected to increase by NOK 100 million to NOK 200 million, primarily driven by LME-linked energy costs in our joint venture portfolio. Fixed costs are expected to increase by NOK 50 million to NOK 150 million, driven by seasonality, and sales volumes are also expected to increase. For Metal Markets, the adjusted EBITDA decreased in Q4 from NOK 319 million in Q4 '24 to negative NOK 56 million due to lower results from sourcing and trading activities and negative currency and inventory valuation effects. Those were partly offset by increased results from recyclers. Excluding the currency and inventory valuation effects, the result for Q4 was NOK 39 million, down from NOK 115 million in Q4 '24. Compared to Q3, adjusted EBITDA for Metal Markets decreased from NOK 154 million due to lower results from recyclers and from sourcing and trading activities. Recycling results ended lower at NOK 48 million, down from NOK 93 million last quarter. Decrease was primarily driven by challenging market conditions for the European recycling operations. For Q1, we expect stable recycling results. In our commercial segment, we also anticipate higher contribution from sourcing and trading activities in Q1. As always, we emphasize the inherent volatility of trading and currency fluctuations. And for 2026, we expect the commercial adjusted EBITDA, excluding currency and inventory valuation effects, to be in the range of NOK 200 million to NOK 400 million. Moving then to Extrusions. For Extrusions, the adjusted EBITDA decreased year-over-year from NOK 371 million to a negative NOK 62 million, driven by lower margins and sales volumes. Still strong focus on cost control and portfolio optimizations have contributed to a full year 2025 positive cash flow. We saw 1% decline in sales volumes as well as strong pressure on sales margins across the portfolio. Similar to the previous quarter, transport volume developments were negative, but headwinds are moderating compared to previous quarters. Shipments to the transport market were down 4%, negatively impacted by North America. Automotive sales in Q4 were still negative in both Europe and North America, driven by continued moderate production at some car manufacturers. Sales volumes growth in the industrial segment ended 8% higher in Q4, while sales in the distribution segment increased by 6% in Q4, mainly driven by increased shipments in the U.S. After a significant increase in volumes in the HVAC&R segment previously in 2025, the trend turned negative in Q4 '25, mainly caused by tighter consumer spending and inventory offloading at customers. The metal effect for the quarter ended at NOK 160 million. Compared to Q3 '25, adjusted EBITDA for Extrusions decreased from NOK 1.1 billion in Q3 to negative NOK 62 million in Q4 due to seasonally lower sales volumes, partly offset by lower costs. When looking at Q1, we always compare it to the same quarter last year, and this helps to capture the typical seasonal patterns we see in Extrusions. Looking at external market data, volumes in Europe are expected to increase moderately by 1%, while North America shows a slight decline of about 1%. We expect our European sales to be largely stable, while our North American sales are expected to decrease slightly more than the external market estimate due to our high exposure to commercial transport and distribution. Margins are expected to remain more or less stable with some improvements expected in North America due to favorable scrap prices. On the metal side, we expect flat metal effect development compared with the same quarter last year. It is, however, important to note that the metal effect are highly dependent on movements in the Midwest premium. Moving then to the final business area, Energy. The adjusted EBITDA for Q4 decreased to NOK 1.1 billion compared to NOK 1.2 billion in Q4 '24. The decrease was mainly due to lower gain on price area differences, offset by higher production and higher prices compared to Q3. Compared to Q3, adjusted EBITDA increased from NOK 828 million, mainly due to high seasonal production. Some of this increase is also due to planned maintenance that will be done during Q1. The price area gain was NOK 37 million in Q4, at significantly lower level than in Q3, following a seasonal convergence between the area prices. Looking into Q1, as always, we should be aware of the inherent price and volume uncertainty in Energy. For the next quarter, production is expected to decrease due to power plant maintenance and to be below the normal seasonal levels. While price area while prices are expected to increase with the seasonality, price area gains are expected to decline further. And then moving to the dividends. This year, the Board of Directors has proposed a distribution to shareholders of NOK 5.9 billion. This will be distributed as an ordinary cash dividend of NOK 3 per share. The dividend proposal represents a cash distribution of 60% of adjusted net income, a year-end yield of around 3.8% and a 5-year average payout ratio of 65%. Hydro's capital structure policy to maintain an adjusted net debt target over the cycle of around NOK 25 billion at the year-end, including proposed shareholder distribution to be paid year after remains unchanged. As always, the final distribution for 2025 is subject to approval by the Annual General Meeting in May 2026. And with this, I end the financial update and give the word back to Ivan. Eivind Kallevik: So let me conclude today's session by outlining our priorities going forward. First and foremost, it's health and safety. This remains a nonnegotiable for Hydro. We see that building a strong safety culture has a positive impact on our performance metrics. And we need to continue learning and improving to keep these numbers low also going forward. Secondly, through uncertain times, we are taking measures to improve our robustness. Cost control measures such as the strategic workforce reduction and restructuring in extrusions are helping us to grow with the right structure going forward. Our strategic growth areas remain recycling, extrusions and renewable energy. While we do recognize the current market challenges, we also see meaningful progress, including the new long-term power contracts secured in Q4 in addition to the upgrade of our own power plants. Lastly, we continue to deliver on our decarbonization and technology road map while seizing opportunities in greener aluminum. One concrete example from Q4 is our new partnership with the University of Michigan, which is aimed at translating innovation rapidly from lab to production. This positions Hydro to support customers in reducing emissions and to future-proof their own supply chains. So to sum up, we remain fully committed to our 2030 strategy, and the fourth quarter of 2025 demonstrated important steps in the right direction. With that, I want to thank you all for your attention, and then over to you, Erik. Baard Haugen: Thank you, Ivan, and thank you, Trond Olaf. We will then commence the Q&A. And just a remind, If you do have questions, please type them in the box on the screen, and I will then read your questions to Ivan and Trond Olaf. And I think we have a few questions already. So let's get started. First one is from Marina from RBC. Based on the order book, how confident are you in a volume recovery in Extrusions in the second half of 2026? Eivind Kallevik: So when we look at the extrusion order book, that is typically pretty close in time. Very seldom do you have extrusion companies booking into the second half. So we'll still need to see the economic growth coming in into the second half from orders as we get later on in the year. What's important, I think, for us, at least when we look at the automotive sales, for instance, several of the new contracts that we have talked about that we have booked in the last couple of years, they are now coming into production. But seen from an internal viewpoint in the company, it's too early to sort of conclude where we see the second half on the extrusion side. Baard Haugen: Okay. Next one is from Liam from Deutsche, also on Extrusions. Can you clarify the guidance for Q1 '26 versus Q1 '25? Are you expecting broadly flat EBITDA year-on-year? What have been the cumulative one-off gains in Extrusions in 2025 from the high Midwest premiums? Trond Christophersen: Liam, so to comment on your question. So first, the last question. So in total, we had around NOK 700 million in positive metal effects in Extrusions in 2025. If you then look at the different parts of the extrusion guiding, you see that we guide on roughly flat metal effect, some pressure on volumes, but flattish development on the margin side. Baard Haugen: Then we have another question from Marina. You are guiding for higher fixed and raw material costs in your Aluminum Metal division. Can you elaborate on the key drivers? Eivind Kallevik: So let me comment on 2 things. So when you look at fixed cost, typically in Q4, you have the reversal of vacation accruals, which is done and then you don't have that into Q1. So that will drive fixed costs up somewhat. And then we have some of the power contracts within our joint venture portfolio that also has an LME link into it. So that will lift the Energy costs somewhat coming into first quarter and into 2026. Baard Haugen: Okay. And then we have another one from Liam. Does the cost guidance for Q1 factor in a stronger NOK? Trond Christophersen: Yes. So the cost guidance is based on the currency assumption some weeks back. So then you need to factor in any development after that. Baard Haugen: And then we have a question from Alain, Morgan Stanley. Q4 B&A beat expectations. Can you quantify the trading contribution in the quarter and indicate how much of this is sustainable into Q1 '26? Trond Christophersen: Yes. So we have around NOK 300 million in very strong commercial results in B&A in Q4. Baard Haugen: And then another question from Alain on B&A. Alunorte ran above nameplate in Q4. Is this operationally sustainable? Or should we expect normalization in 2026 due to maintenance or any bottlenecks? Eivind Kallevik: So I think when you look overall for the year, we still have a target to produce at nameplate capacity, which we showed also in the fourth quarter. Now when we look at first quarter of '26, you should expect volumes to come down somewhat, driven by 2 things. One is that there are fewer production days in Q1. And secondly, also that we will have some planned maintenance in the first quarter. So a little bit lower production speed in Q1. But over the year, we should be still targeting nameplate capacity. Baard Haugen: And then there doesn't seem to be any other further questions. So if nothing else comes in, I think we will say thank you all for joining us here today. And if you do have any further questions, please don't hesitate to reach out to Investor Relations. Thank you.
Christina Glenn: Good morning, and welcome to the presentation of Aker's fourth quarter results for 2025. My name is Christina Schartum, and I am the Head of Communications at Aker. I am joined in the studio today by our President and CEO, Oyvind Eriksen, who will walk you through the key highlights and recent developments across the portfolio. We are also fortunate to have Josh Payne, Founder and CEO of Nscale, with us, to give an update on this exciting company. Our Chief Financial Officer, Svein Oskar Stoknes, will then take you through the financial results in more detail. After the presentation, we'll host a Q&A. And with that, I'll hand it over to Oyvind. Øyvind Eriksen: Thank you, Christina, and good morning, everyone. 2025 was a pivotal year. Aker became a more focused industrial owner with greater scale in fewer platforms and a portfolio positioned to deliver through cycles. That comes through clearly in our full year results. Net asset value closed at NOK 67.3 billion, up 22.4% for the year, if you add the NOK 3.9 billion Aker paid in dividends. Total shareholder return was nearly 50%, a strong reflection of both underlying delivery and the choices we made during the year. Dividend income of NOK 6 billion continue to form the financial backbone of Aker, supporting predictable returns while giving us the freedom to invest where long-term ownership makes a difference. We also saw clear progress across the portfolio. Our listed holdings grew 28%, reflecting strong delivery from companies that remain central to Aker's long-term industrial foundation. And our unlisted holdings, including technology platforms like Cognite and Nscale, grew 33% and is moving forward in ways that increase scale and strategic relevance. Taken together, 2025 strengthened Aker both financially and operationally, while also making it more clear how the mix of our companies positions Aker to navigate a more competitive and capacity-constrained decade. The fourth quarter closed broadly unchanged from the net asset value of the third quarter despite a substantial dividend distribution of NOK 2 billion or NOK 26.5 per share. For 2026, the Board proposes a dividend of NOK 29 per share in the second quarter, with authorization for an additional dividend later in the year. The intention remains the same, a competitive, reliable payout supported by a portfolio that has become structurally stronger. Aker BP and Aker Solutions have remained the core of Aker's Industrial Foundation, and 2025 reinforced why they sit at the center of the portfolio. Aker BP delivered another year of strong performance. Projects stayed on track, production remained high, and the company continued to operate as a low-cost, low-emission producer on the Norwegian continental shelf, a competitive position it has built systematically over time. The year also strengthened its long-term resource base through exploration successes, while maintaining the reliability and efficiency that underpin its cash generation. Johan Sverdrup is the jewel in the Aker BP crown, accounting for more than half of the company's production at record low production cost and CO2 emissions per barrel. The laws of nature will trigger decline in production for any oil and gas field over time, including Johan Sverdrup, which is why that is embedded in Aker BP's plans and guidance. What's not included is the potential of enhanced oil recovery due to technology and drilling. History shows how big oil fields have outperformed forecasts repeatedly. For Aker, Aker BP continues to generate solid value creation, attractive dividends and continued confidence in a business that performs through cycles. Aker Solutions also had a solid year with high activity levels and good progress across major projects, particularly those tied to Aker BP. Its strength lies in deep engineering competence, long-term customer relationships and asset-light model that continues to generate cash while expanding into new verticals. It also benefits from the scale and positions built through OneSubsea, which is increasingly well placed in a growing subsea market. Together, Aker BP and Aker Solutions anchor the kind of stability that lets us take a long-term view across the rest of the portfolio. Real estate has become a significant and growing part of Aker's portfolio, now representing a gross NOK 145 billion platform. Beyond structure, the returns delivered over the past year deserve attention. Since the transaction announced in May 2025, all of Aker's real estate investments have significantly outperformed the broader market. Over this period, PPI delivered a 23% return; Sveafastigheter, 20%; and SBB, 16%; while the OMX Stockholm Real Estate Index declined by 4%. This reinforces our view of real estate as a disciplined, return-driven allocation, one that strengthens cash flow, reduces volatility and improves the portfolio resilience over time. A key driver of this progress was the transaction between Public Property Invest, PPI, and SBB. It tripled PPI's portfolio and established a leading listed platform in the European social infrastructure, characterized by long duration leases, high occupancy and dependable public sector tenants. For Aker, the transaction increased our economic ownership in PPI to 34% and expanded our exposure to a platform with stable, predictable cash flows and countercyclical characteristics. The structure of the transaction was equally important. It reduced risk, strengthened balance sheets and simplified ownership, while allowing SBB to remain the majority owner in a higher-quality platform. The result was a material improvement in the quality and robustness of the ownership structure. Moving on to Cognite, our exposure to industrial software and industrial AI. 2025 marked a clear shift. Focus is now on how AI will move from excitement to enabler of improvement and change and how these technologies are being used in day-to-day operations. Cognite sits at the core of this work, in environments where complexity is high, uptime matters, and the tolerance for error is near 0. Cognite provides the foundation that makes AI useful in production. Cognite Data Fusion delivers the contextualized data layer, while Atlas AI and [ June ] drive how AI is actually deployed in practice. Atlas AI is Cognite's industrial agent platform built on contextualized operational data, enabling AI agents to act on real operating conditions. [ June ] is Cognite's low-code environment for building and adapting industrial applications, reducing the time from ID to deployment significantly. Together, they shorten the distance between data, domain expertise and action, which is what industrial operators need for AI at scale. The shift in adoption this year has been unmistakable. Cognite delivered USD 164 million in annual revenue, with ARR up 32% to USD 124 million. The number of Atlas AI customers grew nearly eightfold, firmly moving the product into mainstream use. And in 2025, more than 70% of new bookings included Atlas AI, showing how central it has become in new customer engagements. The fourth quarter reinforced this. Cognite signed 13 new customer contracts, underlining its ability to scale across asset-heavy industries globally. At the same time, the quality of the business strengthened, gross margin increased and reached 68%. And the software part of that gross margin exceeded 80%, reflecting a high-value Software-as-a-Service mix and operational leverage. And importantly, these are not generic AI pilots. Customers are deploying product-grade AI agents and workflows for our maintenance planning, root cause analysis, energy optimization and decision support, use cases tied directly to uptime, efficiency, safety and profitability where AI has real economic impact. Commercially, Cognite continues to broaden. Around 80% of revenue now comes from customers outside the Aker Group and roughly 40% from outside oil and gas, reflecting significant sector and customer diversification. A new vertical, pharma and life science is showing especially strong traction with 4 of the top 10 global companies now Cognite customers. Cognite is also investing for growth. The company is expanding its sales force, deepening its market coverage and continuing to invest heavily in product development to maintain its pole position in industrial AI. A key differentiator remains the company's industrial proximity. Early deployments inside demanding operating environments, including Aker BP's Yggdrasil development, provide a feedback loop few software companies can match. There, Cognite's technology enables automated operations, remote control rooms and digitally-enabled work processes such as robotic inspection. Taken together, Cognite is moving from early adoption to embedded use. AI is becoming part of day-to-day industrial operations. That is what supports continued growth and why Cognite plays a critical role in Aker's long-term value creation. Aize is providing advanced visualization and collaboration tools that help asset-heavy industries plan, operate and maintain large facilities more efficiently. The company continues to strengthen its position, delivering advanced visualization and collaboration tools for heavy asset industries. Its technology is now deployed across 66 facilities worldwide, supporting customers like BP, Exxon and SBM Offshore. While Aize is well established in EPC and offshore operations, its addressable market is broader. The next area of expansion is onshore processing, and in the fourth quarter, Aize secured a first major contract for a large onshore LNG facility in the U.S., an important step in that direction. 2025 marked a shift in the company's revenue profile. Aize generated more than USD 14 million in recurring revenue, with subscription revenues increasing as the product matures. Revenue from customers outside [indiscernible] Aker Group also made a meaningful step forward, reflecting broader international traction. Looking ahead, the company is targeting a USD 50 million in the recurring revenue by 2029, with around 90% of the business on a recurring basis, reflecting a more scalable and predictable model as adoption grows. We are very pleased to have Josh Payne, Founder and CEO of Nscale,, with us today. Josh has built one of the fast-scaling AI infrastructure platforms globally, and he'll take you through the company's trajectory and plans in more detail shortly. Aker's shareholding in Nscale is our exposure to AI infrastructure at true international scale, where access to compute, power and grid capacity has become the defining constraint. The company combines data center capacity, GPU clusters and orchestrations in one integrated model built around long-duration customer commitments. We're also executing locally through the 50-50 Aker Nscale joint venture in Northern Norway, where Aker's industrial capabilities and Norway's strength in renewable power and grid access come together. Construction is underway in Narvik with 230 megawatts of secured grid capacity and around 1.5 gigawatts in the official queue across multiple sites, locations suited for large-scale energy-efficient AI infrastructure workloads. Over time, our joint venture stake can be rolled into Nscale parent company, ensuring that what we build locally connects directly with a larger long-term ownership in the broader global platform. And with that, I'll hand it over to you, Josh, for a deeper introduction and presentation of your great company, Nscale. Joshua Payne: Good morning, and thank you to Oyvind and the team for your leadership, and to the Aker shareholders for your continued support. Nscale is a European-headquartered, vertically-integrated AI infrastructure company. The true challenge in the market is the enormous demand for AI infrastructure and the lack of supply, driven by the complexities of deploying large-scale infrastructure at speed and the disconnection between each segment of the value chain. Nscale solves this by both building and operating the data centers, building and operating the compute clusters and also the software, delivering large-scale training and inference as an end-to-end service for customers worldwide. Today, we have deployments across 5 countries, and we're working together with Aker as part of the Aker Nscale joint venture to deliver large-scale AI infrastructure in Norway by utilizing the surplus renewable energy that exists in NO4. Norway, I believe, is one of the most compelling places in Europe to deliver on the global demand for AI compute capacity. Here in Norway, there are abundant renewable power resources, a mature industrial base, optimal climate and a high density of human capital. Norway has a long history of turning low-cost renewable energy into economic value. And for this reason, we firmly believe that Norway can leverage its energy resources to emerge as a global leader in artificial intelligence. That's why the partnership between Aker and Nscale matters. Aker is a Norwegian national champion with world-class industrial project delivery. Nscale brings the full AI infrastructure to stack, which involves the data center design and operations, the clusters, the platform software that makes the compute valuable for customers. Together, we are building a new market for the country, turning Norway's economic and industrial strengths into high-performance AI capacity that is both sovereign, sustainable and built to the highest standards. Under the Aker Nscale joint venture, we are progressing a portfolio of AI infrastructure projects in Norway, anchored first by our flagship site in Kvandal near Narvik. In Narvik, we have 230 megawatts of secured grid capacity with a further 290 megawatts in capacity queue, and customer negotiations are ongoing for adjacent plots at Narvik to support continued expansion. Overall, at Nscale, our future expansion is in line with the incredible demand we're seeing today, and we expect this will continue to grow in the future. The market is moving into a phase where the overall limiting factors are power, speed and efficiency of operations. In other words, this is becoming an execution story, and that is where our focus is in 2026 and beyond. In Q4, Nscale also strengthened the foundation for that execution. We successfully completed a Series B funding round, which was the largest Series B in European history at USD 1.1 billion, attracting both strategic investors and also global institutional top-tier investors. In parallel with this round, we also closed a $433 million Series C safe, driven by investor demand and the oversubscribed nature of that Series B round. This capital both underscores the demand for the product that we have and also supports what matters most now, which is delivery. We have a large global power pipeline, multibillion dollar contracts signed, Tier 1 strategic partnerships in place, including NVIDIA, Dell and Nokia, and hundreds of thousands of GPUs awarded to win scale to date. We're also expanding our leadership team, bringing in deep industrial experience and recently acquired global DC engineering firm, Future-tech, bringing in a team of designers, engineers, consultants, project managers and more, which empowers us to accelerate our delivery and execution. What we're building in Norway and beyond is differentiated and durable. It's both engineered for scale, for performance, built to serve demanding training and inferencing workloads reliably and to expand in phases in line with the breakneck speed of the market. And lastly, it's sovereign, both by design, giving customers clarity and control of where their data and workloads run and most importantly, aligned to European standards. We're proud to be building this with Aker. So thank you to Oyvind for your partnership, and thank you to the Aker shareholders for your continued support as we work together to build a long-term European AI infrastructure asset here in Norway and globally. Thank you. Øyvind Eriksen: Thank you, Josh. It's so exciting to see what we have achieved in 21 months only and how Aker and Nscale are working together, a great partnership. And even better, we are just getting started. Now to sum up Aker's fourth quarter and the year, our portfolio today reflects a deliberate shift toward a more balanced and more resilient Aker. We have strengthened the mix between our long-standing industrial businesses and the growth platforms we are building in compute, software and real assets. This was a year where macro conditions mattered, tighter energy systems, heightened security concerns and a more complex backdrop for long-term industrial investments and developments. These dynamics influence how our companies operated, from financing and infrastructure access to customer decision making, and they reinforce the value of diversification across sectors and geographies. A clear theme throughout the year has been collaboration. Across industries and borders, partnerships have accelerated adoption, reduced risk and created scale that individual companies cannot achieve alone. Several of the steps we took in the compute, software and industrial operations were made possible by strong partners, and this will remain a competitive advantage for the different Aker companies. Looking ahead, the portfolio we are building [indiscernible] in areas with long-term structural demand, while maintaining the industrial backbone that supports predictable cash flows. As we look ahead, our focus remains the same: disciplined ownership, operational delivery and building companies that can compete and cooperate in a more complex operating environment. That concludes my part of the presentation this morning. I'll now hand it over to our CFO, Svein Oskar. Svein Stoknes: Thank you, Oyvind, and good morning. To begin, I will provide a brief overview of the key numbers for our listed and unlisted equity investments along with cash and other assets, followed by a more detailed discussion of our financial results. As of the end of the fourth quarter, Aker's listed equity investments were valued at NOK 57 billion, accounting for 72% of the company's total assets and corresponding to NOK 768 per share. This represented an increase from the previous quarter, primarily due to a net asset value increase of NOK 2.7 billion in Aker Property Group's listed real estate holdings, following the investments in PPI and Sveafastigheter. Additionally, the combined market value of Aker BP, Aker BioMarine and Aker Solutions increased by NOK 1.1 billion during the quarter. And these positive developments were partially offset by reductions of NOK 1.1 billion in Solstad Maritime and NOK 0.3 billion in Solstad Offshore. In the fourth quarter, total dividends from listed investments reached NOK 1 billion. Of this amount, Aker BP contributed NOK 842 million; Solstad Maritime provided NOK 78 million; Akastor accounted for NOK 40 million; AMSC delivered NOK 33 million; and Solstad Offshore contributed NOK 14 million. Then over to Aker's unlisted equity investments, which represented 25% of Aker's total assets at the end of the quarter. These assets were valued at NOK 20 billion or NOK 263 per share. This represents an increase of NOK 6.2 billion compared to the previous quarter, driven primarily by Aker's investments in AI infrastructure. Aker acquired a 9.3% ownership stake in Nscale by contributing 50% of the Aker Nscale JV in kind, plus USD 100 million in cash. This stake is valued at NOK 3.8 billion, including an earn-out provision that will take the ownership to 12.2%. Additionally, Aker holds the remaining 50% stake in Aker Nscale valued at NOK 2.9 billion, also based on the Nscale Series B valuation. The reduced value of Aker Holdco and the conversion of interest-bearing receivables and associated accumulated interest, which I will come back to on the next slide, offset most of the Nscale and Aker Nscale value uplifts, giving a total net uplift to our reported NAV of NOK 1.6 billion from these transactions. In addition, the net asset value of Aker Property Group's unlisted real estate increased by NOK 0.6 billion in the quarter as debt and accumulated interest to Aker were converted to equity. At the end of the quarter, cash and other assets represented 4% of Aker's total assets equivalent to NOK 38 per share. Cash inflows reached NOK 5.3 billion, consisting primarily of NOK 3.5 billion from drawdowns on revolving credit facilities and NOK 1 billion in dividends received from Aker BP, Solstad Maritime, Akastor and Solstad Offshore. Additionally, proceeds of NOK 600 million were realized from the sale of shares in SalMar during the period. Cash outflows totaled NOK 5.6 billion, including a dividend payment of NOK 2 billion; investments in Aker Property Group and Nscale of NOK 1.3 billion and NOK 1 billion, respectively; settlement of the AMSC TRS agreements amounting to NOK 565 million; as well as share buybacks totaling NOK 317 million, and these shares were used to settle a share loan from TRG. Meanwhile, cash outlays related to operating expenses and net interest for the quarter amounted to NOK 287 million. As a result, the cash balance at quarter end stood at NOK 0.8 billion. The decrease of NOK 4.4 billion in interest-bearing receivables and NOK 0.7 billion in interest-free assets were primarily due to the conversion to equity of outstanding receivables and accumulated interest from Aker Holdco, Aker Horizons and Aker Property Group. Then let's move to the fourth quarter financials for Aker ASA and holding companies, starting with the balance sheet. In accordance with our accounting principles, investments are recognized at the lower of historical cost and market value. At the end of the quarter, the book value of Aker's investments was NOK 35.5 billion, which represents an increase of NOK 6.9 billion compared to the previous quarter. This change primarily reflects Aker's cash and in-kind investments in Nscale of NOK 3.8 billion, including the estimated value of an earn-out. In addition, investments in real estate of NOK 3.3 billion consisted of a cash investment of NOK 1.3 billion and conversion of receivables and accrued interest of NOK 2 billion. The book value of equity at quarter end was NOK 24 billion, down NOK 3.6 billion from the previous quarter, mainly due to the ordinary dividend allocation for 2025 of NOK 2.2 billion and dividends paid in the quarter of NOK 2 billion, partly offset by a profit before tax for the quarter of NOK 0.7 billion. On a fair value adjusted basis, Aker's gross asset value was NOK 79.4 billion. After subtracting for liabilities, the net asset value amounted to NOK 65.1 billion or NOK 876 per share after allocation for dividend. And the value-adjusted equity ratio was 82%. Of the total liabilities, NOK 11.7 billion is related to bond debt and bank loans and NOK 2.2 billion is related to the dividend allocation for 2025, representing NOK 29 per share. And as Oyvind mentioned, the Board of Directors is proposing that the Annual General Meeting authorizes the Board to pay a potential additional cash dividend during 2026 based on the 2025 annual accounts, in line with the practice from last year. Aker maintains a strong financial position, holding a total liquidity buffer of NOK 5.9 billion, that includes both undrawn credit facilities and liquid funds. Following the end of the quarter, the size of the company's revolving credit facilities increased by NOK 3 billion, resulting in a total RCF capacity of NOK 15 billion. At the close of the quarter, net interest-bearing debt rose to NOK 9.7 billion, up from NOK 1.7 billion in the previous quarter. This increase is primarily due to the conversion of interest-bearing receivables from Aker Holdco, Aker Horizons and Aker Property Group during the period, alongside the capital allocations that were made. The loan-to-value ratio was 14%, with Aker's weighted average debt maturity at 2.9 years. Factoring in available options for credit and loan extensions, the total effective loan maturity extends to more than 5 years. Then finally, moving to the income statement. Operating expenses in the fourth quarter were NOK 170 million, reflecting a high activity level. Dividend income was NOK 1 billion, mainly from Aker BP as well as Solstad Maritime and Akastor. The net value change was negative NOK 46 million. Net other financial items totaled negative NOK 125 million. And finally, our profit before tax was NOK 659 million for the quarter. Thank you. That concludes today's presentation, and we will now proceed to Q&A. Christina Glenn: Thank you, Svein Oskar. We'll now continue with the Q&A. The first question to Oyvind is, what is the long-term industrial logic behind your real estate platform? And how might it evolve? Øyvind Eriksen: Well, the answer to that question is twofold. The real estate investments as stand-alone and real estate as a part of the broader Aker portfolio. So we believe that the investments we made last year in SBB, PPI and Svea, in particular, were attractive due to the quality of the assets and due to timing, and the shareholder returns we reported today are speaking for themselves. So value drivers are stand-alone investments. But equally important is the diversification of the Aker portfolio. We have great assets in volatile industries, oil and gas, in particular. And with real estate, we are establishing a different asset class which has not the same volatility and cyclicality as the oil and gas and energy part of the Aker portfolio. So attractive investment stand-alone and diversification of the Aker portfolio. Christina Glenn: Great. Thank you. The next question is on Nscale. What is the next step for Nscale in its development? And how should we think about the long-term road map for the platform? Josh touched on it. Do you want to? Øyvind Eriksen: Yes. Josh mentioned, by far the most important priority for the time being, it's execution. It's just amazing to see how swiftly Nscale and Aker Nscale help grow the last 21 months and even the last 6 or 7 months since we announced the transaction. And the amount of contracts signed with great customers like OpenAI and Microsoft are nothing more, nothing less than point of departure for execution. First, project execution and so far, so good. And thereafter, a high-quality operation. And that, in parallel, I take for granted that Josh will continue to grow the company. But high-quality execution is a prerequisite for long-term success. Christina Glenn: Great. The next question is, how do you balance investments in high-growth areas like AI infrastructure and real assets with your dividend framework, the 4% to 6% of our net asset value? Øyvind Eriksen: So that's exactly the point, that we would like to diversify Aker portfolio investments and more in order to also establish and obtain cash flow from different sources, different companies. So real estate is once again an example. Over time, we expect a more predictable and attractive dividend also from that part of the portfolio, which will come in addition to the dividends paid by companies like Aker BP and Aker Solutions. So increased nominal dividend year-on-year has been a strategy for a while and continue to be core to our strategy and financial plan. Christina Glenn: Great. You touched on being less tied to commodity cycles with these new investments. Can investors consider this shift largely complete? Or should we expect additional rebalancing of the portfolio? Øyvind Eriksen: Well, Aker has been around for 185 years. And the company has never completed its growth and development. So you can take for granted that we will continue to work 24/7 to create shareholder value through a combination of development of existing portfolio companies and new transactions. Christina Glenn: Great. Last question is on Cognite. Has anything changed in your thinking around a potential IPO or the future ownership structure for that company? Øyvind Eriksen: Not really. And what it's all about is to continue on the good trajectory, continue to grow and to prove that Cognite is an AI for industry leader. 2025 was a great year for Cognite. They took full advantage of what's happening in the AI space also for industry and a huge market, which is, quite frankly, more immature than some other AI markets, but also attractive due to the size of the contracts signed with some of the global leaders in different industries. Christina Glenn: Great. That concludes the Q&A and our presentation today. Thank you for watching.
Christina Glenn: Good morning, and welcome to the presentation of Aker's fourth quarter results for 2025. My name is Christina Schartum, and I am the Head of Communications at Aker. I am joined in the studio today by our President and CEO, Oyvind Eriksen, who will walk you through the key highlights and recent developments across the portfolio. We are also fortunate to have Josh Payne, Founder and CEO of Nscale, with us, to give an update on this exciting company. Our Chief Financial Officer, Svein Oskar Stoknes, will then take you through the financial results in more detail. After the presentation, we'll host a Q&A. And with that, I'll hand it over to Oyvind. Øyvind Eriksen: Thank you, Christina, and good morning, everyone. 2025 was a pivotal year. Aker became a more focused industrial owner with greater scale in fewer platforms and a portfolio positioned to deliver through cycles. That comes through clearly in our full year results. Net asset value closed at NOK 67.3 billion, up 22.4% for the year, if you add the NOK 3.9 billion Aker paid in dividends. Total shareholder return was nearly 50%, a strong reflection of both underlying delivery and the choices we made during the year. Dividend income of NOK 6 billion continue to form the financial backbone of Aker, supporting predictable returns while giving us the freedom to invest where long-term ownership makes a difference. We also saw clear progress across the portfolio. Our listed holdings grew 28%, reflecting strong delivery from companies that remain central to Aker's long-term industrial foundation. And our unlisted holdings, including technology platforms like Cognite and Nscale, grew 33% and is moving forward in ways that increase scale and strategic relevance. Taken together, 2025 strengthened Aker both financially and operationally, while also making it more clear how the mix of our companies positions Aker to navigate a more competitive and capacity-constrained decade. The fourth quarter closed broadly unchanged from the net asset value of the third quarter despite a substantial dividend distribution of NOK 2 billion or NOK 26.5 per share. For 2026, the Board proposes a dividend of NOK 29 per share in the second quarter, with authorization for an additional dividend later in the year. The intention remains the same, a competitive, reliable payout supported by a portfolio that has become structurally stronger. Aker BP and Aker Solutions have remained the core of Aker's Industrial Foundation, and 2025 reinforced why they sit at the center of the portfolio. Aker BP delivered another year of strong performance. Projects stayed on track, production remained high, and the company continued to operate as a low-cost, low-emission producer on the Norwegian continental shelf, a competitive position it has built systematically over time. The year also strengthened its long-term resource base through exploration successes, while maintaining the reliability and efficiency that underpin its cash generation. Johan Sverdrup is the jewel in the Aker BP crown, accounting for more than half of the company's production at record low production cost and CO2 emissions per barrel. The laws of nature will trigger decline in production for any oil and gas field over time, including Johan Sverdrup, which is why that is embedded in Aker BP's plans and guidance. What's not included is the potential of enhanced oil recovery due to technology and drilling. History shows how big oil fields have outperformed forecasts repeatedly. For Aker, Aker BP continues to generate solid value creation, attractive dividends and continued confidence in a business that performs through cycles. Aker Solutions also had a solid year with high activity levels and good progress across major projects, particularly those tied to Aker BP. Its strength lies in deep engineering competence, long-term customer relationships and asset-light model that continues to generate cash while expanding into new verticals. It also benefits from the scale and positions built through OneSubsea, which is increasingly well placed in a growing subsea market. Together, Aker BP and Aker Solutions anchor the kind of stability that lets us take a long-term view across the rest of the portfolio. Real estate has become a significant and growing part of Aker's portfolio, now representing a gross NOK 145 billion platform. Beyond structure, the returns delivered over the past year deserve attention. Since the transaction announced in May 2025, all of Aker's real estate investments have significantly outperformed the broader market. Over this period, PPI delivered a 23% return; Sveafastigheter, 20%; and SBB, 16%; while the OMX Stockholm Real Estate Index declined by 4%. This reinforces our view of real estate as a disciplined, return-driven allocation, one that strengthens cash flow, reduces volatility and improves the portfolio resilience over time. A key driver of this progress was the transaction between Public Property Invest, PPI, and SBB. It tripled PPI's portfolio and established a leading listed platform in the European social infrastructure, characterized by long duration leases, high occupancy and dependable public sector tenants. For Aker, the transaction increased our economic ownership in PPI to 34% and expanded our exposure to a platform with stable, predictable cash flows and countercyclical characteristics. The structure of the transaction was equally important. It reduced risk, strengthened balance sheets and simplified ownership, while allowing SBB to remain the majority owner in a higher-quality platform. The result was a material improvement in the quality and robustness of the ownership structure. Moving on to Cognite, our exposure to industrial software and industrial AI. 2025 marked a clear shift. Focus is now on how AI will move from excitement to enabler of improvement and change and how these technologies are being used in day-to-day operations. Cognite sits at the core of this work, in environments where complexity is high, uptime matters, and the tolerance for error is near 0. Cognite provides the foundation that makes AI useful in production. Cognite Data Fusion delivers the contextualized data layer, while Atlas AI and [ June ] drive how AI is actually deployed in practice. Atlas AI is Cognite's industrial agent platform built on contextualized operational data, enabling AI agents to act on real operating conditions. [ June ] is Cognite's low-code environment for building and adapting industrial applications, reducing the time from ID to deployment significantly. Together, they shorten the distance between data, domain expertise and action, which is what industrial operators need for AI at scale. The shift in adoption this year has been unmistakable. Cognite delivered USD 164 million in annual revenue, with ARR up 32% to USD 124 million. The number of Atlas AI customers grew nearly eightfold, firmly moving the product into mainstream use. And in 2025, more than 70% of new bookings included Atlas AI, showing how central it has become in new customer engagements. The fourth quarter reinforced this. Cognite signed 13 new customer contracts, underlining its ability to scale across asset-heavy industries globally. At the same time, the quality of the business strengthened, gross margin increased and reached 68%. And the software part of that gross margin exceeded 80%, reflecting a high-value Software-as-a-Service mix and operational leverage. And importantly, these are not generic AI pilots. Customers are deploying product-grade AI agents and workflows for our maintenance planning, root cause analysis, energy optimization and decision support, use cases tied directly to uptime, efficiency, safety and profitability where AI has real economic impact. Commercially, Cognite continues to broaden. Around 80% of revenue now comes from customers outside the Aker Group and roughly 40% from outside oil and gas, reflecting significant sector and customer diversification. A new vertical, pharma and life science is showing especially strong traction with 4 of the top 10 global companies now Cognite customers. Cognite is also investing for growth. The company is expanding its sales force, deepening its market coverage and continuing to invest heavily in product development to maintain its pole position in industrial AI. A key differentiator remains the company's industrial proximity. Early deployments inside demanding operating environments, including Aker BP's Yggdrasil development, provide a feedback loop few software companies can match. There, Cognite's technology enables automated operations, remote control rooms and digitally-enabled work processes such as robotic inspection. Taken together, Cognite is moving from early adoption to embedded use. AI is becoming part of day-to-day industrial operations. That is what supports continued growth and why Cognite plays a critical role in Aker's long-term value creation. Aize is providing advanced visualization and collaboration tools that help asset-heavy industries plan, operate and maintain large facilities more efficiently. The company continues to strengthen its position, delivering advanced visualization and collaboration tools for heavy asset industries. Its technology is now deployed across 66 facilities worldwide, supporting customers like BP, Exxon and SBM Offshore. While Aize is well established in EPC and offshore operations, its addressable market is broader. The next area of expansion is onshore processing, and in the fourth quarter, Aize secured a first major contract for a large onshore LNG facility in the U.S., an important step in that direction. 2025 marked a shift in the company's revenue profile. Aize generated more than USD 14 million in recurring revenue, with subscription revenues increasing as the product matures. Revenue from customers outside [indiscernible] Aker Group also made a meaningful step forward, reflecting broader international traction. Looking ahead, the company is targeting a USD 50 million in the recurring revenue by 2029, with around 90% of the business on a recurring basis, reflecting a more scalable and predictable model as adoption grows. We are very pleased to have Josh Payne, Founder and CEO of Nscale,, with us today. Josh has built one of the fast-scaling AI infrastructure platforms globally, and he'll take you through the company's trajectory and plans in more detail shortly. Aker's shareholding in Nscale is our exposure to AI infrastructure at true international scale, where access to compute, power and grid capacity has become the defining constraint. The company combines data center capacity, GPU clusters and orchestrations in one integrated model built around long-duration customer commitments. We're also executing locally through the 50-50 Aker Nscale joint venture in Northern Norway, where Aker's industrial capabilities and Norway's strength in renewable power and grid access come together. Construction is underway in Narvik with 230 megawatts of secured grid capacity and around 1.5 gigawatts in the official queue across multiple sites, locations suited for large-scale energy-efficient AI infrastructure workloads. Over time, our joint venture stake can be rolled into Nscale parent company, ensuring that what we build locally connects directly with a larger long-term ownership in the broader global platform. And with that, I'll hand it over to you, Josh, for a deeper introduction and presentation of your great company, Nscale. Joshua Payne: Good morning, and thank you to Oyvind and the team for your leadership, and to the Aker shareholders for your continued support. Nscale is a European-headquartered, vertically-integrated AI infrastructure company. The true challenge in the market is the enormous demand for AI infrastructure and the lack of supply, driven by the complexities of deploying large-scale infrastructure at speed and the disconnection between each segment of the value chain. Nscale solves this by both building and operating the data centers, building and operating the compute clusters and also the software, delivering large-scale training and inference as an end-to-end service for customers worldwide. Today, we have deployments across 5 countries, and we're working together with Aker as part of the Aker Nscale joint venture to deliver large-scale AI infrastructure in Norway by utilizing the surplus renewable energy that exists in NO4. Norway, I believe, is one of the most compelling places in Europe to deliver on the global demand for AI compute capacity. Here in Norway, there are abundant renewable power resources, a mature industrial base, optimal climate and a high density of human capital. Norway has a long history of turning low-cost renewable energy into economic value. And for this reason, we firmly believe that Norway can leverage its energy resources to emerge as a global leader in artificial intelligence. That's why the partnership between Aker and Nscale matters. Aker is a Norwegian national champion with world-class industrial project delivery. Nscale brings the full AI infrastructure to stack, which involves the data center design and operations, the clusters, the platform software that makes the compute valuable for customers. Together, we are building a new market for the country, turning Norway's economic and industrial strengths into high-performance AI capacity that is both sovereign, sustainable and built to the highest standards. Under the Aker Nscale joint venture, we are progressing a portfolio of AI infrastructure projects in Norway, anchored first by our flagship site in Kvandal near Narvik. In Narvik, we have 230 megawatts of secured grid capacity with a further 290 megawatts in capacity queue, and customer negotiations are ongoing for adjacent plots at Narvik to support continued expansion. Overall, at Nscale, our future expansion is in line with the incredible demand we're seeing today, and we expect this will continue to grow in the future. The market is moving into a phase where the overall limiting factors are power, speed and efficiency of operations. In other words, this is becoming an execution story, and that is where our focus is in 2026 and beyond. In Q4, Nscale also strengthened the foundation for that execution. We successfully completed a Series B funding round, which was the largest Series B in European history at USD 1.1 billion, attracting both strategic investors and also global institutional top-tier investors. In parallel with this round, we also closed a $433 million Series C safe, driven by investor demand and the oversubscribed nature of that Series B round. This capital both underscores the demand for the product that we have and also supports what matters most now, which is delivery. We have a large global power pipeline, multibillion dollar contracts signed, Tier 1 strategic partnerships in place, including NVIDIA, Dell and Nokia, and hundreds of thousands of GPUs awarded to win scale to date. We're also expanding our leadership team, bringing in deep industrial experience and recently acquired global DC engineering firm, Future-tech, bringing in a team of designers, engineers, consultants, project managers and more, which empowers us to accelerate our delivery and execution. What we're building in Norway and beyond is differentiated and durable. It's both engineered for scale, for performance, built to serve demanding training and inferencing workloads reliably and to expand in phases in line with the breakneck speed of the market. And lastly, it's sovereign, both by design, giving customers clarity and control of where their data and workloads run and most importantly, aligned to European standards. We're proud to be building this with Aker. So thank you to Oyvind for your partnership, and thank you to the Aker shareholders for your continued support as we work together to build a long-term European AI infrastructure asset here in Norway and globally. Thank you. Øyvind Eriksen: Thank you, Josh. It's so exciting to see what we have achieved in 21 months only and how Aker and Nscale are working together, a great partnership. And even better, we are just getting started. Now to sum up Aker's fourth quarter and the year, our portfolio today reflects a deliberate shift toward a more balanced and more resilient Aker. We have strengthened the mix between our long-standing industrial businesses and the growth platforms we are building in compute, software and real assets. This was a year where macro conditions mattered, tighter energy systems, heightened security concerns and a more complex backdrop for long-term industrial investments and developments. These dynamics influence how our companies operated, from financing and infrastructure access to customer decision making, and they reinforce the value of diversification across sectors and geographies. A clear theme throughout the year has been collaboration. Across industries and borders, partnerships have accelerated adoption, reduced risk and created scale that individual companies cannot achieve alone. Several of the steps we took in the compute, software and industrial operations were made possible by strong partners, and this will remain a competitive advantage for the different Aker companies. Looking ahead, the portfolio we are building [indiscernible] in areas with long-term structural demand, while maintaining the industrial backbone that supports predictable cash flows. As we look ahead, our focus remains the same: disciplined ownership, operational delivery and building companies that can compete and cooperate in a more complex operating environment. That concludes my part of the presentation this morning. I'll now hand it over to our CFO, Svein Oskar. Svein Stoknes: Thank you, Oyvind, and good morning. To begin, I will provide a brief overview of the key numbers for our listed and unlisted equity investments along with cash and other assets, followed by a more detailed discussion of our financial results. As of the end of the fourth quarter, Aker's listed equity investments were valued at NOK 57 billion, accounting for 72% of the company's total assets and corresponding to NOK 768 per share. This represented an increase from the previous quarter, primarily due to a net asset value increase of NOK 2.7 billion in Aker Property Group's listed real estate holdings, following the investments in PPI and Sveafastigheter. Additionally, the combined market value of Aker BP, Aker BioMarine and Aker Solutions increased by NOK 1.1 billion during the quarter. And these positive developments were partially offset by reductions of NOK 1.1 billion in Solstad Maritime and NOK 0.3 billion in Solstad Offshore. In the fourth quarter, total dividends from listed investments reached NOK 1 billion. Of this amount, Aker BP contributed NOK 842 million; Solstad Maritime provided NOK 78 million; Akastor accounted for NOK 40 million; AMSC delivered NOK 33 million; and Solstad Offshore contributed NOK 14 million. Then over to Aker's unlisted equity investments, which represented 25% of Aker's total assets at the end of the quarter. These assets were valued at NOK 20 billion or NOK 263 per share. This represents an increase of NOK 6.2 billion compared to the previous quarter, driven primarily by Aker's investments in AI infrastructure. Aker acquired a 9.3% ownership stake in Nscale by contributing 50% of the Aker Nscale JV in kind, plus USD 100 million in cash. This stake is valued at NOK 3.8 billion, including an earn-out provision that will take the ownership to 12.2%. Additionally, Aker holds the remaining 50% stake in Aker Nscale valued at NOK 2.9 billion, also based on the Nscale Series B valuation. The reduced value of Aker Holdco and the conversion of interest-bearing receivables and associated accumulated interest, which I will come back to on the next slide, offset most of the Nscale and Aker Nscale value uplifts, giving a total net uplift to our reported NAV of NOK 1.6 billion from these transactions. In addition, the net asset value of Aker Property Group's unlisted real estate increased by NOK 0.6 billion in the quarter as debt and accumulated interest to Aker were converted to equity. At the end of the quarter, cash and other assets represented 4% of Aker's total assets equivalent to NOK 38 per share. Cash inflows reached NOK 5.3 billion, consisting primarily of NOK 3.5 billion from drawdowns on revolving credit facilities and NOK 1 billion in dividends received from Aker BP, Solstad Maritime, Akastor and Solstad Offshore. Additionally, proceeds of NOK 600 million were realized from the sale of shares in SalMar during the period. Cash outflows totaled NOK 5.6 billion, including a dividend payment of NOK 2 billion; investments in Aker Property Group and Nscale of NOK 1.3 billion and NOK 1 billion, respectively; settlement of the AMSC TRS agreements amounting to NOK 565 million; as well as share buybacks totaling NOK 317 million, and these shares were used to settle a share loan from TRG. Meanwhile, cash outlays related to operating expenses and net interest for the quarter amounted to NOK 287 million. As a result, the cash balance at quarter end stood at NOK 0.8 billion. The decrease of NOK 4.4 billion in interest-bearing receivables and NOK 0.7 billion in interest-free assets were primarily due to the conversion to equity of outstanding receivables and accumulated interest from Aker Holdco, Aker Horizons and Aker Property Group. Then let's move to the fourth quarter financials for Aker ASA and holding companies, starting with the balance sheet. In accordance with our accounting principles, investments are recognized at the lower of historical cost and market value. At the end of the quarter, the book value of Aker's investments was NOK 35.5 billion, which represents an increase of NOK 6.9 billion compared to the previous quarter. This change primarily reflects Aker's cash and in-kind investments in Nscale of NOK 3.8 billion, including the estimated value of an earn-out. In addition, investments in real estate of NOK 3.3 billion consisted of a cash investment of NOK 1.3 billion and conversion of receivables and accrued interest of NOK 2 billion. The book value of equity at quarter end was NOK 24 billion, down NOK 3.6 billion from the previous quarter, mainly due to the ordinary dividend allocation for 2025 of NOK 2.2 billion and dividends paid in the quarter of NOK 2 billion, partly offset by a profit before tax for the quarter of NOK 0.7 billion. On a fair value adjusted basis, Aker's gross asset value was NOK 79.4 billion. After subtracting for liabilities, the net asset value amounted to NOK 65.1 billion or NOK 876 per share after allocation for dividend. And the value-adjusted equity ratio was 82%. Of the total liabilities, NOK 11.7 billion is related to bond debt and bank loans and NOK 2.2 billion is related to the dividend allocation for 2025, representing NOK 29 per share. And as Oyvind mentioned, the Board of Directors is proposing that the Annual General Meeting authorizes the Board to pay a potential additional cash dividend during 2026 based on the 2025 annual accounts, in line with the practice from last year. Aker maintains a strong financial position, holding a total liquidity buffer of NOK 5.9 billion, that includes both undrawn credit facilities and liquid funds. Following the end of the quarter, the size of the company's revolving credit facilities increased by NOK 3 billion, resulting in a total RCF capacity of NOK 15 billion. At the close of the quarter, net interest-bearing debt rose to NOK 9.7 billion, up from NOK 1.7 billion in the previous quarter. This increase is primarily due to the conversion of interest-bearing receivables from Aker Holdco, Aker Horizons and Aker Property Group during the period, alongside the capital allocations that were made. The loan-to-value ratio was 14%, with Aker's weighted average debt maturity at 2.9 years. Factoring in available options for credit and loan extensions, the total effective loan maturity extends to more than 5 years. Then finally, moving to the income statement. Operating expenses in the fourth quarter were NOK 170 million, reflecting a high activity level. Dividend income was NOK 1 billion, mainly from Aker BP as well as Solstad Maritime and Akastor. The net value change was negative NOK 46 million. Net other financial items totaled negative NOK 125 million. And finally, our profit before tax was NOK 659 million for the quarter. Thank you. That concludes today's presentation, and we will now proceed to Q&A. Christina Glenn: Thank you, Svein Oskar. We'll now continue with the Q&A. The first question to Oyvind is, what is the long-term industrial logic behind your real estate platform? And how might it evolve? Øyvind Eriksen: Well, the answer to that question is twofold. The real estate investments as stand-alone and real estate as a part of the broader Aker portfolio. So we believe that the investments we made last year in SBB, PPI and Svea, in particular, were attractive due to the quality of the assets and due to timing, and the shareholder returns we reported today are speaking for themselves. So value drivers are stand-alone investments. But equally important is the diversification of the Aker portfolio. We have great assets in volatile industries, oil and gas, in particular. And with real estate, we are establishing a different asset class which has not the same volatility and cyclicality as the oil and gas and energy part of the Aker portfolio. So attractive investment stand-alone and diversification of the Aker portfolio. Christina Glenn: Great. Thank you. The next question is on Nscale. What is the next step for Nscale in its development? And how should we think about the long-term road map for the platform? Josh touched on it. Do you want to? Øyvind Eriksen: Yes. Josh mentioned, by far the most important priority for the time being, it's execution. It's just amazing to see how swiftly Nscale and Aker Nscale help grow the last 21 months and even the last 6 or 7 months since we announced the transaction. And the amount of contracts signed with great customers like OpenAI and Microsoft are nothing more, nothing less than point of departure for execution. First, project execution and so far, so good. And thereafter, a high-quality operation. And that, in parallel, I take for granted that Josh will continue to grow the company. But high-quality execution is a prerequisite for long-term success. Christina Glenn: Great. The next question is, how do you balance investments in high-growth areas like AI infrastructure and real assets with your dividend framework, the 4% to 6% of our net asset value? Øyvind Eriksen: So that's exactly the point, that we would like to diversify Aker portfolio investments and more in order to also establish and obtain cash flow from different sources, different companies. So real estate is once again an example. Over time, we expect a more predictable and attractive dividend also from that part of the portfolio, which will come in addition to the dividends paid by companies like Aker BP and Aker Solutions. So increased nominal dividend year-on-year has been a strategy for a while and continue to be core to our strategy and financial plan. Christina Glenn: Great. You touched on being less tied to commodity cycles with these new investments. Can investors consider this shift largely complete? Or should we expect additional rebalancing of the portfolio? Øyvind Eriksen: Well, Aker has been around for 185 years. And the company has never completed its growth and development. So you can take for granted that we will continue to work 24/7 to create shareholder value through a combination of development of existing portfolio companies and new transactions. Christina Glenn: Great. Last question is on Cognite. Has anything changed in your thinking around a potential IPO or the future ownership structure for that company? Øyvind Eriksen: Not really. And what it's all about is to continue on the good trajectory, continue to grow and to prove that Cognite is an AI for industry leader. 2025 was a great year for Cognite. They took full advantage of what's happening in the AI space also for industry and a huge market, which is, quite frankly, more immature than some other AI markets, but also attractive due to the size of the contracts signed with some of the global leaders in different industries. Christina Glenn: Great. That concludes the Q&A and our presentation today. Thank you for watching.
Operator: So hello, everybody, and thank you very much today for attending Terumo's financial results for the third quarter of the fiscal year ending March 31, 2026. Today, before proceeding, I would just like to give an overview. And Mr. Hagimoto-san, CFO of Terumo will give an explanation followed by time for question and answer, making a total of 45 minutes for today. For this webinar, there is simultaneous interpreting available via the Zoom where you may listen to English or Japanese in either direction. Please do use the globe button at the bottom to choose English or Japanese. The materials displayed on screen will be English only. If you require English disclosure materials, please refer to Terumo's web page. If there are any problems during the -- we will let you know by e-mail if there are any problems with connection throughout. Also, there is just one disclaimer before beginning. All of the explanation that we are about to give is based on current results. And all of these -- they are based on assumptions using information available to us at the time. Accordingly, it should be noted that actual results may differ from those forecasts or projections due to various factors. So with that, I would like to hand over to CFO, Mr. Hagimoto, for an overview of the financial results. Thank you. Jin Hagimoto: Hello. This is Hagimoto, CFO of Terumo. Let me walk you through the highlights of our financial results. Thank you very much for your participation today. So this is the highlights of our financial results for the third quarter of the fiscal year ending March '26. First of all, the highlights, strong earnings results exceeding guidance. So for revenue with the highest ever results, both for the quarter and the third quarter year-to-date. We had strong sales led by North America with 9% growth excluding the FX impact. In particular -- revenue reached record highs, both for the quarter, in particular, demand growth in North America remained strong, resulting in a year-on-year increase of 9%, excluding FX impact. With regard to profits, operating profit -- adjusted operating profit and profit for the year all reached record highs on a Q3 year-to-year basis. Although we recorded certain onetime expenses from the first half of the fiscal year, our globally implemented pricing measures and appropriate cost control enabled us to deliver results that exceeded the pace assumed in our '25 guidance -- fiscal '25 guidance. Please note that the start from -- started from this quarter, the consolidated results with the Leverkusen plant and OrganOx, both of which were acquisitions announced earlier this fiscal year. Next slide, please. So moving on to our P&L performance. Revenue reached a record high of JPY 831.6 billion on a Q3 year-to-date basis. The expansion of global demand continued with the Cardiac and Vascular Company and the Blood and Cell Technologies company serving as the main drivers. Operating profit and adjusted operating profit also achieved growth exceeding that of revenue, reaching record highs of JPY 144.9 billion and JPY 173.5 billion, respectively. While the tariff impact began to materialize partway through the second quarter and continued to affect results in the third quarter as anticipated, we were able to offset these impacts through ongoing pricing measures and disciplined cost control, resulting in progress that exceeded our performance forecast. On a stand-alone Q3 basis, the operating profit margin declined. This was mainly due to the recognition of onetime expenses in the second half of the year, as explained during our second quarter earnings announcement. Next slide, please. So this is the year-on-year OP variance analysis for quarter 3. I will explain the Q3 year-to-date results on the next page. However, there are 2 major movements to highlight for Q3. The first is the impact of tariffs. In this chart, the tariff impact is included within gross margin and pricing. And as a breakdown of the gross margin effect, the tariff impact amounted to a negative JPY 4.2 billion. At the same time, pricing measures contributed a positive JPY 3.5 billion, partially offsetting the negative impact from tariffs. The second point is the recognition of profit and loss from newly acquired businesses. The Leverkusen plant recorded a loss of JPY 1.6 billion, while OrganOx contributed a profit of JPY 0.5 billion. Regarding the Leverkusen plant, we will take a disciplined and cautious approach to capital expenditures for production line preparations and proceed step-by-step as the certainty of customer contracts increases. Next, this slide shows the quarter 3 year-to-date OP variance analysis. Overall revenue growth driven by the continued expansion of demand made a significant contribution. The GP increment by sales increase was driven primarily by overseas TIS, mainly in North America as well as Global Blood Solutions, particularly in the plasma business. With regard to the gross margin pricing measures in the Cardiac and Vascular Company made a significant positive contribution to profit. However, as the impact of tariffs became more pronounced, this positive effect was partially offset. So while the negative effect from tariffs increased in quarter 3, on a year-to-date basis, the positive effect from pricing more than offset the tariff impact. SG&A has increased due to business expansion and remained largely in line with our assumptions. R&D expenses decreased slightly year-on-year. This was due not only to the impact of impairment losses on capitalized R&D recorded last year, but also to a review of R&D priorities and a disciplined focus on selective themes. Going forward, we will continue to invest in priority areas. As for foreign exchange, the impact was negative both on a flow and stock basis compared with the previous year. Next slide, please. I will now explain the performance by company. First, let me start with C&V, the Cardiac and Vascular Company. Revenue increased 8% on a local currency basis with strong performance continuing globally, particularly in North America. By business segment, growth was driven by TIS and Terumo Neuro contributing to revenue growth for the company overall. TIS was primarily driven by North America with solid performance continuing across all product categories. Volume growth contributed more significantly than pricing measures. In Terumo Neuro, strong growth continued in both China and Japan. The profit margin improved to 26%, supported by various initiatives, including pricing measures, profitability improvement and a review of unprofitable regions. However, due to negative impact from foreign exchange on a stock basis, the profit margin for Q3 on a 3-month basis declined year-on-year. Next slide. Pharmaceutical Solutions drove both revenue and profit growth for the company overall. This was led by domestic CDMO business as well as the strong performance of projects overseas. On the other hand, revenue declined in the Hospital Care Solutions and Life Care Solutions businesses. In Hospital Care, revenue decreased due to the impact of the business transfer in Q1 of the previous year as well as supply issue affecting the product. This supply issue has now been resolved, and the business is on the recovery trend. In addition, pricing measures implemented since April are progressing steadily. With regards to profit, earnings increased supported by the efficiencies of pricing measure and disciplined cost control. Regarding the acquisition of the Leverkusen plant announcement in May last year, this has been included in our consolidated results starting from Q3. On this page, figures and presented -- figures are presented excluding the acquisition impact to illustrate trends in the existing businesses. Performance, including the Leverkusen plant is shown in the bottom right of the slide. As mentioned briefly in the profit variance analysis section, the P&L impact related to this acquisition in Q3 has no impact on revenue, while the impact on profit was negative JPY 1.6 billion. We are currently working on production line start-up and production transfer. Since the acquisition was announced, we have received a significant number of inquiries from pharmaceutical companies overseas, particularly in Europe and the United States and are actually promoting the business to secure new projects. Next slide, please. Revenue increased significantly driven by strong growth in plasma innovations within Global Blood Solution. As the rollout of the Rika to existing consumers has already been completed, our focus in the plasma businesses will shift toward acquiring new customers going forward. In addition, our core business constituted to perform well, supported by the successful award of a tender for the [indiscernible] for whole blood collection system in Asia during Q3. The Global Therapy Innovations revenue increased as demand for cell collection -- associated with cell and gene therapy expanded, particularly in North America. Profit increased driven by improved profitability resulting from expanded sales of Rika as well as ongoing disciplined cost control. We have implemented production at -- adjustment related to Rika from Q3. However, due to efficient operation in production lines, the impact has been smaller than initially anticipated and profit margin has improved. Looking ahead to the next year, production adjustment may be implemented as needed, but we expect the impact in our P&L to be limited. Next slide. Following the completion of its acquisition as a wholly owned subsidiary on October 29, 2025, OrganOx has been included in our consolidated results starting from this Q3 earnings announcement. Results from November and December are consolidated with Q3 revenue of JPY 2.9 billion and adjusted operating profit of JPY 0.5 billion. This illustrates the growth trend, we are also disclosing Q3 year-to-date performance on a year-on-year basis. Revenue increased by 50% year-on-year and the profit margin improved significantly from 13% to 21%. This was driven by increase in number of liver transplant procedures as well as expansion of OrganOx consumer base. Looking ahead, the market for organ preservation using normothermic medicine perfusion (sic) [ normothermic machine perfusion ] or NMP is expected to continue expanding. Next slide, please. In the Americas, demand continued to expand, and we achieved double-digit growth on local currency basis. All companies delivered strong growth with TIS, Pharmaceutical Solutions and Global Blood Solutions serving as key drivers to leading global revenue growth. In Europe, TIS and Terumo Neuro continued to deliver stable growth. In addition, strong performance of projects that drove a significant increase in revenue in the Pharmaceutical Solutions business. In Japan, the CDMO business performed well with Pharmaceutical Solutions contributing to revenue growth. With C&V, Terumo Neuro continued to achieve double-digit growth. In China, revenue increased as Terumo Neuro continued to grow, supported by expanded market access resulting from VBP in Asia strong performance of TIS revenue growth and C&V. Next slide. With less than 2 months remaining until March, the full year outlook for the fiscal year is now coming into view. What I would like to reiterate is that our business based on our existing operation is steadily progressing towards the achievement of GS26 in the next fiscal year, supported by strength of our underlying fundamentals. In the current fiscal year, we are -- we recorded acquisition-related costs and other onetime expenses. The main item of onetime expenses that can be reasonably anticipated at this point are outlined on the Page 18 of this presentation. These initiatives reflect our commitment to improving profitability as we work toward achieving GS26. And the structural reform, we believe are necessary. These measures include initiatives to optimize our workforce overseas, which are expected to result in annualized cost savings of approximately JPY 3 billion from the next fiscal year. We position all of these costs as strategic investment aimed at supporting future growth. We continuously review our business portfolio and conduct strategy reviews to drive growth. While the business environment is constantly evolving, we will actively manage these changes to achieve final year of '26. That concludes my presentation. Thank you very much for your attention. Operator: [Operator Instructions] Otaka-san will be joining from the head of the management as a part of the management team joined with Hagimoto. Kohtani-san from Mizuho, you will be the first person to ask. Motoya Kohtani: So this is from Mizuho. Can you hear me okay? Yes. So on 18 -- Page 18, you were talking about the amortization. This is JPY 2.6 billion. And I think at the beginning of the period, it was JPY 4 billion. And if I look at the related costs in quarter 3, I think you said these were supposed to amortize in the first part of the fiscal year. So that amount seems to have -- has been brought ahead to the fourth quarter for the amortization fees. And so it looks to me for next year, I think the goodwill for next year also taken into consideration. So I'm just looking has the evaluation of inventories changed and the goodwill costs seem to be -- over the long period, seem to be slightly down from what was originally planned. But it seems to me that those costs seem to have swelled slightly. Unknown Executive: Kohtani-san, thank you very much for your question. So as your understanding is correct, this is pre-PPA, and we -- these were -- these amortization costs for the current fiscal year are JPY 4 billion, and they had been shared provisionally tentatively. But for the final amortization and depreciation expenses, we used an external organization to reevaluate these and the result of that external evaluation was that the -- we had previously expected them, so they are below our initial expectations. And it says at the bottom of here, the inventory step-up of inventories. This was when we made the purchase, these were reevaluated. The costs were reevaluated under the IFRS rules. So the inventory period had -- they've been distributed across the inventory period. So there's no impact on cash flow. But on the PL, they have to be recorded on the -- so they are JPY 4 billion and JPY 7 billion for next year. But for -- they will not, however, be from... Motoya Kohtani: Okay. So for these -- in these 2 years, these fees will occur. But after that, there will be very lower good rent -- goodwill fees. So it will be in the black in terms -- we will be getting closer to being in the black in terms of amortization? Unknown Executive: Yes. We had expected it to be JPY 9 billion, but it was actually JPY 65 billion in terms of those amortization fees that came with the purchase of OrganOx, but we expect that to be lower than previously predicted. Motoya Kohtani: And secondly, a final question. The -- I just wanted to ask about the -- at the Rika -- share of Rika, I think, probably will be about JPY 50 billion of total revenues. And I think there are some supply chain issues. But if we look at this now, I think it will be about JPY 30 billion, JPY 40 billion in terms of the portion of revenue. So is this the effect of deploying Rika later has had some effect, I think. So could you give me this JPY 50 billion that you had previously predicted for Rika? Why is that late? Why is that late to come online? So also I think MAYUMI a [ completer ] product is also late in deployment. So could you just let me know on that front? Unknown Executive: So for Rika, the revenues for Rika we haven't disclosed those at present. But when it comes to the -- there was some late deployment -- there wasn't any late deployment of Rika. So as I explained last time, it has been extremely efficiently utilized. And so the -- is lower than our initial assumption for the portion of net sales. But there is no particular -- no, there is no delay in the deployment of Rika. And we are currently improving the product and deploying promotions to increase customer inquiries -- acquire customer take-up. So there's nothing particular to add regarding Rika, but it is proceeding on plan steadily. So the -- and comparatively, it is not a particularly large-scale customer in question where we are expanding our promotions. And so we are looking forward to further development. And so this is one pillar of our growth pillars -- one of our main growth pillars and the development is proceeding as planned. Thank you very much. Operator: The next question will be Tokumoto-san from SMBC Nikko Securities. Shinnosuke Tokumoto: Yes. This is Toto speaking. I hope you can hear me. Unknown Executive: Yes, we do. Shinnosuke Tokumoto: Okay. My first question goes back to Slide 12 about your projection beyond -- on and beyond next financial year. And there are some -- you are also reducing some costs, also saving some labor cost, personnel costs. But can you just once again share any projects that you are planning to implement for the next financial year? I mean, passing the prices over to customers, you talked about that will be implemented, but inflation is not going away. I think -- can you talk about is this becoming more difficult. You also talked about profit improvements overseas. But can you share any other projects locally or in any regions that you can share? Kojiro Otaka: Well, thank you very much for your question. Let me pick up your question about price point and our programs overseas. And my colleague, Hagimoto-san,CFO, may jump in if necessary, but let me just start off. First on pricing point. We are just passing the prices based on the inflation based on our terms in agreements. And we will continue to do that as we've been doing already and go beyond next financial year. We are also getting some impact from customs and we are actually putting surcharge as the -- to absorb the impact of the tariffs. So we will continue to work on those price initiatives beyond next financial year. And you also asked me about the restructuring in overseas. We have in Q4, P18, Slide 18, as it shows on the QA, we are planning to have JPY 1 billion in onetime costs for project reduction severance of the people. This is onetime cost in FY '26, and we are expecting the positive impact to continue beyond FY '26. Jin Hagimoto: Let me just add one comment. We -- within FY '25, we are running several different projects, and we will also have some positive impacts from pricing initiatives. We, of course, are managing that. But the price programs, I cannot share -- disclose any specific numbers, but market is going inflation and we are increasing prices based on, if not higher than inflation. So we will be passing the prices because we are delivering added values. And as a company, we are just looking at having more values added so that we can increase the prices faster than the inflation. We'll continue to do that. And on the other hand, there are kind of reduction negatives like restructuring projects. These are the initiatives that we are running for this year as well as last year as onetime costs. And but our programs in FY '26, the very final year of GS26, we are making sure there's not going to be negative ripple effect at the end of the year in FY '25 and '26. So all those negatives that we need to deal with, we need to consume, including the onetime negative cost, we wanted to have them just done it and done it all at once. Shinnosuke Tokumoto: Okay. I just want to clarify about restructuring, JPY 5 billion in overseas. And this is some number that we didn't see in Q4, but you just added as you have made the decision to implement. Unknown Executive: Well, I've been -- we've been talking all through about necessity to go through the restructuring, but we have more precise numbers. So we decided to post it here. Shinnosuke Tokumoto: Okay. Understood. So I think Germany, Leverkusen, you also mentioned about that. But can you just share about what kind of approaches you are getting? There's going to be some time before the production lines go up running. But after negotiation, what will be the timing in which you will be starting to recognize revenue from that plan? I think that's one of the assessment points for assessing value for your stock. So can you talk a little more about the recognition of Leverkusen plant? Unknown Executive: Well, we do have signed an NDA with them. We are being discussing with multiple different potential customers. For PS business, as you can see on this slide, in this financial year, we are just a mid-digit growth. This growth is substantially very good. And we are getting good reputation for stable supply reliability. And for revenue, is that going to be profitable? We would like to share those perspective and deliver those targets in the next midterm plans. Operator: Next, Citigroup, Yamaguchi-san from Citigroup Securities. Hidemaru Yamaguchi: Yes. Can you hear me? This is Yamaguchi from Citigroup. Well, for quarter 3, if we look at quarter 3 alone, the gross profit ratio seems slightly down. But the product mix, is the tariffs the biggest impact on this on the product mix or... Unknown Executive: Yes. So on the right-hand side, are you referring to gross profit? Well, OrganOx, the purchase of OrganOx has also had an impact. But the weakening yen in quarter 3 has also had an impact as well -- so the -- it's one -- this has affected the gross profit rate by 1 point, I believe. But the tariffs, I think these 3 impacts have been impacting the gross profit ratio. Hidemaru Yamaguchi: Also -- sorry, the CFO was just talking about these one-off costs. So the next he says OrganOx. You've already explained that. But apart from other for these one-off costs, these -- in next year, do you think there will be any other significant one-off costs or one-off losses? Unknown Executive: Yes, I think your understanding is largely correct. Of course, in the -- included the balance sheet, we -- having made all the necessary investments, we believe that this is what we can expect to harvest. But we do want to improve profitability. Initiatives for improving profitability will be implemented in this period. So for '26 financial '26 as the final year of GS26, we hope to end in a clean manner. That's all from me. Thank you. Operator: Next question is Yoshihara-san from UBS Securities. Tomoko Yoshihara: It's Yoshihara from UBS Securities. I do want to ask a question about Rika. And in the second half, you are planning to do production adjustment, but the impact was not that big, if I understood correctly. But your customers, if we are hearing your customers' comment, market was soft, market share also shifted quite a bit. It seems like you are also getting some headwinds and production also, you mentioned about production may be adjusted next year. But I know this will be very difficult for you to make a comment about your customer, but can you share a little more details about this Rika business and how you see it's going to go? And also, you talked about the acquisition of new customers and when this business has just started. You were looking into potentially a very big customers who are not your customer back then. But you also talked about having approach -- approaching to small to midsized customers. Has something that changed in terms of the target customer base? Can you talk about that, please? Unknown Executive: Well, thank you very much for your question. So CSL or any other competitors may make some comments, but we will refrain from making any comments about what's represented by the competitors. But we are just competing -- making some progress so we can compete with CSL. And in next financial year, we are expecting to see -- we are not expecting a shrinking revenue from innovation. So we are expecting very stable revenue source. And your question about expansion of customer base, I'm sorry, maybe this was not clear in our explanations. But our approach to big potential customers, nothing has changed. So it will be incremental on top of it to expand our opportunities working with small to medium-sized customers as well on top. Tomoko Yoshihara: My second question is not directly related maybe to your financial performances, but your fundamental, I think, is quite doing well. But you are also having some challenging time over the last 1 year. Can you share examples of contentious discussions you may be having within that top management team. If there's none, that's also fine. But are you also looking into -- because there could be an option for you to buy back some of your shares back. Can you just talk about that as an option? Unknown Executive: Well, thank you for your question. I will refrain from any comment about share buyback in this meeting. But we are not happy with the stock price of today. That's how we see it also. And how we, including OrganOx, right, or -- so we want to send the message that people will hopefully be understanding that we are making investment for the better future. So we will continue to run those programs in the future as well. And we -- the share prices are decided with many different factors. There is no single answer, no solution, one bullet to increase the share prices. But I think we can maybe send our message more clearly, loudly so that we get to have a chance to explain why and what we are doing. And so this is actually a big topic within our top management meeting because we are -- we will be performing well. We will be hitting the target in GS26, but we also need a good job communicating with the people in the marketplace. Operator: Next, Morgan Stanley MUFG Securities, Hayashi-san, please. Ryotaro Hayashi: This is Morgan Stanley, Hayashi. Can you hear me okay? Unknown Executive: Yes, we can hear you fine. Ryotaro Hayashi: So my first question is regarding TBCT. And I believe that from your data, I have calculated that in the third quarter, the net sales apart from FX impact are about 20% up in terms of revenues. And I think with the Rika production adjustment with that in mind, in quarter 3 that has been taken into account. But your production lines is what I'm talking about are able to absorb that negative impact or able to manage that negative impact you were saying. So I just would like to hear some more details about what kind of response, what kind of effect that's had on how are you going to absorb that drop in. I think that you have already taken into account the production adjustments. But the Leverkusen plant I think revenues could go up possibly. Could you give me some color on that, please? Unknown Executive: First of all -- so thanks. In terms of net sales versus revenues, first of all. The Rika has contributed significantly to the increase in revenues. But for the other elements, for other products, those are also having favorable sales. Particularly in Asia, we have secured a tender in Asia, which has contributed greatly to increased profits, increased revenues. And the effect of those increased revenues and the production adjustment in terms of yield and improving production -- yield and production, I think, will bear out positively in our operating profit from now. Ryotaro Hayashi: But I think in November, in your explanation in November, you were saying that the quality was too high and there were -- on the business side, you were talking more about the business side -- it's -- I feel it's slightly different -- there's a bit of a disparity with what you explained in November. What in November, what were you predicting? And this time now, why is the minus lower? Is it to do with Rika? Unknown Executive: Yes. So let me add into that. So regarding the -- you're referring to the consumables for the Rika business. Well, the net sales and the forecasts, those come down, then the inventory level, I think, will -- we don't need to create that beyond need. So we would do some production adjustment. However, of course, for the actual distribution of the accumulation of inventories, that does bring down profits. But in terms of activities to increase productivity, then the production cost, if we're able to bring that down. So that's why we didn't have such a big minus in our revenues this time, that would be... Ryotaro Hayashi: Right. So the net sales for Rika has gone to plan, but the margin has the -- any negative impact on the margin has been brought down to a minimum. Is that correct? Unknown Executive: Yes. Well, what fluctuates is the -- if we look at the PSI, then these -- to keep the stock at a certain level, we have adjusted production. So overall, the structural impact is -- has been absorbed as offset by our higher production efficiency and production adjustment. Ryotaro Hayashi: Understood. Okay. My second question is to do with OrganOx. And I think there are 3 companies involved in OrganOx. In the third quarter, then the JPY 2.9 billion sales, that is -- is that in line with your initial predictions, forecast? I think for the full year, JPY 9 billion a year is what you were predicting. And in quarter 4, I think that has I think -- are you on target in terms of the pace for OrganOx's results? Unknown Executive: Yes. Well, thank you. In November and December, those 2 months have passed. Compared to the previous year, it is a very high level of growth on a year-on-year basis. But in the -- what we were initially expecting in quarter 3, we have gone perhaps beyond that slightly. But sorry, it's gone down compared to our prediction due to a slowdown in donors, available donors. But the demand remains extremely strong for OrganOx. So I think it is -- the growth trend is on target, and it was a slight depression in quarter 3 due to a lack of donors. Ryotaro Hayashi: So in quarter 4, it will go back to the original trajectory. Is that what you're expecting? Unknown Executive: Yes, that is our prediction. It will return to the expected trajectory for quarter 4. Operator: The next question is Tony Ren from Macquarie. Tony Ren: Can you guys hear me? Unknown Executive: Yes, we can hear you well. Tony Ren: Okay. Perfect. So my question is also about OrganOx on Slide #10. So based on the data on this slide, I calculated that the revenue increased about 46%, but the adjusted operating profit increased about 136%, so more than doubled. Did you do any cost improvement over there? Did you try to reduce any cost in manufacturing, SG&A or R&D-related expenses there? Unknown Executive: So thank you very much for your question. So this is a result of the sort of OrganOx organic growth. So we did not do any specific approaches at this point in time. This was all activities that was already planned by OrganOx prior to our acquisition. So what we do believe is that, as we mentioned earlier, OrganOx's business structure is a very highly profitable structure. And as the revenue grows, there is room for profit improvement. What we want to also materialize is that the overall capabilities that Terumo as a group has by combining those kind of skill sets or the manufacturing capabilities of OrganOx, some of the technologies that we have with Terumo, we do hope that we can also accelerate this kind of growth in the profitability. Tony Ren: Okay. So it is a matter of growing the revenue base and therefore, able to cover the fixed cost. Unknown Executive: Yes, exactly. Tony Ren: Okay. Perfect. Yes. My second one, very quickly, I just want to go back to the CSL, your customer CSL situation, right? I mean, obviously, we know that they had a lot of changes this week. Are you foreseeing any future impact because of the changes at your largest blood plasma customer in the U.S.? Unknown Executive: So obviously, we cannot comment on CSL's specific situation. But from our point of view, we do believe that the demand for Rika and the disposables that sort of our revenue stream is not significantly impacted. So our understanding is that we will continue to provide the Rika disposables to CSL. There may be some discussions about the volume in the future. But at this point in time, we do not see significant changes in our projections. Operator: Nomura Securities, Mori-san, please. Takahiro Mori: This is Mori from Nomura Securities. Can you hear me? Well, there are 2 questions I'd like to confirm. First is regarding the Rika. So the profitability of this compared and the growth trajectory, I would like to know whether that will change or not. But -- so this is regarding the -- there is no change to our projections and our initial projections have not been changed for Rika's growth trajectory. Secondly, in your explanation, you talked about achieving GS26. You made several references to that. But what items need to be achieved for GS26 to be achieved? What are the criteria for achievement in order to fulfill GS26? Unknown Executive: Thank you very much for the question. So we have our financial objectives, 3 financial objectives. These are since these were announced in December 2021, which would get double-digit growth for revenues in the late double digits. Secondly, would be the profitability rate, 20% of operating profit ratio of which. And the third is ROIC, 10% ROIC. That is the -- excluding the impact of M&A. But I think for ROIC of 10%, we want to achieve that as another key pillar. And so it's not that if one of those is okay. All 3 of these financial objectives needs to be achieved for us to deem that GS26 has been achieved. Takahiro Mori: Right. So within segments and the profits within each separate segment, if you want to -- GS26 needs to be achieved across segments. Is that correct? Unknown Executive: Yes. Depending on the business segment, then there are some variations, but we have all company financial targets as overall, which need to be achieved for us to declare GS26 to be achieved. Operator: Next question goes to Saito-san from JPMorgan Securities. Naoko Saito: I am sorry about that. My name is Saito from JPMorgan Securities. I hope you can hear me. Unknown Executive: Yes, I do. Naoko Saito: Sorry about that. So just wanted to talk about the slide, you analyze the operating profit ups and downs. I wanted to ask some detailed questions on the price and the expected price revenue. You talked about custom tariffs and prices in details. But the other things -- the other include the impact from inflation that you discussed back in Q2. You talked about some COGS impact, negative impact because of inflation. So I would say majority of the impact was coming from M&A transaction. Just wanted to see if there are all those details included in this analysis. Unknown Executive: Well, thank you for the question. Depreciation -- COGS from depreciation and M&A is adjusted values. So that's JPY 591 million and JPY 439 million actually includes M&A adjustments. So that's not counted in that JPY 103 million, which is about the impact from revenue increase. Revenue increase is also getting impact on tariffs, inflation, product mix are all encompassed within that JPY 103 million. Naoko Saito: Okay. You also mentioned about product mix. Is there any specific business that you saw quite a big change in product mix, especially for Life Care and Pharmaceutical Solutions, the factories are using -- you are using Japanese factories. Are the margin structures changed or not changed? Can you just add a little more comment about those? Unknown Executive: On your question about Life Care, there is not much of a big change on profitability structure. For Pharmaceutical, the revenue is growing. And as it goes up, we can just absorb fixed cost as a leverage. And so that would be the part in which we are seeing the positive impact. Well, the other -- this might be way too much in details. But on -- the plasma business is expected to grow. Then the revenue, if you look at JPY 103 million, the impact will count on driving that JPY 103 million up higher. So if you look at the business structure as a whole, that mix impact will be negative. So there's that kind of structural details. Operator: So we will end Q&A there as that is the end of the allotted time. That marks the end of today's presentation. Thank you very much for your participation. Here, we close the event. [Statements in English on this transcript were spoken by an interpreter present on the live call.]
Operator: Thank you for standing by. At this time, I would like to welcome everyone to today's Q4 2025 Yelp Inc. Earnings Conference Call. [Operator Instructions] And I would now like to turn the call over to Josh Willis, Investor Relations Manager. Josh? Joshua Willis: Good afternoon, everyone, and thank you for joining us on Yelp's Fourth Quarter and Full Year 2025 Earnings Conference Call. Joining me today are Yelp's Chief Executive Officer, Jeremy Stoppelman; Chief Financial Officer, David Schwarzbach; and Chief Operating Officer, Jed Nachman. We published a shareholder letter on our Investor Relations website and with the SEC and hope everyone had a chance to read it. We'll provide some brief opening comments and then turn to your questions. Now I'll read our safe harbor statement. We'll make certain statements today that are forward-looking and involve a number of risks and uncertainties that could cause actual results to differ materially. Please note that these forward-looking statements reflect our opinions only as of the date of this call, and we undertake no obligation to revise or publicly release the results of any revision to these forward-looking statements in light of new information or future events. In addition, we are subject to a number of risks that may significantly impact our business and financial results. Please refer to our SEC filings as well as our shareholder letter for a more detailed description of the risk factors that may affect our results. During our call today, we may discuss adjusted EBITDA, adjusted EBITDA margin and free cash flow, which are non-GAAP financial measures. These measures should not be considered in isolation from or as a substitute for financial information prepared in accordance with generally accepted accounting principles. In our shareholder letter released this afternoon and our filings with the SEC, each of which has been posted on our Investor Relations website, you will find additional disclosures regarding these non-GAAP financial measures as well as historical reconciliations of GAAP net income or loss to both adjusted EBITDA and adjusted EBITDA margin and a historical reconciliation of GAAP cash flows from operating activities to free cash flow. And with that, I will turn the call over to Jeremy. Jeremy Stoppelman: Thanks, Josh, and welcome, everyone. Yelp delivered record net revenue and strong profitability in 2025, driven by our focus on services and accelerated pace of product innovation. We introduced more than 55 new products and features, many powered by AI as we continue to transform the experience for consumers and businesses. Overall, in 2025, net revenue increased by 4% year-over-year to $1.46 billion. We grew net income by 10% year-over-year to $146 million, representing a 10% net income margin. This resulted in 19% year-over-year growth in diluted earnings per share to $2.24. Adjusted EBITDA increased by 3% year-over-year to $369 million, representing a 25% adjusted EBITDA margin. Underlying our results, the operating environment for RR&O categories remain challenging, with revenue from these businesses declining 6% year-over-year to $444 million. At the same time, services drove our business performance with advertising revenue from businesses in these categories up 8% year-over-year to a record $948 million due to the strength in advertising demand and reflecting record revenue per location. Excluding projects acquired through our paid search initiative, Request-A-Quote projects increased approximately 15% year-over-year, driven by improvements to the flow and increased adoption of Yelp Assistant. Our AI chatbot continued to resonate with consumers in 2025 with Request-A-Quote project submissions through Yelp Assistant up more than 400% year-over-year, representing approximately 5% of all Request-A-Quote projects during the year. Total ad clicks decreased 7% year-over-year, driven primarily by macro pressures and, to a lesser extent, reduced spend on paid project acquisition in 2025 compared to 2024. Average cost per click increased 10% year-over-year, reflecting growth in advertiser demand in our services categories and fewer clicks overall. Total paying advertising locations decreased 3% year-over-year as softness in RR&O offset growth in services, while average revenue per location reached an annual record. Other revenue accelerated significantly, up 17% year-over-year, driven by growth in transaction, subscription and data licensing revenue. We also continued to grow our review content in 2025. Yelp users contributed 22 million new reviews, bringing cumulative reviews to 330 million. App unique devices were down 2% year-over-year as consumers visited restaurants with reduced frequency. Over the past year, we meaningfully increased our focus on transforming Yelp with AI. We believe combining our authentic human-generated content with advanced AI presents a significant opportunity to redefine how people connect with local businesses. We plan to build on our progress by investing in three strategic initiatives in 2026. First, we are reconceiving the Yelp experience to focus on delivering answers and actions. We set the stage for this in 2025 by introducing natural language search, launching AI-powered business highlights and expanding Yelp Assistant to RR&O business pages. We plan to further expand Yelp Assistant in 2026 to function across categories and entry points with the goal of making local discovery and task completion seamless. We began testing this comprehensive experience in the fourth quarter and expect to fully roll it out by the end of the first quarter. To further close the loop between discovery and action, we expanded our food ordering network by adding hundreds of thousands of new restaurants through our DoorDash partnership and integrated RepairPal's booking system into Yelp. Second, we are delivering AI tools that help service pros and other local businesses grow, operate and succeed. Building on years of investment in delivering value to our advertisers, our focus is shifting toward becoming an even more valuable partner for businesses by helping them operate more efficiently through AI-powered tools. In 2025, we introduced Yelp Host, our AI-powered call answering service for restaurants, which has answered more than 190,000 calls and handled thousands of reservations since launch. In 2026, we plan to roll out further upgrades, including the ability to take food orders over the phone. To accelerate our broader strategy, we recently closed our acquisition of Hatch, a leading AI lead management platform for service pros. With this acquisition, we've now shifted our focus in lead management from Yelp Receptionist to supporting the rapid growth of Hatch. Lastly, we are further extending our reach to power local discovery across the AI ecosystem. As search evolves towards AI, we believe the value of our first-party data, including 330 million reviews, nearly 500 million photos and more than 8 million business listings is becoming increasingly clear. In 2025, we saw strong demand for our data licensing products, and we recently signed an agreement with OpenAI. We believe we are well positioned to be the essential partner providing trusted local content and enabling actions whenever consumers are making local decisions. In summary, our focus on product innovation and a differentiated services experience once again drove our results in 2025. Looking ahead, we are confident in our ability to transform Yelp with AI in ways that play to the strengths of our business. We plan to increase our investments in 2026, inclusive of our recent acquisition of Hatch to capitalize on this opportunity and deliver long-term sustainable growth. With that, I'll turn it over to David. has answered more than 190,000 calls and handled thousands of reservations since launch. In 2026, we plan to roll out further upgrades, including the ability to take food orders over the phone. To accelerate our broader strategy, we recently closed our acquisition of Hatch, a leading AI lead management platform for service pros. With this acquisition, we've now shifted our focus in lead management from Yelp Receptionist to supporting the rapid growth of Hatch. Lastly, we are further extending our reach to power local discovery across the AI ecosystem. As search evolves towards AI, we believe the value of our first-party data, including 330 million reviews, nearly 500 million photos and more than 8 million business listings is becoming increasingly clear. In 2025, we saw strong demand for our data licensing products, and we recently signed an agreement with OpenAI. We believe we are well positioned to be the essential partner providing trusted local content and enabling actions whenever consumers are making local decisions. In summary, our focus on product innovation and a differentiated services experience once again drove our results in 2025. Looking ahead, we are confident in our ability to transform Yelp with AI in ways that play to the strengths of our business. We plan to increase our investments in 2026, inclusive of our recent acquisition of Hatch to capitalize on this opportunity and deliver long-term sustainable growth. With that, I'll turn it over to David. David Schwarzbach: Thanks for that full year review, Jeremy. Before I discuss our fourth quarter results, I'd like to take a moment to highlight the progress we've made transforming Yelp's business over the last five years through our product-led growth strategy and disciplined expense management. Through our commitment to share repurchases, we reduced our fully diluted share count, which includes outstanding stock options, RSUs and PRSUs from 86 million to 67 million, a 22% reduction between December 31, 2021, and December 31, 2025. Combined with our demonstrated profitability, this drove earnings per diluted share of $2.24 in 2025, a more than fourfold increase from 2021. In short, Yelp enters 2026 from a position of greater financial strength with net income of $146 million in 2025, adjusted EBITDA of $369 million, cash flow from operations of $372 million and record free cash flow of $324 million. Turning to our fourth quarter results. Net revenue decreased by 1% year-over-year to $360 million, $2 million above the midpoint of our outlook range. Net income decreased by 10% year-over-year to $38 million, representing a 10% margin. Adjusted EBITDA decreased by 15% year-over-year to $86 million, $7 million above the midpoint of our outlook range, representing a 24% margin. As Jeremy mentioned, top line growth was driven by performance in our services categories throughout the year. Advertising revenue and services increased by 3% year-over-year in the fourth quarter to $231 million. Conversely, restaurants and retailers remained pressured in the quarter, resulting in a 12% year-over-year decline in RR&O revenue to $107 million. A decrease in RR&O locations, combined with flat services locations in the fourth quarter resulted in an overall decline of 5% year-over-year in paying advertising locations to 496,000. Turning to expenses for the year. Our 2025 results highlight both our ability to deliver profitable growth and the margin potential of our product-led strategy with a net income margin of 10% and an adjusted EBITDA margin of 25%. We again kept headcount approximately flat year-over-year in 2025, demonstrating our continued commitment to disciplined expense management. We see a significant opportunity to drive growth in other revenue through our AI transformation and plan to increase our investments to capitalize on this opportunity in 2026. Excluding the recently integrated Hatch team, we expect headcount growth to again remain approximately flat year-over-year in 2026, reflecting both our commitment to driving leverage in the business through our product-led strategy and our team's ability to deliver operational efficiency using AI. We also remain focused on increasing the quality of our adjusted EBITDA. In recent years, we have taken significant action to shift our compensation mix between stock and cash. While we expect the full impact of these efforts to stack over time, in 2025, we were able to reduce stock-based compensation expense as a percentage of revenue by 2 percentage points from the previous year. In line with our target set in 2023, SBC as a percentage of revenue in the month of December 2025 declined to below 8%. We continue to expect that we will reduce SBC expense to less than 6% of revenue by the end of 2027. In 2026, we are deploying capital to support our growth initiatives through investments in our AI transformation, our acquisition of Hatch and incremental investment in paid search. We intend to continue evaluating potential strategic acquisitions and repurchasing shares subject to market and economic conditions. In 2025, we repurchased $292 million worth of shares at an average purchase price of $33.29 per share, including $88.5 million worth of shares repurchased in the fourth quarter. As of December 31, 2025, we had $38.8 million remaining under our existing repurchase authorization. To support our ongoing repurchase plans in February 2026, our Board of Directors authorized an additional $500 million for share repurchases. Turning to our outlook. We continue to believe in the significant long-term growth opportunities ahead as we focus our investments on high-return areas. We expect many of the same trends that characterized 2025 to persist into 2026, continuing to negatively impact advertising revenue for the year. We anticipate the opportunity in other revenue and services to continue to drive our business performance, while our RR&O remains pressured. As a result, for the first quarter of 2026, we expect net revenue will be in the range of $350 million to $355 million. For the full year, we expect net revenue will be in the range of $1.455 billion to $1.475 billion. Turning to margin. We anticipate expenses will increase seasonally from the fourth quarter of 2025 to the first quarter of 2026, primarily driven by payroll taxes and benefits. As a result, we expect first quarter adjusted EBITDA will be in the range of $58 million to $63 million. For the full year, we expect expenses to increase, driven primarily by investments in our AI transformation and paid traffic acquisition and in Hatch operations. As a result, we expect adjusted EBITDA for the full year to be in the range of $310 million to $330 million. In closing, Yelp's 2025 results reflect both disciplined execution and the margin potential of our product-led strategy. We continue to believe in the opportunities ahead to create shareholder value over the long term as we invest in our AI transformation to drive sustainable business performance. With that, operator, please open up the line for questions.hare repurchases. Turning to our outlook. We continue to believe in the significant long-term growth opportunities ahead as we focus our investments on high-return areas. We expect many of the same trends that characterized 2025 to persist into 2026, continuing to negatively impact advertising revenue for the year. We anticipate the opportunity in other revenue and services to continue to drive our business performance, while our RR&O remains pressured. As a result, for the first quarter of 2026, we expect net revenue will be in the range of $350 million to $355 million. For the full year, we expect net revenue will be in the range of $1.455 billion to $1.475 billion. Turning to margin. We anticipate expenses will increase seasonally from the fourth quarter of 2025 to the first quarter of 2026, primarily driven by payroll taxes and benefits. As a result, we expect first quarter adjusted EBITDA will be in the range of $58 million to $63 million. For the full year, we expect expenses to increase, driven primarily by investments in our AI transformation and paid traffic acquisition and in Hatch operations. As a result, we expect adjusted EBITDA for the full year to be in the range of $310 million to $330 million. In closing, Yelp's 2025 results reflect both disciplined execution and the margin potential of our product-led strategy. We continue to believe in the opportunities ahead to create shareholder value over the long term as we invest in our AI transformation to drive sustainable business performance. With that, operator, please open up the line for questions. Operator: [Operator Instructions] All right. It looks like our first question today comes from the line of Robert Coolbrith with Evercore ISI. Robert Coolbrith: Just wanted to ask about the environment for services, both on the consumer and the service provider side. You saw some deceleration in Q4 in revenue and a little bit steeper sequential decline in services sales this year versus last. Just wondering if you could maybe comment on that a bit and what you're looking for from the services business in '26. And then I'll just have a quick follow-up on OpenAI. Jeremy Stoppelman: Sure. I can kick things off here, Robert. Thanks for the question. Services demand, I think, has softened a bit. Where we really see it hit hard with respect to the consumer and the overall macro environment was RR&O. But I would say it's spilled over to services somewhat, not to the same extent, obviously. So that gets to the question of what are we doing? Well, we're really leaning in with Yelp Assistant. So that's our key investment there. We've been working on that for some time, particularly in the services side, but we rolled it out last year. The business pages -- and we're looking forward to bringing it cross category. We think transforming the consumer experience through AI is really a great opportunity for us. Obviously, AI is a very disruptive force for a lot of companies out there. And so we're really riding that wave. We think consumers are going to expect to have a more chat-like interface in general to a service like Yelp. And so we're eager to bring that to our consumers, drive engagement. And of course, as those users engage with it in high-frequency categories like restaurants, you would expect them to eventually get to services categories as well. And when you're in Yelp Assistant, that's a fully monetized experience with Request-a-Quote. So we're really excited to get that out. We expect to begin our launch towards the end of Q1 here. And that's just the beginning. Of course, we plan to continue to invest in that to bring other actions into Yelp Assistant, so things like making reservations or booking appointments or having a service provider show up at your house. Those are all on the road map. So we're looking forward to executing on that. And then we continue to lean into multi-location services. That's a big opportunity there. We've historically been underpenetrated. We've made a lot of progress. We've also found ways to deliver additional traffic, go out and acquire some traffic for those customers, and that can generate incremental revenue as well. So we do have a lot of bets that we're placing this year that can improve things on the services side and look forward to reporting back on that. Robert Coolbrith: Great. And then just on OpenAI, anything you could tell us maybe about the general outline of the deal if that could be a positive factor for traffic, exposure to younger user cohorts and so forth in addition to whatever monetization opportunity there might be? Jeremy Stoppelman: Sure. Yes, I'll take this one as well on OpenAI. Great to have an agreement there. A couple of quarters ago, we flagged for investors that, hey, we were seeing really high-quality conversations in that area. deals were being signed. It was still early days. And I think this is an important milestone on that journey. Yelp has really great content, millions of human written reviews, really critical content, critical information. If you want to deliver an experience, a general search experience, eventually, those consumers are going to be asking questions with local intent. That's historically with Google has reported that something like 50% of queries on traditional search have local intent. And if you're trying to compete with Google, like many of these folks are, you really need that high-quality content and Yelp has it. And so we're seeing that reflected both in this agreement as well as others. And the conversations are continuing. This isn't the last one we expect to do. I guess I would finish with where does that show up on the revenue side? Other revenue is where data licensing lives. It's up 17% year-over-year. And actually, in the fourth quarter, that accelerated. It was up 30% or 33%. Operator: And our next question comes from the line of Jason Kreyer with Craig-Hallum. Jason Kreyer: So you talked about this AI transition. Just wondering if you can talk about what that looks like through the lens of the consumer. Like how does this evolve in terms of consumers interacting with Yelp and consumers interacting with your customers over time? Jeremy Stoppelman: Yes. Happy to answer that. Yes. Obviously, AI is a very disruptive force, and I think it's changing consumer expectations. How are we approaching that? Well, first and foremost, on the consumer experience, we're really trying to leverage AI everywhere that we can. We rolled out lots of features that are powered by AI. One of the first things we did was enhance our search so you can actually enter natural language queries in there and get back much better answers than you could prior to that. But with Yelp Assistant, that was our foray. We've been working on that for some time, conversational initially focused on the services experience that has driven a lot of projects, incremental projects. And in fact, as we rolled it out, we've seen really great adoption there, up 400% in terms of projects going through Yelp Assistant. Fast forward a little bit there, and we brought it to business pages. And so now consumers, which more frequently, they're having this expectation of you land on a business page, you don't want to read through all the information. You just want to get the needle in the haystack. And so consumers are now able to do that, type in a question about a business, it digs into the photos, it digs into the reviews, and it comes back with relevant information. And that was sort of a milestone on our way to where we're headed towards the end of this quarter, which is the cross-category Yelp Assistant. And that's really exciting because you can ask it any question about a local business or what your need is or whether it's a service request, it will guide you through that process and ultimately match you with businesses. One of the great things back to that needle in a haystack comment is that we're able to back up a user's question or a user's request with great data. So photos that are an example of what they're looking for or snippets right out of reviews and get really precise. We think that's going to delight consumers. Ultimately, that's our goal. And I think with the changing search landscape, everything going or some portion of share going to a more generative AI or a ChatGPT-like experience, consumers are changing their expectations and they don't just want regular search. And so we've put a significant investment in transforming the Yelp experience and preparing for the future, and we'll get our first taste of it as we launch Yelp Assistant at the end of Q1 here. I guess on other areas where we're using AI to transform, I guess I would point to the opportunity that we see in SaaS tool -- AI-powered SaaS tools. So as you probably know, we launched Yelp Post and Yelp Receptionist last year. Yelp Posts is fantastic. We're seeing a great response from restaurants. Sales are above our initial expectations. We've answered over 190,000 calls. So great momentum there. And on the Receptionist side, we did get the opportunity to pair up with Hatch. We're delighted. I think that accelerates our road map there by a couple of years. They were a first mover in the space. And we're able to bring our extensive distribution as well as AI capabilities and talent to bear on the hatch opportunity. Both are going after very large TAMs. So we're extremely excited about the AI SaaS opportunities ahead of us. Yes. Jason Kreyer: Maybe just sticking with Hatch on a follow-up. Just curious what that cross-sell looks like for Hatch services. And then if there's any hatch functionality that will kind of accelerate the road map on host as well. Jeremy Stoppelman: Yes. I mean we're already talking to a lot of the same customers, and there's plenty of contacts that we have that we can introduce Hatch to. So I think that's a really exciting opportunity. They're a relatively small team. We have thousands of sales reps. There's also a benefit, too, in that if you get more efficient at managing leads by leveraging AI, your return on advertising is better. So that's kind of an extra win-win. in there. So very excited about Hatch going after a big TAM, and they're growing rapidly, 70% year-over-year growth. So exciting times there. Operator: And our next question comes from the line of Nitin Bansal with Bank of America. Nitin Bansal: So AI innovation is accelerating at a very rapid pace, particularly as large platform disturb traditional advertising and software models. As you expand your SaaS offerings with Hatch, what gives you confidence that your product innovation can keep up with the leading players and you will be able to achieve the adoption level that you're targeting for? Jeremy Stoppelman: Sure. Thanks for the question. How do we expect to keep up a level of innovation, a pace of innovation such that we could stay ahead of perhaps bigger players. It's not -- it's something that we're very familiar with. Obviously, for many years, we've competed with big tech players, particularly Google. And how we've been successful is, I think, our focus. It's early days in the space that Hatch plays in, which is AI lead management for service pros. They're laser focused. They understand their customers. They understand the players in the ecosystem. They have key partnerships that are essential to make that work. There's just a level of detail and focus that I think is very hard for other companies, especially large ones that have other big opportunities to pursue to spend their time on. So we're quite confident that this is an opportunity with a lot of runway and Hatch has great momentum. And we're -- our view is how do we help. They're doing great. The 70% growth year-over-year is fantastic, and we want to see if we can make that even -- go even faster. So we're bringing our resources to bear. We're bringing our distribution to bear, and they're really experts in the space. And I don't -- I think that's very hard for someone to replicate if they've got lots of other large opportunities to chase like some of these bigger AI players. Nitin Bansal: If I can ask one more. Looking out five years from now, how do you envision Yelp's revenue mix to evolve between like recurring subscription revenue versus variable ad revenue? And what would it mean for your like overall top line growth and margin profile like three to five years down the line? David Schwarzbach: Thanks for the question. We do see the opportunity to diversify revenue by continuing to drive other revenue. Just as a quick reminder, other revenue consists of three components. There is the licensing revenue, there is transaction revenue and things are going well with DoorDash. We're very happy there. And then, of course, there's the subscription revenue. With this significant opportunity across the CaaS landscape, especially with our distribution, we do see the opportunity to diversify our total revenue mix, which is obviously heavily ad-driven today. So, yes, that's definitely an opportunity from our perspective Obviously, as well, there are different margin profiles between SaaS performance and SaaS business models and ad-driven business models. That being said, when you look at over time, where do SaaS businesses go in terms of margins, it's also very attractive. So my expectation is that our SaaS -- our ability to drive SaaS margins will converge with where we are or better than the ad revenue. And as a reminder, when you look at licensing or transaction, that is almost entirely margin. So that's a very nice mix there for us. I'd say overall, other revenue today already has, in aggregate, a better margin profile than the ad side of the business. Operator: [Operator Instructions] And our next question comes from the line of Kishan Patel with Raymond James. Kishan Patel: This is Kishan Patel on for Josh Beck. In restaurants and retail, what do you think needs to change for that advertiser base to stabilize and then improve? And how would you prioritize these changes over the next few quarters? Joseph Nachman: Yes. Thanks. I can take that question. This is Jed speaking. Obviously, there have been some headwinds in restaurant, retail and other. We saw those over the course of 2025. There is a lot of these restaurants are dealing with a weakened consumer, and there's additional pressure of really high input costs that makes it a tough battle out there on Main Street from -- in the local economy. We do believe that over time, in-restaurant dining will return and that we're very well positioned for that. I think when you look at the transformation of Yelp and Jeremy had mentioned Yelp Assistant cross-category Yelp Assistant, that's going to provide an entirely new interface for consumers to interact with all of the Yelp data, and we believe the investment there will position us well when a lot of the stuff comes back. But we're not resting on our worlds. Jeremy mentioned the Yelp Host, and we've been thrilled with the progress there thus far. We believe there's a very large TAM. I think as we mentioned in the letter, we're going to be -- we'll soon have the food ordering available on that Yelp Post product. And I believe we're really well positioned from a voice perspective, and it is obviously a very large TAM that we can go after and bring our existing infrastructure to bear on that opportunity. So overall, we're going to continue to invest in that consumer experience and also see other opportunities to drive on those AI-based SaaS tools. Kishan Patel: Got it. And regarding Hatch, can you provide more color on the margin trajectory goals for Hatch after closing given the cash flow disclosure and how that impacts the full year EBITDA outlook versus the core business? David Schwarzbach: Thanks for the question. It's David. Because Hatch is growing very rapidly, we remain focused on driving that top line growth. Margin -- driving margin is not the immediate focus for us. We actually want to go and really realize the opportunity by providing the solution to as many service pros as we can. Again, I do think over time that the margin profile will converge just a typical SaaS margin profile, but that's not immediate. So it is reflected in the guidance that we've given on adjusted EBITDA for the year from an operating expense perspective. Just as a side note, the retention amounts that we are paying out are being added back to EBITDA. So we're adjusting those. You can see those numbers in the shareholder letter just for reference. But what we want to really achieve right now is this significant growth and realizing the opportunity from the acquisition. Operator: All right. Thanks, Kishan. And that does conclude our Q&A session today as well as our call. So thank you so much for joining us today, and you may now disconnect. Have a great day, everyone. David Schwarzbach: Have a great day, everyone.
Odd-Geir Lyngstad: Good morning, and welcome to Elkem's Fourth Quarter Results Presentation. My name is Odd-Geir Lyngstad, and I'm responsible for Investor Relations in Elkem. Today's presentation has been extended because Elkem has reached a significant milestone to sell the majority of its Silicones division to Bluestar. But before we present the details of that transaction, we will take you through the fourth quarter results. As usual, we will go through the highlights for the quarter and give you an update on the markets and the first quarter outlook. CEO, Helge Aasen, will take us through the first part of this presentation before CFO, Morten Viga, will present Elkem's fourth quarter results in more detail. We will open for Q&A after the presentation of the sales of the Silicones division. So with that, I give the word to CEO, Helge Aasen. Helge Aasen: Yes. Thank you, Odd-Geir, and good morning, and welcome, everyone. So as already indicated by Odd-Geir, we have the pleasure of announcing that we've entered into a sales agreement with China National Bluestar, our majority shareholder for a sale of most of the Silicones division. This transaction will be settled through a redemption of all of Bluestar's shares in Elkem. And as already mentioned, we will come back to the details later in the presentation about this transaction. The result for the quarter was relatively strong given the current market conditions. And I think we can say that as most of our competitors in Europe have temporarily or permanently curtailed production, while we have, throughout the quarter, maintained close to full capacity utilization. The EBITDA for the fourth quarter ended up at NOK 890 million, which gave an EBITDA margin of 12% for the group. And if you exclude Silicones, which is reclassified as assets held for sale and which will now be sold, the operating income was NOK 4 billion with an EBITDA of NOK 485 million, which is then also representing a margin of 12%. We have been able to partly mitigate low demand and declining sales prices with cost improvements, both on raw material costs and other operational costs. And that is, of course, still ongoing. In the quarter, Silicon Products was impacted by lower sales prices. However, we do see higher ferrosilicon prices in the EU due to the safeguard measures restricting imports of ferroalloys into the EU. Carbon Solutions had lower sales in the fourth quarter due to continued idling of steel and ferroalloy capacity, which we have seen across many main operating regions. In the quarter, Silicones delivered further profitability improvements, which is primarily due to higher sales prices towards the end of the year in Asia Pacific and generally strong performance on cost improvements. The share redemption in connection with the sales of the Silicones division will impact Elkem's equity. And due to that, the Board has proposed not to distribute a dividend for 2025. So before we go on to present the market update and results, I'd like to say a few words about ESG. At the end of last year, it was unfortunately marked by a tragic accident at one of our plants in France. On the 22nd of December, an explosion occurred at an R&D facility in our Silicones facility in Sanfo, just outside Lyon. We had 4 colleagues injured and sadly, 2 of them later passed away from the injuries that were sustained. Internal and external investigations are still not finally concluded. But of course, regardless of that, I can only say that this is a very tragic setback in our efforts on safety work. And obviously, such an event right now overshadow other achievements within our ESG work. But we continue to get good ratings on ESG assessments in general as is illustrated on this slide. And moving on to trade barriers. This continues to impact markets and is also having an impact on Elkem, both directly and indirectly. EU's safeguard measures that came into effect in November last year, unfortunately, exempted Norway and Iceland. So we are outside of the EU safeguard measures. I think that's been broadly covered in the media. However, we have received country-specific quotas, which puts us in a rather beneficial position compared with most other countries. Those quotas are approximately 70% to 75% of historic sales. And this has been combined with the pricing benchmark of EUR 2,400 as a reference when you calculate the tariffs for sales, which exceed the quotas. So far, ferrosilicon prices are up about 20% since this was implemented. And if these measures are effective, we will -- we expect to see further price increases. Then moving on to the U.S., countervailing duties have been imposed on silicon, silicon metal, imported from several countries, including Norway. And the preliminary CVD rate is close to 17%. In addition, there are also antidumping duties announced, which is close to 4%. So that brings the total tariffs now that was 5%. Then we have the Trump tariff, 15%. And then we put this on top of that, we are now up to around 40% on silicon metal exported from Norway to the U.S. So the basis for the CVD duty is based on CO2 compensation and the allocation of CO2 quotas, which Norwegian companies receive under the EU carbon scheme. Of course, our position is that EU's policies on CO2 quotas and CO2 compensation do not constitute countervailable subsidies, harming the U.S. domestic industry as there is no CO2 tax in the U.S. So the case is expected to be finally decided in June this year. And so far, I think we can say that we've been fairly successful in navigating and adapting to unpredictable trade dynamics, while we are leveraging a global business model and strong -- with strong cost and market positions. Here, we have included a summary of Elkem's performance over the past years and how that compared to our communicated financial targets. So if we look at the 3 last years, we have seen deteriorating market conditions due to lower economic activity, global overcapacity and a very, I would say, big reshaping of global trade. So despite these challenging conditions, Elkem has met the financial targets over the cycle, very much due to our diversified business model and strong operational execution. And of course, we have continuous cost focus. So since 2020, we have delivered a compound annual growth of 5%, which is in line with our target. And the EBITDA margin during the same period was 16%, which is also within our target range. And if you exclude Silicones from these numbers, the performance is even better with a compound growth in operating income of 6% while the EBITDA margin was 21%, exceeding the target range. Then we move on to the market update and the outlook. So let's have a look at some of the key markets and market trends and indications -- indicators, I mean, automotive is an important sector for Elkem, driving demand for many of our products as silicon is essential in electronics, in batteries and in aluminum, lightweight components. Markets, particularly in Europe, have declined and the outlook remains weak. Soft demand combined with import pressure from China. A new minimum price mechanism in the EU on imported Chinese electrical vehicles could offer some protection; remains to be seen. In the U.S., the outlook for 2026 is also relatively soft due to the pressure on affordability and an overall weak demand for EVs. Construction is another key market for Elkem, for Elkem silicon-based products, which go into high-performance concrete, building materials and other infrastructure. It seems that Europe is seeing a gradual recovery in the sector, but the performance is varying significantly across countries and different segments. The U.S. industry is also relatively soft, but data centers, power infrastructure and institutional projects are showing growth. The PMI number is normally a good indicator for the economic sentiment and global PMIs show a mixed but stable picture. Manufacturing remains soft, but the downturn seems to be easing now. The U.S. stays in mild expansion, supported by improving output, though underlying demand and export orders remain soft. Europe is a mixed picture with the German economy continuing to contract, keeping the broader Eurozone picture rather subdued. If we look at the specific markets for Elkem and start with the silicon. As illustrated on the graph, the silicon reference prices remained on a low level during the quarter. Year-to-date figures for November 2025 show that exports from China to Europe increased significantly compared with last year. And this, combined with, I say, generally weak demand have put quite significant pressure on prices in the EU. In the U.S., silicon prices increased slightly in the fourth quarter, but also here, the demand is relatively low. Prices are, however, expected to rise in 2026 due to tariffs, antidumping duties and a tightening domestic supply. In China, silicon prices are affected by challenging market conditions. Power prices are increasing and sales prices for silicon remain on a low level. A little bit positive is that production curtailments are expected from several producers. Moving on to ferrosilicon. As you know, we have many of the same underlying drivers as the silicon metal. The overall picture for Elkem is also here marked by weak demand. But as mentioned earlier, we've seen an increase in reference prices by around 20% following the implementation of the safeguard measures in the EU. And in addition, the EU has announced a tightening on the safeguard measures for steel. The annual tariff-free import quotas will be reduced. And the out of quota duty will be doubled to 50%. So as these measures will take effect, it is expected that steel production in the EU will increase. I think Outokumpu reported a similar picture yesterday. This could also have a positive impact on the demand for ferroalloys and electrode materials supplied by our Carbon division. In the U.S., ferrosilicon prices were marginally down in the fourth quarter due to weaker demand. And in China, ferrosilicon prices remain on a low level despite further production cuts to address overcapacity. Then the market for carbon products, obviously much smaller than the market for silicon and ferrosilicon, and there are no available reference prices here. Demand for carbon products differ by region, influenced by steel primarily, which again drives consumption of ferroalloys and aluminum is also an important driver. This was -- yes, global steel production actually declined by 3% in the fourth quarter compared to the year before, primarily driven by lower activity in China, where production actually decreased by 9%. In Europe, the production increased by 4%, while North America remained stable. So this means that the steel and ferroalloy markets continue to be challenging and affecting Carbon Solutions. The effects are partly mitigated by our specialized product offering in carbon and a diverse geographic presence, which gives us a natural hedge and creates quite a stable situation, which you have seen on historical financial figures. Then lastly, Silicones. Anti-involution measures are underway in a number of sectors in China, also in silicones, so addressing overcapacity. The DMC price in China rose by about 23% from around RMB 11,000 per tonne by the end of the third quarter, up to RMB 13,600 by the end of the fourth quarter, primarily driven by various anti-involution measures, curbing over production and then leading to an increasing in sales prices. The demand still within China remains on a weak level, particularly due to the construction sector. In the EU and the U.S., demand for commodity silicones was low in the quarter, mainly impacted by shifting tariff policies. So moving on to the outlook for the first quarter. As mentioned, trade regulations and protective measures are likely to continue to affect Elkem's markets and contributing to ongoing uncertainty. However, I think Elkem is well positioned due to our geographic presence and strong market and cost positions. Silicon products still facing subdued demand. We are temporarily reducing capacity in Norway to -- mainly to manage inventory levels. And the EBITDA effect of that is expected to be somewhat negative, but with a very positive cash flow effect. Carbon Solutions is expecting a slight improvement in sales volumes. But again, due to already mentioned the situation in steel, et cetera, the overall demand remains on a relatively weak level. Silicones prices in China have increased due to the reduced supply, while the fundamental demand situation remains on a lower level than what we've seen historically. The division will, of course, benefit from higher sales prices anticipating that yes, that these actions will be maintained on production reduction. So I think with this, I'll give the word to Morten to take you through the financials for the fourth quarter, and then we'll come back to the transaction afterwards. Morten Viga: Thank you very much, Helge, and good morning, everybody. It's certainly a pleasure to go through the results for the fourth quarter in more detail. Our operating income for the quarter was NOK 7.3 billion, which was down 14% compared to the fourth quarter last year. And we saw a reduction in all 3 divisions, and this is mainly explained by lower sales prices. Elkem's EBITDA for the fourth quarter was NOK 890 million, and this was 24% lower than the fourth quarter last year, but slightly higher than in the previous 2 quarters. The reported group EBITDA margin was 12%, which is somewhat below our long-term target of 15% to 20%. However, it's clearly important to bear in mind that sales prices in key markets, particularly in silicon and ferrosilicon have been at or close to all-time low levels. And as such, we believe that Elkem's EBITDA is clearly supported and held up by good operational performance and strong underlying cost positions. There were no particular one-offs affecting the EBITDA in this quarter. As usual, we have provided an overview of some of the main financial numbers and ratios on this slide. I will certainly not go into detail on all of them, but it is important to note that the Silicones division has been reclassified as discontinued operations and assets held for sale. And as you know, now we are announcing this transaction. But Silicones has been a part of Elkem's structure during the quarter, and the division is affecting Elkem's key financial numbers. And for that reason, we will mainly focus on the financial numbers for the group, including Silicones. In the table to the right, you can see comparable figures, however, for Elkem with and without Silicones. Including Silicones, the group EBITDA was NOK 890 million, and the realized effects from the currency hedging program was minus NOK 21 million reported in segment other. Other items amounted to minus NOK 68 million, and the main items were gains on power and currency derivatives of plus NOK 64 million and restructuring expenses of minus NOK 20 million and other items of minus NOK 111 million, mainly consisting of dismantling and environmental expenses. Net finance expenses were minus NOK 192 million. The main items were net interest expenses of minus NOK 130 million and currency losses of minus NOK 48 million. We have been able to reduce the interest expenses from minus NOK 187 million in the same period in '24. Income tax was positive with NOK 6 million due to tax deductions and changes in the tax losses carried forward. So let's then take a look at the divisions, and we start with Silicon Products. The silicon and ferrosilicon market clearly remain difficult with low sales prices, and this is also affecting the division's result in the fourth quarter. Total operating income amounted to NOK 3.2 billion for the quarter, which was a reduction of 14% from NOK 3.8 billion in the fourth quarter of '24. The reduction was largely due to lower sales prices, particularly for silicon and ferrosilicon. The EBITDA amounted to NOK 294 million, which was a significant reduction of 53% from the fourth quarter last year. And the reduction is also here primarily driven by lower sales prices, but this is then partly balanced by lower raw material costs and higher sales volumes. The specialty segments, particularly foundry alloys and materials maintained strong performance also this quarter due to Elkem's very strong market positions. Sales volume was 8% higher compared to the fourth quarter last year, and we had a higher sales volumes across all product lines. The Carbon Solutions division has presented extraordinary good results over a long period and continue to deliver good margins. However, this quarter was impacted by lower sales volumes. The operating income came in at NOK 735 million, which was down 20% from the fourth quarter last year. EBITDA amounted to NOK 174 million, which is a reduction of 38% from the corresponding quarter in '24. But the reduction in operating income and EBITDA can be explained by decline in sales volumes. We have also seen a reduction in sales prices, but this has been partly offset by extraordinary cost improvements. Sales volume was down 11% compared to fourth quarter last year. The Silicones division, where the majority now is being sold to Bluestar has delivered improved results in the fourth quarter, mainly due to cost improvements. Total operating income was NOK 3.6 billion. That's down 14% from the fourth quarter of last year. And the decline is primarily due to lower commodity sales prices during the quarter. EBITDA, on the other hand, improved by 6% from the corresponding quarter last year, and it reached almost NOK 400 million. The decline in sales prices and sales volumes was more than offset by good cost reductions and lower raw material costs. Sales volumes was down 3% compared to the fourth quarter last year, and this is mainly due to lower commodity sales across the geographical regions. Let's now have a look at some of Elkem's key financial ratios. The earnings per share, EPS, was negative with NOK 0.21 per share in the fourth quarter, and that brings the EPS year-to-date to minus NOK 1.05 for the year. We are, of course, not satisfied with this, but clearly, the EPS has been negatively impacted by net losses from the Silicones division, which we are now selling. If we exclude Silicones from the '25 numbers, Elkem's EPS for the full year would have been plus NOK 0.61 per share. The balance sheet remains very solid and total equity amounted to NOK 24 billion by the end of '25, and that equals an equity ratio of 51%. By the end of the fourth quarter, Elkem had a net interest-bearing debt of NOK 11.9 billion, and this gives a debt leverage ratio of 3.5x based on last 12 months EBITDA. The sale of the Silicones division will impact Elkem's equity and debt, and we will revert to that later. The equity will be reduced by share redemption and the net debt will also be reduced from NOK 11.9 billion to NOK 9.8 billion as Bluestar will take over NOK 2.1 billion of the debt. This will then increase Elkem's leverage based on pro forma numbers. But the plan will be or is to raise additional equity and conduct a refinancing of the main bank facilities after closing of the Silicones transaction. As I said, we will get back to more details on this under the presentation of the Silicones transaction. As mentioned in the previous quarters, Elkem's focus has been on cash generation and disciplined capital spending in response to the very challenging market conditions that we are experiencing now. And we have delivered on our promises. In the fourth quarter, the cash flow from operation was plus NOK 829 million, a clear improvement compared to previous quarters. And this is explained by lower CapEx and positive working capital changes. In the fourth quarter, total investments were down to NOK 674 million. Reinvestments were down to NOK 530 million, which amounted to 75% of depreciation for the quarter. And for the full year, reinvestments amounted to NOK 1.5 billion, which equals 58% of depreciation. Strategic investments were moderate, NOK 145 million in the fourth quarter, taking the total number to NOK 328 million for the full year. So let me wrap up this presentation by summarizing the main headlines and takeaway. First of all, trade regulations and protective measures are likely to continue affecting Elkem's markets. Elkem is, however, very well positioned due to strong market and cost positions and a diverse business model. Silicon Products is still facing weak demand, but the division is benefiting from cost improvements and higher ferrosilicon prices after the implemented EU safeguard measures. Carbon Solutions benefits from good cost positions and a geographically diverse customer base. And clearly, the division is excellently positioned when there is a market recovery. Our Silicones business delivered further profitability improvements in the fourth quarter and is well positioned if current price levels are maintained. As I said, the Board has proposed not to distribute dividend for 2025, and this is due to the share redemption in connection with Elkem's sale of the Silicones division. So then I think that summarizes the Q4 presentation, and then I hand the word back to Odd-Geir. Thank you. Odd-Geir Lyngstad: Okay. That concludes the presentation of the fourth quarter results. So thanks to Helge and Morten for taking us through the results and the presentation. We will now go on to present the divestment of the Silicones division and CEO, Helge Aasen and Morten Viga will then take us through the rationale for the transaction, the structure and the approval process for the contemplated divestment. And we will then open for Q&A after this part of the presentation. So with that, I'll give the word back to you, Helge. Helge Aasen: Thank you. Yes, it's been a quite a long process. It's now about a year since we announced the strategic review to sell the Silicones division. And we are very satisfied to present to you today a transaction that we think will benefit all our stakeholders. So before going into the details of the transaction, I'd like to put this into a historic perspective. I mean transformational changes are not new to Elkem. In the company's long history dating back to 1904, continuous portfolio optimization has been part of the course. And in order to adapt to new market environments, seize growth opportunities, consolidate the market or gain more financial room to maneuver, we have on this slide illustrated some of the major transactions that have shaped this company over the years and made it to what it is today. The current chapter that we are about to close started in 2011 with Bluestar's acquisition of Elkem from Orkla. During Bluestar's ownership, Elkem has had a strong development in product diversification and not at least in revenue growth. I mean we have quadrupled the revenue in that period. We've strengthened our market positions. We have emerged as a more cost-effective company and -- than we were, back in 2011. And we've also invested significantly in expanding and upgrading our facilities. Just in Norway alone, we have invested more than NOK 10 billion over the last 10 years, which makes us the European silicon major. And we play a critical role in strategic value chains. It's been a very exciting journey. I've been part of it myself personally. Taking over Bluestar's global silicones business headquartered in France. We took the first part in 2015 and then the silicones business in China in connection with the IPO in 2018. And obviously, that's a particular highlight when Bluestar relisted Elkem on the Oslo Stock Exchange in 2018 after the Orkla takeover, where Elkem was delisted in 2005. And we had actually been listed since 1913, when Orkla delisted the company. So we have a long history here in Oslo on the stock exchange. And significant achievements have been made, and we are proud of that. Today, Elkem is a fully integrated silicon-based manufacturer, all the way from quartz mining to high-end downstream applications in silicones. The company has global positions and each of the 3 divisions are major players within their respective industries and markets. Silicon Products being a global producer and provider of silicon, ferrosilicon and a number of specialty products derived from those -- from the starting point. Carbon Solutions is a leading producer of electrode paste and specialty products for the metallurgical industry. And Silicones, which will now be sold to Bluestar is also a fully integrated silicones manufacturer with focus on specialties and strong global positions. So combined, our divisions have leading cost and market positions delivering and have delivered strong results over the cycle, with a geographically resilient and diverse business model. And I think we should also underline that Elkem is a supplier of critical materials to the green and digital transitions with a strong focus on sustainability. And of course, these efforts will continue regardless of the transaction being announced today. So with such a successful development, I guess the obvious question is why do we undergo such a significant transformation now. And I would say, first of all, it is related to growth potential, and the fact that the current structure and financial capacity of Elkem is not adequate to support the growth opportunities that we see for Elkem's business portfolio going forward. We have #1 positions in carbon materials, in silicon, in foundry alloys, microsilica. And a sale of the Silicones division will now ensure a better capital allocation in order to accelerate organic growth and also enable us to pursue attractive M&A opportunities within these business areas. It will also leave Elkem with more resources for innovation and improve the prospects to strengthen our financial profile through reduced volatility and lower capital intensity. In short, we believe that this transaction will put us in a significantly stronger position to develop these 2 divisions. The fact that Bluestar will take full ownership of Silicones through this transaction, we also think will significantly improve the future opportunities for the Silicones division. It will enable access to a significant investment capacity that would not have been possible in the Elkem structure. In addition, Silicones will benefit from deep strategic synergies within a global chemicals major with improved ability to innovate across the whole value chain. Silicones will also be in a better position to adapt to local market dynamics and accelerate growth in specialty products and in key global markets. So in short, we are confident that this agreement with Bluestar delivers the most favorable outcome for Elkem's employees, shareholders and other stakeholders, while we position ourselves with the remaining metals and materials division and the Silicones division for future growth. This is an overview of the transaction structure and the timeline. So Elkem will sell the majority of the Silicones division to Bluestar. The sale includes all Silicones' assets, excluding Yongdeng, it's a silicon metal plant in China; Ruossillon which is an upstream silox plant in France; and India, a small downstream facility in silicones. The transaction will be settled through the redemption of all of Bluestar's 338 million shares in Elkem. There will be no cash payments by Elkem nor Bluestar. The minority investors, which today have 47.1% of the shares will then assume 100% control of the listed company, Elkem ASA. And through the contemplated transaction, Elkem and Bluestar will solve important long-term strategic goals regarding development and ownership. The transaction is conditional upon shareholders' approval at an Extraordinary General Meeting, waivers and approvals from lenders and other customary approvals. We have obtained pre-commitment from Folketrygdfondet, Must Invest, AS, DNB Asset Management, Nordea Investment Management and Perestroika to vote in favor of the transaction. These investors have also underwritten NOK 1.5 billion equity capital raise. Elkem will call for an EGM today. The EGM is expected to take place on the 9th of March, and we will seek lenders' approval of the transaction before the EGM. After a 6-week formal creditor process, the closing is then expected to take place by the end of April. We are planning to arrange a capital markets update after the summer to present our plans and strategy for the company going forward. Where are we now? Is this -- are you taking over now? Or is it -- this is my last slide. I think, yes, this slide summarizes the outcome of the contemplated transaction. So upon completion, Bluestar will be the owner of all Silicones' assets, except the units that will be retained by Elkem. And since 2018, Silicones' share of EBITDA has been 32%, while the share of EBIT has been negative. The divisions that will constitute Elkem going forward have since 2018 represented 68% of EBITDA of more than 100% of EBIT by offsetting the losses from Silicones. The performance since 2018 demonstrates the potential to strengthen Elkem's financial profile going forward through improved earnings. Yes. I think, Morten, you can take the rest. Let's share the burden of this very nice presentation. Morten Viga: Share the pleasure I would say. Certainly, it's a magnificent day in the history of Elkem. So I'm very happy to continue. So the settlement of the transaction will be made through redemption of all Bluestar's share in Elkem ASA. The decision is subject to 2/3 vote by minority shareholders at the upcoming AGM on the 9th of March. And the minority shareholders will then effectively exchange the 47.1% they hold in the sold Silicones assets with Bluestar's 52.9% in the remaining Elkem. Bluestar will not hold any shares or have any formal roles in Elkem after completion of this transaction. And a new Board of Directors will be elected in connection with the closing of the contemplated transaction. So what is new Elkem all about? Well, after the transaction, Elkem will consist of Silicon Products and Carbon Solutions. And this will certainly then result in a much more focused pure-play metals and materials company. The Silicon Products division has 12 main production sites and has all around the world and has delivered an average EBITDA margin of 22% from 2018 to 2025. Carbon Solutions also has a global business model with 6 main production sites, which have delivered an average EBITDA margin of 27% over the same period. So Elkem will remain a global player with plants all over the world and clearly with #1 positions within these 2 business areas and with very strong and resilient value chains. We will certainly continue to focus on innovation and customer support with strong R&D centers as an embedded part of our value chain. And we believe that this will be even more important going forward due to increased focus on supply chains and the secure supply of critical materials. We also have very strong positions in terms of renewable energy and energy efficiency. And we also believe that this will be a strong competitive advantage going forward. In this transaction, we will keep 3 of the Silicones' plants, which will not be sold to Bluestar. The Roussillon upstream Silicones' plant in France will be a prolonged -- will serve as a prolonged part of the upstream silicon metal value chain. And as such, it will secure demand from -- for our production in Norway. For India, which is a very small business and for Yongdeng, which is a silicon smelter in China, but belonging to the Silicones division, we will explore other alternatives, and we will get back to that in due time. This slide contains a profile of the new structure's historical financial performance. I will certainly not go into detail on all these numbers. But you will see that the historical performance has been volatile as the markets have been volatile, but we have delivered profitability, which is clearly above the average profitability of Elkem Group in the same history. Since Elkem was IPO-ed back in 2018, the remaining business that we will keep has represented 55% of the group revenue, but it has also represented 67% of the EBITDA. And as a matter of fact, it has represented more than 100% of the historical group EBIT. So we believe that it is a very good part of the portfolio that we are bringing further. And that means that we will have a stronger and more profitable Elkem going forward, and we will certainly also focus a lot on cash flow generation based on very good underlying market and cost positions. As mentioned previously in our presentation, we believe that Elkem's positioning will be significantly improved after the transaction. Going forward, the operational and business focus will be on our #1 positions in Silicon Products and Carbon Solutions. And these divisions have demonstrated a very strong ability to deliver solid profitability throughout the cycle with an EBITDA approaching 20% since 2018 and with a strong cash flow generation. So where do we stand today? We, certainly, Elkem's remaining divisions, we have gone through a cyclical trough in terms of turnover, yet we have still delivered profitability and good cash flow throughout 2025. And we clearly believe that with the completion of this transaction, we are very well positioned to deliver increased turnover, higher earnings over time. From 2018 to 2025, Silicon Products and Carbon Solutions together have delivered on an average an EBITDA of around NOK 4 billion throughout the cycle, which is significantly higher than the 2025 numbers. Compared to 2025, we expect a gradually improving market in 2026. And over time, we expect that we should at least be back in line with historical earnings at a minimum. Based on the current outlook, we anticipate an underlying top line growth of more than 10% in 2026 compared to 2025. This is driven by a better mix and higher volumes. Our relative competitiveness versus competitors in our main markets is stronger than ever before, and we are confident that we will gain market shares with good profitability. Higher prices should certainly provide the company with strong operating leverage and also based on today's cost base. Historically, rising revenues have led to increased margins, which is natural given higher volumes and prices. In addition, we have a long track record, and we will continue with that of achieving significant cost improvements in our core business model. And we plan to return to the market with specific cost-cutting measures over the coming quarters as we will streamline the new organization. One of the important factors in the transaction is that we will also significantly reduce our capital intensity through the sale of Silicones, which has clearly been the most capital-intensive part of our portfolio. We expect for the new portfolio around NOK 1 billion in ongoing annual investments, and that is clearly significantly below the average level during the last 5 years. And this also should enable a higher return on capital employed going forward than the historical numbers. In line with our strategy of being a well-capitalized company throughout the cycle, we have also decided to raise new equity from solid investors upon completion of the transaction. We're very happy to see the good support from current shareholders, and we believe that our new financial process has a -- would give a stronger resilience than the historical Elkem. So even though the markets remain, for the time being, challenging and uncertain, we believe that we are in an excellent position to deliver profitable operations, good cash flow even under quite challenging conditions. And over time, as illustrated, we are also comfortable that we have a position that can deliver results at least in line with our historical performance. I should be humble about timing. Normalization, full normalization will probably take some time and our markets will keep fluctuating. But as the markets will settle, we are very well positioned to deliver strong revenues and profitability. And as I said, we will certainly focus on maintaining a strong and efficient balance sheet over time. And we will also, in the future, get back to delivering attractive dividends to the shareholders when the time is right. Finally, I think it's also worth mentioning that the transaction and the streamlining of Elkem in the coming years will enable profitable expansion and growth. And once the transaction is completed, as we said, we will also then after the summer vacation, get back with a capital markets update, elaborating more on our future financial targets and strategic priorities. As we said, the sale of the Silicones division is settled by share redemption with no cash payments. We're planning also, as said, an equity issuance following the closes of the contemplated transaction to ensure a robust and efficient balance sheet. And a number of key current investors have already fully underwritten a NOK 1.5 billion equity capital increase. And with this capital increase, the new pro forma leverage will be 3.6x based on the last 12 months EBITDA. The equity capital raise is subject to certain terms and conditions to be completed following the closes of the contemplated transaction. But what's important from the company's perspective is that there is no uncertainty related to the equity raise and to the financial position of the company going forward. We believe this will be a very strong structure. And certainly, our target is to maintain a strong credit position and a flexible balance sheet, qualifying for investment grade. The transaction is conditional upon approval from certain Elkem lenders and the waiver and approval process is now being initiated. After transaction closing, we plan then to conduct a full refinancing of main credit and loan facilities, and we will get back with more information on that in due time. So then a few words about the approval process from the minority shareholders. The contemplated transaction is conditional upon the approval by Elkem's General Meeting. We will then call for an Extraordinary General Meeting today to be held on the 9th of March to approve the contemplated transaction and the redemption of Bluestar's shares in Elkem. Bluestar will not vote on the agenda items relating to approval of the contemplated transaction as they are part of the transaction. But Folketrygdfondet, Must Invest, DNB Asset Management, Nordea Investment Management and Perestroika have pre-committed to vote in favor of the share purchase agreement, and that is representing approximately 30% of the eligible voting capital for this matter. And as I also said, these investors have collectively underwritten NOK 1.5 billion in new equity capital, subject to market terms. The Board of Directors in Elkem will certainly also ensure to take into consideration of the minority shareholders in relation to the equity capital raise. With respect to the share redemption, Bluestar is entitled to vote and has undertaken to vote in favor. Hence, shareholders holding 67% of the share capital eligible to vote on that item have undertaken to vote in favor of the share redemption at the EGM. And subject to being approved by -- or subject to approval by the EGM and other closing conditions, where there are really no major ones, the contemplated transaction is expected to close late April or early March this year -- May. Thank you, Helge. Elkem's management and the independent Board have thoroughly assessed available options in a long time before entering into these -- or into exclusive negotiations with Bluestar, and we clearly believe that this is the best option, and it's a very good solution. To safeguard the interests of the minority investors in Elkem, the Independent Board has also obtained a fairness opinion from DNB Carnegie, which has concluded that the contemplated transaction is fair from a financial point of view when considering the valuation from the perspective of the Independent Board and its shareholders. So to summarize, we certainly believe that this transaction will be beneficial to all stakeholders, and it will position Elkem as a focused pure-play #1 metals and materials company. This will certainly allow us to pursue tailored strategies aligned with our division's unique strengths and market positions. Elkem, post the transaction, will hold leading positions within operations, technology, market, product technology, et cetera. We will continue to have attractive positions in all relevant geographies. And we clearly also see potential value-accretive M&A opportunities when the timing is right. As a supplier of critical materials to the green and digital transformation, we have developed strong customer relations based on very capable in-house R&D resources, and we will continue to strengthen that going forward and make sure that it's sustainable, both from a financial and an environmental point of view. As I said, Elkem's target is clearly to maintain a robust financial profile over the cycle with a very strong focus on solid cash conversion. And we believe that this will, over time, provide the necessary flexibility for growth and development of the company. So I guess that concludes our presentation, and then I'm happy to leave the word back to Odd-Geir again, who will facilitate the Q&A session. Thank you very much. Odd-Geir Lyngstad: Thank you for that, Morten. We will then open up for Q&A. We have received some questions on the webcast and including some on e-mail. But since there are a few people present here today, I would like to take the opportunity to see if there are any questions from the audience. And the best solution is probably if you just say the question and then I'll repeat for the webcast. So please feel free. If there are no questions from the audience, we'll take a few of the questions that are on the webcast. And the first question is related to the Roussillon and the part of the Silicones' assets that are not part of the transaction. And questions are if -- what is the EBITDA for the Silicones part that are not part of the transaction where obviously, the Roussillon plant is the main item. What was that in '25? And I mean, the part of EBITDA that we are not selling to Bluestar? Helge Aasen: I don't think we have -- this has been an integrated part of the Silicones operations in France. Obviously, we have looked at what is going to look like going forward, but I don't think we have a specific number on 2025 EBITDA for this part. Morten Viga: No, you're absolutely right. This has been an integrated part of the Silicones business in France. So we don't have a precise number on that. We believe that we will have a -- how should I call it, a neutral to positive profitability going forward. Helge Aasen: I should add that this -- to keep that asset obviously gives us a very stable outlet for silicon metal and value uplift on silicon metal into the European market. It's also very important for Bluestar to have a stable source of silox for their downstream operations. And we have entered into a long-term agreement that I think will be very beneficial for both parties. Odd-Geir Lyngstad: And then we have a question related to debt and EBITDA and where do we see the net debt to EBITDA for the remaining Elkem after the NOK 1.5 billion equity raise? Morten Viga: Well, then we will be at a net interest-bearing debt of approximately NOK 8.3 billion. And as I said, we will be at approximately 3.6x EBITDA on a leverage. There will probably be an additional equity raise, which can change or lower that also somewhat. Our target is clearly to generate cash flow going forward, which enable a further deleverage of that number. Odd-Geir Lyngstad: While we are into kind of equity raise, there is also a question about the agreed equity price issue or the conditions of the equity offering, if you're able to provide any further details on that? Morten Viga: More details on that will be provided later. I think the important issue today is that we have underwritten NOK 1.5 billion in new equity, very happy with the support from major shareholders, which clearly see this as a very good and attractive investment. And then we will provide more details on the structure and terms later in the process. Odd-Geir Lyngstad: We have also received a question on the price exchange between Elkem and Bluestar and therefore, the implied EV of the sold assets. Morten Viga: Yes, that's a good question. I think we have provided all the relevant information. And of course, there are many ways to regard this. From our perspective, what's important is that we clearly believe that this is very attractive as seen from the minority interest and from the company's perspective. I think that has also been confirmed by opinions made by ABG and by DNB Carnegie. And as I also said, the important thing is that we now have secured a very, very good business structure for the future of Elkem and also a very good ownership structure. Odd-Geir Lyngstad: Very good. Given the fact that we are seeking to enable the capital allocation to accelerate growth in Carbon Solutions and Silicon Products, are there any concrete opportunities that you are assessing? Helge Aasen: Definitely, we have been looking at that for a long time. And I think that's a very good topic for the Capital Markets update that we will come back to in a few months. So let's get past this next milestones with the EGM and the closing of the deal. And then I think that will be a very, very interesting topic to discuss. Odd-Geir Lyngstad: And also the last question goes more into kind of the future and the prospects for '26. We have guided on improved margins and results for '26. And the question is if you can elaborate a little bit on what is market related and what is cost efficiency related when it comes to that improvement. Helge Aasen: I don't think we should go into those details on that now. But obviously, we are now reducing Elkem's organization and simplifying the business model. And it's a very good opportunity to streamline organization. So we have already been working on that for a while. So there we'll definitely be taking measures to reduce cost through efficiency improvement. And then regarding the market, I think we're positive on the outlook. I think Q1, I mean, we have said there's still a lot of uncertainty. We don't guide beyond Q1. I think Q1, you can expect that to be in line with Q4, and then we are positive going forward. Odd-Geir Lyngstad: Thank you very much. I don't have any further questions, and there doesn't seem to be any from the audience. So that concludes our presentations here today. So thank you very much for attending, and thank you to Helge, Morten for taking us through the 2 presentations. Helge Aasen: Thank you. Odd-Geir Lyngstad: Thank you. Morten Viga: Thank you.
Sven Kristensson: Good morning, and welcome to this conference call regarding Nederman Group Q4 2025. It's been an interesting year. And what we can conclude in Q4 is that we had higher orders received and a stronger business. We have, during this challenging period, continued to strengthen our leading position and we are working with market leadership, technical leadership, commercial leadership and operational leadership. That's our focus during this period. If you look at Q4, we had good organic growth if you consider it on a currency-neutral basis. We also had a currency-neutral growth in sales and we believe that is very positive given the market conditions. We have delivered good cash flow and we have continued invest in operations and also in R&D. And these investments have provided a very solid basis for the future. We will have higher margins and better efficiency when we regain some momentum in the market. Matthew Cusick: If I look at some of the key financials now, orders received grew currency-neutral in both Q4 and the full year. It's very hard -- some of you who've listened to a number of these hearings already in this year-end season might be tired of hearing about currency-neutral and currency effects, but it's really very important to take this into account when analyzing the numbers. Sales as orders received for Q4, SEK 1.38 billion versus SEK 1.4 -- slightly over SEK 1.4 billion last year. So on the face of it, that looks like a decrease. However, organic growth was 4.7% in the quarter, currency-neutral, including some of the couple of acquisitions from Euro-Equip that we acquired back in March of 2025 and some from Duroair last year. That leaves us at 7.3%. Unfortunately, currency effect on orders received and actually on sales in the quarter was over 9%. For the full year, SEK 5.55 billion was the full order intake. That's growth, currency-neutral of 1.5%, slightly negative organically, minus 1.3% and still, obviously, for the full year, a clear currency impact. On the sales side, again, currency-neutral growth for both Q4 and the full year, just over SEK 1.4 billion in sales in the fourth quarter versus a very strong Q4 of 2024. It must be pointed out, SEK 1.62 billion was very high for the Nederman Group. Currency-neutral, that's 1.3% up in the year -- in the quarter -- sorry. For the full year, SEK 5.78 billion versus SEK 5.9 billion last year -- 2024. 3.5% up currency-neutral. So we see in these -- with these market conditions and the current investment appetite that 3.5% currency-neutral growth is rather strong. Profit-wise, like Sven mentioned, these investments that we've done in our operations have improved underlying profitability. The releases of new products has boosted sales in, for example, Process Technology's aftermarket. Adjusted EBITA for the quarter SEK 459 million versus SEK 185 million for quarter 4 2024. That's a drop of SEK 26 million, SEK 22 million currency effect in the quarter. Please take that into account when analyzing this. The SEK 159 million leaves a margin of 10.6%. Earnings per share is SEK 1.86, therefore, versus SEK 2.49 in Q4 last year. Full year adjusted EBITA SEK 627 million versus SEK 708 million. EBITA margin, 10.8% versus 12% and earnings per share SEK 7.8 versus SEK 9.83. When looking at the full year results, we had a currency impact on EBITA of approximately slightly under SEK 70 million. U.S. tariffs were approaching SEK 15 million for the group as a whole. And then we did have a couple of one-offs, you remember in 2024 related to a property sale and the company sale in China. The sum of those is just under SEK 100 million. So when comparing SEK 708 million to SEK 627 million for the full year, please take that into account. Cash flow, good cash flow in the fourth quarter, very good cash flow actually in Q4 of 2025, not quite as good as the cash flow in the -- I think that was an all-time high for 1 quarter cash flow in the Nederman Group in Q4 2024. For the full year, SEK 382 million, again, rather strong. This is important that we maintain a good cash flow. This has funded a lot of the investments that we've been making in our operations. We can see that on the second -- on the right-hand side of this slide, the net debt has decreased over the past 2 quarters, although it is higher than it was 12 months ago. We've made significant investments in our operations. We've also acquired a new company and paid out a dividend during the year, of course. If we go right through and break things down on how the business is going division by division, then Sven, and start with Extraction & Filtration Technology. Sven Kristensson: Yes. Extraction & Filtration Technology Q4, we had more large orders, both Americas and EMEA and that gave an increased order intake versus last year. We grew sales in Q4, currency-neutral. We definitely improved operational efficiency and that was driving profitability. And the full year EBITA was up SEK 10 million. And if you would consider it currency-neutral close to SEK 50 million, which is a strong performance in a very challenging market. For the regions, EMEA, we had increased order received. We had major solutions orders and we are growing our aftermarket business, which has been on the strategic agenda for several years. We had 2 very big orders in Belgium for welding and one in Sweden operating nuclear industry. In Americas, we had actually double digit growth in order and sales. There were several larger orders. Several of them came from defense and aerospace industry, where we have good solutions and our concept of clean air optimized with energy savings, logarithm, et cetera, has given us some success here. Then we have the orphan APAC. One major order was secured to aerospace, a strategic and prestige order. But overall, we are not doing a very strong performance in Asia. Both orders and sales dropped. Key activities during period has been preparation to modernize the facility in Charlotte. It will further strengthen U.S. supply chain and operational capacity. It will shorten lead times, which is one of the biggest advantage, but it will also take away over time, some tariffs and other challenges. Continued investment in the new innovation center in Helsingborg is ongoing and we have a fully booked innovation center for the full year 2026. And we will also see order -- new products and solutions coming out of that. Testing and validation of current and next-generation products in the innovation center is ahead of new launches in that. Matthew Cusick: When we look at the financials for E&FT division, orders received for the quarter, slightly irritating, SEK 0.5 million below the same quarter last year, even at prevailing rates, currency-neutral growth, 7.9% which is purely organic in the case of this division. Sales, SEK 686 million, left an adjusted EBITA of SEK 96.4 million, which is 14.1%. It's ahead of Q4 2024 in both -- in both SEK and in percentages. For the full year, EBITA up to SEK 362 million from SEK 352 million, as Sven mentioned, currency-neutral, that's SEK 48 million up. The margin increasing up to 13.7%. So more efficiency in the operations investments, for example, in the site in Helsingborg and in [ Markaryd ] have contributed to that. If we move on to Process Technology then, Sven. Sven Kristensson: Yes. Process Technology, more dependent on larger projects and have had a challenging period, but the activity picked up towards the end of last quarter. We had a currency-neutral order growth of 15%. We also had some sales increase versus Q4 '24. We have had some positive contribution from Euro-Equip that we acquired end of first quarter last year and they are integrated and doing a very good job working with the rest of the Nederman team. The service business continued to perform strong. Customers are focused on maintaining compliance and ensuring the efficiency of existing installations. And this is, of course, a result of the lower willingness to take decision on larger investments. If we look at textile and fiber, there's still a very low investment appetite and that goes for the global market as such. There is still overcapacity globally in spinning mills and also in weaving mills and that has a negative impact on our sales here. However, we are growing the service content. The order intake did, however, increase slightly in Q4, meaning that we are taking market share, especially in India, where we have a very strong organization and some neighboring countries that we supply from there. When going to foundry and smelters, Euro-Equip supported an increased order intake. It's a very good addition to Spanish-speaking area. We had one large aluminum order in Australia and some local production in India have enabled deliveries to several smaller foundry projects there. That is something we have tried out to get inside the tariff barriers and also shorten lead times by using our strong capacity and capability in India and increase their scope by doing -- under the supervision of our German expert team, doing FS filter, which, of course, is technical mumbo-jumbo for you, but it's configurated large for hot air application like foundries and smelters. This is something we will continue to further develop for the region to take a position in APAC. Customized solutions, orders received increased. It was boosted by large orders in U.S. from pharmaceutical industry. And again, our service and aftermarket is developing well. Key activities has been the investments in upgrading test centers, upgrading buildings in Germany, including solar panels and efficient heating. We have continued positive trend for service and aftermarket business and that includes our digital offerings, our continued strong demand for energy-efficient fan for textile. This, again, the very large energy saving that you get from our newly developed high-tech fans for spinning, weaving industry. And we are soon selling our thousandth new replacement fan for that. Matthew Cusick: Financials then for Process Technology. Orders received SEK 384 million is an increase from an albeit modest SEK 368 million in Q4 last year, but nevertheless, currency-neutral growth, 15%. Sales, a stronger sales quarter for the division than the earlier quarters of the year, SEK 456 million, resulted in an EBITA of SEK 44 million, 9.6%, which is quite good for this division. It's below a very strong Q4 last year, 11.1%. That included some -- concluding some varied -- for this division, high-margin projects then. But 9.6% is pleasing. The mix with higher service -- higher levels of service business helps that. For the full year, adjusted EBITA of SEK 144.7 million is 8.8%. It's down from 182% -- SEK 182 million, which was 11%. We move on to Duct & Filter Technology. Sven Kristensson: Yes. Duct & Filter, the development during the quarter, we had a declining order intake. There were significantly fewer major projects, particularly in the U.S. and that has been very much linked to EV batteries, large investments that has flattened out. We have also seen that there has been the same problem as PT for large investments -- larger investments in smelters, foundries, et cetera. And we are dependent on getting those wood industries, et cetera. Order activity, however, increased in EMEA. Sales was impacted negatively by lower order intake early in Q3. But despite the low volumes, profit margins remained solid. If you look at Nordfab isolated, both orders received and sales decreased in the U.S., and that is a market that stands for almost 80% of division sales. Work continued on 2 large projects in EV battery manufacturing, which generate further follow-up orders. But as mentioned earlier, it's drying up a little bit with the EV battery market in U.S. Nordfab now is contributing to a higher efficiency and profitability with delivery reliability of 99.9% during the quarter. So we are the leading and first choice when they want to have secure deliveries, quick deliveries. And we have also now, which I will mention later, started with our hub in Texas in order to further strengthen our reach in the U.S. market. If we go to Menardi, orders received in the U.S. increased in Q4 and that was boosted by new major orders to U.S. steel manufacturers that are facing a revival due to the tariff protection. In EMEA, the trend remains stable. So again, the key activities have been new production warehouse facility in Thomasville is completed and it's taken into operation. Thailand and Australia have launched new stainless steel product for the food industry and Nordfab EMEA launched improved high vacuum bends and branch for easier installation. Warehouse center established in Dallas, Texas, to strengthen Nordfab Now and Nordfab Now is our concept of being able to have next-day deliveries. Amazon has spoiled people with very quick deliveries and we are now following that trend and we see good success in this new way of handling it. As mentioned, almost 100% delivery certainty. Nordfab EU obtained EPD certification for galvanized and stainless steel product families. Matthew Cusick: Briefly on the financials for Duct & Filter Technology. Orders received did drop 11% currency-neutral as did sales. Sales at SEK 179 million versus SEK 229 million last year. EBITA 17.4%, up from 16.5% last year. Okay, it's down in absolute terms, but this is -- we see the efficiency from these investments we've made in the operations units around this division. So able to maintain good levels of profitability. For the full year, 19.3% is the EBITA. That's slightly down from 19.6% on obviously lower sales volumes. Monitoring & Control Technology then, Sven. Sven Kristensson: Yes. Monitor & Control, the development during the quarter was that we had an increase in orders received and that was fueled by very strong performance by NEO Monitors in Asia. It's a division that has most success in the Asian market. However, the weak orders received in Q3 led to slightly lower sales in Q4. We are focusing on the service business and we continue to perform well in growing that part of the business. We are also here linking our Olicem, the reporting system to our -- especially Gasmet projects and seen success when we can package these things. Some segments, hydrogen and defense are developing well. Geographically-wise, we look at EMEA. It was boringly straight. It was same basically as Q4. First portal analysis to defense customer in Germany and Switzerland has been delivered. And we have also the certification process of Auburn's product line ongoing for European market, which when that will be finalized, will give us access using also our Boston manufactured products for especially particle emission measurement available for the European market. In Asia, NEO Monitors saw strong order intake. We have also come in the situation, we have more direct sales to customers. We are in more direct discussions with customers that strengthen our position. We have also increased the presence in APAC with small offices, both in Korea and in Singapore. In the Americas was the development rather weak. Fuel orders to public sectors that is customs duty and it's emergency service, educational institution where Gasmet has had a very strong market with affordable units. However, with the financial restrictions in the public sector, we've seen a decline here. The exception is that the steel industry as also has been seen in Menardi is continuing to upgrade the old facilities, which has led to some new opportunities and orders. The key activities has been the launch of LG III ICL. That's a very prosaic name, only an engineer or a Ph.D. in engineering can come up with that very market-friendly name, but it's there and it's an advanced laser gas analyzer for industrial application. The extension of Auburn's facility in Boston is completed. It was inaugurated January 21, but it was taken into use slightly earlier than that. What it means is that we have strengthened the product and logistic flow. So we have now a test base and a more efficient operationally working in that factory as well. We have also preparations underway to improve efficiency and increase production capacity at Gasmet Finland. And we have attended some of the important shows in Asia to prove our willingness to be there and grow our market. Matthew Cusick: Financials for Monitoring & Control. SEK 189 million in order intake was an increase of 10% currency-neutral. Sales, SEK 205 million is below what was a very, very strong Q4 of 2024, SEK 241 million. Currency-neutral, that's actually down 8%. Adjusted EBITA is SEK 37 million, which is 18%. That's an improvement in margin versus the full year average. So we see -- we think -- or we are seeing some efficiency in the operations, these investments in NEO Monitors in Auburn starting to have an effect right away. For the full year, currency-neutral growth was 1% positive, sales, 1% negative currency-neutral. And then adjusted EBITA, SEK 129 million versus SEK 144 million in 2024. That leaves a full year margin of 16.7%. So Sven, our outlook? Sven Kristensson: Yes. And as for the last few years and especially this year, the outlook is interesting, but the demand remains dampened in many industries. There are some areas that are better than others. We have a growing service business and a very strong digital range enable us to assert ourselves well in the current turbulent market. Following higher activity in September, orders received continued to pick up in Q4, which if it continues, would be very positive for development in the first half of 2026. At the same time, the market is dominated by considerable uncertainty, making it difficult to forecast the broader recovery in demand. But if it gains momentum, we are in a very good position to increase our margins. With a strong balance sheet, we are continuing to invest in operational efficiency, ongoing improvements to our offering, allowing us to continue to advance our position irrespective of the market condition. In the world with growing insight into the damage that poor air does to people, Nederman with its leading industrial air filtration offering has a key role to play and good possibility for continued growth. Matthew Cusick: Financial calendar annual report will be released on the 17th of March this year. The interim report exactly a month later on the 17th of April for the Q1. Annual General Meeting on the 21st of April, where we expect the AGM to approve the proposed dividend of SEK 4 per share. That's unchanged versus 2024 level. Q2 report will be released on the 16th of July and the Q3 report on the 21st of October this year. And with that, we can open up, I think, for any questions that people listening may have for us. Operator: [Operator Instructions] The next question comes from Anna Widstrom from DNB Carnegie. Anna Widstrom: So firstly, I just want to dive into price and volume in the order book. Given that there are some tariff effects, how should we think about volume versus price in the organic growth that we see in the orders? Matthew Cusick: Let me think. That's a very good question. The currency -- the tariff -- if you think in relation to tariffs, the tariffs are not making a huge effect. The tariffs affect our costs by around SEK 5 million per quarter on approximately current -- give or take on current volume. So on sales prices, they don't affect things massively. Then when it comes to price, we're not seeing massive price movement in the market. There's not -- it's not -- we're very careful not to get dragged into a race to the bottom. However, we're not increasing prices significantly. So I think when you're looking at this -- or when you look at this organic or currency-neutral growth, it is growth that you're looking at there is the simple answer. Anna Widstrom: Okay. Perfect. And just to continue there on the tariffs. Have you experienced any shift in customers' willingness to pay these new set of prices? Have they sort of been more keen on evaluating local opportunities? Or have they just sort of caused investment decisions? What's your sense in your view? Sven Kristensson: This is, of course, not something that you can empirically prove. But the biggest effect during this year is that the uncertainty that has been generated is that a lot of American large project has been postponed. We are talking about several hundred million PT project that has been postponed both in U.S. and some also in Asia due to the uncertainty of what are the rules here. When it comes to other effects... Matthew Cusick: I could answer that maybe, Sven. Sven Kristensson: Yes. Matthew Cusick: When it comes to tariffs, we don't import an awful lot into the U.S. And what we do -- of course, what we do has been impacted by certain parts of what we do is being impacted by this. But in the U.S., you have seen inflation, for example, in steel prices internally anyway. So it's not that our costs are significantly different to any competitor. And I mean, in fact, we source approaching 90% of everything we sell in the U.S. is sourced U.S. anyway. But we don't think that we're at a competitive disadvantage related to these tariffs. And like you say, the investment appetite is... Sven Kristensson: Yes. And then you have some awkward sort of more emotional feeling that some Canadian customers refuse to take the product from our U.S. factory. So we are now shipping directly from Europe and manufacturing in Europe is that it has more to do with an emotional side of it than -- and that is things that going on. So it's more that you have an uncertain world and animosity towards some. But we also have to -- EFT has more than 80%, 85% local made in U.S. Where we have some import is on MCT when it comes from our Norwegian and Helsinki. But that's where we see that. Otherwise, we have basically in all regions manufacturing for the local market. Anna Widstrom: Okay. That's very clear. So then I just want to go into the margin development in EFT. So first, I'm a bit curious on the improvement that we can see here. How much of this is an effect from the improvements made in, for example, the Helsingborg site? Matthew Cusick: There are clear improvements made. If we talk operational improvements, then, we were talking around SEK 20 million, I think we were talking. We believe we've made operations improvements of around SEK 20 million in total in the EFT division through -- and then it's very -- it's not exactly the same volumes that are going through, but we've definitely made clear operations improvements. We've also seen a part of the profitability boost is that we are -- we have seen good growth in product sales or a higher portion of product sales, which means we're filling our factory up even more with less. So there's more Nederman content in everything we sell. But operations clearly helping and 20 million is the -- what we believe is the full year effect for 2025. Sven Kristensson: And we will continue to see effects of that. And we are now also investing further in order to show, as mentioned, in the Charlotte factory, in-sourcing more. We will take less from our Polish factory. But the biggest advantage here will be that we are more competitive because we have -- we are shortening the lead time. This is actions we are going to use in other areas as well. And we are also looking at how can we utilize our capabilities in, for instance, Thailand because there are free trade agreements between Thailand, India and some other areas. So we -- you have to play this game as well. But generally speaking -- and when you mention EFT, we'll also say that the NEO Monitors efficiency program where we have rebuilt and reorganized from a more prototype version of manufacturing to a more -- when we now have got some volumes, we have also there significant improvements, then we need some further volume. We had also for NEO and Gasmet set up in Suzhou in China where we now can service locally the equipment rather than shipping them across the globe to Norway and so on. So that is also not saving so much of the cost saving. It's more attractiveness for the customers that we locally can handle their issues. It was a long answer. It was slightly outside of the -- I hope that it was okay. Anna Widstrom: And just a follow-up on sort of the short-term expectations because I think you wrote something about the orders having quite a lot of solutions and service in the order book for the division. Is that then perhaps a bit more of a negative effect for margins in Q1 if we just think short term? Sven Kristensson: I -- probably not. I think that -- our assessment is the service increase will continue to -- or the service proportion will continue to be high and that will counter any shift between the products and solutions there. That's -- but also remember, we are doing very well in our solutions with our -- now I'm almost bragging, but our superior, we get better paid for our solution because this clean air optimize would include the energy save system, it includes digital surveillance. It includes the good filters locally made. We have an attractive offer. And the reason why we get larger orders and the special orders to defense and so on is that we have proven concept. We do not have to guess that it will work. We have done it. We've been there. We've done it. We got the winners T-shirts before. So we -- and that we see especially in sensitive areas like aerospace, defense, where we have good strong performance. Anna Widstrom: Great. That's a perfect segue into my next question because for several quarters, we've noted that you mentioned large orders from defense. Do you have any sort of guesstimate on how much of the order book or sales that currently is towards the defense industry? Sven Kristensson: Matthew? Matthew Cusick: We don't have a completely accurate figure on that. So I would rather not say -- I could do some -- I will do some research on that. We will try to -- I think we will note this because it's not the first -- you're not the first person we've heard this question from. I think in the Q1 report, we will try to have some level of estimation there. So we don't -- it's -- what we -- we should say about this defense is not in one particular region that we see. This is both Europe and the U.S., is less so in APAC. Europe and U.S. is where we're seeing it and it's different countries. Some of the same suppliers -- customers, sorry, BAE, we followed -- we've seen them in Europe, U.S. -- and the U.S. Sven Kristensson: Northrop Grumman here, the big -- and it's very much -- you can say that it's the same. It's aerospace, which we've been a long-term supplier to Airbus, et cetera, that now also goes into military aircraft. You have vehicles where, for instance, our RoboVent company in Detroit has been utterly dependent on the local regional automotive market, which has declined significantly, but we have exchanged that by using their American-favored technology in defense for welding applications, but also in food and other areas. So we have exchanged somewhat the customer base. And you understand that what did they say for the company, they had SEK 130 billion in losses last year because they write off. Their investment appetite is not enormous. So we have the customer base. Anna Widstrom: Great. I have a follow-up question on this. If you've -- you're sort of answering it. But if you noted that you have sort of gained market share within this segment or having a sort of preferred supplier position? Or is the growth that you're noting is mainly from the growing of the defense industry in general? Sven Kristensson: I think the preferred supplier one, you can say something. When you -- with these customers, once you're in, you are kind of -- you are in -- it's not to say there's no competition whatsoever, but the likelihood of getting repeat orders is there. And we have seen that where like I mentioned with BAE, for example, so it is happening in more than one country or more than one project. So this signals that -- hopefully that there is some stickiness on this business going forwards. Anna Widstrom: Great. And then on the [ GST ] division, it stands out a bit on the organic order intake. Is this mainly from it having larger U.S. exposure? Or what's your view of this? Matthew Cusick: They do have a large U.S. exposure. It's around 80%, I think, U.S. And then they have -- on top of that, they have a couple of -- they were very strong in EV battery investments, which were happening late last year and actually Q1 -- sorry, late 2024 and actually in Q1 of 2025, we were receiving orders there. The other part of the market, they do have quite a large chunk of exposure to the wood industry still, which -- a lot of which is construction-related, which isn't super hot right now, but it's obviously a very, very important industry and will continue to be so. So what we've seen in Duct & Filter like we mentioned is the efficiency in the factory is clearly, clearly better, but they are lacking volume. It cannot be denied. Anna Widstrom: As you said, the margin is positive and you mentioned that improved production and warehousing process in U.S. and Europe is a positive. Is this also a benefit from having a lower ratio of very large orders? Or should this scale from current levels very well and also that activity of significant large order comes back? Matthew Cusick: We have invested also in some more -- in the production of the -- for the larger ducting as well so that you ought not to see a decline. If we were to get more large orders, you ought not to see a decline. And in fact, with more volume, we'll have more absorption of overheads as well. So we don't -- we think this improvement is here to stay. Sven Kristensson: Yes. The improvement is definitely there to stay. The thing is, of course, we need to utilize the equipment and so on. But what you see is that we have been heavily impacted with EV batteries when we had magnificent success over a year's period when that market grew. Now we have to do the same as we did with [indiscernible]. We need to find new attractive areas where we can supply. And we have to remember, what we are doing is that we have in -- we are efficient and we are mostly used in combustible dust environment because that is -- this is a specialty. It is very clean interior in the duct work and that is the importance here. So that's where we have. So it's typically combustible dust in food. It is in EV batteries. It is in aluminum, wood, et cetera. Anna Widstrom: Great. Just 2 more questions from my side. The first one is on the Monitoring & Control Technology division that you mentioned and you mentioned that, I think, in the last quarter as well, that the conversion to new technologies amongst customers is taking a bit longer than expected and connecting this also to the political uncertainty. Could you maybe expand a bit on this? And is it a type of customers that has found this trend more clearly or regions like the U.S. or something else? Sven Kristensson: Yes, it's difficult. What we see -- the main thing here and what has been talked is the decline in the public sectors. That has had a strong impact. What we then have to do is, of course, focus a little bit more on other customers, again, like EFT has been doing and so on. If our current customer base are reluctant to do the investments, we need to work harder with some other areas. And I think we've seen -- we are launching new products in U.S. in Auburn, where we are cooperating between NEO and Auburn and the combination here, we can do better. We are working now with the Gasmet Olicem on service and quick reporting response been quite successful in this incineration business where reporting is a very important portion of it. So we are building out sort of packaging it to be even more attractive going slightly outside our current customer base in a controlled way. Anna Widstrom: Perfect. And then my final question is on capital expenditures, which is down year-over-year. While you mentioned some initiatives in the report and so what level of CapEx are you planning for during 2026? And is there differences in tangibles and intangibles? Matthew Cusick: For 2026, I think the rate of product development, which is the vast chunk of our intangibles, that will continue. We're not going to ease off on product development, digital or actually filters -- new filters, et cetera. When it comes to fixed assets, what we can say on that, 2024 and 2025 were quite high years for fixed asset expenditure with a lot sort of longer-term investments in buildings in Helsingborg, the one in RoboVent, the Nordfab ducting one in the USA as well. 2026, what are we doing on that front? We're going to invest in the Charlotte plant to some extent. But I think you can expect a drop in tangible fixed asset investments, although it will still be on a -- historically, if you go back 5 years on a rather high level. As things are now, we would expect this to drop in 2027 a little more because we don't -- we believe we've got -- we will have a footprint that is there to and can incorporate a manufacturing footprint that can handle significant growth without major further CapEx. Operator: [Operator Instructions] There are no more questions at this time. So I hand the conference back to the speakers for any closing comments. Sven Kristensson: We thank you for taking your time listening on this Thursday morning and we'll be back for the Q1 report later in the year. So thank you very much, everyone.